Fitness Industry Business Loans
According to the State of Obesity and their recent studies, “Adult obesity rates now exceed 35 percent in four states, 30 percent in 25 states and are above 20 percent in all states”. CDC data has shown that more than one-third of United States adults are obese, leading to conditions such as heart disease, stroke, type 2 diabetes, and cancer. This epidemic has led to medical costs over $147 billion in U.S. dollars. The obesity epidemic is a battle that the United States is struggling to combat, but many people are starting to open their eyes to the harsh reality that is plaguing our country – starting with the fitness community and industry. This industry is at the forefront for promoting good, quality health through eating and exercise.
Health and Fitness Industry Trends
Fitness is now incredibly trendy and capitalizing on the obesity epidemic at hand; also, more people today are simply value the importance of their health. One out of every five Americans are paying for fitness memberships at some type of gym, ranging from weight lifting classes all the way to trampoline workouts. Weight loss centers are also included in the fitness industry, such as Weight Watchers. Since the 60’s, traditional gyms consisted of a variety of equipment for building muscle and working on cardio, as well as a pool and possibly even a racket ball court. Don’t get me wrong, these types of traditional gyms are still widely available, but many people are looking for something new and exciting to motivate them to get their workout in for the day. Some of the most popular new fitness industry trends include SoulCycle, barre classes, TRX suspension training, Barry’s Bootcamp, CrossFit, and kickboxing classes.
For those fitness gym owners out there, you will all be glad to hear that this industry is continuously seeing exponential growth. As of 2014, more than 63 million Americans used a health and fitness club of some sort, as well as signing up for a membership. According to Joe Moore, the International Health, Racquet and Sportsclub Association (IHRSA)’s president and CEO, “For the second consecutive year, total health club visits surpassed 5 billion, an impressive mark for the industry”. With that being said, there are many industry trends today that business owners need to be aware of, especially because some of these new integrations can be difficult to fund right away; looking into different financing options can always be beneficial when staying up to date with the latest trends!
Reasons a Gym or Fitness Club Would Need Financing
All in all, this industry is essential to the growing health conscious population in the United States today, and had endless potential. There are so many new and exciting trends and gadgets emerging for the fitness industry, so business owners need to be aware of the different loan and financing options available.
- Healthy choices: Many fitness centers are trying hard to promote a healthy lifestyle, while also trying to combat the obesity epidemic, through public-private partnerships. For example, TRX and the Drew Brees Foundation are working with local schools to implement more options for exercise in schools. Randy Hetrick, CEO and Founder of TRX, said, “TRX and Drew Brees share a common mission of championing the importance of physical activity for all, regardless of age or athletic ability. With so many physical education programs facing dramatic budget cuts and childhood obesity continually rising, TRX and Drew are committed to making youth fitness a priority”. Other fitness centers looking to promote their business while creating these partnerships that draw customers in can be expensive, so loans are always an option worth exploring.
- Competition: Many consumers are demanding accessibility to online workout and fitness videos, which leads to a more competitive and diverse industry. Those fitness centers that want a niche that sets them apart from their competitors are starting to offer online videos in conjunction with their facilities and memberships.
- Technology: Once again, technology is in high demand in all markets. In the fitness industry, many businesses are starting to utilize new technology devices that allow a more accurate measuring system for all types of physiological parameters, such as body composition and intermuscular glycogen storage. Usually these types of services and upgrades are costly, so considering financing options is essential.
- Trends: As mentioned above, many people are looking for a way out of their monotonous work out’s in the gym. Many people are gravitating towards instructor-led workouts that are innovative and exciting. Consumers enjoy having motivation outside of themselves, as well as workouts that spice things up a little bit – how many burpees can a person really do before no longer having motivation to continue? However, creating the space, hiring trainers, and providing equipment is incredibly pricey.
- Specialized training: Another popular trend that is continuing to grow is personal trainers, especially when they are able to come to the client. With the current health trends in food and exercise growing, people are looking for trainers who can do it all; they want professional trainers who can double as a health coach. In conjunction with these types of training, people are also looking for information and training on how to recover from intense physical workouts. This type of training for business owners to pay for can be expensive, but in turn can be incredibly lucrative for a fitness business owner because clients will pay more for a better, well-rounded trainer.
- Techniques: According to the American Council on Exercise, in recent years there has been a high demand for strategies and techniques on exercises that were typically only accessible to high-performance athletes. Some of these programs include barbell strength training, high-intensity weight lifting, and strength training. Boot camp training, HIIT group exercise classes, and small-group training are also in high demand. Catering to these top of the line classes can be expensive, which means needing options for financing.
- Aging population: Since baby boomers are now at the age where being extra health conscious is vital, the demand for senior fitness programs and memberships are skyrocketing. They are among the top ten most frequently adopted industry trends, meaning fitness business owners need to get on board with this soon!
- Social media is by far the most essential tool for any business owner today. The fitness industry has not fully embraced the use of social media to enhance the member-client experience, however many technological opportunities are readily available for those companies willing to pay the extra money to implement these options into their fitness businesses. These include online pricing transparency, online registration, online reservation for programs and events, selling memberships via social media and virtual training options (as mentioned above).
Loans Available to Fitness Centers
|Bank||6-10%||3-7 years||14-30 days|
|SBA||6-10%||3-7 years||10-30 days|
|Line of Credit||5-15%||1 – 3 years||7-30 days|
|Alternative||6-25%||1-5 years||5-7 days|
|Cash Advance||1.16-1.55||3-24 months||1-3 days|
Bank Gym Loans
Traditional bank gym financing is the most common and affordable financing option for gyms and fitness centers. Gym term loans and fitness center lines of credit offer rates that begin in the low to mid single digits, with extended terms and low fees. But in order to qualify you must exhibit good credit, strong financials and show you have the ability to service the new debt comfortably
- Rates: 5-10%
- Terms: 1-25 years
SBA Fitness Center Loans
If you’ve tried the traditional bank-rate financing route and were unable to obtain funding, another option would be to seek a SBA enhancement. SBA-enhanced gym loans are essentially traditional loans. The different between SBA financing and traditional is the fact that the Small Business Administration agrees to cover a percentage of the SBA lender’s losses should the gym or fitness center default.
- Rates: 6-8%
- Terms: 3-25 years
Alternative Gym Loans
Alternative fitness center loans are a qualify funding option for gyms and fitness centers who are unable to obtain traditional loans. Alternative loans have a much lower credit requirement than banks, and also require much less documentation. On top of that, alternative lenders are willing to take risks on businesses that bank consider high-risk.
- Rates: 8-25%
- Terms: 1-5 years
Asset Based Fitness Center Loans
If you are a gym that owns the commercial real estate that the fitness center operates out of, or if you are a gym owner that also has their own personal real estate with decent equity, you can use such real estate as collateral for business financing. Asset based lenders are willing to lend up to 75% of the real estate collateral’s value through either a term loan or line of credit.
- Rates: 10-20%
- Terms: 1-5 years
Gym Equipment Leasing
Having the most current and up-to-date fitness equipment is a much for many competitive gyms. If a fitness center doesn’t have the money to purchase the gym equipment upfront, or if the fitness center doesn’t want to commit to a piece of fitness equipment long-term, a good option would be to use gym equipment leasing.
- Rates: 6-20%
- Terms: 1-10 years
Fitness Center Cash Advance
Fitness center cash advances aren’t business loans, but are instead sale of the gym’s future credit card or bank account deposits at a discount in return for upfront fast financing. This type of business financing is cash-flow driven and doesn’t require additional collateral making it essentially unsecured.
- Factor rates: 1.16-1.50
- Terms: 3-24 months