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Exam 15: Sources of Debt Financing

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Question 21

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When a bank proves the quality of its loan decisions to the SBA and becomes a ________ lender,the bank makes the final lending decision itself,subject to SBA review for the guarantee.

A) preferred
B) qualified
C) certified
D) LDC

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Question 22

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Under what circumstances should the small business owner consider borrowing money?

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•Increasing the company's workforce and/...

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Question 23

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Jones Manufacturing has been in business for 30 years.About 3 years ago,the company spent about $2.5 million in upgrading / purchasing new equipment.Currently,due to bad weather,the company is suffering cash flow problems and is not able to pay its expenses or inventory purchases.One option for financing would be:

Factoring:

Private placement debt is a hybrid between a conventional loan and a bond.

Savings and loan associations typically specialize in loans for:

The most common method of SBIC financing is the:

Trade credit,while more difficult to obtain than bank financing,is a somewhat important source of financing to most established companies.

When a bank makes enough good SBA-guaranteed loans to become a ________ lender,the SBA promises a faster turnaround time for the loan decision-typically 3 to 10 business days.

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

This program was started to encourage small businesses that wanted to expand their research and development efforts.It has made over 36,000 awards in excess of $10 billion.

The SBA's immediate participation loans are a mix of private and public funds,and the SBA is prohibited from financing more than 75% of the loan.

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

The majority of the loans a commercial finance company makes are unsecured by collateral.

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:

SBICs are privately owned financial institutions that are licensed and regulated by the SBA.

Small Business Lending Companies (SBLCs)make only intermediate and long- term SBA-guaranteed loans.

A(n) ________ is a private nonprofit financial institution that will make small loans to its members for the purpose of starting a business.

________ were created by the SBA in 1992 to provide loans under $35,000 that are normally shunned by banks.

Which of the following factors do banks focus on when lending money to a company?