SBA 7(a) Fitness Center Feasibility Study in Texas

High franchising and a high charge-off floor

Fitness centers in Texas look different from most 7(a) classes, and the charge-off figure is what sets them apart. Look at the 454 loans funded in the earliest cohort, FY2017 to FY2021: 14.3% or more went to charge-off, and the figure counted only to the fifth anniversary of approval is 7.9%. Both are floors. The cohort belongs to a book of 1,134 approvals from FY2017 to FY2026 worth $517.1 million, which makes Texas second only to one state for this program and class. Fitness is 5 of 39 among Texas asset classes, and 64.1% of the loans went to franchise brands.

Size and structure

The median loan is $305,000, 1.24x the national 7(a) median for fitness centers, and the central half of loans stretches from $150,000 to $514,950. Those sums fund build-outs, equipment and working capital in leased space. Cancellations were at least 9.3% of FY2017 to FY2024 approvals, or 11.0% once the undisbursed are included. Approvals rose from 90 in FY2017 to 129 in FY2019, dipped to 91 in FY2021, then climbed to 157 loans and $77.3 million in FY2025, the largest year. Fitness lending is therefore growing in volume, which sharpens the question of how many clubs a market can carry.

Who lends, and where

The Huntington National Bank has 174 loans on its books, worth $54.5 million. Next on the list, Wells Fargo Bank National Association has 78 loans, Simmons Bank with 56, Frost Bank with 37 worth $21.6 million and Stearns Bank National Association with 34. That is SBA's note of present holders, a portfolio and not a credit policy, and a high charge-off floor across the class must not be pinned on any one name. Harris County has 174 loans, Dallas 108, Tarrant 85, Collin 83 and Denton 82, so the suburban counties ring the big cities with substantial activity.

What a Texas gym study must test

Because the SBA 7(a) program serves general business needs, a fitness study here is about the operating business more than the building. It should test membership demand within a short drive, the pricing of competitors from budget chains to boutique studios, and the retention curve, since churn determines whether fixed costs are covered. Franchise terms deserve scrutiny: royalties, required equipment and territory rights affect margins. With charge-offs this heavy among comparable loans, debt service coverage must be shown with a slow membership ramp and a cushion for the months when joining falls away. Lease length against the amortisation of leasehold improvements is the last test an appraiser or lender will apply.