Question 1

Asset-based lenders avoid inventory-only deals;they prefer to make loans backed by inventory and:

Accepted Answer

A) experienced management. 
B) good market reputation. 
C) more secure accounts receivable. 
D) All of the above 
A) experienced management. 
B) good market reputation. 
C) more secure accounts receivable. 
D) All of the above

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A(n)________ is a nonprofit organization licensed by the SBA and designed to promote economic growth in local communities.

Accepted Answer

A) FDC 
B) CDC 
C) GDC 
D) RDC 
A) FDC 
B) CDC 
C) GDC 
D) RDC

Question 5

The majority of loans provided by the SBA are:

Accepted Answer

A) direct. 
B) preferred. 
C) guaranteed. 
D) immediate participation. 
A) direct. 
B) preferred. 
C) guaranteed. 
D) immediate participation.

Question 6

New online funding options are emerging to help small businesses with credit.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Leasing is an effective way to reduce long-term capital requirements for a small business.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Insurance companies specialize in long-term loans.

Accepted Answer

A) True 
 B)False

Question 11

Explain the role of commercial banks as source of debt capital for small businesses.What types of financing are available from commercial banks?

Accepted Answer

Commercial banks are the very heart of t

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

What is trade credit? How is it different from or the same as loans from equipment suppliers?

Accepted Answer

Trade credit involves convincing vendors

Question 14

Asset-based financing:

Accepted Answer

A) is efficient since the small business borrows only the money it needs. 
B) provides less borrowing capacity than inventory-based financing. 
C) is more expensive than other types of financing. 
D) is less desirable than inventory-only deals to bankers. 
A) is efficient since the small business borrows only the money it needs. 
B) provides less borrowing capacity than inventory-based financing. 
C) is more expensive than other types of financing. 
D) is less desirable than inventory-only deals to bankers.

Question 15

The 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 16

The loans of commercial finance companies to small businesses:

Accepted Answer

A) tend to be for less than a commercial bank but at a lower interest rate. 
B) are offered based on the company's balance sheet. 
C) tend to be at a lower interest rate but are harder to get. 
D) are in many of the same forms as commercial bank offers. 
A) tend to be for less than a commercial bank but at a lower interest rate. 
B) are offered based on the company's balance sheet. 
C) tend to be at a lower interest rate but are harder to get. 
D) are in many of the same forms as commercial bank offers.

Question 17

Term loans often have a ________ feature,which means that after three to five years,the full amount of principal is due before the amortized payments fully repay the loan.

Accepted Answer

A) parachute 
B) covenant 
C) balloon 
D) handcuff 
A) parachute 
B) covenant 
C) balloon 
D) handcuff

Question 18

Term loans impose restrictions called:

Accepted Answer

A) loan boundaries. 
B) covenants. 
C) financial limits. 
D) margins. 
A) loan boundaries. 
B) covenants. 
C) financial limits. 
D) margins.

Question 19

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 20

Some of the reasons which small business owners should consider borrowing money are:

Accepted Answer

A) gaining market share. 
B) refinancing existing debt. 
C) taking advantage of cash discounts. 
D) All of the above 
A) gaining market share. 
B) refinancing existing debt. 
C) taking advantage of cash discounts. 
D) All of the above

Exam 17: Sources of Debt Financing

Asset-based lenders avoid inventory-only deals;they prefer to make loans backed by inventory and:

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

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

A(n)________ is a nonprofit organization licensed by the SBA and designed to promote economic growth in local communities.

The majority of loans provided by the SBA are:

New online funding options are emerging to help small businesses with credit.

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

Leasing is an effective way to reduce long-term capital requirements for a small business.

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

Insurance companies specialize in long-term loans.

Explain the role of commercial banks as source of debt capital for small businesses.What types of financing are available from commercial banks?

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

What is trade credit? How is it different from or the same as loans from equipment suppliers?

Asset-based financing:

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

The loans of commercial finance companies to small businesses:

Term loans often have a ________ feature,which means that after three to five years,the full amount of principal is due before the amortized payments fully repay the loan.

Term loans impose restrictions called:

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?

Some of the reasons which small business owners should consider borrowing money are:

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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