Exam 12: A Firms Sources of Financing

Match the definition with its term. a.7(a)Loan Guaranty Program b.7(m)Microloan Program c.Certified Development Company (CDC)Loan Program d.Community-based financial institution e.Formal venture capitalists f.Informal venture capital g.Loan covenants h.Small Business Innovative Research (SBIR)Program i.Small business investment companies (SBICs) -An SBA program that provides short-term loans of up to $50,000 to small businesses and not-for-profit child-care centers

Florence wants to obtain a loan for a large color laser printer for her copy shop.Since the printer will last approximately 8 years,the ideal loan would be a _____ loan.

Venture capital companies

A chattel mortgage is a loan for which real property,such as land or a building,serves as collateral.

Around 5 percent of the business plans reviewed by venture capitalists are funded.

Even with all his billions and influence,Donald Trump,as an equity investor,cannot demand more than

Assets such as the quality of a firm's employees are considered tangible in nature and thus have substantial value as collateral.

Galen runs an Greek restaurant and is currently considering leasing or purchasing some updated equipment.What statement is correct?

A line of credit is the _____ amount of credit a bank will provide a borrower at any one time.

A loan covenant is very likely to require

When Ben left the corporate rat race to start his own pottery business,he used some of his retirement savings to finance the business.This practice is known as:

Chuck,Marie and Tommy are a group of friends who have formed a LLC to raise capital for an investment in 20 franchises of Rigby's,a new sports bar concept.Tommy will be the general partner;Chuck and Marie will be limited partners.These three are:

Match the definition with its term. a.7(a)Loan Guaranty Program b.7(m)Microloan Program c.Certified Development Company (CDC)Loan Program d.Community-based financial institution e.Formal venture capitalists f.Informal venture capital g.Loan covenants h.Small Business Innovative Research (SBIR)Program i.Small business investment companies (SBICs) -An SBA program that helps to finance companies that plan to transform laboratory research into marketable products

Novelty Shirts is a manufacturing company needing to expand its production facilities.Which SBA program would be best to acquire real estate valued at $150,000?

Andrew is a venture capitalist who would like to find a good new business in which to invest.He's done this before so he has learned to limit his investing to firms with potentially high returns in a _____ period.

Match the term with its definition. a.Asset-based loan b.Basis point c.Chattel mortgage d.Equipment loan e.LIBOR (London InterBank Offered Rate) f.Line of credit g.Prime rate h.Purchase-order financing i.Term loan -A line of credit secured by working capital assets

If a company has a signed purchase order from a creditworthy customer and the gross profit margin on the order is anticipated to be 36 percent,purchase-order financing is likely.

Irwin has applied for a loan from an asset-based lending company.As security he will offer:

What are the four basic factors that determine how a firm is financed?

Renata has asked her family members to help her launch her new business.She must consider that: