Industry Bank Financing: Don’t Wait Until You Think You Need Capital
If there is one comment I hear repeatedly while attending industry events, it is: “I didn’t think I was a good candidate for bank financing.”
I hear this most often from younger agency principals and producers. Many assume they need to reach a certain size or level of success before having a conversation with a lender. In reality, I find that’s rarely the case.
A lender certainly reviews financial statements as part of the underwriting process; however, the conversation begins with something much more important: understanding your story. Your background, your vision for the agency, and your strategy for deploying capital are often just as important as the numbers.
It’s also worth recognizing that insurance agency financing extends well beyond acquisitions. Although acquisitions remain one of the most common reasons agencies seek financing, they’re far from the only opportunity. Agency owners also use financing to:
- Acquire a book of business rather than an entire agency,
- Invest in technology that improves operations or client service,
- Hire experienced talent to expand into new specialties or market segments,
- Agency perpetuation including partial sales or shareholder buyouts, and
- Fund other strategic initiatives that position the agency for long-term growth.
Of note to younger agency staff who have ownership as an objective, stockholder loans offer the opportunity to purchase equity in an agency. Financing is also available for individuals to purchase their books of business.
Another misconception is that you should only contact a lender when financing is needed immediately. In my experience, the most productive conversations often happen well before capital is required. Working with a lender that specializes in the independent agency channel allows you to discuss your goals, evaluate different approaches, and benefit from the experience of someone who has seen similar situations across the industry.
Those conversations are not simply about receiving a “yes” or “no” on a loan request. They’re an opportunity to refine your strategy. It’s common for me to ask, “Have you considered this approach?” or “What if you structured it this way?” Sometimes those discussions lead to better outcomes than the original plan. The timing of financing can then be aligned with your objectives, whether that’s in a few months or several years.
If there’s one takeaway I encourage agency owners to remember, it’s this: Don’t wait until you think you need financing to start the conversation. Early planning often creates more options, better positioning, and greater flexibility when opportunities arise.
Whether your next step is an acquisition, an investment in your people or technology, or another strategic initiative, exploring your financing options sooner rather than later may help you achieve your goals more efficiently than you expected.
Scott T. Freiday
Senior Vice President & InsurBanc Division Director
Scott has more than 30 years of experience in domestic and international banking and financial services. As Division Director Scott oversees the commercial lending and cash management operations of InsurBanc. By staying informed and responsive to market dynamics, Scott leads InsurBanc in meeting the capital needs of agencies across the country.
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