Black 'n' Blue Boxing will receive $30,000 under the Drought Communities Program to improve its facilities in the Gunnedah Showground but is facing a "dilemma" because it has outgrown its space.

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Owner and trainer David 'Spike' Syphers said 60-80 locals pack into the one-room digs over the course of the week and the lack of space has been further exacerbated by COVID safety rules.

It has got to the point that they are spilling out onto the verandah and have to be split up into groups, so some exercise outside while others stay in, then they swap. Black 'n' Blue has been operating in the showground for 16 years.

"We're in a little bit of a dilemma," Mr Syphers said.

"We've utilised the area we've got but we've outgrown it.

"We can't grow ... [but] we don't knock any kids back."

Mr Syphers thinks the ideal solution would be to build a new shed in the showground, which is managed by Gunnedah Shire Council.

Black 'n' Blue is home to professional boxers Wade Ryan and Enja Priest and trainers coach locals from as young as eight, and up to 70-years-old.