How To Get A Loan For A Gym: Funding & Finance Options

What is gym financing?

Gym financing is any financial solution that provides you with the capital you need to purchase and/or operate a gym or fitness center. This comes in many forms, including bank loans, small business loans, and asset-based financing.

What are the reasons a gym or fitness center would need financing?

There are many reasons why a gym or fitness center may need financing, depending on the age of the business.

• Increasing the size of your gym: If you have already established a gym business and you are looking to move into a larger space to increase the equipment you have available; you are likely to need gym financing. The working capital you can receive from a loan for gym business will allow you to pay rent, make mortgage payments, cover any down payment, and cover potential renovation costs for your new facility.
• Covering equipment costs: Gym business funding can provide you with the capital you need to purchase the most up to date exercise equipment or will enable you to cover the cost of machine repairs or replacements should the need arise.
• Hiring the right staff: Hiring the right employees is important for the success of your gym or fitness center which requires enough money to pay them a good wage. Gym financing can allow you to offer competitive wages to your employees and even enable you to offer benefits to show that they are a valued member of your team.
• Covering marketing costs: Having a good marketing strategy is one of the best ways to bring in new members to your gym, but the most effective marketing and advertising methods come at a cost. Gym business funding will enable you to purchase online advertisements to reach the maximum number of potential members and will give you the opportunity to hire a social media manager who knows how to utilize this valuable resource to its full potential.

How Much Does It Cost To Open A Gym?

The cost of opening a new gym depends on several factors. First location and amenities can impact the cost. Some gyms offer a small space with basic equipment while other gyms offer everything from smoothies to massages and of course everything you need for a killer workout too. If you plan to start small and grow, you may want to start with a larger space. The cost of opening a small to medium-sized gym with standard equipment is about $65,000 to $100,000 on average. This figure assumes you are renting the space. Although purchasing the facility could take your investment to the next level. And, with financing, it may be possible to do both. 

Here are some of the most common expenses that someone looking to open a new gym may want to prepare for.

1. Physical location: The location of your gym is important. A conveniently located gym in a well-populated area instantly makes building a clientele easier. The location and size of your gym is ultimately what will determine the cost of the location. Additionally, do you plan to rent or own the space?  If you are looking to own the space, then you should be prepared to offer a down payment on the property of somewhere between 20% to 40%. If you are looking to rent the space, you still are going to need to make a deposit that may be equal to 2 month's rent or more. 
2. Space renovation: Unless you’re moving into a space that was already a gym, you’re going to need to renovate the space to make it a gym. This may include tearing out walls, putting in bathrooms and locker rooms, painting walls, laying carpet or hardwood floors, decorating and putting in some furniture, and any other renovations that you would like.
3. Gym equipment: Another large portion of your start-up costs for opening a gym are going to include all of the equipment that you purchase. You’ll need several of each type of machine and equipment you’re  looking to purchase. From treadmills and ellipticals to free weights and weight machines, from benches to stationary bikes, there is a lot of equipment that needs to be procured. If you’re looking to cut down on upfront start-up expenses, you may want to consider leasing your equipment. There are plenty of companies out there that lease gym equipment to gym owners, and some even have rent-to-own programs that can help reduce your initial costs of purchasing equipment. A better avenue though is usually equipment financing. 
4. Hiring staff: If you’re  opening a new gym, you are going to need to get some help running the place. You will need customer service and sales personnel, janitorial staff, maintenance workers, and certified trainers. Also, who is going to do all of the back-office work? If you need help with that, you may need to hire an accountant, a marketing specialist, and maybe a general manager or assistant manager to oversee all of the staff and day-to-day operations.
5. IT: You may also need to hire an IT professional to help install and manage any technology you may want to have available at your gym. This could include a sound system for a dance studio, an electronic verification system to give gym access to members when they enter, flat screen televisions located throughout the building, or even a POS system for a snack/juice bar or to sell branded merchandise. 
6. Legal fees: When opening a new gym, you may need to hire an attorney to help register your business and obtain any permits you may need to operate your business. 

These are simply some of the most common startup costs that someone looking to open a new gym may want to prepare for. In addition to these costs, there may be a number of other expenses, some expected and some unexpected. It’s important to do your research to know exactly how much you may need to get your gym up and running.

What Can Gym Loans Be Used For?

Gym loans can be used for just about anything business related. Some gym loans may be specified for a designated purpose such as an equipment loan, but a general business loan will give you more freedom. Always check with the lender to find out if there are any restrictions.

How Gym and Fitness Center Loans Can Help You

The right gym and fitness center loan is a valuable resource and will help you with a number of things, including:

• giving you the ability to provide new services or sell products
  • this could include services such as massage therapy and nutritional advice
  • you could open a juice bar or healthy café for members to unwind and refuel after workouts
  • selling workout clothing and equipment within your gym will be particularly convenient for your members and could increase gym profits
• allowing you to hire new, well qualified employees
  • members will pay more for personal trainers who are able to provide them with nutritional advice as well as improving their physique through exercise
  • as your gym grows you will need employees to work the front desk, collect and maintain member information, and keep the exercise equipment clean
• enabling you to upgrade your exercise equipment
  • you want to ensure that you have the most up-to-date workout equipment and machines to keep up with the competition
  • you may want to think about kitting your gym out with a top-of-the-range sound system to enhance your member’s experience
• covering insurance costs
  • you will need worker’s compensation insurance in case an employee sustains an injury whilst at work
  • you will also need premises liability insurance to protect you and your business should a member or guest get hurt whilst using your gym

What Gym Financing Options Are Available?

