Using Small Business Investors for Gym Equipment Financing
These are individuals, who may be with a professional investment firm or simply private investors who want to help you succeed, who put money into your gym in exchange for a percentage of the profits later.
You don’t pay investors back with interest the way you do a small business loan. Instead, you agree upon what percentage of your business they will own in equity. They provide funds you use to grow your business, maybe by buying cutting-edge equipment. In a few years, they have the option to take their equity out of the business. By then, it should be worth far more than what they initially invested.
A benefit of working with an investor is that they may have experience in the gym industry and may be able to help you make strategic decisions to help your business succeed. They may have contacts they can introduce you to that you can partner with. If you are considering investors, be aware that they may want to have a say in the decisions for your gym, and make sure you’re comfortable with sharing that power.
Gym Equipment Leasing vs. Loans
With a loan, you are purchasing the equipment. Once you pay the loan in full, you own the equipment outright. You can keep it or sell it. Often, though, the equipment has depreciated in value and you won’t be able to sell it for more than a fraction of the cost you paid.
With an equipment lease, you are paying to have the equipment for a specified period of time. Once that lease period is over, you give the equipment back to the company. You may also have the option to purchase the equipment at the end of the lease.
Best Gym Equipment Leasing Options
To summarize: you can buy gym equipment…or you can lease it. Some companies also allow you to lease to own, which means you are leasing the equipment but at the end of the lease, you have the option to buy the equipment outright. This gives you a chance to try it out with no obligation to buy, and then decide to keep the equipment if you like it.
Ultimately, the decision is up to you as to whether to buy or lease your gym equipment. If you opt for leasing, there are several companies that specialize in gym equipment leasing. Let’s look at a few.
Life Fitness offers a wide range of gym equipment for cardio, strength training, group fitness, and accessories, and offers leasing and financing options.
Fitness equipment brand Expert Fitness Supply has partnered with leasing company Katapult to offer customers the option to lease or lease to buy equipment. You don’t need good credit to qualify for credit up to $3,500, and even if you have a bankruptcy on your record, you can qualify.
Leases are available for 10 to 18 months, and can be autorenewed. Expert Fitness Supply offers products like saunas, ellipticals, treadmills, exercise bikes, free weights, and more.
ELEASE offers both leases and financing for gym equipment, including free weights, exercise benches, aerobic equipment, Nautilus equipment, universal gyms, and mats and training equipment.
You may qualify for leasing finance of between $10,000 and $5 million, which should be plenty to outfit a gym or two! ELEASE will work with you to create a lease agreement that meets your needs. You can even customize your payment schedule to make larger payments during high-revenue periods and smaller ones when revenues aren’t as high.
How Much Does Gym Equipment Cost?
Not sure what you might need to pay for gym equipment? Here’s a quick guide to average costs for gym equipment.
Keep in mind there may be a discrepancy in quality from the low end of these ranges to the high end. You want to buy or lease gym equipment that will be durable and keep your members safe.
How Much Money Do You Need to Open a Gym?
If you’re opening a gym, it’s important to get an idea of how much money you will need to cover all your expenses. Those will not only include the cost for the equipment, but also costs for remodeling, commercial rent, payroll, marketing, supplies, and any business licenses you will need to get started.
Here’s what you need to consider:
- Monthly rent: $5k-8k
- Equipment: $10k-50k
- Permits/certifications: $2k
- Insurance: $12k/year
- Miscellaneous: varies
If you choose to purchase your gym space, it will, of course, cost you much more than renting it. Rents will vary from one market to another, but expect to pay between $5,000 and $8,000 a month.
What you spend on gym equipment will depend on what equipment you have, the quality, and how many pieces of equipment you need. This may range from $10,000 to $50,000 per location.
Your state or local government may require you to have certain business permits, and you may also want to have fitness certifications if you offer personal training. These costs can be up to $2,000. You’ll also need insurance, including workers’ comp and liability. Rates will vary, but average about $12,000 a year.
You’ll have other startup costs, including computers and printers, a point-of-sale system to take payments, and other office equipment. These will vary depending on your needs. You’ll also need a website, which can cost a few thousand dollars.
In total, it may cost $50,000 or more to start a gym business.
Pros and Cons of Gym Equipment Financing
Before taking on gym equipment financing, understand the benefits and drawbacks of doing so.
- Don’t need cash up front to get the equipment
- Can pay for the equipment over months or years
- Allows you to get the best equipment available
- You’ll pay interest and potential fees on top of the loan
- Some loans may be difficult to qualify for
- Some lenders limit how much you can borrow to purchase equipment
The Bottom Line
Gym equipment financing can help you start or grow your gym business faster than bootstrapping those costs. Having the capital available to buy the latest technology and equipment can help you stay competitive in what can be a crowded market.
Whether you lease equipment or buy it outright using a gym equipment loan, companies like the ones we’ve covered here can help you get the equipment you need to succeed.