Question 1

The SBA's Section 504 program is designed to encourage small businesses to expand their facilities and to create jobs.

Accepted Answer

A) True 
 B)False

Question 2

A ________ is an agreement with a bank that allows a small business to borrow up to a predetermined specified amount during the year without making an application each time.

Accepted Answer

A) term loan 
B) factor 
C) line of credit 
D) floor plan 
A) term loan 
B) factor 
C) line of credit 
D) floor plan

Question 3

Installment loans have to be repaid in:

Accepted Answer

A) 5 to 10 years. 
B) 10 to 30 years. 
C) 1 to 3 years. 
D) None of the above 
A) 5 to 10 years. 
B) 10 to 30 years. 
C) 1 to 3 years. 
D) None of the above

Question 4

Bonds are corporate "IOUs."

Accepted Answer

A) True 
 B)False

Question 5

The maximum amount of a disaster assistance loan is ________ dollars

Accepted Answer

A) 100,000 
B) 500,000 
C) 1 million 
D) 2 million 
A) 100,000 
B) 500,000 
C) 1 million 
D) 2 million

Question 6

A loan from a stockbroker,based on the stocks and bonds in the customer's portfolio:

Accepted Answer

A) tends to be at a higher rate than a bank but easier to obtain. 
B) can be "called" for payment in a matter of hours or days. 
C) is for a maximum of $50,000. 
D) has a fixed repayment schedule and must be paid within 90 days. 
A) tends to be at a higher rate than a bank but easier to obtain. 
B) can be "called" for payment in a matter of hours or days. 
C) is for a maximum of $50,000. 
D) has a fixed repayment schedule and must be paid within 90 days.

Question 7

In a factoring arrangement,the risk of uncollected accounts receivable falls on the small business owner.

Accepted Answer

A) True 
 B)False

Question 8

The capital access programs (CAPs)were first introduced in:

Accepted Answer

A) Iowa. 
B) Michigan 
C) Wisconsin. 
D) New York 
A) Iowa. 
B) Michigan 
C) Wisconsin. 
D) New York

Question 9

It is important for the small business owner to stay in communication with his/her banker by visiting,sending customer mailings to him/her,and even sending samples of new products.

Accepted Answer

A) True 
 B)False

Question 10

Entrepreneur Wally Wilton wants to build a colossal amusement park for kids of all ages.Wilton will need $48 million to get the first phase of "Wally World" into operation.Which of the following is the type of loan best suited for Wally?

Accepted Answer

A) An asset-based loan,based on inventory or accounts receivable 
B) A mortgage loan from an insurance company 
C) A credit union loan 
D) A MESBIC loan 
A) An asset-based loan,based on inventory or accounts receivable 
B) A mortgage loan from an insurance company 
C) A credit union loan 
D) A MESBIC loan

Question 11

Approximately one-half of all SBA loan guarantees are for machinery and equipment or working capital.

Accepted Answer

A) True 
 B)False

Question 12

International Trade Program is for small businesses that are engaging in international trade or are adversely affected by competition from imports.

Accepted Answer

A) True 
 B)False

Question 13

One advantage of leasing is that in most cases,it does not require any down payment.

Accepted Answer

A) True 
 B)False

Question 14

A federally-sponsored program which offers loan guarantees to create and expand businesses in areas with below-average income and high unemployment is called:

Accepted Answer

A) the Small Business Administration. 
B) the Economic Development Administration. 
C) SBIC. 
D) the Farmers Home Administration. 
A) the Small Business Administration. 
B) the Economic Development Administration. 
C) SBIC. 
D) the Farmers Home Administration.

Question 15

A recent survey of small companies with lines of credit found that only 25% actually use them.

Accepted Answer

A) True 
 B)False

Question 16

Generally speaking,all growing companies need to borrow money at some point.

Accepted Answer

A) True 
 B)False

Question 17

Asset-based borrowing permits small businesses:

Accepted Answer

A) to borrow up to 100% of the value of their inventory or their accounts receivable for the money they need for long-term goals. 
B) to use normally unproductive assets-accounts receivable and inventory. 
C) to obtain loans more easily but with less borrowing power than if they used an unsecured line of credit. 
D) access to a source of funds ideally suited for long-term financing needs. 
A) to borrow up to 100% of the value of their inventory or their accounts receivable for the money they need for long-term goals. 
B) to use normally unproductive assets-accounts receivable and inventory. 
C) to obtain loans more easily but with less borrowing power than if they used an unsecured line of credit. 
D) access to a source of funds ideally suited for long-term financing needs.

Question 18

Small manufacturers (for example)needing money for fixed assets with long repayment schedules have access to an attractive,relatively inexpensive source of funds called:

Accepted Answer

A) zero-coupon bonds. 
B) industrial development bonds (IDBs). 
C) corporate bonds. 
D) Both A and C 
A) zero-coupon bonds. 
B) industrial development bonds (IDBs). 
C) corporate bonds. 
D) Both A and C

Question 19

Grants to small businesses,made to strengthen the local economy in cities and towns that are considered economically distressed,are made by:

Accepted Answer

A) the Department of Housing and Urban Development. 
B) a local development company. 
C) the Farmers Home Administration. 
D) the Economic Development Administration. 
A) the Department of Housing and Urban Development. 
B) a local development company. 
C) the Farmers Home Administration. 
D) the Economic Development Administration.

Question 20

Convertible bonds:

Accepted Answer

A) can't be converted to equity. 
B) typically pay a lower interest rate. 
C) typically pay a higher interest rate. 
D) None of the above 
A) can't be converted to equity. 
B) typically pay a lower interest rate. 
C) typically pay a higher interest rate. 
D) None of the above

Exam 15: Sources of Debt Financing

The SBA's Section 504 program is designed to encourage small businesses to expand their facilities and to create jobs.

A ________ is an agreement with a bank that allows a small business to borrow up to a predetermined specified amount during the year without making an application each time.

Installment loans have to be repaid in:

Bonds are corporate "IOUs."

The maximum amount of a disaster assistance loan is ________ dollars

A loan from a stockbroker,based on the stocks and bonds in the customer's portfolio:

In a factoring arrangement,the risk of uncollected accounts receivable falls on the small business owner.

The capital access programs (CAPs)were first introduced in:

It is important for the small business owner to stay in communication with his/her banker by visiting,sending customer mailings to him/her,and even sending samples of new products.

Entrepreneur Wally Wilton wants to build a colossal amusement park for kids of all ages.Wilton will need $48 million to get the first phase of "Wally World" into operation.Which of the following is the type of loan best suited for Wally?

Approximately one-half of all SBA loan guarantees are for machinery and equipment or working capital.

International Trade Program is for small businesses that are engaging in international trade or are adversely affected by competition from imports.

One advantage of leasing is that in most cases,it does not require any down payment.

A federally-sponsored program which offers loan guarantees to create and expand businesses in areas with below-average income and high unemployment is called:

A recent survey of small companies with lines of credit found that only 25% actually use them.

Generally speaking,all growing companies need to borrow money at some point.

Asset-based borrowing permits small businesses:

Small manufacturers (for example)needing money for fixed assets with long repayment schedules have access to an attractive,relatively inexpensive source of funds called:

Grants to small businesses,made to strengthen the local economy in cities and towns that are considered economically distressed,are made by:

Convertible bonds:

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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