Economic Injury Disaster Loan Program Changes to Benefit Gyms

    To better provide the health and fitness industry with relief, IHRSA worked with industry professionals and the Small Business Administration to revise the Economic Injury Disaster Loan Program.

    We have some positive developments regarding the Small Business Administration’s (SBA) COVID-19 Economic Injury Disaster Loan (EIDL) program.

    IHRSA worked alongside health club owners and the SBA to make changes to the rules and requirements of the EIDL program which make it easier for businesses in the health and fitness industry to take advantage of the relief offered through the program. These changes have now been officially implemented by the SBA as of September 8, 2021. We wanted to loop you in on the changes.

    Liz Clark, CEO of IHRSA, was instrumental in IHRSA joining the American Hotel and Lodging Association, National Restaurant Association, International Franchise Association, Asian American Hotel Owners Association, and the Coalition of Franchisee Associations in sending a letter to the Administrator of the SBA. This letter urged the SBA to make the changes effective as soon as possible, and highlighted the need for these program changes, so businesses can get the relief that they so desperately need.

    “While EIDLs are debt it is one of the only lifelines for operators to grab a hold of while they are trying to survive.”

    Jeff Sanders, COO

    Athletic Apex Health Clubs - Rochester, NY

    We're still working hard to pass the GYMS Act—targeted federal relief for the health and fitness industry—but these EIDL revisions will help many gyms. So, here's what you need to know about the SBA's EIDL revisions.

    1. The cap on how much you can borrow has increased.

    2. You can now use the funds towards additional expenses (e.g. paying regularly scheduled payments on federal debt and pre-paying commercial debt).

    3. The deferment period of the loan has increased to a full 24 months.

    4. EIDL can be used to pay off higher interest loans.

    5. The affiliation rule has changed, allowing more businesses to be eligible.

    Why the EIDL Program Needed Updating

    The SBA designed the COVID-19 EIDL program to provide short-term economic relief— through low-interest loans—to small businesses which experienced temporary revenue loss due to the COVID-19 pandemic. However, to prevent exhausting the funds available through the program too quickly, borrowers were only eligible to receive up to $150,000. Thankfully, the initial concern over exhausting funding passed in April 2021, and the SBA increased the cap to $500,000.

    This cap on available funds and other issues around the program's application process caused many businesses in the health and fitness industry who needed economic relief to be unable to apply for or receive these loans.

    The Small Business Administration recognized the issues that businesses in the fitness industry faced initially with COVID-19 EIDLs. Since then, the SBA has worked directly with IHRSA and owners and operators in the health and fitness industry to adapt the current program to be more accessible so more businesses can get the short-term economic relief they so desperately need.

    What Changes Did the SBA Make to the EIDL Program?

    The largest change to the EIDL program is the latest cap increase. The maximum loan funds available to borrowers has been expanded to $2,000,000.

    The amount borrowers receive is calculated based on the extent of economic hardship which they suffered. However, this new maximum loan amount will allow struggling businesses to get the money they need to keep their doors open.

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    Additionally, businesses are now able to use the loan funds to pay regularly scheduled payments on federal debt and pre-pay commercial debt. The SBA is also expected to increase the deferment period of the loans to a full 24 months. Finally, the affiliation rule which previously capped the number of employees a business could have to be eligible for EIDL at 500 employees per business, has now been changed to 500 employees per location.

    Jeff Sanders, COO of Athletic Apex Health Clubs and Board Chair of the New York State Fitness Alliance, was key in working with the SBA. His expertise as a health club operator helped ensure the revised program would work for the health and fitness industry. Sanders is very optimistic about the new changes.

    “Our industry was one of the hardest hit and had the least amount of relief given to it. While EIDLs are debt it is one of the only lifelines for operators to grab a hold of while they are trying to survive,” says Sanders. “Increasing the maximum amount to $2 million and allowing operators to use it to pay other debt alone is going to help give a vehicle for refinancing some of the expensive debt that people were forced to pull out to try and survive while waiting for relief options.”

    Sanders also believes the EIDL revisions will help thousands of locations survive long to receive the targeted relief we continue to fight for or until their businesses are profitable again.

    While we must continue to push hard for further direct relief to the health and fitness industry, the revised EIDL program can provide much-needed short-term relief for struggling businesses.

    Want to learn more? Check out our special IHRSA webinar featuring SBA representatives on Friday, September 17 at 12:00 p.m. EDT. A speaker from the SBA will cover the new EIDL program revisions and answer any questions attendees may have. Sign up using the link below!

    Author avatar

    Jake Landry

    Jake Landry previously served as IHRSA's Public Policy Assistant—a position that focused on monitoring legislation that affects the health club industry at the state and federal levels and writing legislative alerts and articles on issues that affect IHRSA members.