SBA Enabled ‘Bulldog’ to Hang Onto Ownership Stake in Boutique Gym

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By DAVID GEFFNER


Contributing Reporter

Frank Brancale, public information officer for the Small Business Administration in Glendale describes John Damon as a “bulldog” and that may be an understatement.


Damon, 34, is the co-founder, with fianc & #233;e Gina DeJoseph, of Active Fitness, a 5,300-square-foot boutique gym in Santa Monica. A former manager of the high end Sports Club/LA, Damon shopped his $400,000 SBA loan to 39 different lenders, before Irvine-based Metro Pacific Bank provided funding.


From the day Damon showed his business plan to the SBA via a referral from his personal attorney to the day he signed his loan documents was 13 months.


“I could have asked one of my celebrity clients for $500,000, but that meant giving up our ownership position,” recalled the former Boston College football star. “It’s a long, emotional roller coaster (of a process), but the SBA never gives up on finding you a lender.”


The 7(a) loan Damon received relates to Section 7(a) of the Small Business Act passed by Congress, which empowers the federal agency to make or assist commercial borrowers. The loans, which are fully amortized for up to 25 years, cover a broad umbrella of products. They’re typically used by small business owners for working capital, inventory, accounts receivable, machinery and other expenditures.


According to Brancale, Damon’s quest was slowed down because banks making 7(a) loans often shy away from startups and high dollar loans. Moreover, Damon does not own property, so he could not put up real estate as collateral. Instead he had to come up with one third of the loan as cash collateral, or roughly $130,000. The funds covered the purchase of state-of-the-art equipment, private trainers and expenses to drive new membership.


Since opening in September, Damon said enrollment is above his projections. He currently has 140 clients paying $70 per month with no long-term contracts. Fees are in the middle-to-upper tier of LA gyms. “We’re not the $19.99 per-month Ballys or the $200-per-month Sports Club/LA,” he said.


Despite days where he had to drive from Brentwood to Rancho Cucamonga to meet prospective lenders, then “take off his suit” to train clients at night, Damon has no regrets.


“Our next location will be in Beverly Hills or the South Bay, and we’ll go SBA again,” he said. “They had total confidence in our business plan, and emphasized my character and integrity with each and every lender they sent my way.”

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