Chapter 10

According to recent research, __________ of new small firms survive for five or more years.

45%

An organization that collects, analysis, and resells information supplied by financial institutions and others who extend credit is referred to as ________.

A credit reporting agency

Beach Bake, a small maker of a new sunscreen, needs financing to build a warehouse. The owner wants to avoid personal loans. What type of financing would you recommend?

Asset-based

Financing a business by finding creativity stretching existing capital as far as possible, including the use of the entrepreneur's time is called ____________.

Bootstrap financing

Credit extended by a company allowing qualified customers to make purchases up to a specified limit, without paying cash at the time of purchase refers to ___________.

Charge accounts

what type of business loans is typically provided by a bank or other financial institution?

Commercial loan

Which type of institution are for-profit corporations that provide capital to rebuild economically distressed communities through targeted lending and investing?

Community Development Banks

Which business financing source provides funds to be used to rebuild communities through targeted lending?

Community development banks

The five C's of credit include collateral, character, capacity, capital, and ________.

Conditions

_________ refers to the amount a borrower us obligated to pay in a given period until a loan is payed.

Debt service

_________ refers to the results of a borrower failing to meet the repayment agreement on a debt.

Default

_________ refers to the amount of a bond to be repaid by the corporations or government a its maturity.

Face Value

According to the text, recent research shows that 45 percent of new small firms survive for __________.

Five or more years

Which of the following is a advantage of equity financing?

If the business does not make a profit, the investor does not get paid.

Which of the following is NOT true of sources of capital for your business?

It is important to capture the interest of the reader in the executive summary or the plan is unlikely to be read.

What percentage of small firms use any form of credit to finance their business?

Just over 80%

Which of the following is a disadvantage of debt financing?

Lenders expect regular financial reporting and compliance with the loan contracts.

When a company is financed by debt, as opposed to equity, we say that it is________.

Leveraged

Community Development Loan Funds offer main types of loans funds including all of the following except ________.

Macroentreprise

D&B research found that more than half of all new small companies can expect to survive for __________.

No more than one year

_______ refers to the amount of risk or threat of loss that an individual is willing to sustain.

Risk tolerance

Which statement is NOT true of how stocks work?

Stocks can be either preferred or common

Which of the following phrases refers to the direct reduction of taxes?

Tax credit

Bob started his company, Big Drain Excavation last year. He is hoping to borrow some money, but to understand the five C's of credit. Which of the following is NOT true?

The lender will obtain your credit report from your bank.

An investor or investment company whose specialty is financing new, high-potential entrepreneurial companies and second stage companies is know as a __________.

Venture Capitalist