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Financing Methods for Health and Fitness Clubs

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Paul BosleyPaul Bosley

This article reviews three different financing methods that are available to any startup and existing business in today's lending environment. What makes the health and fitness industry somewhat unique is that fitness equipment can be financed through equipment leasing. And, what makes our company unique is that, several years ago, Paul Bosley, Founder of Business Finance Depot, served as volunteer counselor for SCORE, a division of the Small Business Administration, and learned the SBA loan process. So, we understand how to finance new and existing companies by utilizing either equipment leasing or an SBA loan! Additionally, in 2018, we entered into an agreement with a company that specializes in unsecured personal and business credit cards and lines of credit.

Equipment Leasing

The main benefits of equipment leasing are that the transactions are completed quickly, and the collateral for the transaction is the equipment package being financed. The typical terms require a down payment or a security deposit ranging from one lease payment up to 20% of the dollar amount being financed. The repayment term ranges from 3 - 6 years. Once the lease is paid, the ownership of the equipment is transferred to the company leasing the equipment.

Business Finance Depot has served as a main source of equipment leasing for fitness franchises, including F45 Training, Blink Fitness, Athletic Republic, The Camp Transformation Center and HOTWORX, and for fitness equipment manufacturers, including Keiser, Promaxima and Woodway.

SBA 7(a) Loans

This national loan program can be used to finance nearly any legitimate business purpose. The SBA loan guarantee reduces the lender's risk which, in turn, makes securing an approval more likely. These loans offer the lowest APR available, amortized over the longest repayment term available. The following information lists possible uses of the loans and our franchisor clients currently using each aspect of the program:

1. Finance a Start-up Business - Massage Envy, F45 Training, HOTWORX, iCryo, Fitness 1440:

  • The SBA 7(a) Loan will finance up to 85% of the total project costs, including equipment, organization costs, buildout, deposits, inventory, working capital and franchise fees.
  • The SBA Express Loan provides working capital up to $150,000 for any business purpose and requires only business collateral.
  • The owners' equity injection ranges from 15 - 30% of the total costs, and it can't be borrowed money, such as a home equity loan.
  • A resume with industry experience, transferable skills and/or related education is important!

2. Capital to Expand an Existing Businesses - All of the Above Franchisors:

  • Same as above except the emphasis is on the profitability of the business based upon business tax returns and interim financial statements.

3. Debt Consolidation for an Existing Business:

  • The funds are used to refinance business debt including mortgages, equipment leases and loans. Credit card debt is typically NOT included.
  • The resulting monthly payment must reduce the total monthly payments of all debt being consolidated by at least 10%.

Common Criteria, Terms and Conditions for the Three (3) Uses Listed Above:

  • The collateral is all business assets. For loans over $350,000, additional collateral is required, which is typically real estate up to the loan dollar amount.
  • Good personal credit.
  • 10-year loan repayment term.
  • No prepayment penalties are most common.
  • The interest rate is prime rate as published in the Wall Street Journal (currently 3.25%) plus a risk premium typically 2.75% = 6%.
  • Closing Costs are typically 3.5% of loan amount and are added to the amount financed.
  • Timing to close - 90 days, which varies with the bank workload and responsiveness of the borrower.

4. Real Estate - Commercial Mortgages:

  • The loan will finance up to 90% of the purchase and development cost.
  • The equity injection is no less than 10% of the total cost and cannot be borrowed money such as a home equity loan.
  • The business must occupy at least 51% of the usable space. This provides an opportunity to sublease the remaining 49% of the usable space.
  • Terms and Conditions - Same as above with the following exceptions: Loan Repayment Term up to 25 years; fully amortized loan repayment with no balloon payment; prepayment penalties range from 1 - 4% over the initial 3 - 4 years; Interest Rate - Prime (3.25%) + a risk premium typically 1.75% = 5%.

Unsecured Business Credit Card and Lines of Credit

Business Finance Depot works closely with an aggregator specializing in unsecured business and personal credit cards and lines of credit for financing in addition to an equipment lease or for clients not eligible for SBA loans for any reason. To see if you are prequalified for unsecured business credit, please go to

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I have been blessed to be active in the fitness industry for 46 years, and I am honored to serve our many clients in the health and fitness club industry. If you want to learn more about how we can serve your financing needs, please contact me at (800) 788 - 3884 or For more information, please visit

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