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| The bank has already committed to the term debt. You generally have to renew the operating note every year. So, from a risk standpoint, it may be better to build working capital. If you use it to pay off machinery/land then then a couple bad years can erode working capital, then you are asking the banker to term it out against the paid for equipment/land. Easier for the banker to say no. In really bad times, access to short term credit or having cash is very important. | |
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