Question 1

A small business that uses factoring:

Accepted Answer

A)  pledges its accounts receivable as collateral to obtain a loan from a financial institution. 
B)  relies on a third party consultant to apply for SBA-guaranteed loans. 
C)  sells its accounts receivable to a third party to get the capital it needs. 
D)  borrows money from lenders by offering them the option to convert the loan into stock in the company. 
A)  pledges its accounts receivable as collateral to obtain a loan from a financial institution. 
B)  relies on a third party consultant to apply for SBA-guaranteed loans. 
C)  sells its accounts receivable to a third party to get the capital it needs. 
D)  borrows money from lenders by offering them the option to convert the loan into stock in the company.

Question 2

Rather than piecing together their startup capital from multiple sources as they have in the past, entrepreneurs now are relying on a single source of funding.

Accepted Answer

A) True 
 B)False

Question 3

Not only must a company meet SEC requirements for a public offering, but it also must meet securities laws in all states in which the issue is sold.

Accepted Answer

A) True 
 B)False

Question 4

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.

Accepted Answer

A)  term loan 
B)  factor 
C)  line of credit 
D)  floor plan 
A)  term loan 
B)  factor 
C)  line of credit 
D)  floor plan

Question 5

Typically, the entire process of going public takes ________, but it can take much longer if the issuing company is not properly prepared for the process.

Accepted Answer

A)  30 days 
B)  6 months 
C)  120 to 180 days 
D)  one year 
A)  30 days 
B)  6 months 
C)  120 to 180 days 
D)  one year

Question 6

When looking for an angel, the key is:

Accepted Answer

A)  networking. 
B)  waiting until you need the money. 
C)  looking across industries. 
D)  using computer matches. 
A)  networking. 
B)  waiting until you need the money. 
C)  looking across industries. 
D)  using computer matches.

Question 7

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

Accepted Answer

A)  the SEC registration statement is being prepared. 
B)  the underwriter decides what regulation to file under. 
C)  the firm prices the stock for the offering. 
D)  the company is waiting for SEC approval after filing the registration statement. 
A)  the SEC registration statement is being prepared. 
B)  the underwriter decides what regulation to file under. 
C)  the firm prices the stock for the offering. 
D)  the company is waiting for SEC approval after filing the registration statement.

Question 8

The recent turbulence in the financial markets has caused banks to ________ their lending standards, making it ________ for small businesses to qualify for loans.

Accepted Answer

A)  tighten; easier 
B)  tighten; more difficult 
C)  relax; easier 
D)  relax; more difficult 
A)  tighten; easier 
B)  tighten; more difficult 
C)  relax; easier 
D)  relax; more difficult

Question 9

Banks tend to be very conservative in their lending practices and prefer to make loans to established small businesses rather than to high-risk business start-ups.

Accepted Answer

A) True 
 B)False

Question 10

In most SBA loans, the SBA does not actually lend any money; it merely guarantees a bank repayment of a portion of the loan the bank makes in case the borrower defaults.

Accepted Answer

A) True 
 B)False

Question 11

In a typical commercial or industrial loan, a savings and loan association will lend up to 80 percent of the real property's value with a repayment schedule of up to 30 years.

Accepted Answer

A) True 
 B)False

Question 12

While equity capital represents the personal investment of the owner(s) of a business and does not have to be repaid, debt capital is a liability that must be repaid with interest in the future.

Accepted Answer

A) True 
 B)False

Question 13

The average loan in the SBA's Microloan Program is $100,000.

Accepted Answer

A) True 
 B)False

Question 14

Networking through personal contacts and the Internet is one of the best ways to find angels, who usually prefer to invest in local businesses operating in industries they know something about.

Accepted Answer

A) True 
 B)False

Question 15

Angels fill a significant gap in the seed capital market.

Accepted Answer

A) True 
 B)False

Question 16

Under the SBA's Patriot Express Program, the ceiling is ________ and the SBA guarantees up to ________ percent of the loan.

Accepted Answer

A)  $250,000: 65 
B)  $500,000: 85 
C)  $500,000: 95 
D)  $6200,000: 100 
A)  $250,000: 65 
B)  $500,000: 85 
C)  $500,000: 95 
D)  $6200,000: 100

Question 17

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

Accepted Answer

A)  small business investment company 
B)  local development company 
C)  small business lending company 
D)  SBIC 
A)  small business investment company 
B)  local development company 
C)  small business lending company 
D)  SBIC

Question 18

The goal of the SEC's Regulation S-B and S-K is:

Accepted Answer

A)  to discourage small companies from trying to "go public." 
B)  to make it easier for the SEC to detect companies whose stock would be bad investments for consumers. 
C)  to open the doors to capital markets to smaller companies by cutting the paperwork and the costs normally required to make a public offering. 
D)  to make the standards for making a public stock offering more stringent. 
A)  to discourage small companies from trying to "go public." 
B)  to make it easier for the SEC to detect companies whose stock would be bad investments for consumers. 
C)  to open the doors to capital markets to smaller companies by cutting the paperwork and the costs normally required to make a public offering. 
D)  to make the standards for making a public stock offering more stringent.

