Starting or growing your insurance agency often means taking on debt. Whether it's a small business loan to get things rolling, a line of credit to expand your team, or financing to upgrade your office space, borrowing can be a powerful tool. But here’s the thing — if you’re not managing that debt strategically, it can turn into a burden that limits your growth instead of fueling it.

Let’s talk about how to use debt wisely, keep your financial stress in check, and build an agency that’s as financially healthy as it is successful.

1. Know the "Why" Behind the Debt

Before we talk numbers, let’s get clear on the why. Debt isn’t inherently bad — in fact, it can be an incredibly smart move when it’s tied to a growth strategy. But if you took out a loan just to stay afloat or because “that’s what everyone does,” it might be time to reassess.

Ask yourself:

• Did this debt help me hire a producer or team member who drives revenue?
  
  
• Did it fund marketing that’s bringing in consistent ROI?
  
  
• Am I seeing a clear path to recoup that investment?
  
  

If the answer is no, your first priority should be re-evaluating that spending and working toward paying it down aggressively.

2. Cash Flow is King (Not Revenue)

One of the biggest traps agency owners fall into is focusing on top-line revenue and ignoring the cash flow underneath. A million-dollar book doesn’t mean much if you're barely covering your bills because loan payments are eating up your margins.

That’s where financial planning comes in — and it’s exactly what Club Capital’s CFO services are designed to help with. They don’t just look at your balance sheet and P&L; they dive into cash flow projections, debt service coverage, and repayment schedules to help you make decisions with your future in mind, not just your current bank balance.

3. Create a Debt Reduction Plan (And Stick to It)

Not all debt needs to be eliminated right away, but high-interest debt? That’s a red flag. Start by listing out every loan, credit card, and credit line, along with:

• Outstanding balance
  
  
• Interest rate
  
  
• Monthly payment
  
  
• Maturity date
  
  

Then prioritize repayment using one of two tried-and-true strategies:

• Avalanche method: Pay off the debt with the highest interest rate first (mathematically optimal).
  
  
• Snowball method: Pay off the smallest debt first (psychologically motivating).
  
  

Club Capital clients often work with their CFOs to build repayment schedules into their monthly budget, so it becomes automatic — and less stressful.

4. Reinvest Wisely

As you pay down debt and free up cash, resist the urge to “reward yourself” too early. Instead, be intentional about reinvesting into areas that will continue to generate income: marketing campaigns that have proven ROI, training for your team, or tech that improves efficiency.

Debt shouldn't be the default tool for every business decision. As your agency grows and becomes more profitable, lean on retained earnings before reaching for outside financing again.

5. Monitor KPIs That Matter

Want to know if you're managing debt well? Watch these numbers:

• Debt service coverage ratio (DSCR) – tells you how comfortably your income covers your debt obligations.
  
  
• EBITDA margin – gives insight into your profitability after factoring out debt payments.
  
  
• Operating cash flow – the real fuel of your business.
  
  

Club Capital’s CFOs help agency owners track these metrics monthly, so you’re not just guessing — you know whether your debt strategy is working.

Final Thought: Use Debt as a Tool, Not a Crutch

The bottom line? Debt is neither good nor bad — it’s all about how you manage it. Used wisely, it can help you build a bigger, more successful agency. Mismanaged, it can slow you down or even put your business at risk.

If you're feeling overwhelmed or unsure whether your current debt load is sustainable, you’re not alone. A fractional CFO service like Club Capital's can help you create a clear plan, make smarter financial decisions, and grow with confidence.

Because in the world of insurance, risk management isn’t just for your clients — it’s for your agency too.

Want help creating a debt management plan that fits your agency’s growth goals? Let’s talk. Whether you're with Club Capital or just exploring your options, getting clarity on your finances is always a smart move. Click here to see how we can grow your agency’s financial strength and longevity together.