Case Study · New Hampshire · Fitness & Recreation · SBA 7(a)
Fitness Center Feasibility Study, New Hampshire — An SBA 7(a) Worked Case
This is how our independent feasibility study company and gym feasibility consultant team analyzed a ground-up membership fitness club underwritten to an SBA 7(a) credit, from trade-area participation and membership demand through the debt-service coverage a lender must document. It is a representative, anonymized worked example of the methodology — not a specific client deal — set in an affluent Boston-commuter suburb in New Hampshire's southern tier.
A ground-up membership club on a New Hampshire commuter arterial.
A sponsor came to our feasibility study company with a ground-up membership fitness center and an SBA 7(a) lender that needed the projected cash flow independently tested before it would commit. The subject is a new, roughly 28,000-square-foot full-service club on a 2.5-acre suburban pad, sited on a signalized arterial with strong daytime and evening commuter flow in an affluent outer-ring town in New Hampshire's Boston-commuter southern tier. The program is a mid-to-upper-market membership club — cardio and strength floors, functional-training space, group-fitness studios, and personal training — owner-operated rather than franchised.
Because a gym is a going-concern operating business rather than a passive real-estate play, the lender's question is not “what is the building worth” but “can this specific club sign, retain, and monetize enough members to service this specific loan.”8 The feasibility trigger here is not special-purpose collateral but the ground-up, no-operating-history nature of the project, which is exactly the condition SBA guidance treats as expecting a study rather than leaving it discretionary.13 Our scope was the independent demand, penetration, capture, competition, churn, ramp, and debt-service analysis that supports that credit.
Representative and anonymized. Every figure below is illustrative of a typical engagement of this type; the club, town, and parties are composited, not a real named borrower, address, or completed transaction.
Trade-area participation and membership demand.
The demand read starts with people and participation, not a member count pulled from thin air. The five-mile ring holds roughly 88,000 residents in an affluent commuter suburb, layered over a national fitness participation rate now at an all-time high.
Membership is the value driver, and it is grounded in penetration, not optimism. U.S. fitness-facility membership reached a record 77.0 million in 2024 at a 24.9 percent penetration rate, the highest ever recorded, and the member base skews toward higher incomes — households above $75,000 represent just over half of memberships.1 Applied to the trade area, a 24.9 percent participation rate implies roughly 21,900 fitness members within five miles. A new full-service club capturing about 16 percent of that base against the surveyed competitive set supports a stabilized membership near 3,450 — a defensible capture read rather than a share pulled to fit the debt service. The retention story matters more to the credit than the sign-up: industry annual retention runs about 66.4 percent, roughly one member in three is lost each year, and half of new members quit within six months, so a durable model grades a ramp and holds conservative churn rather than capitalizing a launch surge.2 On blended dues held flat at $52 a month and ancillary revenue from personal training, classes, fees, and retail, the model supports stabilized revenue near $2.80 million and revenue per member around $813 a year — between the ~$517 national all-member average and the premium operators' $3,531.16
| Demand driver | Basis | Supported figure |
|---|---|---|
| Trade-area population (5-mi ring) | ~88,000 residents, affluent Boston-commuter suburb | Captive base |
| Membership penetration | National all-time high 24.9%; affluent suburb at/above1 | ≈ 21,900 trade-area members |
| Subject capture | New full-service club vs. 6-site competitive set | ≈ 3,450 members (~16% capture) |
| Blended monthly dues | Tiered base/premium pricing, held flat | $52/mo ($624/yr) |
| Revenue per member | Dues plus PT, classes, fees, retail6 | ≈ $813/yr |
| Stabilized total revenue | Members × revenue per member | ≈ $2.80M/yr |
Penetration and retention logic grounded in HFA/IHRSA membership data; per-member revenue benchmarked between industry-average and premium operators. See sources 1, 2, and 6. Figures are illustrative of the engagement type.
A gap at the full-service price point.
