- Short answer
- Bankable if retention is real
- Best fit
- SBA 7(a) for acquisition or buildout
- Also fits
- Equipment finance on the floor
- Once bankable
- SBA 504 if you own the building
- What decides it
- Churn rate and average member tenure
- Usual disqualifier
- Discount-driven membership with high churn
Recurring revenue with a leak in it
A gym's membership base is contracted monthly revenue, which is a good starting point. The complication is that fitness has some of the highest churn of any subscription business, and a base that turns over substantially every year is not the annuity the headline number suggests.
Report churn and average member tenure, not just member count. Two thousand members at 4% monthly churn is a very different business from two thousand at 2%, and a lender modelling your revenue eighteen months out cares far more about the second number than the first.
The discounting spiral
The common failure pattern is filling a soft month with heavily discounted memberships. It raises the count, lowers average revenue per member, attracts the least committed cohort, and raises churn — so the next month is softer still. Lenders who know the sector look for falling revenue per member as an early warning, and it is visible well before revenue turns.
Annual memberships are deferred revenue
Paid-in-full annual memberships are collected up front and delivered over twelve months. On a cash basis they land as revenue on sale, which flatters the month you ran the promotion and starves the eleven that follow. Booked properly they are a liability releasing monthly — which shows the real earnings pattern and, incidentally, the true value of your contracted base.
Equipment and buildout
- Cardio and strength equipment finances well — serialized, real resale market, predictable depreciation.
- Turf, flooring, rigging and buildout are leasehold improvements rather than collateral, and generally belong in a 7(a) rather than an equipment deal.
- Owning the building is the strongest long-term position. SBA 504 removes lease risk, which for a location-dependent business with heavy sunk buildout is the risk that matters most.
Where gym files get declined
- High churn with no retention programme and no explanation.
- Falling revenue per member masked by rising member count.
- Annual memberships booked as earned on collection.
- Short lease against heavy sunk buildout.
- Stacked advances taken to cover a January that under-delivered.
Send us the file either way. Send member count, churn, tenure and revenue per member and we will tell you what the base supports. Either way you get the memo, and you will know our fee before you commit to anything.
Common questions
- Is a gyms & fitness business bankable?
- Bankable if retention is real
- What financing fits a gyms & fitness business best?
- SBA 7(a) for acquisition or buildout
- What do lenders look at for gyms & fitness businesses?
- Churn rate and average member tenure
- Why do gyms & fitness businesses get declined?
- Discount-driven membership with high churn
Industries with the same answer
These businesses look nothing alike, but the product that fits them is the same one — and usually for the same structural reason.