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FROM THE FOUNDER
Working with your bank
Having little understanding of banking could result in missed opportunities for growth or thorny problems that could put your firm out of business.
M ost people who own AEC firms have some sort of bank financing to help ensure adequate working capital for their business. Most typical is a line of credit (LOC) that is secured by accounts receivable, although some companies also have term loans taken on for buybacks of ownership from departing owners, or loans for vehicles or equipment that they own. Then there is also building financing for those companies that own their own building(s) or company owners who have a building(s) they rent to the AEC firm.
Mark Zweig
But in spite of these very common borrowing relationships with their bank, many AEC firm owners seem to have little knowledge or understanding of banking and how that impacts or could impact their business. That can result in missed opportunities for growth or thorny problems that could actually put the AEC firm out of business. I have worked with a lot of banks and had many banking relationships. My debt was at its peak of more than $20 million if you added it up across all of our businesses and real estate back about eight years ago. After selling most all of our real estate and business interests, thankfully it is nothing like that today. I was never scared of debt because I
understood it and had confidence in our ability to pay it back. That said, I think it’s normal as you get older to start thinking it may be time to be more conservative in your approach to debt and that certainly did happen to me. From my own personal experience as well as that of the companies I worked with, I have learned a lot about borrowing from banks that I thought might be helpful to some of our readers. Here are a few of those tidbits: 1. Banks operate on very thin margins and are not equipped to take any real risks. The difference
See MARK ZWEIG, page 6
THE ZWEIG LETTER DECEMBER 9, 2024, ISSUE 1564
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