Six competing facilities sit within five miles, but they cluster at the budget floor and the boutique ceiling. The trade area is served on price and on premium per-class formats, and thin at the mid-to-upper full-service point the subject occupies.
| Competitor | Format tier | Size | Distance | Read |
|---|---|---|---|---|
| Competitor A | National HVLP (budget) | ~20,000 sf | 1.2 mi | $15 dues; price floor, thin service/PT |
| Competitor B | Regional full-service | ~34,000 sf | 2.3 mi | Established; aging equipment, dated fit-out |
| Competitor C | Boutique studio (HIIT/cycle) | ~3,500 sf | 1.7 mi | Premium per-class; narrow demographic |
| Competitor D | Franchise mid-market | ~18,000 sf | 3.2 mi | Cross-town, off the commute line |
| Competitor E | 24-hour access box | ~6,000 sf | 2.1 mi | Keycard, unstaffed; no classes or PT |
| Competitor F | YMCA / community | ~40,000 sf | 3.6 mi | Family/aquatics; subsidized, different segment |
Competitive set surveyed for the engagement; anonymized. Announced and permitted supply was scanned, not just the standing set, consistent with institutional site-selection practice.
The nearest competitor is a national high-value-low-price (HVLP) box on a $15 dues floor — a formidable draw for price-led members but a weak defender of the full-service member who wants staffed personal training, group fitness, and a broader floor. HVLP is the format that has driven the sector's growth, so the analysis treats it as the pricing anchor and stress-tests the subject's dues against a hypothetical second HVLP entry rather than assuming today's pricing holds unchallenged.4 A rigorous study does not stop at the standing set: it scans announced and permitted supply so the capture forecast is not quietly overstated by a new club the trailing data cannot yet see.4 Here the read is a genuine gap — the town is served at the $15 floor and by a single premium studio, and the subject fills the mid-to-upper full-service space rather than splitting a saturated segment.
New Hampshire macro: affluent demand, property-tax and cost sensitivity.
The state backdrop is a tailwind for a southern-tier club, tempered by two New Hampshire realities a national template misses: the highest property-tax reliance in the country and high New England energy cost.
New Hampshire held about 1.41 million residents as of July 2024, and its southern tier — the Manchester–Nashua corridor and the tax-free border-retail belt — is an affluent Boston-commuter market with the household incomes that carry a full-service club, since the gym member base skews toward households above $75,000.101 The state levies neither a general sales tax nor a broad personal income tax, which supports discretionary spending, and fitness supply is set by the market rather than any permit gate.
The offsetting realities are local cost lines a national model understates. New Hampshire raises 59.5 percent of state and local tax revenue from property — the highest reliance of any state — and rates vary enormously town to town, from $2.62 to $36.54 per $1,000 in 2025, so an owner-occupied club that carries its own building is exposed directly; a consultant who applies a national-average tax load materially understates operating expense and overstates NOI and DSCR.11 High New England energy cost lifts the utilities line for a 24-hour, equipment- and HVAC-intensive box, and the state's near-1-percent rental vacancy and tight labor market raise the real risk of staffing the very asset being built. On the capital side the SBA channel is deep for a deal this size: the New Hampshire District Office in Concord approved 667 loans totaling $163.3 million in fiscal 2024 at an average 7(a) loan of $244,889, so a $4.95 million ground-up credit is a large, feasibility-supported file rather than a routine one.12
Why the site converts the trade area.
Household income, commuter flow, and parking all point the same direction, and the site geometry converts participation into visits.
The five-mile trade area carries household incomes well above the national median — comfortably above the $75,000 level at which membership and ancillary attach rates strengthen — and a daytime population inflated by the outbound morning and inbound evening commute. Statewide, New Hampshire is the nation's second-oldest state at a median age of 43.4, but the southern-tier commuter towns skew younger and family-heavy, and the older cohort is itself a growing fitness segment, so the club is programmed across dayparts rather than for a single demographic.10
Geometry does the rest. The subject occupies a visible arterial pad on the going-home side of a signalized intersection, where evening commuters can convert a membership into a routine visit without a detour — the highest-frequency position for a suburban club. Ample surface parking matters more than it looks: peak-hour capacity, floor space, and parking are the ceiling on how many members a club can actually serve, and a site that clears the after-work rush protects both retention and the ancillary trip. The nearest budget box cannot match a staffed, full-service floor at that location, which is why the model credits the subject with a mid-to-upper capture rather than a price-floor one.
