Question 1

The most common type of commercial bank loan granted to small businesses is:

Accepted Answer

A) the short-term commercial loan. 
B) the lines of credit agreement. 
C) the floor plan. 
D) the unsecured term loan. 
A) the short-term commercial loan. 
B) the lines of credit agreement. 
C) the floor plan. 
D) the unsecured term loan.

Question 2

Asset-based financing is an efficient means of borrowing because the business only pays for the capital it actually needs and uses.

Accepted Answer

A) True 
 B)False

Question 3

A popular form of debt financing with large companies,a sort of corporate "IOU," which is becoming more accessible to a growing number of small companies is:

Accepted Answer

A) stockbroker-based loans. 
B) bonds. 
C) commercial bank loans. 
D) SBICs. 
A) stockbroker-based loans. 
B) bonds. 
C) commercial bank loans. 
D) SBICs.

Question 4

SBA loans do not carry special deals or interest rates and typically are set at prime plus 2.25% for loans under seven years in length.

Accepted Answer

A) True 
 B)False

Question 5

Typically,a commercial bank will lend a small business owner 100% of the value of accounts receivable pledged as collateral.

Accepted Answer

A) True 
 B)False

Question 6

Under a CAP,the bank and the borrower each pay an upfront fee (a portion of the loan amount)into a loan-loss reserve fund at the participating bank,and the state matches this amount.

Accepted Answer

A) True 
 B)False

Question 7

Commercial finance companies are willing to take more risks in making loans,but they also charge a higher interest rate.

Accepted Answer

A) True 
 B)False

Question 8

The common short-term loan is for one year,often repaid sooner,and repaid in one lump sum.

Accepted Answer

A) True 
 B)False

Question 9

The maximum disaster loan usually is $2 million.

Accepted Answer

A) True 
 B)False

Question 10

What is an SBIC? How important is it as a source of small business capital? How does it operate?

Accepted Answer

Created by the 1958 Small Business Inves

Question 11

The majority of loans provided by the SBA are direct.

Accepted Answer

A) True 
 B)False

Question 12

Unsecured term loans typically involve very specific terms which may limit the owner's freedom to make financial decisions.

Accepted Answer

A) True 
 B)False

Question 13

A small business owner should avoid borrowing money when he/she sees a downturn in business or to refinance existing debt.

Accepted Answer

A) True 
 B)False

Question 14

Most SBIC loans are between $10,000 and $50,000 and the loan term is longer than most banks allow.

Accepted Answer

A) True 
 B)False

Question 15

The average microloan is for $25,500 with a maturity of 37 months (the maximum term is six years).

Accepted Answer

A) True 
 B)False

Question 16

A small business that uses factoring:

Accepted Answer

A) pledges its accounts receivable as collateral to obtain a loan from a financial institution. 
B) relies on a third-party consultant to apply for SBA-guaranteed loans. 
C) sells its accounts receivable to a third party to get the capital it needs. 
D) borrows money from lenders by offering them the option to convert the loan into stock in the company. 
A) pledges its accounts receivable as collateral to obtain a loan from a financial institution. 
B) relies on a third-party consultant to apply for SBA-guaranteed loans. 
C) sells its accounts receivable to a third party to get the capital it needs. 
D) borrows money from lenders by offering them the option to convert the loan into stock in the company.

Question 17

The Small Business Innovation Research Program was started by the National Science Foundation and spread to 10 other federal agencies with an annual budget in excess of $100 million.

Accepted Answer

A) True 
 B)False

Question 18

Grants to small businesses,made to strengthen the local economy in cities and towns that are considered economically distressed,are made by:

Accepted Answer

A) the Department of Housing and Urban Development. 
B) a local development company. 
C) the Farmers Home Administration. 
D) the Economic Development Administration. 
A) the Department of Housing and Urban Development. 
B) a local development company. 
C) the Farmers Home Administration. 
D) the Economic Development Administration.

Question 19

The most common method of SBIC financing is the:

Accepted Answer

A) equity instrument. 
B) debt instrument combined with equity investment. 
C) debt instrument. 
D) line of credit. 
A) equity instrument. 
B) debt instrument combined with equity investment. 
C) debt instrument. 
D) line of credit.

Question 20

47% of small business owners rely on banks as their source of start-up capital.

Accepted Answer

A) True 
 B)False

Exam 17: Sources of Debt Financing

The most common type of commercial bank loan granted to small businesses is:

Asset-based financing is an efficient means of borrowing because the business only pays for the capital it actually needs and uses.

A popular form of debt financing with large companies,a sort of corporate "IOU," which is becoming more accessible to a growing number of small companies is:

SBA loans do not carry special deals or interest rates and typically are set at prime plus 2.25% for loans under seven years in length.

Typically,a commercial bank will lend a small business owner 100% of the value of accounts receivable pledged as collateral.

Under a CAP,the bank and the borrower each pay an upfront fee (a portion of the loan amount)into a loan-loss reserve fund at the participating bank,and the state matches this amount.

Commercial finance companies are willing to take more risks in making loans,but they also charge a higher interest rate.

The common short-term loan is for one year,often repaid sooner,and repaid in one lump sum.

The maximum disaster loan usually is $2 million.

What is an SBIC? How important is it as a source of small business capital? How does it operate?

The majority of loans provided by the SBA are direct.

Unsecured term loans typically involve very specific terms which may limit the owner's freedom to make financial decisions.

A small business owner should avoid borrowing money when he/she sees a downturn in business or to refinance existing debt.

Most SBIC loans are between $10,000 and $50,000 and the loan term is longer than most banks allow.

The average microloan is for $25,500 with a maturity of 37 months (the maximum term is six years).

A small business that uses factoring:

The Small Business Innovation Research Program was started by the National Science Foundation and spread to 10 other federal agencies with an annual budget in excess of $100 million.

Grants to small businesses,made to strengthen the local economy in cities and towns that are considered economically distressed,are made by:

The most common method of SBIC financing is the:

47% of small business owners rely on banks as their source of start-up capital.

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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