Fitness Center & Gym Loans up to $725,000
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If you’re starting or expanding a fitness center or gym, you know that it can be expensive. That’s where gym loans come in – they can help you get the money you need to buy gym equipment, renovate your space, open new locations, and more. These loans come in various shapes and sizes, so it’s essential to understand your options before settling on one. In this article, you’ll discover everything you need to know about how to apply for, use, and repay gym loans.
What Are Gym Loans?
Gym loans are a type of financing fitness centers and gym owners can use them to strategically grow and expand their gym or fitness club. Loans help pay for significant expenses without cutting into a gym’s financial safety net. A variety of gym loan types are available, so you should understand your options before selecting one.
Ways to Use Gym Loans to Your Benefit
Gym loans provide access to increased working capital to enable a business to bridge the gap between “a good gym” and “the best gym.” With increased funding, an owner can install top-of-the-line gym equipment, hire professional trainers, upgrade the facility, and enhance service offerings to meet the needs of their members best.
Bring on New Employees
A solid staff roster is required to provide regular equipment maintenance, hourly cleaning, flexible class scheduling, and extended operating hours. The hiring of more employees reduces the risk of being short-staffed and gym-quality suffering as a result. Business funding for gyms and fitness centers can help your club cover the cost of bringing on new employees until membership dues and training packages can cover your expenses.
New or Upgraded Gym Equipment
Member satisfaction increases when the atmosphere is clean, convenient, and motivational. Part of this includes providing quality equipment for your members to use. For example, personal display monitors, Bluetooth, charging ports, and cooling fans offer a much more enjoyable experience. Working capital loans for gyms can cover the expense of acquiring modern equipment while spreading out the cost over several years.
Cover Legal Fees and Insurance Costs
Most businesses require some type of license and insurance to operate and provide services to the general public. This is especially true for fitness clubs as members may injure themselves on your premises, despite signing liability waivers. Having a suitable insurance carrier will do its part in protecting your business in the long run. Gym loans can help cover fees and dues during periods of reduced cash flow.
Provide New Services or Products
Expanding class offerings, adding a juice bar, or building out a wellness spa provides new service offerings to members while simultaneously opening up extra streams of revenue for your gym. Investing in new programs requires access to working capital for funding and development. Gym loans can be used to hire specialized contractors and build out additional amenities for your members.
Sales and Marketing
Monthly membership fees are a significant part of a gym’s revenue in addition to professional training packages. Getting more customers to sign up for a membership can help you grow your revenue rapidly. To reach potential new gym members, marketing and sales campaigns are essential. A gym business loan can be used to cover the cost of hiring a marketer to handle your advertising and outreach campaigns.
Gym Member Management Software
Installing a member management system is an absolute necessity when running a gym or fitness club. The management software helps organize billing, contact information, personal training sessions, and member privileges in one easy place. A variety of software companies exist that cater directly to the fitness industry. Business loans for gyms can cover initial software purchase and installation costs.
Liquid Capital and Cash Flow Requirements
Running a successful gym requires adequate amounts of liquid capital and cash. Hiring more professional trainers, expanding equipment offerings, and extending business hours require access to money. Gyms tend to operate on steady, recurring income in monthly membership dues. Gym loans can provide a financial cushion for growth activities and business expansion.
Digital Fitness Equipment and Online Security
Smart home gyms and connected fitness equipment are all the rage. Local gyms and fitness centers may adapt to the digital shift by offering live classes and streamed trainings through remote gym memberships. Setting up a streaming service for public use includes implementing a security system to protect customer privacy and sensitive data – like access to webcams and location tracking. Gym and fitness center loans can cover installation and equipment expenses to launch your digital offerings.
What Gym Financing Options Are Available?
Depending on individual financing needs, many options are available to fund gyms and fitness centers.
For new gyms just getting started or borrowers with bad credit, merchant cash advances and invoice financing are alternative ways for gym business owners to access working capital quickly.
Merchant cash advances (also known as MCAs) are available in amounts up to $500,000 and can be funded to your business bank account by the next working day. Application approval is based upon your gym’s earning potential and overall business health, not your credit history.
Repaying a merchant cash advance is fulfilled through daily or weekly withdrawals from your business bank account based upon a percentage of sales earned. MCA payment amounts automatically adjust to accommodate changes in business revenue.
Term loans, gym equipment financing, and SBA loans are additional funding options to consider. Standard requirements for lender approval are good credit history, a minimum of two years in business, strong financial statements, valid reason for requesting a loan, and collateral to reduce risk.
