SBA 7(a) Fitness Center Feasibility Study in Pennsylvania

Pennsylvania gyms: brands, and heavy losses

Two features define fitness centres in Pennsylvania under 7(a). Franchising accounts for 39.7% of loans, so many are branded studios or gyms. And the losses are heavy: for 164 loans disbursed across that window, 12.2% are charged off to date and 9.8% inside five years of approval. Because some loans remain open, treat both as minimums. Cancellation after approval reaches at least 10.3% for FY2017 to FY2024, and 13.1% when undisbursed loans are counted as cancelled, a gap pointing to many approvals that never funded.

How big the loans are

The file for FY2017 to FY2026 holds 406 loans worth $169.1 million. The median is $194,000, or 0.79x the typical gym loan nationally, with half the loans between $50,000 and $493,800. Pennsylvania ranks seventh among states on the count, and on Pennsylvania's list of 39 classes fitness holds third, a high position that shows how often the class turns to this program in the state.

Lenders, counties and years

The Huntington National Bank has 54 loans and $12.7 million, Manufacturers and Traders Trust Company 48 and $6.9 million, TD Bank, National Association 27 and $2.9 million, Wells Fargo Bank National Association 21 and $6.2 million, and Wilmington Savings Fund Society FSB 16 and $15.0 million. Wilmington's average loan is much larger than the others'. These are portfolios, not policies. Montgomery County has 59 loans, Allegheny 54, Philadelphia 52 and Bucks 36, with Lancaster at 22 and Chester and Delaware at 21. Approvals fell to 21 in FY2020 and reached 65 in FY2025.

What a Pennsylvania fitness study has to test

The study has to treat membership as the revenue engine. It should estimate how many members the trade area can supply within a realistic drive, the monthly dues the market tolerates, and the churn that every gym suffers, because losses of this size usually trace to membership that never reached break-even. Seasonal swings, with January sign-ups and summer lulls, belong in the cash flow. For a franchised unit the royalty, the required equipment package and the territory terms must be in the model. Build-out and equipment need reconciling with the $194,000 median, and a request near $493,800 requires clear support. Repayment should hold on slow member growth, and a lender will want to see the owner's cash in the deal.