Question 1

A small company needs fixed capital to purchase its permanent assets.

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

The SBA has several loan programs designed to help finance both startup and existing businesses that cannot qualify for traditional loans because of their thin asset base or their high risk of failure. The SBA works with local lenders to offer a variety of loan programs. The SBA does not actually lend any money, it merely acts as an insurer guaranteeing the lender a certain amount of repayment in case the borrower defaults on the loan.
Contrary to popular beliefs, SBA loans do not carry special interest rate deals. The lender determines the terms and rate set within SBA limits. The average rate on an SBA loan is prime plus 2 percent, compared with prime plus 1 for conventional banks. The SBA also assesses a one-time fee of 3.875 for all loan guarantees. The most common loan is the 7(a) loan guarantee.

Question 3

Venture capital companies reject 90 percent of the proposals they receive because they don't meet the firms' investment criteria.

Accepted Answer

A) True 
 B)False  True

Question 4

The first place an entrepreneur should look for startup capital is ________.

Accepted Answer

A)  a bank 
B)  a venture capitalist 
C)  the Small Business Administration 
D)  his own savings 
A)  a bank 
B)  a venture capitalist 
C)  the Small Business Administration 
D)  his own savings

Question 5

Publicly-held companies must file periodic reports with the Securities and Exchange Commission.

Accepted Answer

A) True 
 B)False

Question 6

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 7

The SBA's Section 504 Certified Development Company Program (CDC), which provides long-term, fixed-asset financing, is designed to encourage small businesses to expand their facilities and to create jobs.

Accepted Answer

A) True 
 B)False

Question 8

Private investors, or angels, seek 60 to 75 percent annual return on investment, which is much higher than those of professional venture capitalists, and tend to take a 51+ percent share of the business.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not an asset-based financing technique?

Accepted Answer

A)  Discounting accounts receivable 
B)  Inventory financing 
C)  Term loan 
D)  None of the above 
A)  Discounting accounts receivable 
B)  Inventory financing 
C)  Term loan 
D)  None of the above

Question 10

Investment bankers who underwrite public stock offerings typically look for all but which of the following characteristics in a small company?

Accepted Answer

A)  A strong record of earnings. 
B)  A solid position in a stable market. 
C)  Consistently high growth rates. 
D)  A sound management team with experience and a strong board of directors. 
A)  A strong record of earnings. 
B)  A solid position in a stable market. 
C)  Consistently high growth rates. 
D)  A sound management team with experience and a strong board of directors.

Question 11

Entrepreneurs needing between $100,000 and $3 million in the current financial environment will likely find acquiring financing to be ________.

Accepted Answer

A)  challenging 
B)  confusing 
C)  attainable 
D)  easy 
A)  challenging 
B)  confusing 
C)  attainable 
D)  easy

Question 12

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

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

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 15

Entrepreneurs basically "borrow from themselves" by pledging their ________ as collateral for the loans they receive in a ________.

Accepted Answer

A)  business; commercial loan 
B)  business assets; home equity loan 
C)  home; home equity loan 
D)  big ticket items; floor loan 
A)  business; commercial loan 
B)  business assets; home equity loan 
C)  home; home equity loan 
D)  big ticket items; floor loan

Question 16

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

Accepted Answer

A)  10,000; 12 
B)  1,000; 1 
C)  5,000; 13 
D)  5,000; 80 
A)  10,000; 12 
B)  1,000; 1 
C)  5,000; 13 
D)  5,000; 80

Question 17

Most entrepreneurs seeking money to launch their businesses need more than $1,000,000 in startup capital.

Accepted Answer

A) True 
 B)False

Question 18

A method of raising capital that taps the power of social networking and allows entrepreneurs to post their elevator pitches and proposed investment terms on specialized Web sites and raise money from ordinary people who invest as little as $100 is called ________.

Accepted Answer

A)  crowd funding 
B)  angel financing 
C)  venture capital 
D)  bootstrapping 
A)  crowd funding 
B)  angel financing 
C)  venture capital 
D)  bootstrapping

Question 19

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

Accepted Answer

A)  increased 
B)  stabilized 
C)  decreased 
D)  disappeared 
A)  increased 
B)  stabilized 
C)  decreased 
D)  disappeared

Question 20

The Tanning Parlor is in the middle of the busy season. Owner Sunny Bright has hired extra help and encountered some unexpected repairs that have left her short of operating capital. What type of financing would Sunny most likely use in this situation?

Accepted Answer

A)  A line of credit 
B)  Floor planning 
C)  A discounted installment contract 
D)  Trade credit 
A)  A line of credit 
B)  Floor planning 
C)  A discounted installment contract 
D)  Trade credit

A small company needs fixed capital to purchase its permanent assets.

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

Venture capital companies reject 90 percent of the proposals they receive because they don't meet the firms' investment criteria.

The first place an entrepreneur should look for startup capital is ________.

Publicly-held companies must file periodic reports with the Securities and Exchange Commission.

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 SBA's Section 504 Certified Development Company Program (CDC), which provides long-term, fixed-asset financing, is designed to encourage small businesses to expand their facilities and to create jobs.

Private investors, or angels, seek 60 to 75 percent annual return on investment, which is much higher than those of professional venture capitalists, and tend to take a 51+ percent share of the business.

Which of the following is not an asset-based financing technique?

Investment bankers who underwrite public stock offerings typically look for all but which of the following characteristics in a small company?

Entrepreneurs needing between $100,000 and $3 million in the current financial environment will likely find acquiring financing to be ________.

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

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

When looking for an angel, the key is ________.

Entrepreneurs basically "borrow from themselves" by pledging their as collateral for the loans they receive in a .

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

Most entrepreneurs seeking money to launch their businesses need more than $1,000,000 in startup capital.

A method of raising capital that taps the power of social networking and allows entrepreneurs to post their elevator pitches and proposed investment terms on specialized Web sites and raise money from ordinary people who invest as little as $100 is called ________.

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

The Tanning Parlor is in the middle of the busy season. Owner Sunny Bright has hired extra help and encountered some unexpected repairs that have left her short of operating capital. What type of financing would Sunny most likely use in this situation?

The Foundations of Entrepreneurship

Ethics and Social Responsibility: Doing the Right Thing

Inside the Entrepreneurial Mind: From Ideas to Reality

Conducting a Feasibility Analysis and Designing a Business Model

Crafting a Business Plan and Building a Solid Strategic Plan

Forms of Business Ownership and Buying an Existing Business

Franchising and the Entrepreneur

Building a Powerful Bootstrap Marketing Plan

E-Commerce and the Entrepreneur

Pricing and Credit 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 company needs fixed capital to purchase its permanent assets.

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

Venture capital companies reject 90 percent of the proposals they receive because they don't meet the firms' investment criteria.

The first place an entrepreneur should look for startup capital is ________.

Publicly-held companies must file periodic reports with the Securities and Exchange Commission.

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 SBA's Section 504 Certified Development Company Program (CDC), which provides long-term, fixed-asset financing, is designed to encourage small businesses to expand their facilities and to create jobs.

Private investors, or angels, seek 60 to 75 percent annual return on investment, which is much higher than those of professional venture capitalists, and tend to take a 51+ percent share of the business.

Which of the following is not an asset-based financing technique?

Investment bankers who underwrite public stock offerings typically look for all but which of the following characteristics in a small company?

Entrepreneurs needing between $100,000 and $3 million in the current financial environment will likely find acquiring financing to be ________.

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

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

When looking for an angel, the key is ________.

Entrepreneurs basically "borrow from themselves" by pledging their ________ as collateral for the loans they receive in a ________.

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

Most entrepreneurs seeking money to launch their businesses need more than $1,000,000 in startup capital.

A method of raising capital that taps the power of social networking and allows entrepreneurs to post their elevator pitches and proposed investment terms on specialized Web sites and raise money from ordinary people who invest as little as $100 is called ________.

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

The Tanning Parlor is in the middle of the busy season. Owner Sunny Bright has hired extra help and encountered some unexpected repairs that have left her short of operating capital. What type of financing would Sunny most likely use in this situation?

The Foundations of Entrepreneurship

Ethics and Social Responsibility: Doing the Right Thing

Inside the Entrepreneurial Mind: From Ideas to Reality

Conducting a Feasibility Analysis and Designing a Business Model

Crafting a Business Plan and Building a Solid Strategic Plan

Forms of Business Ownership and Buying an Existing Business

Franchising and the Entrepreneur

Building a Powerful Bootstrap Marketing Plan

E-Commerce and the Entrepreneur

Pricing and Credit Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters

Entrepreneurs basically "borrow from themselves" by pledging their as collateral for the loans they receive in a .

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