Question 1

________ 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.

Accepted Answer

A) A CAPLine program 
B) A Section 504 loan 
C) An LDC loan 
D) An export working capital program 
A) A CAPLine program 
B) A Section 504 loan 
C) An LDC loan 
D) An export working capital program

Question 2

Janis Reardon is in the process of launching a craft shop.Her biggest supplier,Lothrop's Craft Supply,agrees to sell her the inventory she needs to stock her store on a delayed payment schedule.Janis is using what type of financing?

Accepted Answer

A) Line of credit 
B) Floor planning 
C) Trade credit 
D) Asset-based borrowing 
A) Line of credit 
B) Floor planning 
C) Trade credit 
D) Asset-based borrowing

Question 3

________ is (are)an asset-based financing technique.

Accepted Answer

A) Discounted installment contracts 
B) Inventory financing 
C) Installment lending 
D) Floor planning 
A) Discounted installment contracts 
B) Inventory financing 
C) Installment lending 
D) Floor planning

Question 4

A(n)________ is a hybrid between a conventional loan and a bond;at its heart it is a bond,but its terms are tailored to the borrower's individual needs,as a loan would be.

Accepted Answer

A) private placement 
B) industrial revenue bond 
C) 504 loan 
D) zero coupon bond 
A) private placement 
B) industrial revenue bond 
C) 504 loan 
D) zero coupon bond

Question 5

SBICs:

Accepted Answer

A) were chartered by the SBA to help start-up companies find private financing from commercial banks and finance companies. 
B) provide short-term debt-based capital to small businesses through the sale of the debt to private investors. 
C) cannot invest in or lend money to a business for more than five years. 
D) were created by the Small Business Investment Act to use a combination of private and federal guaranteed debt to provide long-term capital to small businesses. 
A) were chartered by the SBA to help start-up companies find private financing from commercial banks and finance companies. 
B) provide short-term debt-based capital to small businesses through the sale of the debt to private investors. 
C) cannot invest in or lend money to a business for more than five years. 
D) were created by the Small Business Investment Act to use a combination of private and federal guaranteed debt to provide long-term capital to small businesses.

Question 6

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?

Accepted Answer

A) Asset-based lenders 
B) Corporate investors 
C) Government funding 
D) None of the above 
A) Asset-based lenders 
B) Corporate investors 
C) Government funding 
D) None of the above

Question 7

Small Business Investment Companies (SBICs)provide both debt and equity financing to small businesses.

Accepted Answer

A) True 
 B)False

Question 8

Because private investors are willing to take greater risks than banks,they are more willing to finance deals through private placements than are banks.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

∙ Increasing the company's workforce and

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 12

Start-up companies often use trade credit from suppliers to buy equipment and fixtures for their business.

Accepted Answer

A) True 
 B)False

Question 13

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 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 Community Development Block Grants (CDBGs)are extended to cities and towns that,in turn,lend or grant money to entrepreneurs to start small businesses that will strengthen the local economy.

Accepted Answer

A) True 
 B)False

Question 16

Insurance companies typically make two types of loans:

Accepted Answer

A) policy loans and mortgage loans. 
B) asset-based,inventory and discounted accounts receivable. 
C) short-term and policy loans. 
D) mortgage loans and unsecured loans. 
A) policy loans and mortgage loans. 
B) asset-based,inventory and discounted accounts receivable. 
C) short-term and policy loans. 
D) mortgage loans and unsecured loans.

Question 17

SBICs act as government-backed venture capitalists.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 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 17: Sources of Debt Financing

________ 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.

Janis Reardon is in the process of launching a craft shop.Her biggest supplier,Lothrop's Craft Supply,agrees to sell her the inventory she needs to stock her store on a delayed payment schedule.Janis is using what type of financing?

________ is (are)an asset-based financing technique.

A(n)________ is a hybrid between a conventional loan and a bond;at its heart it is a bond,but its terms are tailored to the borrower's individual needs,as a loan would be.

SBICs:

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?

Small Business Investment Companies (SBICs)provide both debt and equity financing to small businesses.

Because private investors are willing to take greater risks than banks,they are more willing to finance deals through private placements than are banks.

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

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

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

Start-up companies often use trade credit from suppliers to buy equipment and fixtures for their business.

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

The Community Development Block Grants (CDBGs)are extended to cities and towns that,in turn,lend or grant money to entrepreneurs to start small businesses that will strengthen the local economy.

Insurance companies typically make two types of loans:

SBICs act as government-backed venture capitalists.

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

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.

Convertible bonds:

Entrepreneurs: the Driving Force Behind Small Business

Ethics and Social Responsibility: Doing the Right Thing

Creativity and Innovation: Keys to Entrepreneurial Success

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

New Business Planning Process: Feasibility Analysis,business Modeling,

Building a Bootstrap Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Creating a Solid Financial Plan

Managing Cash Flow

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

The Legal Environment: Business Law and Government Regulation

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