Question 1

Loans from stockbrokers carry higher interest rates since the collateral-stocks and bonds in the borrower's portfolio-involve a high level of risk.

Accepted Answer

A) True 
 B)False  False

Question 2

Nonbank sources of debt financing could be based on:

Accepted Answer

A) asset-based lenders. 
B) inventory financing. 
C) Both A and B 
D) None of the above 
A) asset-based lenders. 
B) inventory financing. 
C) Both A and B 
D) None of the above C

Question 3

Factoring:

Accepted Answer

A) is a more expensive method of financing than borrowing from a bank. 
B) places the risk of uncollected accounts receivable on the small business owner. 
C) is best used as a long-term source of capital. 
D) is a type of trade credit. 
A) is a more expensive method of financing than borrowing from a bank. 
B) places the risk of uncollected accounts receivable on the small business owner. 
C) is best used as a long-term source of capital. 
D) is a type of trade credit. A

Question 4

The Farmers Home Administration makes direct loans to small businesses meeting the rural area criteria in order to create nonfarm employment.

Accepted Answer

A) True 
 B)False

Question 5

What role do commercial finance companies,stockbrokerages,and insurance companies play in providing debt-based loans to small businesses?

Accepted Answer

a)	Commercial Finance Companies—When den

Question 6

The EDA makes low-interest loans to create new businesses in economically depressed areas with below-average incomes and high unemployment rates.

Accepted Answer

A) True 
 B)False

Question 7

Asset-based borrowing permits small businesses:

Accepted Answer

A) to borrow up to 100% of the value of their inventory or their accounts receivable for the money they need for long-term goals. 
B) to use normally unproductive assets-accounts receivable and inventory. 
C) to obtain loans more easily but with less borrowing power than if they used an unsecured line of credit. 
D) access to a source of funds ideally suited for long-term financing needs. 
A) to borrow up to 100% of the value of their inventory or their accounts receivable for the money they need for long-term goals. 
B) to use normally unproductive assets-accounts receivable and inventory. 
C) to obtain loans more easily but with less borrowing power than if they used an unsecured line of credit. 
D) access to a source of funds ideally suited for long-term financing needs.

Question 8

A line of credit is usually secured by collateral.

Accepted Answer

A) True 
 B)False

Question 9

The capital access programs (CAPs)were first introduced in:

Accepted Answer

A) Iowa. 
B) Michigan 
C) Wisconsin. 
D) New York. 
A) Iowa. 
B) Michigan 
C) Wisconsin. 
D) New York.

Question 10

Capital Access Programs (CAPs)that are designed to encourage lending institutions to make loans to businesses that do not qualify for traditional financing.

Accepted Answer

A) True 
 B)False

Question 11

In contrast to traditional lenders,finance companies offer small business borrowers:

Accepted Answer

A) faster turnaround times. 
B) longer repayment schedules. 
C) more flexible payment plans. 
D) All of the above 
A) faster turnaround times. 
B) longer repayment schedules. 
C) more flexible payment plans. 
D) All of the above

Question 12

The average SBA loan guarantee is $150,000 and has an average duration of seven years.

Accepted Answer

A) True 
 B)False

Question 13

When a lender becomes a certified lender,it makes the final lending decision itself,subject to SBA review.

Accepted Answer

A) True 
 B)False

Question 14

Jerry Turner and Michael Clarke needed money to buy equipment and weren't able to get either trade credit or a bank loan because they had no assets and didn't have the cash for a down payment.

Accepted Answer

A) True 
 B)False

Question 15

Explain the different SBA loan programs.Explain how a typical SBA loan guarantee works.What interest rates do such loans normally carry?

Accepted Answer

Almost all SBA loan activity is in the f

Question 16

The average interest rate on SBA-guaranteed loans is:

Accepted Answer

A) prime minus 2 percent. 
B) 2 percent. 
C) prime plus 2 percent. 
D) 7 percent. 
A) prime minus 2 percent. 
B) 2 percent. 
C) prime plus 2 percent. 
D) 7 percent.

Question 17

Approximately 75% of SBA-guaranteed loans go to small businesses start-ups.

Accepted Answer

A) True 
 B)False

Question 18

________ is (are)a method of financing frequently employed by retailers of "big ticket items"-autos and major appliances.

Accepted Answer

A) Discounted installment contracts 
B) Trade credit 
C) Installment loans 
D) Floor planning 
A) Discounted installment contracts 
B) Trade credit 
C) Installment loans 
D) Floor planning

Question 19

SBICs must invest at least ________ percent of their capital in smaller businesses,which are defined by the SBA as those with a tangible net worth of less than $6 million and an average of $2 million in net income over the previous two years at the time of investment.

Accepted Answer

A) 75 
B) 60 
C) 25 
D) 50 
A) 75 
B) 60 
C) 25 
D) 50

Question 20

What is an asset-based lender? What are the most common types of asset-based financing?

Accepted Answer

Asset-based lenders,which are usually sm

Exam 17: Sources of Debt Financing

Loans from stockbrokers carry higher interest rates since the collateral-stocks and bonds in the borrower's portfolio-involve a high level of risk.

Nonbank sources of debt financing could be based on:

Factoring:

The Farmers Home Administration makes direct loans to small businesses meeting the rural area criteria in order to create nonfarm employment.

What role do commercial finance companies,stockbrokerages,and insurance companies play in providing debt-based loans to small businesses?

The EDA makes low-interest loans to create new businesses in economically depressed areas with below-average incomes and high unemployment rates.

Asset-based borrowing permits small businesses:

A line of credit is usually secured by collateral.

The capital access programs (CAPs)were first introduced in:

Capital Access Programs (CAPs)that are designed to encourage lending institutions to make loans to businesses that do not qualify for traditional financing.

In contrast to traditional lenders,finance companies offer small business borrowers:

The average SBA loan guarantee is $150,000 and has an average duration of seven years.

When a lender becomes a certified lender,it makes the final lending decision itself,subject to SBA review.

Jerry Turner and Michael Clarke needed money to buy equipment and weren't able to get either trade credit or a bank loan because they had no assets and didn't have the cash for a down payment.

Explain the different SBA loan programs.Explain how a typical SBA loan guarantee works.What interest rates do such loans normally carry?

The average interest rate on SBA-guaranteed loans is:

Approximately 75% of SBA-guaranteed loans go to small businesses start-ups.

________ is (are)a method of financing frequently employed by retailers of "big ticket items"-autos and major appliances.

SBICs must invest at least ________ percent of their capital in smaller businesses,which are defined by the SBA as those with a tangible net worth of less than $6 million and an average of $2 million in net income over the previous two years at the time of investment.

What is an asset-based lender? What are the most common types of asset-based financing?

Entrepreneurs: the Driving Force Behind Small Business

Ethics and Social Responsibility: Doing the Right Thing

Creativity and Innovation: Keys to Entrepreneurial Success

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

New Business Planning Process: Feasibility Analysis,business Modeling,

Building a Bootstrap Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Creating a Solid Financial Plan

Managing Cash Flow

Sources of Equity Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Management Succession and Risk Management Strategies in the Family Business

The Legal Environment: Business Law and Government Regulation

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