Exam 16: Obtaining Debt Capital

What business frequently lends money to companies that do not have positive cash flow?

Time-sales financing is a way for a seller to generate cash from a long-term installment accounts receivable.

With regard to personal guarantees,what is meant by 'joint and severable'?

Which of the following is the most important consideration when seeking bank debt?

Leasing provides the flexibility of returning equipment after the lease period if it is no longer needed--but not if that equipment has become technologically obsolete.

To build credibility with bankers,entrepreneurs should borrow before they need to and then repay the loan.

Banks expect a borrower to pay off his or her open loan within a year and hold a zero balance for one to two months.This is known as _________.

Which of the following can provide tax advantages?

Banks will lend to a startup if the lead entrepreneur has a track record and is well connected in the local area.

Lines of credit must be secured by a pledge of inventory,receivables,equipment,or other acceptable assets.

A ________ is a formal or informal agreement between a bank and a borrower concerning the maximum loan a bank will allow the borrower for a one-year period.

Discuss how an entrepreneur can build a good working relationship with his or her banker.

Restrictive loan covenants are not negotiable.

Leasing enables a company to conserve cash and reduce its requirements for equity capital.

For new and young businesses,lenders do not like to see total debt-to-equity ratios greater than

Following the restructuring of debt in a turnaround situation,that forgiven debt becomes ________ for the entrepreneur who owns the company and who has personally had to guarantee the loans.

Factoring is accomplished on a ________ value of the receivables pledged.

In the US,commercial banks are the primary source of debt capital for existing (not new)businesses.

The primary reason banks are lower-risk lenders is because that profile is consistent with their management style.

In tight economies,which of the following is most accepting of risk?