Exam 13: Sources of Financing: Debt and Equity

When a bank makes enough SBA-guaranteed loans to become a ________ lender, the SBA promises a faster turnaround time for the loan decision, typically 3 to 10 business days.

The average venture capital firm screens about ________ investment proposals each year and ultimately invests in ________ of them.

Angels are not a good source of financing for entrepreneurs seeking relatively small amounts of money, as they typically do not make investments of less than $1 million.

If the value of the borrower's collateral drops, a stockbroker can make a ________, requiring the borrower to provide more collateral for his margin loan.

Savings and loan associations typically specialize in loans for:

Private placements of debt offer all but which of the following advantages?

SBICs provide financing to small businesses that are at least 51 percent owned by minorities, or socially or economically disadvantaged people.

The general trend of angel financing is that it has ________ as a source of capital for entrepreneurs over the past 9 years.

Explain how a typical SBA loan guarantee works. What interest rates do these loans normally carry?

In an initial public offering, a company raises capital by selling shares of its stock to the general public for the first time.

A typical venture capital firm seeks investments in the $20,000 to $50,000 range and annual returns of 35-50 percent over three to five years.

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

Corporate Venture Capital accounts for approximately 14 percent of all venture capital.

Financing through ________ is similar to trade credit and this source of financing offers reasonable credit terms with only a modest down payment with the balance financed over the life of the purchase.

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

SBICs, privately owned financial institutions that are licensed and regulated by the SBA, provide both debt and equity financing to small businesses.

The single most important ingredient in making a successful initial public offering is selecting a capable underwriter to manage the process.

In inventory financing, a small business can typically borrow an amount equal to ________ percent of the inventory it pledges as collateral.

Because small businesses typically borrow small amounts of money, they pay interest rates below the "prime rate."

Bootstrapping is a process in which entrepreneurs tap their personal savings and use creative, low-cost start-up methods to launch their businesses.