The SBA 7(a) structure.
Total project cost lands at $5.50 million. The 7(a) program can finance the real estate, equipment, build-out, and working capital in a single loan, which is why an owner-operated, ground-up club routes here and is sized to a two-to-three-year membership ramp.
| Cost component | Amount |
|---|---|
| Land (~2.5-acre suburban pad) | $0.75M |
| Site work & utilities | $0.55M |
| Building shell (28,000 sf) | $1.95M |
| Interior build-out & finishes | $0.75M |
| Fitness equipment (cardio, strength, functional) | $0.85M |
| FF&E, lockers & technology | $0.25M |
| Soft costs & contingency | $0.30M |
| Working capital & fees (funds the ramp) | $0.10M |
| Total project cost | $5.50M |
| Item | Figure |
|---|---|
| SBA 7(a) loan (90%) | $4.95M |
| Borrower equity injection (10%) | $0.55M |
| Term / amortization | 10-year term; blended 25-yr (real estate) & 10-yr (equipment/working capital) |
| Illustrative rate | ~10.25% (Prime + 2.75%) |
| Annual debt service (stabilized, amortizing) | ≈ $604k |
| Year-1 interest-only bridge | ≈ $507k |
Structure per SBA 7(a) conventions under SOP 50 10 8; 10% minimum equity injection; owner-occupancy 60% for new construction; single-loan 7(a) cap $5M. See source 13.
The equity injection sits at the 10 percent minimum reinstated under SOP 50 10 8, supported by an experienced owner-operator and a strong founding-member pre-sale that de-risks the ramp; a thinner pre-sale or a first-time operator would draw a higher injection.13 At $4.95 million the loan also sits just under the $5 million single-loan 7(a) ceiling, so the structure works within one 7(a) facility without a companion loan, and because the subject is an independent owner-operated club rather than a franchise it sidesteps the franchise-directory and concept-default screens that follow branded concepts.13 The amortization is blended — the real-estate-secured majority over 25 years, the equipment and working-capital slice over 10 — and on an illustrative 10.25 percent rate that produces annual debt service of about $604,000 once fully amortizing. A Year-1 interest-only bridge near $507,000 carries the ramp. The study exists to support exactly that coverage — the number the lender must document to approve the credit, tested against an independent read of membership demand rather than the sponsor's own projection.
Feasible and bankable, on coverage the credit can document.
The stabilized model builds revenue from recurring dues and ancillary lines, nets operating expense against New Hampshire's real cost structure, and carries the coverage to the SBA floor and beyond on a graded membership ramp.
| Line | Basis | Amount |
|---|---|---|
| Membership dues | 3,450 members × $624/yr1 | ≈ $2,153k |
| Personal & small-group training | Attach to ~20% of members | ≈ $355k |
| Enrollment & annual fees | Join fees plus annual maintenance fee | ≈ $175k |
| Retail, café & guest fees | Ancillary in-club revenue | ≈ $120k |
| Total revenue | Dues plus ancillary | ≈ $2,803k |
| Operating expenses | Payroll, energy, R&M, marketing, property tax, insurance, G&A9 | ≈ ($1,957k) |
| Net operating income (NOI) | Revenue less operating expense | ≈ $846k |
NOI margin near 30% reflects an owner-occupied club that carries property cost as debt service rather than rent; comparable to well-run operators' after-rent margins. See sources 5 and 9.
| Year | Stage | Avg members | NOI | Debt-service basis | DSCR |
|---|---|---|---|---|---|
| Year 1 | Ramp (interest-only bridge) | ~2,750 | ~$507k | Interest-only ~$507k | 1.00 |
| Year 2 | Building | ~3,150 | ~$725k | Full amortizing ~$604k | 1.20 |
| Year 3 | Stabilized | ~3,450 | ~$846k | Full amortizing ~$604k | 1.40 |
DSCR computed as NOI divided by the period debt-service obligation. See source 13 for the ~1.15x coverage convention.
