SBA 7(a) Fitness Center Feasibility Study

Fitness centers: high volume, high losses

Between FY2017 and FY2026, fitness centers drew 11,604 SBA 7(a) loans worth $4.70 billion, and the loss record is what a lender needs to see first. Charge-offs have already claimed at least 9.5% of the 4,674 gym loans disbursed in FY2017 to FY2021, and 5.3% inside five years of approval, a floor well above the 7(a) program's across all classes. No metric clears our distinctness screen, because 7(a) carries nearly the whole class; the losses belong to fitness lending generally, not to this program.

The loans are modest: a median of $246,000 and a middle half from $75,000 to $494,625. Franchise share is 48.5%, so a large part of this book is branded gyms whose franchisors set the build-out, the equipment package and the membership model. FY2020 and FY2021 were the low years, at 843 and 786 loans; volume then rebuilt to 1,606 loans and $659.7 million in FY2025, and dollars rose again to $671.6 million on 1,382 loans in FY2026.

Lenders, states and fallout

The Huntington National Bank leads with 1,771 loans and $472.8 million. Wells Fargo Bank National Association trails far behind at 513 loans and $188.0 million; Manufacturers and Traders Trust Company has 403 loans for $64.2 million, Newtek Bank, National Association 318 for $87.4 million and Stearns Bank National Association 317 for $76.8 million. California has 1,138 loans and Texas 1,134, then Florida 790, New York 617 and Ohio 517. Approved gym loans that never funded make up 11.6% at the floor and 13.0% at the ceiling.

What a gym study has to test

No limitation line applies. Any feasibility study for a 7(a) fitness center has to test demand from the households within a short drive and the gyms, studios and boutique concepts already selling memberships to them; the cost of the lease build-out and equipment, which has little resale value; debt service coverage from membership revenue after attrition, at the count the club can realistically sign and keep; and, for an owned building, an appraisal that looks past the fit-out to the space's value for a retailer or other user. The charge-off record says the study's downside case matters more than its base case.