The brand helped Nike Studios grow to double-digit locations in less than two years with its fitness-friendly approach to finance
A new age in fitness equipment financing began two years ago when Broad Fit Financial launched to better support the health and wellness industry.
With their commonsense approach to risk and finance, the company procured a substantial amount of capital financing to help FitLab’s new concept, Nike Studios, reach double digit locations in less than two years.
Procuring credit for a new wellness concept is never easy, not even when that brand has an iconic name attached to it.
Such was the case for Nike Studio’s planned expansion in California and Texas in 2024.
FitLab, the fitness and wellness ecosystem builder behind Nike’s new-age, high-intensity strength and cardio exercise experience, struggled to secure funding for the concept as it was not yet a proven business. That was, until Broad Fit Financial got involved. With persistence, prudence and resolve, the industry’s leading financial institution did what others couldn’t — or wouldn’t.
Prior to Broad Fit’s involvement, FitLab pursued financing through another funding source. After that fell through, Broad Fit engaged and got down to work.
“As soon as we received the call for help, we started collecting financials, invoices, the ‘story’ and putting our package together for credit presentation,” said Broad Fit President and Founder Stephanie Taylor. “Our ability to clearly present a financial profile and its merits are essential to a smooth review and decision. That’s something we do very well from our 30 years in this industry. Truly understanding our unique industry, having the knowledge to speak to associated risks and overcoming objections matters when you work with a funding partner who is representing your creditworthiness to a committee.”
Through a commitment to full transparency, creativity and determination, the two companies established a new partnership. After numerous setbacks from underwriters who were too rigid, Broad Fit successfully secured funding for nine new locations, all opening within months of each other.
The FitLab Nike Studios were funded and opened at a fast clip. They now stand at 10 highly profitable locations with the majority opened in 2024.
More Persistent Than Others
When Broad Fit began seeking credit, it wasn’t about second or third tries. FitLab previously attempted to secure credit through its equipment vendors several times. It then took Broad Fit several more tries to succeed.
“Fairly quickly, we received numerous declines with responses like ‘cool concept but cannot extend credit to new concepts’ and ‘love the concept but cannot finance this type of collateral mix,’” said Taylor.
Even as the rejections stacked up, Broad Fit never allowed them to cast a shadow of doubt over their belief that Nike Studios would be a success.
“Despite the feedback, we felt strongly about supporting the FitLab team,” said Taylor. “We were comforted by their already established and successful businesses under the FitLab suite of brands and knew their Nike partnership and Nike Studios concept was going to be well received by Nike fans.”
Broad Fit’s Solution
The largest financial barrier impeding Nike Studios’ growth was the same one that has been challenging young fitness brands for years: reluctance to invest in startups. Without history to review facility and ownership performance, lenders become averse to lending funds on high-risk, unproven concepts or owners.
“In addition to the equipment needs, startups typically incur significant costs related to build-out, architectural, legal and accounting fees as well as deposits, furniture, AV and much more,” Taylor explained. “The amount of soft costs and capital needed on a new project often exceeds the value of collateral, such as the actual fitness equipment itself.”
To overcome these hurdles, Broad Fit went back to the FitLab profile, conducted a deeper dive into their portfolio and constructed a new strategy. Taylor called FitLabs’ transparency in communication, accessibility and financial disclosure the key to their collective success.
“They laid all their cards on the table, so we were able to clearly see what we were working with and how to move the chess pieces around to mitigate risk for credit approval,” Taylor said.
Those moves led Broad Fit to present FitLab with a credit approval that included the funding of significant build-out, consultant and architect fees, soft costs and equipment financed on a 72-month note with no residual, no down payment, no advance payment and no security deposit.
“Equipped with deeper company visibility of their structure and financials, we quickly secured our ‘yes,’” Taylor said. “What we were able to do for the FitLab Nike Studios is not the norm in our industry. New concepts with multiple locations at a time is typically a quick decline, as is the request for significant build out and soft costs. We really believed in the model, believed in the operators and most importantly, were able to prove their ability to cover the obligation. With FitLab’s engagement and that of our forward thinking credit team, we were able to accomplish a very positive outcome. To say we are proud of the work and partnership we have with this group is an understatement.”
Fitness Equipment Finance is Different than Traditional Equipment Finance
This wasn’t the first time the Broad Fit team pulled off a feat that other finance companies couldn’t get their arms around. Most equipment finance companies do not truly understand the collateral, differentiations in manufacturing, asset values and shifts in consumer demands taking place within the fitness industry, making it a challenge to support growing fitness and wellness businesses.
With decades of fitness and finance experience and a deeper understanding of the many nuances at play, Broad Fit has been a welcome addition to the lenders vying for attention in this space.
Broad Fit makes a clear case: who you partner with on a project matters. Choosing a lender who speaks the customers language, the vendors language and the credit committee’s language is critical to success in procuring funding in a smooth and streamlined manner.
“This experience confirmed for me how limited our industry is in resources to finance projects that make sense but may be outside the proverbial box or with finance partners that do not have access to additional capital to work around exposure limits,” Taylor said. “Bringing in new funders who are less constrained has been critical to our success as a fitness-focused finance company. We have aligned ourselves with partners who are progressive, innovative and make decisions because they make sense, not because the right number of boxes are checked.”
This article originally appeared in ATN’s Fitness Center Reimagined: The Evolution of Gyms, Wellness Tourism & Real Estate report, which explores how health clubs, hospitality brands and boutique operators are reshaping the industry to meet shifting member expectations and lifestyle demands. Download the free report.