The stabilized 1.40x coverage is the figure the lender documents, and it clears the SBA's roughly 1.15x floor with real headroom.13 By Year 2 the project already covers fully amortizing debt service at 1.20x. The Year 1 figure of 1.00x sits right at break-even — it is the ramp year — which is exactly why the structure carries an interest-only bridge through stabilization: the bridge covers the ramp, and permanent, fully amortizing coverage is measured once the club reaches its supportable membership. Modeling stabilized membership on opening day is one of the most common ways these pro formas fail review; here the ramp is graded over two to three years and validated against the founding-member pre-sale, with churn held to a conservative level consistent with the ~66.4 percent industry annual retention rather than an unsupported sub-3-percent monthly figure.2 Member-acquisition cost of roughly $100 to $300 is funded continuously against churn, and the model verifies a lifetime-value-to-CAC ratio of at least 3 to 1.9
On the equity side, the $0.55 million injection runs roughly break-even in the interest-only ramp year and builds to about $110,000 a year of levered free cash flow once stabilized, net of an equipment-refresh reserve — a real line for a gym, since cardio and strength equipment must be replaced on a multi-year cycle and the reserve funds that mid-hold rather than a distribution. The exit is valued on a going-concern basis, not a leased-fee cap rate: a club is an owner-operated business, and valuing a Year-10 stabilized business-plus-real-estate at roughly 5x stabilized EBITDA near $0.87 million — a blend of the ~1.5x–3x SDE the market pays for independent clubs and the value of the owned building — implies a going-concern value near $4.5 million, and roughly $1.1 million of net equity after selling costs and the ~$3.3 million outstanding SBA balance.8 Holding dues flat and membership at its stabilized level rather than assuming continued price increases, the blended result is an illustrative levered equity IRR of about 19 percent over a 10-year hold.
Verdict: financially feasible and bankable. On independently derived membership demand, a stabilized 1.40x DSCR, and a ~19% levered equity IRR, the projections support the SBA 7(a) credit.
Independent demand, capture, churn, and DSCR stress.
The engagement was scoped the way a credit committee reads it. As an independent feasibility consultant, our role is to test the sponsor's projection against the market, not to restate it — the value of the deliverable is precisely that it carries no stake in the outcome. We derived membership from trade-area participation, income, and the surveyed competitive set, then placed the subject at a defensible capture rather than reverse-engineering the member count the debt service needed. Dues and ancillary lines were modeled on a graded two-to-three-year ramp at flat pricing, validated against the founding-member pre-sale rather than a stabilized launch.
The coverage analysis was then stress-tested. We ran the debt-service coverage against membership and dues downside — the two variables a club is most exposed to, including a hypothetical HVLP entry that forces a price response — to confirm the credit still holds when member counts or pricing compress. One scope boundary is worth stating plainly: as the feasibility consultant, we reference, but do not perform, the going-concern appraisal and the Phase I environmental site assessment; each is a separate professional's engagement that runs in parallel to the study.13 That combination — independent demand, capture, competition, churn, and a stressed DSCR — is what lets the lender rely on the file.
Underwriting a New Hampshire fitness center for an SBA loan? Start with the feasibility study.
Feasibility Study Company prepares independent fitness center and gym feasibility studies for SBA 7(a) and 504 credits, built to the coverage standard your lender must document. A methodology briefing with our gym feasibility consultant team walks through the membership demand, capture, churn, ramp, and DSCR analysis behind a case like this one, calibrated to your trade area and format.
Request a methodology briefingData sources and dates.
The deal figures are illustrative of the engagement type; the market data that grounds each dimension is real and sourced, drawn from our standing New Hampshire, Fitness & Recreation, and SBA 7(a) & 504 analyses and the primary authorities they cite.
- Health & Fitness Association (HFA), 2025 U.S. Health & Fitness Consumer Report: 77.0 million members in 2024 (+5.6% YoY), 24.9% penetration (an all-time high), ~96 million total customers (31% penetration), ~1.5 weekly visits, and ~$517 average annual member value; member base skews to households above $75,000 (just over half of memberships), as compiled in the firm's Fitness & Recreation analysis.
