Gym Equipment Finance: Your Top 5 Options

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Gym Equipment Finance: What You Need to Know

For fitness enthusiasts and health buffs, opening your own gym is a dream come true—finally, you have the opportunity to share all the routines, methods, and classes that you’re passionate about with a larger community.

But whether you’re just starting your business or you’ve been running your boutique gym, studio, or franchise for some time now, you know that running a gym takes much more than endorphins.

All that gym equipment needs to be bought somehow. And if you don’t have the cash to finance your gym equipment (as few business owners do), you’ll need to look into your gym equipment finance options.

Gym equipment finance is a type of small business loan that provides gym owners with the capital they need to purchase fitness equipment for their commercial gym. The gym equipment purchased with the proceeds of the financing will, in turn, act as collateral for the gym equipment finance loan used to purchase it.

Your best options for gym equipment financing include:

  1. SBA 7(a) loans
  2. SBA CDC/504 loans
  3. Balboa Capital
  4. Crest Capital
  5. eLease Capital

Here’s a closer look at your gym equipment finance options, and how to understand which option will work best for your gym.

See Your Loan Options

Top 5 Loans for Gym Equipment

To stock your gym with smaller necessities—think dumbbells, mats, fitness bands, Bosu balls, and other accessories—you’re best off buying that gear outright. In that case, you have a couple of business financing options, depending on the kind of inventory you’re buying.

However, for larger equipment purchases—such as treadmills, ellipticals, squat racks, and more—you’ll want to look into equipment financing. With this type of financing, your lender will front you all or most of the cash you need to purchase your gym equipment. You’ll repay that amount, plus interest, over time. And once you’ve paid down your loan, you’ll fully own your gym equipment.

The exact amount of money you’ll qualify for depends largely on the gym equipment’s projected resale value, as the equipment itself secures the loan.

All in all, equipment loans are a top option for gym equipment finance, so let’s see the details on the top equipment loan options:

1. SBA 7(a) Loans

If you’re looking for the most affordable equipment finance option, then start your search with SBA 7(a) loans. Through the SBA 7(a) loan program, the Small Business Administration provides partial guarantees for small business loans that can go toward a variety of expenses—including, of course, equipment purchases.

Gym equipment finance loans through the SBA 7(a) loan program are ideal for a few reasons. First, SBA 7(a) loans come with repayment term lengths of up to 10 years. You can also qualify for amounts up to $5 million with interest rates as low as 7%.

    How to Qualify

    SBA 7(a) loans aren’t easy to qualify for: You’ll usually need credit of at least 650, at least $100,000 in annual revenue, and at least two years in business for SBA lenders to consider lending to you.

2. SBA CDC/504 Loans

Another gym equipment finance option to consider also comes from an SBA loan program: SBA CDC/504 loans are typically synonymous with commercial real estate loans. Most borrowers seek SBA CDC/504 loans for capital to purchase commercial real estate. That said, a little-known eligible use for CDC/504 loans is purchasing equipment and machinery.

Be sure to note, though, equipment and machinery purchased with the proceeds of an SBA CDC/504 loan will need to have an estimated life of at least 10 years. Gym equipment with a shorter lifespan might not qualify for SBA CDC/504 loan financing, as a result.

This gym equipment finance option offers up to $20 million in financing. That said, it will also require a down payment of 10% to 15% and repayment term lengths will only go up to 10 years for equipment financing. So, if you’re looking for full gym equipment financing, the SBA 7(a) loans might be a better option.

    How to Qualify

    Similar to 7(a) loans, 504 loans aren’t easy top qualify for. You’ll need a minimum credit score of 650 and no red flags, such as bankruptcies, in your recent financial history. It also helps to have a debt service coverage ratio of no more than 1.2.

    On top of that, the SBA requires that you meet the following criteria to qualify:

    • Meet the SBA’s size standards for small business
    • Have a tangible net worth of no more than $15 million and an average net income of $5 million or less after federal income taxes for the two years prior to application
    • Meet owner-occupancy requirements
    • Create or retain jobs or promote other public policy goals
    • Operate for profit and not be in a passive industry, such as real estate investing

3. Balboa Capital

A gym equipment finance option that will be more accessible for younger, less-qualified gyms is the online equipment financing company Balboa Capital. Balboa Capital offers equipment financing from $2,000 all the way up to $500,000. Repayment term lengths are two to five years long, and rates can be as low as 3.99%.

