Question 1

Savings and loan associations typically specialize in loans for:

Accepted Answer

A) equipment. 
B) inventory. 
C) real property. 
D) accounts receivable. 
A) equipment. 
B) inventory. 
C) real property. 
D) accounts receivable.

Question 2

When a bank makes enough good SBA-guaranteed loans to become a ________ lender,the SBA promises a faster turnaround time for the loan decision-typically 3 to 10 business days.

Accepted Answer

A) preferred 
B) qualified 
C) certified 
D) LDC 
A) preferred 
B) qualified 
C) certified 
D) LDC

Question 3

The majority of the loans a commercial finance company makes are unsecured by collateral.

Accepted Answer

A) True 
 B)False

Question 4

A popular form of debt financing with large companies,a sort of corporate "IOU," which is becoming more accessible to a growing number of small companies is:

Accepted Answer

A) stockbroker-based loans. 
B) bonds. 
C) commercial bank loans. 
D) SBICs. 
A) stockbroker-based loans. 
B) bonds. 
C) commercial bank loans. 
D) SBICs.

Question 5

The SBA's immediate participation loans are a mix of private and public funds,and the SBA is prohibited from financing more than 75% of the loan.

Accepted Answer

A) True 
 B)False

Question 6

This program was started to encourage small businesses that wanted to expand their research and development efforts.It has made over 36,000 awards in excess of $10 billion.

Accepted Answer

A) Small Business Technology Transfer Act 
B) Local development companies 
C) The SBA Capline program 
D) Small Business Innovation Research Program 
A) Small Business Technology Transfer Act 
B) Local development companies 
C) The SBA Capline program 
D) Small Business Innovation Research Program

Question 7

When a lender becomes a certified lender,it makes the final lending decision itself,subject to SBA review.

Accepted Answer

A) True 
 B)False

Question 8

When a bank proves the quality of its loan decisions to the SBA and becomes a ________ lender,the bank makes the final lending decision itself,subject to SBA review for the guarantee.

Accepted Answer

A) preferred 
B) qualified 
C) certified 
D) LDC 
A) preferred 
B) qualified 
C) certified 
D) LDC

Question 9

SBICs are privately owned financial institutions that are licensed and regulated by the SBA.

Accepted Answer

A) True 
 B)False

Question 10

Private placement debt is a hybrid between a conventional loan and a bond.

Accepted Answer

A) True 
 B)False

Question 11

Factoring:

Accepted Answer

A) is a more expensive method of financing than borrowing from a bank. 
B) places the risk of uncollected accounts receivable on the small business owner. 
C) is best used as a long-term source of capital. 
D) is a type of trade credit. 
A) is a more expensive method of financing than borrowing from a bank. 
B) places the risk of uncollected accounts receivable on the small business owner. 
C) is best used as a long-term source of capital. 
D) is a type of trade credit.

Question 12

________ were created by the SBA in 1992 to provide loans under $35,000 that are normally shunned by banks.

Accepted Answer

A) Microloans 
B) Preferred loans 
C) Seasonal line of credits 
D) 8(a)program loans 
A) Microloans 
B) Preferred loans 
C) Seasonal line of credits 
D) 8(a)program loans

Question 13

Under what circumstances should the small business owner consider borrowing money?

Accepted Answer

•Increasing the company's workforce and/

Question 14

A(n)________ is a private nonprofit financial institution that will make small loans to its members for the purpose of starting a business.

Accepted Answer

A) SBIC 
B) private placement 
C) credit union 
D) insurance company 
A) SBIC 
B) private placement 
C) credit union 
D) insurance company

Question 15

The most common method of SBIC financing is the:

Accepted Answer

A) equity instrument. 
B) debt instrument combined with equity investment. 
C) debt instrument. 
D) line of credit. 
A) equity instrument. 
B) debt instrument combined with equity investment. 
C) debt instrument. 
D) line of credit.

Question 16

Which of the following factors do banks focus on when lending money to a company?

Accepted Answer

A) Personal guarantee 
B) Positive cash flow 
C) Successful track record 
D) All of the above 
A) Personal guarantee 
B) Positive cash flow 
C) Successful track record 
D) All of the above

Question 17

Jones Manufacturing has been in business for 30 years.About 3 years ago,the company spent about $2.5 million in upgrading / purchasing new equipment.Currently,due to bad weather,the company is suffering cash flow problems and is not able to pay its expenses or inventory purchases.One option for financing would be:

Accepted Answer

A) inventory financing. 
B) asset-based financing. 
C) sell the business. 
D) All of the above 
A) inventory financing. 
B) asset-based financing. 
C) sell the business. 
D) All of the above

Question 18

Trade credit,while more difficult to obtain than bank financing,is a somewhat important source of financing to most established companies.

Accepted Answer

A) True 
 B)False

Question 19

Small Business Lending Companies (SBLCs)make only intermediate and long- term SBA-guaranteed loans.

Accepted Answer

A) True 
 B)False

Question 20

A small business owner should avoid borrowing money when he/she sees a downturn in business or to refinance existing debt.

Accepted Answer

A) True 
 B)False

Exam 15: Sources of Debt Financing

Savings and loan associations typically specialize in loans for:

When a bank makes enough good SBA-guaranteed loans to become a ________ lender,the SBA promises a faster turnaround time for the loan decision-typically 3 to 10 business days.

The majority of the loans a commercial finance company makes are unsecured by collateral.

A popular form of debt financing with large companies,a sort of corporate "IOU," which is becoming more accessible to a growing number of small companies is:

The SBA's immediate participation loans are a mix of private and public funds,and the SBA is prohibited from financing more than 75% of the loan.

This program was started to encourage small businesses that wanted to expand their research and development efforts.It has made over 36,000 awards in excess of $10 billion.

When a lender becomes a certified lender,it makes the final lending decision itself,subject to SBA review.

When a bank proves the quality of its loan decisions to the SBA and becomes a ________ lender,the bank makes the final lending decision itself,subject to SBA review for the guarantee.

SBICs are privately owned financial institutions that are licensed and regulated by the SBA.

Private placement debt is a hybrid between a conventional loan and a bond.

Factoring:

________ were created by the SBA in 1992 to provide loans under $35,000 that are normally shunned by banks.

Under what circumstances should the small business owner consider borrowing money?

A(n)________ is a private nonprofit financial institution that will make small loans to its members for the purpose of starting a business.

The most common method of SBIC financing is the:

Which of the following factors do banks focus on when lending money to a company?

Trade credit,while more difficult to obtain than bank financing,is a somewhat important source of financing to most established companies.

Small Business Lending Companies (SBLCs)make only intermediate and long- term SBA-guaranteed loans.

A small business owner should avoid borrowing money when he/she sees a downturn in business or to refinance existing debt.

Entrepreneurs: the Driving Force Behind Small Business

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Creating a Solid Financial Plan

Managing Cash Flow

Building a Guerrilla Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Sources of Equity Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Management Succession and Risk Management Strategies in the Family Business

Ethics and Social Responsibility: Doing the Right Thing

The Legal Environment: Business Law and Government Regulation

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