Why fitness businesses use CSBFP
Opening a gym or fitness studio requires substantial upfront capital: equipment packages for a mid-size fitness studio run $100,000 to $400,000 depending on the format (big-box general fitness vs. boutique cardio vs. functional training box); the leasehold build-out — rubber flooring, mirrors, HVAC modifications, changeroom plumbing, reception construction — can easily match or exceed the equipment cost.
CSBFP sits well in this profile. Equipment and leaseholds are the primary eligible categories, the $500,000 non-RP sub-limit accommodates most studio-scale projects, and the working-capital line of credit provides flexibility for pre-opening costs and the ramp period before membership numbers stabilize.
Eligible CSBFP costs for fitness businesses
Equipment
Fitness equipment that qualifies as eligible capital assets under CSBFP includes:
- Cardio equipment: Treadmills, ellipticals, rowing machines, stationary bikes (including commercial-grade spin bikes), stair climbers
- Strength equipment: Plate-loaded and cable machines, functional training rigs, barbells, dumbbells, and plate sets (as a bulk capital purchase), squat racks and benches
- Specialty studio equipment: Reformers and cadillac frames for pilates studios, TRX and suspension systems, speed bags and heavy bags for martial arts and boxing studios, competition mats
- Flooring: Commercial rubber flooring, foam mat systems, hardwood spring floors for dance and yoga — where these are installed as permanent capital assets rather than individual mats, they may be characterized as either equipment or leasehold improvements depending on the installation method
- Technology: Member management software (perpetual licences), studio booking systems, access-control hardware, commercial AV systems (speakers, screens) installed as capital fixtures
Leasehold improvements
Fitness studio leasehold improvements typically include:
- Rubber and specialty flooring installation on the base slab (permanently adhered or locked systems)
- Mirror installation (commercial wall-to-wall mirror systems)
- HVAC modifications (high-capacity ventilation required for group fitness; heated yoga rooms require specialized HVAC systems with humidity control)
- Changeroom and washroom construction (plumbing rough-in, shower stalls, lockers)
- Reception and retail area buildout (millwork, lighting, floor finish, storefront glass)
- Acoustic treatment (soundproofing between studio spaces, mechanical vibration isolation where required by the building landlord)
- Electrical upgrades (commercial fitness equipment requires significant amperage for treadmill concentrations; heated yoga requires independent electrical)
The lease constraint applies: the CSBFP loan cannot be amortized past the lease expiry. Fitness businesses often sign 5-year leases with 5-year renewal options; a lender will require that the renewal option covers the loan maturity, or that the landlord confirms their intention to renew, before approving a 10-year amortization on a leasehold-improvement loan on a 5-year lease.
Membership revenue and lender underwriting
Fitness businesses are membership-dependent — monthly recurring revenue from members is the primary cash-flow source. Lenders underwriting a fitness studio CSBFP file will focus on:
- Projected membership ramp:How many members in month 1 vs. month 12 vs. steady state? A realistic ramp — not day-one full capacity — is what the lender’s model accepts. Starting at 15–20% of target capacity in month 1 and reaching 60–70% by month 12 is typical.
- Monthly revenue per member: What does the average member pay? A large general-fitness gym at $40/month and 500 members generates $20,000/month; a boutique yoga studio at $150/month and 150 members generates $22,500/month. The lender models both sides.
- Member churn and attrition: Fitness businesses have known churn patterns (the January spike and the June trough). The business plan should show monthly membership projections, not just an annualized average.
- Pre-sales and existing commitments: Fitness businesses that can show pre-sold memberships before opening — a founding member campaign, charter memberships, or confirmed corporate wellness contracts — strengthen the repayment case significantly.
Franchise vs. independent: structuring differences
Many fitness businesses operate as franchises (F45, Anytime Fitness, Orangetheory, and others). For franchise fitness operations, the franchise fee sits in the CSBFP intangibles category (up to $150,000 within the intangibles-and-WC sub-limit). The leaseholds and equipment are the same as an independent.
A franchise fitness CSBFP file with a $120,000 franchise fee + $300,000 equipment + $200,000 leaseholds would total $620,000 — but the franchise fee component ($120K) would be within the $150K intangibles sub-limit, and the equipment + leaseholds ($500K) would be at exactly the non-RP ceiling. Structuring the franchise fee to stay within $150K (and within the $500K non-RP ceiling for the remainder) is the key constraint on a franchise fitness file.
Lenders who regularly process franchise CSBFP files understand this allocation and have a template for it. First-time fitness franchise borrowers should work through a CPA or advisor who knows the sub-limit structure to avoid inadvertent over-allocation.
Common issues on fitness CSBFP files
- Equipment classified as operating expense.Individual dumbbell pairs or small items purchased at retail are sometimes expensed rather than capitalized by the operator. For CSBFP purposes, a bulk equipment package (50-pair dumbbell rack, full barbell set, etc.) should be structured as a single capital purchase with a single invoice, not 50 individual small purchases.
- Heated yoga HVAC cost. Specialized heated yoga HVAC (Bikram or infrared systems) is expensive ($30,000– $80,000) and is a leasehold improvement or specialized equipment cost. Confirm the classification early — some systems are freestanding (equipment); others are built into the HVAC infrastructure (leasehold).
- Membership revenue projections too aggressive.Lenders have seen many fitness studio business plans that project full capacity in month 3. A conservative ramp (50% target in 12 months) with a debt-service coverage check at that level is what the lender wants to see, not a best-case scenario.
- Lease term too short. A 5-year lease with no confirmed renewal creates a leasehold loan that may mature after the lease — a standard decline. Negotiate the lease renewal option or confirm a 10-year term before structuring a 10-year leasehold-improvement amortization.
A worked example: boutique fitness studio
An operator opens a 3,500 sq ft boutique functional training studio in a leased commercial space (10-year lease). Project:
- Equipment package (rigs, barbells, cardio, mats): $180,000
- Leasehold improvements (flooring, mirrors, HVAC, changerooms, reception): $220,000
- Total: $400,000
Equity injection: $50,000 (12.5%). CSBFP loan: $350,000. Structure check: $400,000 non-RP — inside the $500K sub-limit ✓. Lease 10 years — loan can amortize 10 years ✓.
At Prime + 3% (7.95%) amortized over 10 years, the monthly payment is approximately $4,275. Target capacity: 200 members at $130/month = $26,000/month gross revenue. At 60% capacity (month 12 target), revenue = $15,600/month. Operating costs at 60% capacity: approximately $11,500/month. Monthly EBITDA: $4,100. Annual DSCR at 60% capacity: $49,200 / $51,300 = 0.96x — just below threshold. The operator would need to either raise the equity injection (reducing the loan amount and payment), extend the amortization to lower the payment, or demonstrate contracted pre-sales that justify a higher month-12 occupancy assumption.
This is the modelling job before the application — not a reason to not apply, but a reason to have the numbers right before the lender sees the file.