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Exam 11: Sources of Capital

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Question 41

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Typically,debt financing requires:

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

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Question 42

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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.

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Question 43

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In a factoring arrangement,the factor:

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

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

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

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

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

Equity financing requires collateral.

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

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

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

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

The SBA's primary business loan program is:

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

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

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

Private offerings:

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

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