Chapter 12 Mindtap Assignment

A/n ___________________ must have an income of at least $200,000 or a net worth of at least $1 million, not including the primary residence.

Accredited Investor

The best description of the difference between angel investors and venture capitalists is:

Angels invest their own money in early-stage businesses; venture capitalists invest other peoples' money in later-stage businesses.

Which of the following statements is most accurate concerning financing for businesses?

Businesses that have an established track record are more likely to receive financing from banks and other financial institutions.

Restrictions that limit or require certain activities as conditions of a loan are called:

Covenants.

______________ is an arrangement with a loaning entity that purchases a business's accounts receivable and advances the business a percentage.

Factoring

A __________ is an informal agreement between a borrower and a bank concerning the maximum amount of funds the lender will provide at any given time.

Line of Credit

The best description of the current (as of early 2015) state of equity-based crowdfunding is

Only accredited investors can make actual equity investments.

During early-stages of a business, equity financing is preferred to debt financing because:

Outside investors like to see a founder put "skin in the game." AND Paying interest on debt is generally unaffordable for a new business. (A and B)