SBA 7(a) Fitness Center Feasibility Study in Louisiana

A large share of franchises and a loss record to watch

Louisiana places fitness centers at 4 of 39 among its asset classes under SBA 7(a), though the state sits at 32 among states by count. The record holds 96 loans worth $42.0 million. Franchise-affiliated borrowers account for 52.1% of them, so this is a branded business more often than not. Loans centre on $250,000, 1.02x the nationwide 7(a) typical for gyms, with most loans falling from $150,000 to $525,250. What marks the cell is the charge-off floor of 7.3% among the 55 loans funded early in the series, with 3.6% inside five years.

Fidelity Bank holds 10 of the loans, worth $6.9 million. Hancock Whitney Bank ($1.9 million) and The Huntington National Bank ($1.4 million) hold 6 loans apiece, while American Bank and Gulf Coast Bank hold 5 each, worth $3.4 million and $2.6 million. SBA lists holders; nothing here says how any of them treats a gym. East Baton Rouge has 16 loans, Saint Tammany 14, Jefferson 12, and Lafayette and Orleans 9 each, with Caddo and Calcasieu at 5.

Years

Approvals were 15, 16 and 19 in the three years from FY2017 to FY2019, collapsed to 2 in FY2020 with $680,700, and have run between 5 and 9 a year since. FY2025 shows only 5 loans but $7.4 million, a much larger average.

Cancellation after approval among Louisiana gym loans approved by FY2024 has a floor of 4.8%, and counting undisbursed loans leaves it unchanged, a low rate next to many other cells.

Questions a Louisiana gym study must answer

The study has to show membership: how many households live within a realistic drive, what rival clubs charge, and how fast a new club can sign members and keep them. The charge-off record argues for caution on the ramp, so present a slow-enrolment case and a case with a new competitor. With more than half of loans tied to franchises, the franchise agreement's fees, territory and required equipment should be spelled out, and the study should say who bears the cost of mandated remodels. A lender will ask what equipment would fetch in a sale and whether the lease term outlasts the loan, so address both. Storm risk and insurance on a leased building belong in the operating costs.