Revenue-Based Gym Financing: How a Revenue-Based Gym Loan Works

You might have heard people talk about revenue-based gym financing as “royalty-based financing.” Put simply, revenue-based gym financing is a loan with repayment terms based on your revenue. You don’t need to put down any collateral, and you won’t have to worry about your debt-to-income ratio.

Just because you’ve just started your gym business doesn’t mean you have to stay small. There are exciting yet practical financing options out there for you, and one of these is revenue-based gym financing. With these loans, you only make payments when you bring in revenue. Let’s discuss what’s involved in qualifying for a small gym business loan and how these financing options work.

What is Revenue Based Gym Financing?

Perhaps you’ve guessed what revenue-based gym financing is based on the name. Instead of needing collateral  (in other words, assets) to secure a loan, your gym business revenue is the basis of your financing.

In other words, you agree to pay the lender a set percentage of your revenue over a specific term, until your loan is paid off. When looking at revenue-based gym financing, find out the rates of prospective lenders. The largest amount you will usually have to pay is between three and five times how much you borrowed.

You will know the exact percentage rate you will pay when entering the loan agreement. As well as a percentage of your revenue, you must pay a set multiplication of the loan amount.

Why Revenue Based Gym Financing Is Important

Revenue-based gym financing gives options to businesses that may not qualify for other kinds of loans. Alternatively, businesses may qualify for traditional loans, but the repayment burden may jeopardize their well-being.

Many gym businesses seek revenue-based gym financing for growing their business through activities such as expanding the team, improving marketing and sales, and developing new products.

How Does Revenue Based Gym Financing Work?

Revenue-based financing is a fantastic tool for gym businesses with fluctuating revenue. You don’t have to worry that your monthly payment will be too much, as it will change with your revenue. When your business grows and you get higher revenue, you will make larger payments.

Payments will always be in line with the rate you agreed on in the revenue based financing agreement.

Its flexibility is the most attractive feature of revenue-based gym financing. Starting a new gym business brings a lot of uncertainty, and there are plenty of ups and downs. With other kinds of loans, you have trouble on your hands if you can’t make a payment. However, if you choose the revenue-based financing work, you only pay a proportion of the money you bring in.

Revenue Based GymFinancing Pros and Cons

Make sure to consider all aspects of this type of financing while researching how to get a small gym business loan.


Like every other financing option, revenue-based gym financing has both pros and cons. Let’s begin with the many advantages.

1. Flexibility

You’ll never be faced with overwhelming or unaffordable payments if you go with revenue-based gym financing.

2. Focus on Growth

With revenue-based gym financing, you’re encouraged towards growth. However, you won’t end up with the toxic pressure that sometimes comes with traditional loans. With a revenue-based loan, you will only pay if you have the revenue.

3. No Collateral Needed

You won’t need to offer any collateral to get a revenue-based gym financing loan. This lends better peace of mind for many gym business owners.

4. Keep All Ownership

You always retain full ownership of your gym business and its assets throughout the revenue-based financing process.

5. More Affordable than Equity Funding

Maybe you’ve thought about looking for equity funding, such as funding from angel investors or VC funding. While the large amounts of money available on this route seem transformative, you will have to pay between ten and 20 times what you borrowed. This kind of burden is enough to bring down a gym business.


Like any other kind of loan, revenue-based gym financing does have some disadvantages. Let’s take a look at them below.

1. You Need Revenue

This sounds common sense, but it’s an obstacle for new startups that haven’t yet started bringing in revenue.

2. You Must Make Monthly Payments

Having to make monthly payments is a problem if you don’t yet have any revenue.

3. Less Money Available

You won’t get the kind of loan sizes from revenue-based gym financing that you may be able to from venture capital.

The Best Revenue-Based Gym Financing Model for Startups

Startups sometimes combine revenue-based gym financing for startups with other kinds of financing to help reduce risk. While revenue-based gym financing lenders look for existing revenue, you may not need to be profitable.

If you have a start-up, look for revenue-based gym financing that fits your business. In other words, if you have limited revenue, look for a revenue-based gym financing model that will accommodate your current business reality.

Revenue Based Gym Financing Interest Rates

Regarding revenue-based gym financing, information on interest rates is generally contained in the repayment caps. These caps tend to range between 1.35x and 3x. To find out what the total debt will be, you simply multiply the financing amount (also known as the principal debt) by the agreement’s repayment cap.

How to Prepare for Loan Application

Now, we’ll provide a quick guide on how to qualify for a gym business loan.  

Get all the necessary documentation ready for when you apply for any loan. Of course, your gym business revenue is the most crucial factor with a revenue-based loan. But you must document and prove this, and there are other kinds of documents you will probably need to produce, as well.

When you apply for your revenue-based gym financing loan, have all your business information on hand. Of course, lenders will require your revenue data when deciding on your loan application. Some of these may include:

  • Business balance sheet
  • Articles of incorporation, if applicable
  • Business bank statements
  • Personal bank statements
  • Income statements
  • Personal identification
  • Business tax returns
  • Personal tax returns
  • Commercial leases, if applicable
  • Apply here

Final Thoughts

There’s no doubt about it; revenue-based gym financing is an exciting option for many gym businesses, especially small gym businesses with established revenue. But remember, you need professional advice and guidance when making financing and loan decisions. That is where Business Financing Advisors come in with their expertise and experience. The best loan providers offer advice and information free of charge.  Apply here.

An Outsourced CEO and expert witness, Jim Thomas is the founder and president of Fitness Management USA Inc., a management consulting, turnaround and brokerage firm specializing in the gym and sports industry. With more than 25 years of experience owning, operating and managing clubs of all sizes, Thomas lectures and delivers seminars, webinars and workshops across the globe on the practical skills required to successfully to overcome obscurity, improve sales, build teamwork and market fitness programs and products. Visit his Web site at: or

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