Gym equipment finance from Balboa Capital will follow a lease and buy-back structure. This means that the lender will technically own the equipment while you pay down your debt, and you’ll buy the equipment for a small amount at the end of your remittance schedule. Though Balboa technically offers equipment leasing instead of equipment financing, it will work much like your other gym equipment finance options, because you’ll own the equipment after paying it down.

If that sounds like a good gym equipment finance structure for you, be sure to check that you’re eligible before applying for Balboa Capital.

And if you end up qualifying for Balboa Capital, then you could access a loan for gym equipment as quickly as the same day that you apply.

    How to Qualify

    To qualify for gym equipment financing from Balboa Capital, you’ll need:

    • At least $100,000 in annual revenue
    • Personal credit score of at least 600
    • At least a year in business

4. Crest Capital

Another top equipment financing company to consider for your gym needs is Crest Capital. Crest Capital offers equipment financing from $5,000 to $500,000. Crest Capital borrowers repay their equipment loans with two- to six-year terms and with rates as low as 5%.

Gym equipment finance can come in many different forms, and Crest Capital offers pretty much all of them. Aside from traditional loans from gym equipment, Crest Capital also offers:

  • $1 purchase agreement
  • 10% purchase option
  • Fair market value
  • Guaranteed purchase agreement
  • First-amendment lease
  • Operating lease

    How to Qualify

    To be eligible for gym equipment financing from Crest Capital, you will need a personal credit score of at least 650, and your gym will need to have at least two years in business. And though Crest Capital doesn’t name a minimum annual revenue for their equipment financing, the higher your gym’s annual revenue, the better.

5. eLease

Last but not least is eLease Capital. This lender is a good option for borrowers with low annual revenues or little-to-no business history.

Through eLease, you can secure gym equipment financing ranging from $3,000 to $500,000 on two- to five-year repayment terms. Depending on your creditworthiness, interest rates range from 6% to 35%.

    How to Qualify

    The main determining factor when applying for gym equipment financing through eLease Capital is your personal credit score. A personal credit score above 600 will increase your likelihood of getting approved. However, a lower credit score doesn’t necessarily disqualify you. If your business has other strong financials, such as high annual revenue, that will also help your case.

The Pros and Cons of Gym Equipment Finance

Now that you know some of the best loan options for gym equipment financing, lets look at the pros and cons of this funding product.

Pros

A major selling point of a gym equipment loan is that it lends you funding for what you need right away but allows you to pay off that large expense gradually. And because gym equipment finance loans are self-collateralized, you won’t need to put up any additional collateral—and put your business or personal assets on the line—to secure an equipment loan.

Thanks to that extra security, too, eligibility requirements are a little less stringent for equipment loans than they would be for unsecured loans. So, if your credit score is challenged, or if you’re a new or as-yet-unprofitable gym, you might still have a shot at approval for an equipment loan.

Cons

The downside of gym equipment financing is that you need to pay interest as a part of your repayment plan. If the gym equipment you’re purchasing is less valuable, or if your gym’s financials or credit scores are struggling, you’ll end up with a heftier APR. Also know that if your lender doesn’t offer you 100% of the cash necessary to buy your gym equipment, you’ll need to make up the difference out of your own pocket.

Gym Equipment Leasing vs. Loans

If the prospect of being tied down to your gym equipment scares you—probably because the technology advances so rapidly, and exercise fads change just as quickly—then you can look into gym equipment leasing, in which case you’re simply paying the owner for the use of that equipment.

Essentially, an equipment lease means that you’re paying a monthly fee to rent that equipment from the title holder—which, in this case, is your lender—for as long as your leasing agreement lasts. For gym equipment, that agreement may last anywhere from six months to several years.

At the end of your lease, you’ll have a few options: You can renew your lease, buy the equipment at its fair market value, return the equipment to the partner, or upgrade to a new piece of equipment. For that reason, it might be smart to lease machines like treadmills, elliptical machines, stationary bikes, and similar equipment whose technology and models advance rapidly.    

The Pros and Cons of Gym Equipment Leasing

Just like gym equipment financing, there are pros and cons to gym equipment leasing. Let’s take a look at both.

    Leasing Pros

    Taxes

    One good reason to lease your gym equipment is the tax advantage: Depending on the specifics of your deal, you might be able to include your monthly lease payments as a deduction on your tax returns. Of course, you’ll need to double-check with your equipment leasing company and your business accountant to be sure those expenses are legitimately tax-deductible.

