SBA 7(a) Fitness Center Feasibility Study in California

The top state for 7(a) fitness lending

No state approves more SBA 7(a) fitness center loans than California: 1,138 across FY2017 to FY2026, worth $457.8 million in gross dollars. Fitness ranks 6 of 39 among California's asset classes. The median loan of $250,000 is only 1.02x the median for 7(a) fitness lending elsewhere, so size is ordinary. The feature that marks out this cell is the loss record, the charge-off rate to date.

Franchises, and the loss floor

A franchise stands behind 44.6% of the loans, and loans from $100,000 to $475,000 make up the central half, the scale of a studio or a franchised gym, not a large club. Of the 420 loans that funded from FY2017 to FY2021, 12.4% have been charged off to date and 8.3% by the fifth anniversary of approval. Both are floors and neither is final. Cancellations ran at least 13.9% for FY2017 to FY2024 approvals, or 15.0% with undisbursed loans treated as cancelled. Lenders should read this as a class where losses have been real, and a borrower should know that the format financed most often is the one with the plainest loss history.

Holders of the loans

The Huntington National Bank holds 149 loans worth $41.6 million. Wells Fargo Bank National Association holds 93 worth $28.6 million, U.S. Bank, National Association 75 worth $14.4 million, Newtek Bank, National Association 65 worth $14.8 million, and CDC Small Business Finance Corp. 55 worth $9.7 million. SBA lists each loan's current holder, which is not always the originating lender. Los Angeles County has 239 loans, San Diego 152, Orange 126 and Santa Clara 70. Approvals sank to 48 in FY2021 and rebounded to 190 in FY2025.

The study behind a California gym loan

Since 7(a) is the general-purpose program, the study must say whether money buys a lease build-out, equipment, an existing studio or a franchise. The central test is membership: residents and workers near the site, the studios and clubs they already use, and how fast members leave. Dues and class revenue should be set against rent and staffing, with sign-ups assumed to build slowly. Given the loss record, the study should push the payment test harder than usual, including a case in which membership falls short and one in which a franchise agreement ends. An appraiser values the business on earnings, never on equipment alone.