Question 1

Equity financing requires collateral.

Accepted Answer

A) True 
 B)False

Question 2

The SBA's primary business loan program is:

Accepted Answer

A)  the Microloan.
B)  the SBIR.
C)  the 7(a) loan.
D)  the 504.

Question 3

When new equipment is being purchased or presently owned equipment is used as collateral,usually 50 to 80 percent of the value of the equipment can be financed depending on its salability.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not a form of cash flow financing?

Accepted Answer

A)  Trust receipt
B)  Character loan
C)  Line of credit
D)  Installment loan

Question 5

In a factoring arrangement,the factor:

Accepted Answer

A)  takes no risk and sustains no losses.
B)  "buys" the accounts receivables of a firm.
C)  receives no interest payment.
D)  pays a premium for the firm's assets.

Question 6

To improve the chances of being approved for a bank loan,the entrepreneur should prepare a "mini" business plan for the loan committee.

Accepted Answer

A) True 
 B)False

Question 7

Bootstrap financing helps avoid some of the problems of external capital like decreases in flexibility and increased impulse to spend.

Accepted Answer

A) True 
 B)False

Question 8

Long-term debt financing is normally used to provide working capital to finance inventory,accounts receivable,and operation of the business.

Accepted Answer

A) True 
 B)False

Question 9

Typically,debt financing requires:

Accepted Answer

A)  an asset as collateral.
B)  a degree of ownership in the firm.
C)  reduction of short-term assets.
D)  reduction of working capital.

Question 10

In a straight commercial loan funds are typically used for what time period?

Accepted Answer

A)  Less than 30 days
B)  30-90 days
C)  180 days
D)  Up to one year

Question 11

In a factoring arrangement,the bank lends the business money using inventory as collateral.

Accepted Answer

A) True 
 B)False

Question 12

The five C's of credit are character,capacity,collateral,capital and competence.

Accepted Answer

A) True 
 B)False

Question 13

Bootstrap financing involves using any possible method,such as discounts for volume purchasing,to conserve cash.

Accepted Answer

A) True 
 B)False

Question 14

Private offerings:

Accepted Answer

A)  must comply with Regulation D.
B)  involve more time and expense than public offerings.
C)  do not involve the SEC.
D)  are not a viable option for new ventures.

Question 15

Banks will lend a company up to 50% of their account receivable value.

Accepted Answer

A) True 
 B)False

Question 16

The most frequently used source of funds for start-ups is:

Accepted Answer

A)  the entrepreneur's personal funds.
B)  bank loans.
C)  credit cards.
D)  SBA loans.

Question 17

Equity partnerships,royalty partnerships,and joint ventures are used in the ___________ stage of limited partnerships to reap the benefits of the effort.

Accepted Answer

A)  funding
B)  development
C)  exit
D)  all of these.

Question 18

______ financing entails obtaining funds for the company in exchange for ownership.

Accepted Answer

A)  Bootstrap
B)  Equity
C)  Debt
D)  Commercial

Question 19

The SBA 7(a)loan program has a maximum loan amount of $5 million.

Accepted Answer

A) True 
 B)False

Question 20

Which grant program requires partners at universities or other non-profit institutions?

Accepted Answer

A)  The 504 program
B)  Small Business Innovation Research
C)  The SBA 7(a) 
D)  Small Business Technology Transfer

Exam 11: Sources of Capital

When new equipment is being purchased or presently owned equipment is used as collateral,usually 50 to 80 percent of the value of the equipment can be financed depending on its salability.

Correct AnswerverifiedShow Answer

Bootstrap financing involves using any possible method,such as discounts for volume purchasing,to conserve cash.

Correct AnswerverifiedShow Answer

The five C's of credit are character,capacity,collateral,capital and competence.

Correct AnswerverifiedShow Answer

In a straight commercial loan funds are typically used for what time period?

Correct AnswerverifiedShow Answer

Equity partnerships,royalty partnerships,and joint ventures are used in the ___________ stage of limited partnerships to reap the benefits of the effort.

Correct AnswerverifiedShow Answer

Banks will lend a company up to 50% of their account receivable value.

Correct AnswerverifiedShow Answer

In a factoring arrangement,the bank lends the business money using inventory as collateral.

Correct AnswerverifiedShow Answer

Private offerings:

Correct AnswerverifiedShow Answer

Which of the following is not a form of cash flow financing?

Correct AnswerverifiedShow Answer

The most frequently used source of funds for start-ups is:

Correct AnswerverifiedShow Answer

Typically,debt financing requires:

Correct AnswerverifiedShow Answer

The SBA 7(a)loan program has a maximum loan amount of $5 million.

Correct AnswerverifiedShow Answer

Long-term debt financing is normally used to provide working capital to finance inventory,accounts receivable,and operation of the business.

Correct AnswerverifiedShow Answer

To improve the chances of being approved for a bank loan,the entrepreneur should prepare a "mini" business plan for the loan committee.

Correct AnswerverifiedShow Answer

Equity financing requires collateral.

Correct AnswerverifiedShow Answer

In a factoring arrangement,the factor:

Correct AnswerverifiedShow Answer

Which grant program requires partners at universities or other non-profit institutions?

Correct AnswerverifiedShow Answer

Bootstrap financing helps avoid some of the problems of external capital like decreases in flexibility and increased impulse to spend.

Correct AnswerverifiedShow Answer

The SBA's primary business loan program is:

Correct AnswerverifiedShow Answer

______ financing entails obtaining funds for the company in exchange for ownership.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified