Exam 11: Sources of Funds: Where Do You Get the Money

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Bootstrap financing refers to the practice of starting and growing a business using personal savings, revenue from the business, and other low-cost methods, rather than seeking external funding from investors or lenders. There are several advantages to using bootstrap financing for a business. Firstly, bootstrap financing allows the business owner to maintain full control and ownership of the company. Without outside investors or lenders, the entrepreneur is free to make decisions without having to answer to anyone else. This can lead to greater flexibility and autonomy in running the business. Additionally, bootstrap financing can help the business avoid debt. By using personal savings and revenue from the business to fund growth, the company can avoid taking on high-interest loans or giving up equity to investors. This can lead to a more stable financial position in the long run. Furthermore, bootstrap financing encourages frugality and resourcefulness. When a business is forced to operate with limited resources, it can lead to creative problem-solving and a focus on efficiency. This can ultimately lead to a more sustainable and resilient business model. Finally, bootstrap financing can lead to a stronger and more sustainable business in the long term. By growing the business organically and focusing on profitability from the start, the company can build a solid foundation for future growth and success. Overall, bootstrap financing offers several advantages for entrepreneurs, including maintaining control, avoiding debt, fostering creativity, and building a strong business foundation. While it may require more patience and perseverance, the long-term benefits can be well worth the initial challenges.

A) Seed capital
B) Debt financing
C) IPO sale
D) Venture capital
E) Private placement

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MBDA stands for Minority Business Develo...

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A) Commercial banks
B) Commercial finance companies
C) Lines of credit
D) Issuing public stock
E) Issuing private stock

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A, B, C

A) Long-term
B) Interim
C) Bootstrapping
D) Initialized
E) Short-term

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True

A) Bank
B) Bootstrap
C) Trade
D) Lease
E) Home equity

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Debt financing is a method of raising ca...

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A) Intermediate
B) Short-term
C) Long-term
D) Interim
E) Investment

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A) SCARE (Service Citizens and Retired Entities)
B) MBDA (Minority Business Development Agency)
C) NAACP (National Association for the Advancement of Colored People)
D) SCORE (Service Corps of Retired Executives)
E) Round Table Companies

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A) Commercial bank financing
B) Seed financing
C) Savings
D) Friends' money
E) Angel fund

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A) equity, debt
B) income, loss
C) net worth, real worth
D) corporate, non-corporate
E) asset, liability

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A) buffer
B) angel
C) Good Samaritan
D) partner
E) venturists

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