Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following businesses would be eligible for an SBA loan?

Accepted Answer

A) A small computer manufacturer 
B) A nonprofit business 
C) A magazine publisher 
D) A casino 
A) A small computer manufacturer 
B) A nonprofit business 
C) A magazine publisher 
D) A casino

Question 3

The loan ceiling for the International Trade Loan Program is

Accepted Answer

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

Question 4

When a bank proves the quality of its loan decisions to the SBA and becomes a ________ lender,the bank makes the final lending decision itself,subject to SBA review for the guarantee.

Accepted Answer

A) preferred 
B) qualified 
C) certified 
D) LDC 
A) preferred 
B) qualified 
C) certified 
D) LDC

Question 5

Sometimes small businesses have to use debt financing instead of equity financing.When they do,they discover that:

Accepted Answer

A) banks give them a lower interest rate because of their closeness to the customer and better management practices. 
B) finance companies are their primary source for debt funding. 
C) the cost of debt financing is often less than the cost of equity financing. 
D) there are fewer lenders than investors in the marketplace,but the money is easier to get from lenders. 
A) banks give them a lower interest rate because of their closeness to the customer and better management practices. 
B) finance companies are their primary source for debt funding. 
C) the cost of debt financing is often less than the cost of equity financing. 
D) there are fewer lenders than investors in the marketplace,but the money is easier to get from lenders.

Question 6

The most common form of secured credit is:

Accepted Answer

A) accounts receivable financing. 
B) inventory financing. 
C) floor planning. 
D) discounted installment contracts. 
A) accounts receivable financing. 
B) inventory financing. 
C) floor planning. 
D) discounted installment contracts.

Question 7

When a small business is refused a loan because it is not profitable and deemed a poor credit risk,the owner can usually turn to ________ as a source of short-term funds.

Accepted Answer

A) venture capital companies 
B) trade credit 
C) stockbrokers 
D) loans from insurance companies 
A) venture capital companies 
B) trade credit 
C) stockbrokers 
D) loans from insurance companies

Question 8

Disaster loans are made to small businesses devastated by some kind of financial or physical losses.

Accepted Answer

A) True 
 B)False

Question 9

When denied bank loans,small business owners often look to commercial finance companies for the same types of loan.

Accepted Answer

A) True 
 B)False

Question 10

________ were created by the SBA in 1992 to provide loans under $50,000 that are normally shunned by banks.

Accepted Answer

A) Microloans 
B) Preferred loans 
C) Seasonal line of credits 
D) 8(a)program loans 
A) Microloans 
B) Preferred loans 
C) Seasonal line of credits 
D) 8(a)program loans

Question 11

The CDC is the for-profit arm of the SBA.

Accepted Answer

A) True 
 B)False

Question 12

The Farmers Home Administration only makes loans to small farms.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) make only asset-based,long-term loans. 
B) be very conservative and lend primarily short-term capital. 
C) focus on either inventory or accounts receivable when evaluating a business's loan requests. 
D) be eager lenders to start-ups as these tend to be smaller loans at less risk. 
A) make only asset-based,long-term loans. 
B) be very conservative and lend primarily short-term capital. 
C) focus on either inventory or accounts receivable when evaluating a business's loan requests. 
D) be eager lenders to start-ups as these tend to be smaller loans at less risk.

Question 14

The U.S.Department of Agriculture provides financial assistance to certain small businesses through the Rural Business-Cooperative Service (RBS).The RBS program is open to:

Accepted Answer

A) just farms. 
B) urban businesses. 
C) rural businesses. 
D) all types of businesses. 
A) just farms. 
B) urban businesses. 
C) rural businesses. 
D) all types of businesses.

Question 15

Typical short term loans are for:

Accepted Answer

A) purchase of more inventory. 
B) purchase of computers. 
C) positive cash to pay other debts. 
D) All of the above 
A) purchase of more inventory. 
B) purchase of computers. 
C) positive cash to pay other debts. 
D) All of the above

Question 16

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 17

Private placement debt is a hybrid between a conventional loan and a bond.

Accepted Answer

A) True 
 B)False

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

A boat retailer would most likely use a line of credit to finance the purchase of his inventory.

Accepted Answer

A) True 
 B)False

Question 20

Jones Manufacturing has been in business for 30 years.About 3 years ago,the company spent about $2.5 million in upgrading/purchasing new equipment.Currently,due to bad weather,the company is suffering cash flow problems and is not able to pay its expenses or inventory purchases.One option for financing would be:

Accepted Answer

A) inventory financing. 
B) asset-based financing. 
C) sell the business. 
D) All of the above 
A) inventory financing. 
B) asset-based financing. 
C) sell the business. 
D) All of the above

Exam 17: Sources of Debt Financing

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

Which of the following businesses would be eligible for an SBA loan?

The loan ceiling for the International Trade Loan Program is

When a bank proves the quality of its loan decisions to the SBA and becomes a ________ lender,the bank makes the final lending decision itself,subject to SBA review for the guarantee.

Sometimes small businesses have to use debt financing instead of equity financing.When they do,they discover that:

The most common form of secured credit is:

When a small business is refused a loan because it is not profitable and deemed a poor credit risk,the owner can usually turn to ________ as a source of short-term funds.

Disaster loans are made to small businesses devastated by some kind of financial or physical losses.

When denied bank loans,small business owners often look to commercial finance companies for the same types of loan.

________ were created by the SBA in 1992 to provide loans under $50,000 that are normally shunned by banks.

The CDC is the for-profit arm of the SBA.

The Farmers Home Administration only makes loans to small farms.

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

The U.S.Department of Agriculture provides financial assistance to certain small businesses through the Rural Business-Cooperative Service (RBS).The RBS program is open to:

Typical short term loans are for:

Installment loans have to be repaid in:

Private placement debt is a hybrid between a conventional loan and a bond.

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.

A boat retailer would most likely use a line of credit to finance the purchase of his inventory.

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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