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Recently Funded Deal: Fitness Center

Recently Funded Deal: Fitness Center

The 504 Company helps a two-decade-old fitness center to continue operating under new ownership.

Situation:

  • A fitness center offering tennis, swimming, group exercise, and more in New Windsor, NY had an absentee owner with an interest in selling the property and business. The center’s two managers had more than 24 years of combined experience operating the business and were wished to purchase the business together.
  • The purchasers were concerned about being considered a “new business” since this transaction involved an exchange-of-ownership, which would increase the owners’ equity contribution to the project.
  • A partner bank referred the owner to The 504 Company local loan officer who recognized the fit for an SBA 504 loan.

Solution:

  • In most cases the 504 equity injection is 10%; however, the equity injection for this property type is 15% due to the existence of a swimming pool being deemed as “special use.”
  • The 504 Company funded $910,000 of a $2.6 million project. This allowed the managers to purchase the assets and gain full ownership.

Impact:

  • The transaction allowed for a smooth ownership transition and the retention of over 170 full time, part time, and seasonal employees.
  • The fitness center, which has been open since 1990, was able to continue its operations. 

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