Fitness Center Financing in Northern California

Fitness is a growth business. Over 55 million Americans have memberships in fitness centers and that number is growing steadily, especially in California. If you are a fitness center owner, now is a good time to think about expanding your business. This may mean updating your current facility or buying a new one. The Small Business Administration (SBA) 504 loan can meet the needs of a fitness center owner seeking to expand in these ways.

Fitness Is Growing in Several Directions at Once

Fitness activities are highly diverse. People might go to a fitness center to engage in line dancing or to lift free weights. The industry may seem to be highly trend driven. People are happy to try new fitness techniques—and then leave them behind. The business owner who once operated a jai alai court may have converted it into an indoor rock climbing gym before it became a trampoline park.

That said, a high-quality product that meets a need will have staying power, even in the fitness market. Since 1970, the fitness market have seen many things come and go, but more has stayed than we may realize at first. For example, aerobics is so well ingrained in the modern consciousness that it is hard to believe the word was only introduced into English in 1968. The activity was considered as trendy then as jai alai was a quarter century later. Jazzercise, which is based on aerobic principles, was invented in 1969. Today it has 8,200 franchises worldwide and its own apparel line and media production company.

In addition to different forms of fitness, there are a wide range of business models and price points in the industry. Customers might pay $29.95 a month for access to workout machines and showers, or a few times more than that for a more fashionable activity, such as SoulCycle or barre, at a “boutique” fitness center. At the more expensive end of the spectrum, customers could work with a personal trainer, then luxuriate in a spa or get a massage at a price calculated by minute.

When considering expansion, you may want to reproduce your current success with the same type of facility as you have now, or branch out into something new. The fitness market is highly localized and highly competitive and market research is essential. You should look at questions such as:

  • What type of fitness center is underrepresented in a target area
  • What fitness trends are rising or falling
  • What price range the area can support

Financing Your Fitness Center Expansion with a 504 Loan

As a fitness center owner preparing to expand, you will have certain financing needs, including buying or constructing new buildings, or acquiring new equipment with a long service life. An SBA 504 loan is the perfect option to meet these particular requirements.

A 504 loan is a partnership between conventional lenders (banks and credit unions) and a nonprofit Certified Development Company (CDC) that administers the SBA portion of the program.  Conventional lenders provide 50% of the financing, while the SBA portion of the loan covers 35-40% of the project cost.  The borrower pays 10% down payment. (If the property is considered “single-use” by the SBA, a down payment of 15% is required.)

The borrower and the conventional lender decide on the conditions and term of that loan. The SBA portion of the loan can come to as much as $5 million, at a fixed, below-market rate with a long term (10, 20 or 25 years) and no balloon payment.

Many fitness businesses are eligible for a 504 loan. The main eligibility requirements are:

  • The business must be for-profit
  • The business’s tangible net worth cannot exceed $15 million
  • The business’s after-tax profit for the last two years cannot exceed $5 million

TMC Financing Client Success Story: BodyROK Studios

Franchising plays an important part in the fitness business. Northern California CDC TMC Financing had the privilege of helping client BodyROK Studios transition into a franchise using a 504 loan.

BodyROK is a “luxury, boutique lifestyle and fitness brand” that focuses on Pilates, indoor cycling and yoga. It secured a 504 loan from TMC in 2015 to purchase and refurbish its Mission location on 20th Street in San Francisco.

“Our classes were completely full. The only way we could grow revenue was by opening new locations,” founder and president Jakob Irion said. “Our building needed significant improvements. I don’t think I could have found a lender who would have given me money just for the improvements, let alone the building… Updating a building like ours would never have been feasible without the SBA program that TMC put in front of us. In a city like San Francisco, where rents are forever increasing, it gives us security.”

The following year, BodyROK took the next step in its business development and created a franchise. The BodyROK Studio in Berkeley is the brand’s first franchise location and, thanks to Jakob’s referral, it too was financed by TMC! There are now a total of ten BodyROK locations in the Bay Area.

You can find out more about 504 loan financing for your fitness center from one of TMC Financing’s 504 loan experts. TMC is an SBA Premier Certified Lender and a high-volume loan provider. With over 35 years of experience, TMC can help you find the financing that is best for you and guide you through the 504 loan process. Contact TMC Financing today.


Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison