SBA loans for sports and recreation instruction

What SBA lenders approved for instruction businesses

Sports and recreation instruction (NAICS 611620) covers schools that teach a physical skill: swimming, martial arts, gymnastics and tumbling, golf and tennis lessons, youth sports training, climbing and similar programs. From FY2024 through June 2026 the industry took 842 SBA 7(a) loans worth $387,602,400, from 215 lenders. That is a wide lender base for an industry this size, which matters to a borrower: many lenders will look at the file, and they will not all see it the same way.

The median figures look ordinary. The spread does not. The middle half of loans ran from $50,000 to $488,000, so a quarter of loans were $50,000 or less, while the top tenth started at $1,242,910 and 107 loans (12.7%) were $1 million or more. One code holds an instructor financing mats and a scheduling system and an operator building a pool.

Two borrowers under one industry code

A lender reading this industry is really reading two businesses. The first is a studio in leased retail space: the owner teaches, a few instructors cover the schedule, and the loan pays for a fit-out, equipment and a cushion of working capital. The second is a facility: a swim school with its own pools, a gymnastics center with sprung floors and pits, an indoor training complex. Its costs are mostly construction and the equipment built into it, and it often owns or wants to own the building.

The rate caps explain much of the spread in pricing, from 9% to 11.25% across the middle half. SBA lets lenders charge more on small loans, and a quarter of loans here were $50,000 or less; the larger facility loans sit under the tightest cap, base rate plus 3%. For how the caps work, see SBA maximum interest rate and SBA loan rates.

How a lender underwrites a school that has not opened

With 41.2% of loans going to start-ups, the question most lenders face in this industry is not how the school has performed but whether it will fill. SBA requires an equity injection of at least 10% of total project costs for a start-up, and every owner of 20% or more guarantees the loan personally. Past that, lenders look for evidence that enrollment is more than a hope:

• The owner's teaching and operating record. A coach who has run a program, managed instructors and kept families enrolled is a different credit from an enthusiast. The resume supports SBA Form 1919; see SBA Form 1919.
• Pre-enrollment and a waitlist. Families signed up before opening, or a following the owner brings from another program, are the closest thing a start-up has to history.
• Session structure. Monthly tuition on auto-pay recurs; drop-in classes and one-off camps do not. Lenders build the projection from the recurring part.
• Seasonality. Swim lessons peak before summer, school-year programs thin out in it, and camps crowd revenue into a few weeks. A projection that shows flat monthly revenue will be questioned.
• Liability insurance and certifications. Instruction involving children, water or contact carries real liability. Lenders expect coverage in place and instructors certified where the discipline requires it.
• The lease. A school that has spent heavily on the space needs to stay in it. Lenders commonly want the remaining term, with options, to run at least as long as the loan.

Coverage is tested on the projection for a start-up and on results for everyone else. SBA's minimum is 1.15x, and many lenders look for more. A school projecting cash flow of 230 against loan payments of 200 covers 1.15x; the lender then asks how many families the school can lose before that falls below 1.0x.

Franchises: the brand carries part of the file

Franchises were 28.5% of loans. For a lender, a franchise swaps some of the owner's unknowns for the franchisor's: the build-out budget, the curriculum, the marketing and the unit economics come from a system with a record. The lender will confirm the brand is eligible for SBA financing, read the franchise agreement for terms that give the franchisor control SBA does not accept, and ask how other units in the system have performed.

A franchise does not replace the owner's equity or the lease review, and a young brand with few open units helps less than an established one. Buying an existing franchised school is a different file again; see franchise resale financing.

Owning the facility: SBA 504 and special-purpose property

SBA 504 financed 81 projects in this industry, at a median of $767,000. That is a high count against 842 7(a) loans, and it reflects the facility end of the industry: operators who would rather own a building fitted with pools or gymnastics equipment than pay rent on improvements they cannot take with them.

504 typically splits the project 50% from a bank, 40% from the CDC and 10% from the borrower. The borrower's share rises to 15% for a new business or for special-purpose property, and to 20% when both apply. A building designed around a natatorium can be treated as special-purpose, so a new swim school buying one may be putting in 20%. The borrower must occupy at least 51% of an existing building, or 60% of new construction. See SBA 7(a) vs SBA 504.

A new school in a special-purpose building can face the highest 504 contribution, 20%, because both conditions apply at once.

Buying an existing school

Only 31 loans, 3.7% of the total, financed a change of ownership, against 10.4% nationally. The median purchase loan was $402,000 at a median rate of 8.63%, well under the industry median. The low share is not a sign that lenders avoid purchases; it reflects how these businesses are built. Many schools are the owner: families enroll for a coach, and the goodwill leaves when the coach does.

A lender financing a purchase will ask how much of the enrollment follows the seller personally, whether the instructors are staying, and what the business owes its customers. Prepaid tuition, session packages and annual memberships are obligations the buyer inherits: classes already paid for that the new owner must deliver without new cash coming in. The purchase agreement should account for them.

SBA's change-of-ownership rules apply in full. The buyer needs an equity injection of at least 10% of total project costs; a seller note can count for up to half of it, but only on full standby for the life of the loan; SBA prohibits an earnout; and the seller may consult for up to 12 months, rising to 24 months for loans under SOP 50 10 8.1 from 1 October 2026. From the same date, a change of ownership must show 1.25x coverage on historical results. See SBA 7(a) acquisition loans and SBA seller transition rules.

Preparing an instruction business's file

The SBA list applies: business tax returns for 2–3 years (for an operating school), a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule, and personal tax returns and a personal financial statement for each owner of 20% or more. A use-of-proceeds narrative and the owner's resume carry more weight here than usual, because for a start-up they are most of the evidence.

Beside those, the reports that answer a lender's industry questions come straight out of the scheduling and billing software: active students by month, retention from one session to the next, tuition collected against tuition prepaid, and the class schedule against instructor capacity. For a start-up, add the build-out budget, pre-enrollment, the franchise agreement if there is one, and the lease.

Transparent turns the file into a full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in, and sends it to the lenders in its book whose appetite fits, among the 278 that write SBA 7(a) and 504. On SBA loans the lender pays Transparent, not the borrower. See the package and how we underwrite.