GB 370 Unit 5 Test

Professional Venture Capitalist look for:

***STRONG MANAGEMENT - Proprietary strength - Window of opportunity - Market potential - Return on investment

This ensures a business against accidents and injuries that may happen on its premises.

General Liability

This covers medical, rehabilitation costs and lost wages for employees injured on the job.

Workers Compensation

What are the 4 C's of credit?

credit, character, capacity, collateral

2/10, net 30

if the amount due is paid within 10 days, the customer will enjoy a 2% discount. Otherwise, the amount is due in full within 30 days.

Affiliated Angel

someone who has contact with you or your business but not necessarily related or acquainted with you Examples: - Professionals - Business associates including suppliers/vendors, customers, & employees - Competitors - Angel.co

What is one of the best sources for grants?

the government (Small Business Innovation Research (SBIR) Program)

What are the two basic points to the customer credit policy?

1. Limiting Credit Risk 2. Diligently investigating each company's creditworthiness.

What are the 4 fundamental coverages in the basic insurance package?

1. Worker's compensation 2. General Liability 3. Auto and Property Casualty 4. An umbrella Policy

The primary and most flexible loan program; provides maximum loan guarantees

7(a) loan program

Small business set-aside program that allows certified socially and economically disadvantaged companies to enter the federal procurement market in addition to the economic mainstream

8(a) Business Development Plan

You may need this if employees have company cars or drive a delivery van.

Auto Insurance

Usually written under another name, they can be identified by the fact that the full amount is received when the contract is signed, but only the interest is paid off during the life of the loan; "balloon" payment is due on the final day Ex: Line of Credit

Balloon Loans

Someone who represents many companies?

Broker - They can shop multiple insurance companies

This accounts for the income that you lose while your business is unable to function during a disaster.

Business Interruption Coverage

this provides long-term, fixed-rate loans for financing fixed assets, usually real estate and equipment, most often used for growth and expansion; the SBA has certain types of expectations for this type of loan.

CDC/504 Loan Program

Someone who represents one insurance company?

Direct Writer - They have more clout for a specific company.

This can guarantee a fixed amount of income, usually 60% of your average income, while you're receiving treatment or unable to work.

Disability Insurance

Debit card swipe fees are capped under?

Dodd Frank

Credit is...

Everywhere - buy something, credit comes from the vendor - sell something, frequently giving credit to the customer.

The second most popular source for startup money is composed of?

Friends, relatives, and business associates 1. first find the right person to borrow money from (don't enlist those with ulterior motives) 2. Then approach in an INFORMAL situation to gauge their interest in your business. 3. if interested, follow up FORMALLY with business plan and sales presentation. (BE PREPARED TO ACCEPT REJECTION)

these are paid back with equal monthly payments covering the principal and interest; receive the full amount when the contract is signed, with interest calculated to the final date of the loan.

Installment Loan

With these, bankers are concerned with who will be paying off the loan, and whether that commitment is reliable.

Interim Loans

a source of private capital, referring to anyone who invests their money in an entrepreneurial company. - typically not millionaires

Investment Angel

Scale Massively (Levels of Money)

Large;VC, Crowd Equity

Typically used in international trade; allows entrepreneurs to guarantee payment to suppliers in other countries; substitutes the bank's credit for the entrepreneur's for a set amount during a specific period of time.

Letter of Credit

The most useful type of loan for the small business as it protects the business from emergencies and stalled cash flow. - NOT INTENDED for purchases of real estate or equipment - Short - Most are written for periods of one year and can be renewed.

Line of Credit Loan

This is like your sales tool, and must convince your lender that you will pay back the loan as promised.

Loan Application

What is the difference between venture capital companies and angels?

Many angels are not motivated solely by profit

Medium (Levels of Money)

Medium; Banks, Angels

To accept credit card payment, your business must establish?

Merchant status with each of the credit card companies whose card you want to accept

This program helps entrepreneurs get small loans and is unique because it assists borrowers who do not meet traditional lenders' standards.

MicroLoan Program

Capital

Money to start your business and buy things you need

What is step one of the process?

PLAN - In order to raise money, you need to know much money you need. - Create a 12 month budget, be aware of what you can change from month to month. - Go light and borrow --> Rent

promises quick processing for amounts less than $350,000

SBA Express Program

This type of loan requires some type of collateral(maybe real estate or inventory), but generally has a lower interest rate. Ex: Mortgage

Secure Loan

Concept (Levels of Money)

Small amount; Yourself, family, friends

Credit cards increase the probability, speed and size of customer purchases. True or False?

True

When it comes to insurance, you get what you pay for. True or False?

True

You never have to pay back equity. True or False?

True

You have to pay back a debt. True or False?

True - debt financing is receiving the money in the form of a loan that you have to REPAY

As a business, you are not legally obligated to accept cash. True or False?

True (can vary by state, but MS has no problem)

When private financing turns you down, where is the best place to try?

U.S. Small Business Administration

Many insurance agents recommend this as an additional layer of protection; this protects you for payments in excess of your existing coverage, or those not covered by your existing insurance policies.

Umbrella Coverage

This type of loan occurs if you are low risk. Generally requires a track record of success. Ex: Credit Cards

Unsecure Loan

What is not easy to come by and luck plays a factor in getting them to invest in your startup.

Venture Capitalist (These funds are most likely to be given to an established company with a proven record.

this can come from various sources, including venture capital firms and private investors

equity finances

Common mistake for startup businesses?

failing to buy adequate insurance - invest a little more to protect what you have already invested.

Nonaffiliated Angel

has no connection to either you or your business Examples: - Professionals - Middle Managers - Entrepreneurs