Businesses often need financing whether they are just getting started or mature. While saving up and paying cash is more cost-effective, there’s no reason to wait to chase your dreams and pursue a profitable business endeavor.

Here are some of the most common types of financing options available to people looking to open a new gym.

1. Conventional loans: A conventional business loan from your bank, credit union, or through an online lender may be an option worth exploring. Conventional business loans are often easier to qualify for than SBA loans, and by working with a bank you are already a customer, you may be able to get a hold of some special finance options. If you’re curious about a business loan and what you qualify for, visit PrimeRates. At PrimeRates you can check business loan offers with no impact on your credit score. 
2. Find a business partner or angel investor: You may be able to partner with someone or find an angel investor who is willing to invest in your business in exchange for future equity and a share of the profits. If you’re hoping to find an angel investor, then you should be able to produce a well-detailed business plan complete with financial figures and estimates and be able to demonstrate that you have experience operating successful businesses in the past. 
3. Become a franchisee: Some gyms may offer franchise programs to people interested in opening a gym location of a well-established national brand. Some franchise programs have their own internal financing options to help new gym owners get everything they need to get up and running. 
4. Equipment financing: Equipment financing, equipment leasing, and rent-to-own programs are good ways to fill your gym with all of the equipment you need to get started, and to pay for it over time. 
5. SBA loans: If you can qualify, SBA loans are an excellent way to secure large loan amounts with lower interest rates since the loans are partially guaranteed by the federal government through the Small Business Administration. 

What Are The Pros and Cons of Gym Financing?

There are many pros and cons to gym financing. Here are some of the most common advantages and disadvantages that new gym owners experience when they use financing to open their own gym. 

Pros

• Grow your business faster
• Improve cash flow
• Purchase higher quality equipment
• Offer more amenities
• Invest in marketing
• Easy monthly payments available

Cons

• Taking on debt
• Potential to fail and still be responsible for the debt
• Extra financial stress

Is a gym a profitable business?

It’s generally accepted that it can be very profitable to open and operate a gym. However, it may take some time to see your hard work and upfront investment pay off. Typically, a gym may generate between $1,000 to $2,000 of revenue per month for the first 6 months. That can steadily increase, and after the 1st year, a gym may start to generate monthly revenue of $20,000 or more.

How do I start a successful gym?

To start a successful gym, there are a number of things that you should consider:

• additional services – such as childcare, dry cleaning, a café, or a spa – anything that will make them want to come to the gym or make their lives easier
• find a niche – think about exactly what type of member you are looking to attract – include classes that are particularly popular such as CrossFit, boot camps, and prenatal classes
• provide tracking solutions – gym members and guests want to be able to track their fitness levels and progress – sensor technology allows visitors to track multitudes of fitness data, making their workouts more worthwhile  
• have the right employees – make sure that your employees care about the success of your gym business as much as you do – find trainers who keep members motivated to come back time and time again and who are easy for your members to talk to about any aspect of their health and fitness
• take advantage of digital marketing – encourage your members and guests to post about their fitness and your gym across social media, possibly with a discount or other incentive – this is an affordable way to advertise your gym or fitness center until you are able to invest in genuine online advertisements
• find the right funding – a basic gym will need anywhere between $10,000 and $50,000 to get started comfortably – if you are looking to create a unique gym with all the most up to date tech you are looking more in the region of $100,000 plus

Do You Need Good Credit For A Gym Loan?

While you may not need excellent credit to open a gym with a conventional business loan or another type of financing, it can be extremely helpful. Lenders are going to want to see that you are good with money and handling debt before they trust you with a large sum of money to start a business. Running a business like a gym takes a lot of knowledge and experience in handling money. Having a bad credit score is not going to demonstrate that you are good with money and that you can be trusted with a large loan to open a new gym. 

Can You Get Gym Financing With Bad Credit?

If you have bad credit, it may not be the best idea to apply for business loans to pay for your new gym. Every time you apply for a new loan, it can further damage your credit, and if you are only going to be denied financing, then what is the point? If you have bad credit, you may want to look into finding a business partner or a cosigner who can vouch for you and help you get the gym financing you need.

How do I qualify for gym and fitness center financing

The qualification requirements for gym and fitness center financing depends on which loan you choose and the lender you decide to work with. Banks and SBA loans will have much stricter requirements and therefore will be harder to qualify for. However, online lenders tend to be more lenient with their qualification requirements so it is very unlikely that you will be unable to find the right financing for you and your business, although some will be more affordable than others.

Lenders will typically focus on credit score, annual revenue, and time in business.

How do I apply for a gym and fitness center loan?

As above, the way in which you apply for a gym and fitness center loan will depend on the loan type and lender. That being said, for most funding applications you will need to provide, at least:

• tax records (personal and business)
• business history
• a strong business plan
• bank statements (personal and business)
• projection of anticipated earnings

Opening a gym is costly, but a proven worthy investment. However, to ensure success you’ll need to properly manage the business and its finances. Financing may be necessary to grow or start your gym. At PrimeRates, all credit types can explore business loan offers. For all of your business financing needs you can count on PrimeRates to help you access the best offers in minutes.  Skip false advertising and hope. Replace it with real offers that are just for you. Simply submit some basic information and access offers from a network of vetted and trusted lenders. With no credit impact, investing a little bit of time in checking offers at PrimeRates can have a healthy ROI. Our lending partners are experts at what they do, therefore, you can avoid red flags or scams by working only with a network of top-rated lenders.