- HFA / IHRSA 2025 Benchmarking Report (via Gym Marketing Pros): 66.4% annual member retention; monthly-churn bands (Excellent under 3%, Good 3–5%, Average 5–7%, High 7%+), industry overall ~5% monthly; half of new members quit within six months (Glofox and Gymdesk citing HFA).
- IBISWorld, 2026 (Gym, Health & Fitness Clubs in the US): $47.0 billion industry revenue in 2026 (+1.3%), 3.6% CAGR 2021–2026; ~114,370 fitness establishments (IBISWorld 2024, via Gymdesk).
- Planet Fitness FY2024 Annual Report (SEC) and 8-Ks (January 2025 and January 2026): 19.7 million members / 2,722 clubs (YE2024), ~90% recurring revenue, Classic Card $10→$15 (2024, first increase since 1998); HVLP dues of roughly $10–$30 as the sector's pricing anchor and growth engine; institutional site-selection practice scanning announced/permitted supply.
- Planet Fitness 2025 FDD, Item 19 (12 months ended December 31, 2024): franchised Average Annual EFT Revenue by third — Bottom $1,205,580 / Middle $1,803,265 / Upper $2,613,753 (2,197 clubs); corporate-owned EBITDA-after-rent margins 21% / 35% / 42% (252 clubs). Used to frame owner-occupied margin context.
- Life Time Group Holdings 10-K and Q4 releases, 2024–2025: average revenue per center membership $3,531 (2025), $3,160 (2024); ~94,000 sq ft 2026 club class; “new and ramping” versus “mature” center disclosure supporting a two-to-three-year ramp. Premium benchmark bracketing the subject's ~$813 revenue per member.
- Anytime Fitness 2024 FDD and franchise disclosures: average unit volume $441,894 (1,530 clubs open ≥1 year), flat $799/month royalty; illustrative of the small-box franchise revenue point below the subject's full-service format.
- CT Acquisitions, 2026 Buyer's Guide (citing NACS/industry data): going-concern multiples — 1.5x–3x SDE (independents), 2.5x–5x SDE (single-unit franchise), 4x–7x EBITDA (multi-unit platforms), 8x–12x EBITDA (premier-brand scale); a single-tenant net-leased fitness property is valued separately as real estate, and a going-concern is not a leased-fee cap rate; retention and MRR mix each can swing final price 20%+.
- Financial Models Lab (2026) and arvo.guru (2025): member-acquisition cost $100–$300 and a healthy LTV:CAC ratio of 3:1 or higher; Sharpsheets (2024) and MMCG (2024): 22.7% average EBITDA margin among the largest franchises and ~11% sector net margin, used to bound the operating-expense build.
- U.S. Census Bureau, Vintage 2024 Population Estimates: New Hampshire ~1.41 million residents as of July 1, 2024; median age 43.4, the second-oldest U.S. state; southern-tier (Manchester–Nashua) commuter demographics, as compiled in the firm's New Hampshire market analysis.
- Tax Foundation and New Hampshire Department of Revenue Administration: New Hampshire raises 59.5% of state and local tax revenue from property, the highest reliance of any state; 2025 town rates range from $2.62 to $36.54 per $1,000; no general sales tax and no broad personal income tax; high New England energy costs and near-1% rental vacancy (NH Housing) informing the utilities and staffing lines.
- U.S. Small Business Administration, New Hampshire District Office (Concord): in fiscal 2024 the SBA approved 667 loans totaling $163.3 million in New Hampshire, average 7(a) loan $244,889; Granite State Development Corporation is the dominant 504 CDC; USDA Rural Development serves the state from the combined Vermont/New Hampshire office (Montpelier, with a Concord office).
- U.S. Small Business Administration SOP 50 10 8 (effective June 1, 2025) and 13 CFR 120.160(b): a feasibility study is discretionary but expected for startup and ground-up projects lacking operating history; 10% minimum equity injection restored; Franchise Directory reinstated; owner-occupancy of 51% (existing) or 60% (new construction); 7(a) can finance real estate, equipment, build-out, and working capital in one loan; single-loan 7(a) cap of $5 million; SBA/504 DSCR convention of roughly 1.15x or higher; the feasibility author references but does not perform the going-concern appraisal or the Phase I environmental site assessment.