In this article, you will learn how to finance the purchase of a gym. HINT: Look into getting an SBA loan.
Why starting a gym business can be a great opportunity
Starting a gym business can be a great opportunity for entrepreneurs who are passionate about fitness and helping others achieve their fitness goals. Gyms provide a much needed service to their communities by giving people a place to workout and stay healthy. Owning a gym can be a very rewarding experience, both financially and personally.
There are many reasons why starting a gym business can be a great opportunity. First, as an entrepreneur, you will have the ability to create your own schedule and build the business exactly how you want it. Second, owning a gym gives you the chance to positively impact people’s lives by helping them improve their health and reach their fitness goals. Lastly, starting a gym can be financially rewarding – you will be able to generate income through membership fees, personal training services, and other products and services that you offer at your club.
However, opening a fitness center can be expensive. How expensive? Let’s talk about that next.
What are the costs of starting a gym business?
Operating a gym can be expensive, with the costs of leasing or purchasing commercial space, outfitting the facility with workout equipment, and hiring trained staff among the biggest considerations. For those looking to start a gym business, these costs must be carefully considered in order to ensure profitability.
Leasing or purchasing commercial space is often the most expensive upfront cost for starting a gym. The size of the facility will dictate how much money needs to be invested, with larger gyms requiring more square footage and therefore costing more money.
Outfitting the gym with workout equipment is another significant expense, as high-quality machines can be costly.
Finally, hiring trained staff to work at the gym is essential, as customers will expect knowledgeable and friendly employees who can help them reach their fitness goals.
The bigger the gym facility, the more the rent will be, you will need to purchase or lease more gym equipment (and service them), and you will have to hire more staff to keep it running.
Keep these general costs in mind:
- Personal training clients' home gyms, beginning at $10,000
- Low-cost facility with prices starting at $50,000
- Midsize gyms cost between $200,000 and $400,000
- Mega gyms cost over $1,000,000 to have everything you could ever want
These costs will vary widely. Location, foot traffic, whether the gym is already established, etc.
How do you finance the purchase of a gym?
When it comes to financing the purchase of a gym, there are a few options to consider.
One option is to take out a loan from a bank or other financial institution.
Another option is to use equity from your home or another property.
Many business owners tap their credit cards and personal loans to finance their business startups.
Finally, you could also finance the purchase with personal savings.
Often, aspiring gym owners use a variety of financing options, including loans, equity, credit cards, and personal funds they have saved.
If you decide to take out a loan, be sure to shop around for the best interest rate and terms. You'll also want to make sure you can afford the monthly payments.
Banks issue loans to businesses all the time. Just remember, though, to get the very best terms, you need excellent credit and sometimes you need to offer collateral that mitigates the bank’s risk in your business.
If you're using equity from your home or another property, be aware that you could lose that asset if you default on the loan.
Personal savings is usually the best way to finance a major purchase like a gym, but it may not always be possible. If you do have savings, be sure to consider all other options before dipping into them. Retirement funds can be a good source of funds to open a gym.
However, possibly the BEST financing option for a budding gym owner is an SBA 7a loan.
Which option should you choose when financing a gym business?
The most common type of loan for small businesses is the Small Business Administration (SBA) 7(a) loan.
The SBA 7(a) loan program is the most popular loan program offered by the Small Business Administration (SBA). The SBA 7a loan program is designed to help small business owners start or expand their businesses.
The maximum amount that can be borrowed under the SBA 7(a) loan program is $5 million. The interest rate on an SBA 7a loan is typically lower than the interest rate on a conventional bank loan. The reason is that part of the loan is guaranteed by the SBA.
If you’re interested in pursuing an SBA 7a loan to open your gym business, contact an experienced commercial loan advisor today.