Exam 16: Obtaining Debt Capital

A bank may inform the purchaser of goods that the account has been assigned to the bank,and payments are made directly to the bank,which credits them to the borrower's account.This is called

Under _________ financing,the bank purchases installment contracts at a discount from their full value and takes as security an assignment of the manufacturer/dealer's interest in the conditional sales contract.

Which of the following secures a bank's interest in a time-sales finance contract?

Why do startups have a more difficult time borrowing money than existing businesses?

Trade creditors sometimes regard factoring as evidence of a company in financial difficulty.

Time-sales financing is a way for a seller of obtaining ________ from long-term installment accounts receivable.

________ is any machinery,equipment,or business property that is made the collateral of a loan.

Term lenders stress the entrepreneurial and managerial abilities of the borrowing company.

In a standard factoring arrangement,the factor buys the client's receivables outright,without ________,as soon as the client creates them,by shipment of goods to customers.

How can leasing provide tax advantages?

A factor assumes the credit risk,does the credit investigations and collections,and advances funds.

In hard times,banks have been known to call their best loans first.

Effective entrepreneurs think of the process of obtaining a loan as a sales job.

Commercial finance companies lend against the ________ value of assets.

Identify the two most likely sources of debt financing for a startup company.

Loan covenants are designed so as not to hinder a company's growth.

Favorable lending decisions depend in large part on an entrepreneur's ability to sell and to develop a good relationship with the loan officer.

One way to acquire financing on existing equipment is to sell that equipment back to the dealer and then repurchase it under a payment contract.

What should an entrepreneur look for when seeking to develop a constructive banking relationship?

When a seller of high-end services wants to offer installment payment terms to purchasers,they can sell and assign that installment contract to a bank or sales finance company.