    Simplicity

    Finding gym equipment finance companies is relatively simple, and can be accomplished with a simple Google search. Many gym equipment finance companies take a holistic approach to underwriting, meaning you likely won’t need to provide years’ worth of financial documents in your application, and they might also consider businesses with challenged credit scores.

    Maintenance Services

    Another selling point is that there’s a chance your equipment lease includes maintenance services, in which case you don’t need to worry about paying for that out of your own pocket. And because you’re not purchasing your equipment with a lease (unless you choose to down the line), you won’t need to provide a down payment to secure your deal.

    Leasing Cons

    The pitfall with equipment leasing is that it can become costly over time. Because you won’t pay interest on your monthly rental bills, your lender may hike up those monthly payments to make up for the revenue they’d gain if there were interest attached. In some instances, you might actually end up paying more by renting that rowing machine than you would if you’d bought it outright.

Alternative Funding Options

Perhaps neither gym equipment finance loans nor leasing are right for your needs. Maybe you can’t qualify for a loan, or leasing doesn’t work well for your gym’s finances. Either way, be sure to know that there are other options for financing your gym beyond the gym equipment finance options we’ve discussed.

If you’re able to shift your finances, you can access more general business capital to cover your gym’s operational costs that will then open up your gym’s cash flow for an equipment purchase. Working capital loans are generally more accessible and shorter-term than gym equipment finance loans.

Take a look at these three general financing alternatives to gym equipment loans.

1. Short-Term Loans

Short-term loans from online business lenders generally have shorter terms (as their name implies) than equipment loans—usually between three and 18 months—and lower capital amounts. But thanks to their less rigorous qualification standards than conventional bank loans, short-term loans can be an accessible option to more business owners. And because the application is online, the process is relatively quick and painless. That makes these loans a great option for gym owners who are in a rush to purchase less expensive pieces of equipment.

    How to Qualify

    Short-term loans from alternative lenders are relatively easy to qualify for. Most borrowers who are approved have annual revenue of over $150,000, a minimum credit score of 600, and at least two years of business history.

2. Invoice Financing

Another kind of working capital loan to consider as an alternative to gym equipment finance loans is invoice financing. Through invoice financing, business owners can access advances for their outstanding invoices. This advance is, in turn, secured by the invoice itself. Also known as accounts receivable financing, invoice financing can allow gyms to free up cash flow while they wait for customers to pay up.

    How to Qualify

    You don’t have to be wildly qualified to be eligible for invoice financing: Your gym will just need to be in business for six months to be eligible for funding from the invoice financing company Fundbox.

3. Business Lines of Credit

Online lenders can offer business lines of credit, as well. In this case, your lender will extend you a predetermined amount of cash that you can dip into whenever you need to, and in whatever amount you need. You’re only responsible for repaying what you’ve used, plus interest. So, lines of credit are an ideal financing solution for business owners to cover smaller, unexpected expenses—like, for instance, your foam rollers and wrist wraps that have mysteriously gone missing.

Also, know that a line of credit isn’t mutually exclusive with any of the loan or leasing options mentioned here. In fact, it’s a useful solution for many business owners to have in their back pocket, just in case the need arises for extra funds.         

    How to Qualify

    Qualifying for a business line of credit is a little harder than invoice financing, which is self-securing. Lenders will want to see an annual business revenue over $180,000, a minimum credit score of 630, and at least one year of business history.

Frequently Asked Questions

The Bottom Line

As is always the case with small business financing, the right kind of gym equipment finance solution for you depends largely upon your business’s unique needs.

If you have a single, clear purchase in mind—say, you need 10 treadmills exactly—then your best financing method is probably an equipment loan. An equipment loan gives you access to funds to buy exactly what you need, when you need it, but pay off the purchase over time; and the more valuable the equipment is, the more cash you’re likely to get from your lender. Keep in mind, though, that at the end of your loan you’ll own that equipment. Make sure it’s not a piece of equipment that you’ll end up getting rid of or upgrading in just a few years.

And if you do anticipate upgrading your equipment, go for an equipment lease instead. In this financing arrangement, the lender actually owns the title to that equipment. So when your rental is up, you can easily trade it in for a newer model.

To discover your loan options even more efficiently (and with less stress), work with a loan specialist. Leave them with the loan-related heavy lifting, so you have more time and energy to lift actual weights.

See Your Loan Options
Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
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