Exam 15: Sources of Debt Financing

Jerry Turner and Michael Clarke needed money to buy equipment and weren't able to get either trade credit or a bank loan because they had no assets and didn't have the cash for a down payment.

________ is designed to provide working capital to small exporters by providing loan guarantees of 90 percent of the loan amount up to $1.5 million.

In asset-based borrowing,the ________ is the percentage of an asset's value that a lender will lend.

The majority of loans provided by the SBA are:

CAPs are designed to encourage lending institutions to make loans to businesses that do not qualify for traditional financing.

A line of credit is usually secured by collateral.

What are local development companies and the small business innovation research programs? How do they help small businesses?

Commercial banks are primarily lenders of short-term capital to small businesses.

Which of the following retailers may use floor planning financing?

The Small Business Technology Transfer Act of 1992 supports the SBIR program by exploiting promising technological developments that come out of small businesses and funds and guides their practical application to the commercial world.

Typically,factoring is less expensive than bank and commercial finance company loans.

Urban Development Grants are used to construct buildings and plants for small businesses and have no ceilings or geographic limitations.

The maximum disaster loan usually is $2 million.

Which form of financing works especially well for manufacturers,wholesalers,distributors,and other companies with significant stocks of inventory,accounts receivable,equipment,real estate,or other assets?

Credit unions are best known for making consumer and car loans.

Some credit unions are now extending personal loans to members,often without personal collateral,in order to start a business.

Banks may make "character loans" when the small business is able to pledge installment contracts as collateral.

As the providers of debt financing to small businesses,banks tend to:

What role do commercial finance companies,savings and loan associations,stockbrokerages,and insurance companies play in providing debt-based loans to small businesses?

Commercial finance companies are willing to take more risks in making loans,but they also charge a higher interest rate.