GYMS Act Pumping Resources Back into Local Gyms

A bill recently proposed in Congress may provide $30 billion in relief to gyms and fitness centers struggling because of COVID-19.  On February 5, 2021, U.S. Reps. Mike Quigley (D-IL) and Brian Fitzpatrick (R-PA) filed the “Gym Mitigation and Survival Act of 2021” (H.R. 890) or “GYMS Act of 2021” for short. This bill would create a grant program managed by the Small Business Administration (SBA) to assist gym and fitness centers struggling after a year of closures, social distancing regulations, and economic uncertainty.

The grant program specifically targets “Fitness Facilities” that provide instruction on, or offer space for, health and physical fitness. However, golf, hunting, sailing, riding, and state-owned facilities are not eligible for this proposed grant program. To receive a grant, the fitness center must certify that it applied because of uncertainty of current economic conditions and that it will use the funds to retain workers or for other allowable expenses.

The bill proposes to give the SBA the authority to make initial and supplemental grants. Initial grants would equal the lesser of 45% of an applicant’s gross revenue from 2019 or $20,000,000. If an applicant opened after January 1, 2019, it would receive six times its average monthly gross revenue. Supplemental grants would be available if the revenues of an applicant’s most recent quarter are not more than 33% of the revenues of the corresponding 2019 quarter.

Recipients of the grant may use the money for payroll costs, payments to independent contractors, rent, maintenance costs, utilities, the principal or interest on a mortgage, scheduled interest payments on other scheduled debt, payments of principal on outstanding loans, and other ordinary and necessary business expenses. However, the grant money must be used within one year after disbursement or else it has to be returned to the SBA.

The bill also proposes to give priority, during the first 14 days that grants may be awarded, to eligible Fitness Facilities serving marginalized and underrepresented communities, with a focus on women, veteran, and minority-owned and operated entities serving such communities. Therefore, such entities should prepare to submit an early application if this bill becomes law.

This bill is not yet law, and Miller Johnson’s team of multi-disciplinary attorneys will continue to monitor developments of the GYMS Act.