Question 19

A term loan:

Accepted Answer

A)  is typically unsecured. 
B)  may contain restrictions or covenants. 
C)  is based on past operating history and a firm's high probability of repayment. 
D)  All of the above 
A)  is typically unsecured. 
B)  may contain restrictions or covenants. 
C)  is based on past operating history and a firm's high probability of repayment. 
D)  All of the above

Question 20

What is an IPO? What type of companies should go public? Outline the advantages and disadvantages of an IPO. Also, outline the steps a company should follow in taking a company public.

Accepted Answer

An initial public offering (IPO) is how

A small business that uses factoring:

Rather than piecing together their startup capital from multiple sources as they have in the past, entrepreneurs now are relying on a single source of funding.

Not only must a company meet SEC requirements for a public offering, but it also must meet securities laws in all states in which the issue is sold.

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.

Typically, the entire process of going public takes ________, but it can take much longer if the issuing company is not properly prepared for the process.

When looking for an angel, the key is:

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

The recent turbulence in the financial markets has caused banks to their lending standards, making it for small businesses to qualify for loans.

Banks tend to be very conservative in their lending practices and prefer to make loans to established small businesses rather than to high-risk business start-ups.

In most SBA loans, the SBA does not actually lend any money; it merely guarantees a bank repayment of a portion of the loan the bank makes in case the borrower defaults.

In a typical commercial or industrial loan, a savings and loan association will lend up to 80 percent of the real property's value with a repayment schedule of up to 30 years.

While equity capital represents the personal investment of the owner(s) of a business and does not have to be repaid, debt capital is a liability that must be repaid with interest in the future.

The average loan in the SBA's Microloan Program is $100,000.

Networking through personal contacts and the Internet is one of the best ways to find angels, who usually prefer to invest in local businesses operating in industries they know something about.

Angels fill a significant gap in the seed capital market.

Under the SBA's Patriot Express Program, the ceiling is and the SBA guarantees up to percent of the loan.

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

The goal of the SEC's Regulation S-B and S-K is:

A term loan:

What is an IPO? What type of companies should go public? Outline the advantages and disadvantages of an IPO. Also, outline the steps a company should follow in taking a company public.

The Foundations of Entrepreneurship

Inside the Entrepreneurial Mind: From Ideas to Reality

Designing a Competitive Business Model and Building a Solid Strategic Plan

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Forms of Business Ownership

Franchising and the Entrepreneur

Buying an Existing Business

Building a Powerful Marketing Plan

E-Commerce and the Entrepreneur

Pricing Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters

Exam 13: Sources of Financing: Debt and Equity

A small business that uses factoring:

Rather than piecing together their startup capital from multiple sources as they have in the past, entrepreneurs now are relying on a single source of funding.

Not only must a company meet SEC requirements for a public offering, but it also must meet securities laws in all states in which the issue is sold.

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.

Typically, the entire process of going public takes ________, but it can take much longer if the issuing company is not properly prepared for the process.

When looking for an angel, the key is:

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

The recent turbulence in the financial markets has caused banks to ________ their lending standards, making it ________ for small businesses to qualify for loans.

Banks tend to be very conservative in their lending practices and prefer to make loans to established small businesses rather than to high-risk business start-ups.

In most SBA loans, the SBA does not actually lend any money; it merely guarantees a bank repayment of a portion of the loan the bank makes in case the borrower defaults.

In a typical commercial or industrial loan, a savings and loan association will lend up to 80 percent of the real property's value with a repayment schedule of up to 30 years.

While equity capital represents the personal investment of the owner(s) of a business and does not have to be repaid, debt capital is a liability that must be repaid with interest in the future.

The average loan in the SBA's Microloan Program is $100,000.

Networking through personal contacts and the Internet is one of the best ways to find angels, who usually prefer to invest in local businesses operating in industries they know something about.

Angels fill a significant gap in the seed capital market.

Under the SBA's Patriot Express Program, the ceiling is ________ and the SBA guarantees up to ________ percent of the loan.

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

The goal of the SEC's Regulation S-B and S-K is:

A term loan:

What is an IPO? What type of companies should go public? Outline the advantages and disadvantages of an IPO. Also, outline the steps a company should follow in taking a company public.

The Foundations of Entrepreneurship

Inside the Entrepreneurial Mind: From Ideas to Reality

Designing a Competitive Business Model and Building a Solid Strategic Plan

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Forms of Business Ownership

Franchising and the Entrepreneur

Buying an Existing Business

Building a Powerful Marketing Plan

E-Commerce and the Entrepreneur

Pricing Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters

The recent turbulence in the financial markets has caused banks to their lending standards, making it for small businesses to qualify for loans.

Under the SBA's Patriot Express Program, the ceiling is and the SBA guarantees up to percent of the loan.