Exam 12: A Firm S Sources of Financing

Even though Evan's company is a corporation, the bank imposed a loan covenant that required Evan to:

Carla is a loan analyst at the bank.  When Cameron applied for a loan, Carla looked at his balance sheet for  ________ assets to evaluate a possible loan for his company's financing.

Small Business Administration loans include guaranty loans and loans directly from the SBA.

Lyman's business has grown to 400 employees with annual revenues of $15 million.  He would like to expand further but needs another $5 million.  He should consider:

For entrepreneurial ventures with the potential for becoming significant businesses, initial public offerings have been the fastest-growing source of financing over the past two decades.

Discuss suggestions for an entrepreneur who is considering asking family or friends for financing.

Crowdfunding works strictly with individual donations made over the Internet.

If the firm's rate of return on its assets is _____ than the cost of borrowing, then the owners' rate of return on equity will _____ as the firm uses _____ debt.

Asset-based lending is a type of financing secured by assets such as equipment and inventory.

What are the tradeoffs between profitability, risk, and control that should be considered when choosing between debt and equity?

Novelty Shirts is a manufacturing company needing to expand its production facilities.  Which SBA program would be best to acquire real estate valued at $150,000?

Goodwill is considered a intangible asset and is highly valued when securing a loan.

Borrowing money rather than issuing common stock typically increases the potential for higher rates of return to owners.

Cameron has applied for a loan to expand his young business.  When bankers look for evidence of whether he will be able to repay a loan, they usually base their assessment on

What should an entrepreneur do before approaching an investor?

Gina owns a clothing resale store in a low-income neighborhood. Since opening, the store has hired five employees and is making a small profit. The store is the only business in her area and often sponsors fundraisers at the location. Since the store is in need of expansion capital, what type of funding should Gina to and why?

Business loans are the primary source of financing for startups.

Anna's new business looks like it can grow quickly and become profitable in its first year.  Anna will likely find  _____ possible sources of financing than those with less potential for growth and profits.

People like Ben who "bootstrap" company financing are

Florence wants to obtain a loan for a large color laser printer for her copy shop.  Since the printer will last approximately 8 years, the ideal loan would be a _____ loan.