The small business administration has various loan program options available for gym owners to consider. These SBA loans are offered by their partnered lenders that can be used to purchase commercial real estate, hire additional personal trainers, and cover various gym franchise expenses.
Equipment loans use purchased equipment as collateral and do not require additional assets. Repayment for most types is fulfilled through fixed-rate monthly payments until the total loan amount plus interest is made whole.
A business line of credit and credit card work the same way, with interest paid only on funds used. Funds continuously revolve and become available again once the account balance is paid down. Credit lines and credit cards renew annually and stay open until a business owner closes an account. Lines of credit may have lower interest rates than credit cards and are usually the better option if you can get approved for one.
How Do Gym Loans Work?
Loans for gyms and fitness centers work just like any other type of loan. As soon as a loan application has been approved, funds are released to the fitness business as a large one-time payment. Following the cash exchange, a borrower is legally responsible for repaying the lender the total cost of the loan plus interest via fixed monthly payments.
Qualifying for Gym Loans With the Best Rates
Across the board, lenders look for the same criteria when reviewing applications for business financing: an excellent credit history, good financial statements, profitability, two years of business experience, collateral, and a legitimate reason for borrowing.
What Credit Score Is Needed to Get a Gym Loan?
Most traditional lenders want to see a minimum credit score of 670 to take out a loan. An alternative method for financing for those who may not meet credit score requirements is a merchant cash advance. If your personal credit score is 500 or above, cash advances through MCA are available up to $500,000.
Where to Get Gym Business Loans
Fitness businesses can be funded with a conventional bank loan or through an online lender. Once you have decided which type of financing you need and what you may qualify for, you can begin shopping around for lenders.
Online lenders might offer more flexibility and have less strict requirements. If you don’t have assets for collateral or two years of established business history and need money fast, consider applying for a merchant cash advance.
How to Apply for the Best Gym Funding
To be approved by mCashAdvance™, you must meet the following requirements:
- Must be a U.S. citizen or legal resident
- Must be at least 18 years old
- Your gym or fitness club must be at least six months old
- Must have a 500+ credit score or higher
Your fitness business’s financial health determines the amount of funding you can receive, but you may be eligible for up to $500,000.
Your repayment period will vary according to the amount of funding you receive and how much business you conduct.
Pros and Cons of Gym Loans
Small business loans for a gym or fitness center generally offer better interest rates and terms than other forms of business financing for those who qualify. Payments are made monthly in fixed amounts for the duration of the loan and won’t change based on the performance of your business.
Strategic small business financing through a conventional loan can give you direct access to working capital, instantly fueling growth activities and business expansion.
In cases where interest rates are high or loan terms aren’t the best, the total cost of the loan will be significantly more than you initially borrowed. Interest and added fees will inevitably cut into the profitability of your business until your debt is paid up in full.
Additionally, conventional loans are tough to get. In 2021, Forbes reported only 13.6% of all small business loan applications were approved. As a result, many new business owners or established gyms with weak profit margins will not meet the stringent criteria needed for lender approval. In those instances, merchant cash advances may offer a better alternative until credit history and overall business health improve.
Frequently Asked Questions
Almost all loans for gyms can be used for working capital and new gym equipment purchases. Equipment loans, in particular, maybe the better option; rates tend to be lower due to the availability of gym equipment for collateral.
The amount of funding available for you to borrow will depend on the lender, your credit history, the purpose of the loan, collateral, and financial statements from your business. The stronger your application is, the higher the amount you may likely borrow. If you don’t qualify for a traditional loan for various reasons, commercial cash advances up to $500,000 are available through MCA with funding to your account as soon as the next business day.
Small business loans generally require at least two years of business history as part of the loan application criteria. However, to open a new gym or fitness center, you may be able to take out a personal loan instead. Personal loans may have higher rates than a business loan but can give you a financial head start with careful budgeting and planning.
The minimum credit score required for most lenders is 670+. As an alternative, MCA offers merchant cash advances up to $500,000 for those with a credit score of 500 and above.
Funding Your Business Is Our Business
Gym Loans Can Help Grow Your Business
Many options are available to help you finance your gym or fitness center. Whether you’re looking to hire more trainers, introduce the latest equipment, or offer the newest technology – you can use a gym loan to take your location(s) to the next level. Contact mCashAdvance™ to apply for financing and learn more about our innovative direct lending options.
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