Exam 12: A Firms Sources of Financing

A drawback to "going public" is

It's been George's "baby" from the beginning and he really doesn't want to be accountable to any outsider for the decisions he makes in his business.In George's case,he should seek initially to secure _____ financing.

What key terms should an entrepreneur understand so as to be prepared for loan negotiation?

In the beginning,some entrepreneurs use ____________ as a source of financing.

A company that has over 100 employees with locations in several states is typically the type of company in which business angels make an investment.

Which type of equity-based crowdfunding will,with SEC approval,allow unaccredited investors to invest?

Even though Evan's company is a corporation,the bank imposed a loan covenant that required Evan to:

One factor that influences the choice between debt and equity is the

To determine how well her business is doing,Darlene should monitor the return on her investment (equity)because it is a better measure of performance than

When considering a loan application,bankers will consider:

One potential problem with acquiring funds from friends and relatives is that they might feel they have the right to interfere in the management of the business.

Use of debt financing increases potential returns when a company is performing well,but it also increases the possibility of lower--even negative--returns if the company does not attain its goals in a given year.

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -Private individuals who invest in others' entrepreneurial ventures

Match the term with its definition. a.Balloon payment b.Business angels c.Chattel mortgage d.Crowdfunding e.Factoring f.Initial public offering g.Loan covenants h.Private placement i.Real estate mortgage j.Venture capitalist -Bank-imposed restrictions on a borrower that enhance the chance of timely repayment

Venture capitalists restrict their investment in startup companies.

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) -A loan program that helps small companies obtain financing through a guaranty provided by the SBA

List the "5 C's of Credit" and explain their impact on borrowing ability.

Most startup investors limit their investing to firms that offer potentially high returns within a one to three year period.

A firm with potential for large profits,as opposed to high growth potential,has many more possible sources of financing than does a firm that offers only unattractive returns.

Qualified small businesses that cannot obtain business loans through normal lending channels can get loans directly from the SBA through its 7(a)Loan Guaranty Program.