Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting.

Owner Dependency + Labor Normalization

• Is the owner the lead trainer or class instructor?
• Have market-based replacement wages been used?
• Are other instructors full-time W-2 or part-time/contracted?
• Would member retention suffer without the owner?

Membership + Revenue Review

• Is revenue recurring (subscriptions) or event/class-based?
• Are new member spikes tied to promotions or sustainable?
• Are memberships tracked via CRM or POS?
• What’s the average churn or cancellation rate?

CapEx and Equipment Risk

• Are key machines (treadmills, bikes, weights) in working condition?
• Has CapEx been normalized in free cash flow?
• Are any items leased, seller-retained, or deferred?
• Is depreciation an appropriate CapEx proxy?

Red Flags

• Owner performs 80%+ of class or training work
• Addbacks include personal training, apparel, food, phone
• Equipment over 10 years old with no CapEx plan
• Membership reported without churn or contract terms

SBA SOP Tip

Fitness businesses must reflect normalized owner labor, sustainable member revenue, and recurring CapEx. One-person brands don’t qualify as transferable value under SBA SOP.