Question 1

A small retail boat shop is most likely to rely on ________ to finance its inventory.

Accepted Answer

A) discounted installment contracts 
B) floor planning 
C) installment loans 
D) trade credit 
A) discounted installment contracts 
B) floor planning 
C) installment loans 
D) trade credit

Question 2

How do the EDA and HUD lend money to small businesses?

Accepted Answer

The Economic Development Administration,

Question 3

Small Business Investment Companies (SBICs):

Accepted Answer

A) prefer to finance companies in later stages rather than "raw start-ups." 
B) only provide long-term debt financing to small businesses. 
C) cannot make their own investment decisions,which are controlled by the SBA. 
D) loan money through debentures not requiring regular interest payments. 
A) prefer to finance companies in later stages rather than "raw start-ups." 
B) only provide long-term debt financing to small businesses. 
C) cannot make their own investment decisions,which are controlled by the SBA. 
D) loan money through debentures not requiring regular interest payments.

Question 4

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 5

SBICs are an example of a public-private partnership.

Accepted Answer

A) True 
 B)False

Question 6

An SBIC can lend up to 40% of its private capital to a single client.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

The typical private placement of debt is characterized by:

Accepted Answer

A) a variable interest rate. 
B) a maturity shorter than most bank loans. 
C) more restrictions imposed on the borrower than with a comparable bank loan. 
D) a spreading of risk by the selling of the debt to one or more small investors. 
A) a variable interest rate. 
B) a maturity shorter than most bank loans. 
C) more restrictions imposed on the borrower than with a comparable bank loan. 
D) a spreading of risk by the selling of the debt to one or more small investors.

Question 9

Industrial revenue bonds are a relatively inexpensive source of funds for small manufacturers.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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

Accepted Answer

A) True 
 B)False

Question 12

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 13

Installment loans are made to big firms for purchasing other businesses.

Accepted Answer

A) True 
 B)False

Question 14

For small businesses,________ are the heart of the financial market.

Accepted Answer

A) banks 
B) finance companies 
C) private placement 
D) insurance companies 
A) banks 
B) finance companies 
C) private placement 
D) insurance companies

Question 15

Term loans impose restrictions called covenants.

Accepted Answer

A) True 
 B)False

Question 16

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 17

An entrepreneur seeking an SBA loan guarantee can cut out a tremendous amount of time and paperwork by working with a bank that is either a certified or a preferred lender.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following retailers may use floor planning financing?

Accepted Answer

A) Car dealer 
B) Shoe store 
C) Carpet dealer and cleaning service 
D) All of the above 
A) Car dealer 
B) Shoe store 
C) Carpet dealer and cleaning service 
D) All of the above

Question 19

Even companies whose financial statements are too weak to produce other types of loans can get asset-based loans.

Accepted Answer

A) True 
 B)False

Question 20

In an installment loan for equipment,the loan's amortization schedule would coincide with the equipment's useful life.

Accepted Answer

A) True 
 B)False

Exam 17: Sources of Debt Financing

A small retail boat shop is most likely to rely on ________ to finance its inventory.

How do the EDA and HUD lend money to small businesses?

Small Business Investment Companies (SBICs):

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.

SBICs are an example of a public-private partnership.

An SBIC can lend up to 40% of its private capital to a single client.

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

The typical private placement of debt is characterized by:

Industrial revenue bonds are a relatively inexpensive source of funds for small manufacturers.

The maximum amount of a disaster assistance loan is ________ dollars.

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

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

Installment loans are made to big firms for purchasing other businesses.

For small businesses,________ are the heart of the financial market.

Term loans impose restrictions called covenants.

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.

An entrepreneur seeking an SBA loan guarantee can cut out a tremendous amount of time and paperwork by working with a bank that is either a certified or a preferred lender.

Which of the following retailers may use floor planning financing?

Even companies whose financial statements are too weak to produce other types of loans can get asset-based loans.

In an installment loan for equipment,the loan's amortization schedule would coincide with the equipment's useful life.

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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