Exam 13: Sources of Financing: Debt and Equity

The typical letter of intent states that the underwriter of a stock issue is not bound to the offering until it is executed,usually the day before or the day of the offering.

The "wait to go effective" is the time period when:

Which of the following kinds of securities can an entrepreneur sell through a Small Company Offering Registration (SCOR)?

Classify Jim's expansion estimates into the three categories of capital: (a)fixed capital requirements,(b)working capital requirements,and (c)growth capital requirements.

What is trade credit? How important is it as a source of debt financing to small firms? What role does it play in "bootstrapping"? What are some other bootstrapping techniques?

Two factors that make a deal attractive to venture capitalists include high returns and a convenient and profitable exit strategy.

The Economic Development Administration offers loan guarantees to create new businesses in economically depressed areas with below-average incomes and high unemployment rates.

Savings and loan associations specialize in loans for the purchase of inventory and for working capital.

A ________ is an agreement with a bank that allows a small business to borrow up to a predetermined specified amount during the year without making an application each time.

The formal underwriting agreement between the company and the underwriter is signed:

A small business that uses factoring:

Entrepreneurs have access to two different types of capital,________ and ________ .

Banks typically limit a company's line of credit to:

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?

A(n)________ is when a company raises capital by selling shares of its stock to the general public for the first time.

Venture capital companies are an important source of equity funding for small businesses.Discuss their policies,ownership control,and investment preferences regarding funding small businesses.

A(n)________ makes only intermediate and long-term SBA guaranteed loans.It specializes in loans many banks would not consider.

To reduce the paperwork required and speed up its loan application process,the SBA has instituted several programs,which allows small businesses to benefit due to reduced response time.

An option for acquiring equity capital is for the entrepreneur to take on partner(s); however,it is important that he consider the impact of giving up some personal control over operations and of sharing profits with others.

Venture capital firms rarely take an active role in managing the business in which they invest.