396 Ch. 12 Pt. 2

Will has decided to invest $10,000 into his neighbor's new company. The money will be used in the early stages of development. Will is considered a

business angel.

Instead of borrowing money from suppliers to purchase equipment, an increasing number of small businesses are

choosing to lease the equipment.

Sandy is using a governmental program to help finance her new business. Her company is not eligible for a loan through a normal lending channel and is receiving $120,000 with the SBA guaranteeing 85 percent of the loan. She also had to submit a loan application to the lender. Ellie is participating in the

7(a) Loan Guaranty Program.

Elena plans to open a non-profit child-care center in her depressed neighborhood. She may qualify for an SBA loan program that provides loans of up to $50,000 known as the:

7(m) Microloan Program.

Vicki is a business angel who is looking for a start-up company in which to invest. Which company would she most likely invest in based on current research?

A business in an industry in which she has had experience

Isaac is looking for a business angel. His best chance of finding one is through:

contact with business associates, accountants and lawyers.

Martina wants to expand her business. She will need to buy a larger facility and equip it with additional machinery. She should look into the SBA loan program that provides long-term financing for small businesses to acquire real estate or machinery and equipment called the:

Certified Development Company 504 Loan Program.

Novelty Shirts is a manufacturing company needing to expand its production facilities. Which SBA program would be best to acquire real estate valued at $150,000?

Certified Development Company 504 Loan Program.

Connie owns a small but growing company that produces gorilla glass for smartphones. One possible source of funding might be:

Samsung, who sells smartphones.

Barbara runs an Italian restaurant and is currently considering leasing or purchasing some updated equipment. What statement is correct?

Since the equipment she is buying will become outdated in two years, leasing would be a better option than purchasing.

Barry needs financing to start his inner-city venture. His goal is to provide part-time employment for at-risk youths to keep them off the streets and engaged in learning marketable skills. Barry may find some assistance from:

a community-based financial institution.

Irwin has applied for a loan from an asset-based lending company. As security he will offer:

accounts receivable and inventory.

Lyman's business has grown to 400 employees with annual revenues of $15 million. He would like to expand further but needs another $5 million. He should consider:

an SBIC loan.

Venture capital companies

are often limited partnerships that raise capital from other investors.

Harlan's customers have been a little slow in paying their invoices and he is short on cash to pay his quarterly taxes. Harlan should consider:

factoring.

Chuck, Marie and Tommy are a group of friends who have formed a LLC to raise capital for an investment in 20 franchises of Rigby's, a new sports bar concept. Tommy will be the general partner; Chuck and Marie will be limited partners. These three are:

formal venture capitalists.

In groups of business angels,

individual angels make personal decisions about whether or not to invest.

Business angels, as opposed to venture capitalists, provide

informal venture capital.

The type of financing Evangeline received from a business angel is known as:

informal venture capital.

Many venture capitalists:

intend to cash out after five to seven years.

Private placement

is the sale of capital stock to selected individuals.

Guaranty loans are

made by private lenders.

If Janelle were to use crowdfunding as a means of attracting equity investors, she would have to:

make sure each investor was accredited.

Before accepting money from a business angel, the entrepreneur should:

make sure the business angel is accredited.

Small business investment companies (SBICs)

may lend funds or supply equity funds.

A drawback to "going public" is

numerous SEC requirements.

Nancy has decided to raise working capital for her upscale boutique business which currently has four locations and is considering franchising the concept in the next few years. Because of the current company organization and anticipated future plans, the most likely form of financing would be ________.

public sale

Ralph owns a lumber yard and has a $500,000 purchase order from a construction company. His cost of goods sold for this order is $300,000 Because his company needs working capital, the most logical loan for the lumberyard would be to use ________.

purchase order financing.

Miracle Fund LLC is a venture capitalist. In exchange for providing venture capital, Miracle Fund:

receives the right to own a percentage of the entrepreneur's business.

Wounded Warriors runs TV ads requesting viewers support their program by sending money in exchange for a blanket. This type of crowdfunding uses the ___________ approach.

rewards

The federal government primarily provides funds to small businesses through

the Small Business Administration.