Gym Stimulus: How ARP Aids Gyms & Where it Doesn’t

The second stimulus approved at the end of December offered many gym operators a vital lifeline going into the new year. With an estimated one in four gyms on the verge of closing because of COVID-19 cuts and restrictions, the stimulus can help struggling businesses to continue to tread water into 2021. But for how long?

While the aid package (stimulus) helps gyms in some areas, such as a new round of expanded and simpler payroll loans, the bailout does not include any measures specific to the fitness industry, which has been as hard hit as restaurants and hotels, which did receive expanded assistance.

Here’s a closer look at the features of the $900 billion coronavirus stimulus package and where it helps gyms — and where it may not.

PPP loans expanded, simplified

First, a new round of Payroll Protection Program (PPP) loans makes available some $284 billion for small businesses. Even if you received a PPP loan last year. That’s almost a third of the entire aid package.

The new round of forgivable loans, which have eliminated some restrictions from the first round, are available through March.

This can be gym stimulus for clubs that meet the following eligibility requirements:

• Your gym’s gross receipts are down by at least 25% from 2019.
• Your gym has fewer than 300 employees.
• Your fitness club has been in business since before Feb. 15, 2020.
• Your previous PPP loans must be spent or earmarked.

Businesses can get PPP loans up to 2.5 times your average monthly payroll, and the loans cap at $2 million.

In the stimulus, provisions have also been created for businesses with fewer than 10 employees, gyms in low-income areas, and community-based lenders. These guardrails were added in response to the many bigger firms that quickly snatched up the first round of PPP loans. Many small businesses were shut out of the initial PPP loans entirely.

Unlike the original PPP loans that had to be earmarked only for employee wages, the new round can be used on an expanded list of expenses to include supplies and protective gear. In addition, you can now claim deductions for gym expenses paid with the loan, clarifying some of the ambiguous language from the original stimulus.

“The reopening of PPP loans will provide more opportunity for gym and fitness clubs to get financial aid,” says Alli Schulman of the Sports and Fitness Industry Association. “But we are not aware of any other specific additions to the bill that would significantly help or impact them.”

Where the stimulus comes up short

While some accommodations have been made for the hard-hit food and lodging industries in the new stimulus, including PPP loans of up to 3.5 times payroll, no such measures have been included for gyms and rest of the fitness industry.

“While it is good to see Congress finally take action, the bill fell short of expectations,” Jeff Perkins, assistant VP of government relations for the International Health Racquet and Sportsclub Association, writes.

“Unfortunately, the bill does not contain specific grants for health and fitness businesses. The good news is some Democratic leaders are already describing it as a ‘down payment’ for a larger relief bill expected to come in the new 117th Congress, following the change in administration.”

According to the Community Gyms Coalition, gyms have experienced higher closure rates than restaurants due to the pandemic, and fitness clubs have been unable to fully participate in federal relief programs.

The industry is hopeful more legislation, such as the Personal Health Investment Today (PHIT) Act, gains traction in Washington.