MGT 241 Ball State Ch 13 Quiz
In a typical year, small businesses borrow about:
$1 trillion
_________ are programs that often are sponsored by universities or communities that provide select business start-ups a small amount of seed capital and a wealth of additional support, such as a work space, access to office equipment, mentors, and others.
Accelerators
The average angel investment in a small company is ______, while the average venture capital firm's investment in a small company is ______.
$350,000; $7.4 million
The typical venture capital firm receives about _____ business plans each year and invests in ____ of them.
1,200; 1
Angel investors are most likely to finance start-ups with capital requirements in the _______ range.
$10,000 to $2 million
According to the Global Entrepreneurship Monitor, entrepreneurs need on average ________ to start their businesses.
$15,000
Since 2001, the average number of companies that make initial public offerings in the United States is:
120
Traditionally, about what percentage of venture capital investments go to companies in the start-up and seed phases?
2
About _____ percent of Small Business Administration-backed loans go to start-up companies.
30%
The average corporate venture capital investment in a small company is:
4.5 million
Small and midsize banks approve ___ percent of small business loan requests; large banks approve ___ percent of small business loan requests.
45; 10
What percentage of angel investors' investments in businesses lose money, returning less than the angels' original investment?
52 percent
About _____ percent of new businesses rely on credit cards to finance operations in their first year of business.
58
Which loan program is the Small Business Administration's flagship loan program that involves more than 3,500 private lenders across the United States that make loans to small companies?
7(a) loan guaranty; The 7(a) loan guaranty program accounts for about 75 percent of the SBA's loan activity.
According to the Global Entrepreneurship Monitor, entrepreneurs in the United States rely on personal savings for ___ percent of their start-up companies' total funding.
73
________ invest $24.8 billion annually in more than small 70,000 companies, making them the largest and most important source of external equity capital for small businesses.
Angels
Which of the following statements about angel investors is false?
Angels accept about 55 percent of the deals pitched to them.
What is the most common source of funds entrepreneurs use to start their businesses?
personal savings
Which method of financing involves entrepreneurs tapping the power of the Internet through sites such as Kickstarter, Rock the Post, IndieGoGo, and others, to post their elevator pitches and raise up to $1 million per year from ordinary people, who invest as little as $100?
crowdfunding
After investing her own money, Annie Pratt needed $25,000 to start a small gourmet ice cream shop and approached her parents for a loan. Annie agreed to repay the loan with interest in 60 monthly installments beginning one year from the day she opened her shop. Her parents agreed and provided Annie the start-up capital she needed. What type of capital did Annie get from her parents?
debt capital
Not surprisingly, the most common source of capital for existing small businesses is earnings from the business. What is the next most common source of capital for existing small businesses?
Commercial bank loans
Which source of debt financing is the heart of the debt capital market for small businesses, providing the greatest number and variety of loans to small companies?
Commercial banks
Nearly 1,000 communities across the United States have created ____________ that designate a portion of their loan portfolios to supporting entrepreneurs and small businesses to provide capital to otherwise "unbankable" business owners and aspiring entrepreneurs.
Community Development Financial Institutions
The _________ program covers 11 federal agencies that award cash grants or long-term contracts to small businesses that develop inventive products and services across three phases.
Small Business Innovation Research, SBIR
Which of the following statements about financing a business is false?
The money simply is not out there; entrepreneurs must rely on their own capital to start businesses today.
Which of the following statements about initial public offerings (IPOs) is false?
The number of companies with less than $25 million in annual sales that make IPOs has increased since 2001.
After investing her own money, Annie Pratt needed $25,000 to start a small gourmet ice cream shop and approached her parents for the money. Instead of asking for a loan, however, Annie asks her parents to become investors in her business. They agree and invest $25,000 in Annie's start-up business. What type of capital did Annie get from her parents?
equity capital
Alicia Stone owns a small hardware store and extends credit to many of her customers. To finance the purchase of some much-needed equipment for her business, Alicia sells her company's accounts receivable to generate immediate cash. Alicia is using:
factoring
Lake Murray Marine is a boat dealership located on a lake near a sizeable metropolitan area. Which of the following types of loans would be most appropriate for Lake Murray Marine to finance its inventory of boats?
floor planning
The interest rates that small businesses pay on loans are:
higher than the rates that big businesses pay because of the higher risk associated with making loans to small companies.
________ loans have a preset limit and allow a small business to borrow any amount up to that ceiling at any time.
line of credit
