93) Insurance companies specialize in long-term loans.
Topic: Insurance Companies
AACSB: Analytic Skills
94) Some credit unions are now extending personal loans to members, often without personal
collateral, in order to start a business.
Topic: Credit Unions
AACSB: Analytic Skills
95) Credit unions are best known for making consumer and car loans.
Topic: Credit Unions
AACSB: Analytic Skills
96) Bonds are corporate “IOUs.”
Topic: Bonds
AACSB: Analytic Skills
97) Industrial revenue bonds are a relatively inexpensive source of funds for small
manufacturers.
Topic: Bonds
AACSB: Analytic Skills
98) Private placement debt is a hybrid between a conventional loan and a bond.
Topic: Private Placements
AACSB: Analytic Skills
99) Because private investors are willing to take greater risks than banks, they are more willing
to finance deals through private placements than are banks.
Topic: Private Placements
AACSB: Analytic Skills
21
100) SBICs act as government-backed venture capitalists.
Topic: Small Business Investment Companies (SBICs)
AACSB: Analytic Skills
101) SBICs are an example of a public-private partnership.
Topic: Small Business Investment Companies (SBICs)
AACSB: Analytic Skills
102) An SBIC can lend up to 40% of its private capital to a single client.
Topic: Small Business Investment Companies (SBICs)
AACSB: Analytic Skills
103) SBICs provide only debt financing to small businesses.
Topic: Small Business Investment Companies (SBICs)
AACSB: Analytic Skills
104) Small Business Investment Companies (SBICs) provide both debt and equity financing to
small businesses.
Topic: Small Business Investment Companies (SBICs)
AACSB: Analytic Skills
105) The EDA makes low-interest loans to create new businesses in economically depressed
areas with below-average incomes and high unemployment rates.
Topic: Economic Development Administration (EDA)
AACSB: Analytic Skills
106) Urban Development Grants are used to construct buildings and plants for small businesses
and have no ceilings or geographic limitations.
Topic: Department of Housing and Urban Development (HUD)
AACSB: Analytic Skills
22
107) The Farmers Home Administration only makes loans to small farms.
Topic: U.S. Department of Agriculture’s Rural Business and Cooperative Program and Business
Program
AACSB: Analytic Skills
108) The Farmers Home Administration makes direct loans to small businesses meeting the rural
area criteria in order to create nonfarm employment.
Topic: U.S. Department of Agriculture’s Rural Business and Cooperative Program and Business
Program
AACSB: Analytic Skills
109) The Small Business Innovation Research Program was started by the National Science
Foundation and spread to 10 other federal agencies with an annual budget in excess of $100
million.
Topic: Small Business Innovation Research (SBIR) Program
AACSB: Analytic Skills
110) The Small Business Technology Transfer Act of 1992 supports the SBIR program by
exploiting promising technological developments that come out of small businesses and funds
and guides their practical application to the commercial world.
Topic: Small Business Innovation Research (SBIR) Program
AACSB: Use of IT
111) An entrepreneur seeking an SBA loan guarantee can cut out a tremendous amount of time
and paperwork by working with a bank that is either a certified or a preferred lender.
Topic: Small Business Administration (SBA)
AACSB: Analytic Skills
112) The majority of loans provided by the SBA are direct.
Topic: SBA Loan Programs
AACSB: Analytic Skills
23
113) The SBA’s immediate participation loans are a mix of private and public funds, and the
SBA is prohibited from financing more than 75% of the loan.
Topic: SBA Loan Programs
AACSB: Analytic Skills
114) The average SBA loan guarantee is $150,000 and has an average duration of seven years.
Topic: SBA Loan Programs
AACSB: Analytic Skills
115) Approximately 75% of SBA-guaranteed loans go to small businesses start-ups.
Topic: SBA Loan Programs
AACSB: Analytic Skills
116) SBA loans do not carry special deals or interest rates and typically are set at prime plus
2.25% for loans under seven years in length.
Topic: SBA Loan Programs
AACSB: Analytic Skills
117) Three lenders play a role in every 504 loan: a bank, the SBA, and a certified development
company (CDC).
Topic: Section 504 Certified Development Company Program
AACSB: Analytic Skills
118) The SBA’s Section 504 program is designed to encourage small businesses to expand their
facilities and to create jobs.
Topic: Section 504 Certified Development Company Program
AACSB: Analytic Skills
119) The CDC is the for-profit arm of the SBA.
Topic: Section 504 Certified Development Company Program
AACSB: Multicultural and Diversity
24
120) In a factoring arrangement, the risk of uncollected accounts receivable falls on the small
business owner.
Topic: Factoring Accounts Receivable
AACSB: Analytic Skills
121) Leasing is an effective way to reduce long-term capital requirements for a small business.
Topic: Leasing
AACSB: Analytic Skills
122) Jerry Turner and Michael Clarke needed money to buy equipment and weren’t able to get
either trade credit or a bank loan because they had no assets and didn’t have the cash for a down
payment.
Topic: Leasing
AACSB: Reflective Thinking
123) Credit cards are a ready source of temporary financing that can carry a company through
the start-up phase until it begins generating positive cash flow.
Topic: Credit Cards
AACSB: Analytic Skills
124) New online funding options are emerging to help small businesses with credit.
Topic: Peer-to-Peer Loans
AACSB: Analytic Skills
125) Revolving loan funds (RLFs) combine private and public funds to make loans to small
businesses, often at below-market interest rates.
Topic: State and Local Loan Development Programs
AACSB: Analytic Skills
126) Capital Access Programs (CAPs) that are designed to encourage lending institutions to
make loans to businesses that do not qualify for traditional financing.
Topic: State and Local Loan Development Programs
AACSB: Analytic Skills
25
127) Disaster loans are made to small businesses devastated by some kind of financial or
physical losses.
Topic: Disaster Assistance Loans
AACSB: Analytic Skills
128) When a lender becomes a certified lender, it makes the final lending decision itself, subject
to SBA review.
Topic: Small Business Administration (SBA)
AACSB: Analytic Skills
129) The International Trade Program is for small businesses that are engaging in international
trade or are adversely affected by competition from imports.
Topic: Loans Involving International Trade
AACSB: Analytic Skills
130) The CAPLine Program offers short-term capital to growing companies needing to finance
seasonal buildups in inventory or accounts receivable.
Topic: The CAPLine Program
AACSB: Analytic Skills
131) The Community Development Block Grants (CDBGs) are extended to cities and towns that,
in turn, lend or grant money to entrepreneurs to start small businesses that will strengthen the
local economy.
Topic: Department of Housing and Urban Development (HUD)
AACSB: Analytic Skills
132) The maximum disaster loan usually is $2 million.
Topic: Disaster Assistance Loans
AACSB: Analytic Skills
26