A CEO’s perspective: using loan finance to compete in a crowded market

The charity operates four gyms and its flagship gym in the heart of Covent Garden has 50 competitors within a one-mile radius. It needed a complete overhaul to survive in such a competitive market, so turned to Charity Bank for a £500,000 loan. The Grade II listed gym now boasts state of the art facilities, including an immersive cycling studio, upgraded café, cardio mezzanine with views over the Covent Garden Piazza, and a 14.5m² ‘living wall’.

Whilst the Board and Executive team were keen to improve the facilities, they were concerned about taking out a large loan. Chief Executive Phil Rumbelow explains.

Could you have achieved the refurbishment without loan finance?

No. We could have tried fundraising, but it would have taken too long.

I believe you also got a £150,000 grant from the London Marathon Charitable Trust?

Yes. I wasn’t hopeful about getting the grant; we’re a small organisation and I’m not a fundraising expert, so I was absolutely delighted when I found out we’d been successful. The grant meant we could either reduce the loan or increase our budget. The project was originally scoped at around half a million pounds. We decided to increase that to £650,000 and do things properly. We’ve been able to deliver a fantastic project. Jubilee Hall has always been an amazing space, but it really has been transformed.

Did you have any concerns about taking out a loan?

Yes. The charity had never had a loan or any significant debt before, so we were concerned about risking our assets. Ultimately, the risk of not doing the work was greater than the risk of taking out a loan.

The gym business has never been more competitive than it is now, particularly in central London. Our Covent Garden gym membership and income had been very slowly declining since 2014. All the evidence suggested that if we kept on doing what we were doing, that downward trend would continue, and we’d end up in trouble within a few years. We could have cut costs, but you can only do that for so long.

We had 800 members when we applied for the loan. A latent demand analysis by an independent company showed we could have 1,200 members if we got the product right. We worked out that we’d need an extra 100 members in order to repay the loan. So, if we got to at least 901 members, we’d be better off. We’re almost there now.

Why did you choose Charity Bank for your loan?

I’d heard of Charity Bank through Community Leisure UK and it was also recommended as being an ideal fit for us by a major bank.

How did you find the loan process?

It seemed pretty torturous and bureaucratic at the time, but I guess it was as straightforward as it could be!

We get on very well with our Charity Bank contact and he’s been very supportive. We had a couple of face-to-face meetings and then lots of conversations by email. Charity Bank was prepared to negotiate on the Terms & Conditions, which was helpful – we appreciated the flexibility.

The draw down process was super-efficient. It was made very clear what I needed to do by when, and payments were fast.

What are the main challenges of the loan process do you think?

A lot of the challenges for us related to the fact that, as a charity, our Directors are unpaid Trustees and many have important ‘day jobs’, so collecting consents and signatures can be quite time-consuming.

What would you say to other charities who are thinking of taking out a loan?

Mainly, just to use common sense. Make sure you have a clear business plan. Know what you’re aiming to do, by when, and how much money you need. Are there other ways of raising some of the money, e.g. through donations? Challenge your numbers. What’s the worst-case scenario? What’s the best-case scenario? What will you do if X happens? If you wait to get 100% of the information, you could miss the opportunity, but you probably need at least 80% of it to be able to make the decision.

I’d also recommend Charity Bank as a lender. They’re easy to work with, flexible, willing to listen and efficient.

What’s next for Jubilee Hall Trust?

We have four gyms now and there has been an ambition to increase that, but we want to get all four close to capacity before we consider opening another one. Having invested all this money into Jubilee Hall, we need to deliver on what we said we’d do.

We’re trying to attract more female members. Currently, around 75% of the Jubilee Hall members are male. We’re trying to change that, but it’s challenging. We’ve increased female users from 18% to 26% since reopening the gym in September 2019, but there’s still a long way to go.

Our Free Sunday membership continues to grow. It’s brought more local people into our gyms, as well as people who might not otherwise use a gym. 42% of Free Sunday members are female.

We’re also helping older people to stay active. 20% of our Free Sunday members are over 60 and we now have seven free senior classes every week.

In the wider context, what changes would you like to see to help people get fitter?

There are a lot of things being discussed by different government departments, the NHS and Sport England, but how much of that sees the light of day remains to be seen. A cancer ‘prehabilitation programme’ is being trialled at the moment in Manchester. The fitter people are when they start treatment, the better their chances of survival. I’m keen for us to be involved in that somehow here in London. Everyone has been touched by cancer in some way, so that would be a great thing to support.

Another big thing that everyone is talking about is social prescribing – GPs prescribing activities rather than just medicines. We’ve been successfully running exercise on referral programmes for over 20 years, at no cost to the NHS or taxpayer, and we have now launched a GP referral scheme at Jubilee Hall and want to scale that up. We need to move away from the short-term ‘quick fix’ approach of prescribing drugs, to taking a more long-term, holistic approach.

Find out what Jubilee Hall is doing to attract under-represented groups.