978-0134741086 Chapter 15 Part 3

15-17. Outline and briefly describe the major types of short-term, intermediate, and

long-term loans commercial banks offer. (LO 4)

Short-term loans are those that are intended to be less than one year, are the most

common type of commercial loan banks make to small companies. These loans are

further borrowing without bank permission, or maintenance of certain financial

15-18. What is trade credit?

15-19. How important is trade credit as a source of debt financing to small firms?

15-21. How does an SBIC operate?

Chapter 15, Page 254

Small Business Investment Companies (SBICs) are privately owned financial institutions

that are licensed by the SBA and use a combination of private capital and federally

guaranteed debt to provide long-term venture capital to small businesses.

15-22. What methods of financing do SBICs rely on most heavily? (LO 4)

15-23. Explain the advantages and disadvantages of using crowdfunding.

Crowdfunding is a method of raising capital that taps the power of social networking and

allows entrepreneurs to post their elevator pitches and proposed investment terms on

specialized Web sites and raise money from ordinary people who invest as little as $100.

15-24. Briefly describe the loan programs offered by the Economic Development

Administration. (LO 5)

15-25. Briefly describe the loan programs offered by the Department of Housing

and Urban Development (LO 5)

15-26. Briefly describe the loan programs offered by the Department of Agriculture.

(LO 5)

The Department of Agriculture’s loan program is open to all businesses and is designed to

Chapter 15, Page 255

rural environment. The Rural Development Rural Business Services (RBS) does not make

direct loans to small businesses, but will guarantee bank loans.

15-27. Explain the purpose and the methods of operation of the Small Business

Innovation Research Program and the Small Business Technology Transfer

Program. (LO 6)

15-28. What is a factor? (LO 6)

15-29. How does the typical factor operate?

15-30. Explain the advantages and the disadvantages of using factors as a source of

15-31. Explain how an entrepreneur can use retirement funding to start a business

15-32. How do merchant cash advances work as a course of financing a small

15-33. What is peer-to-peer lending?

15-34. What is the role and function of loan brokers?

Loan brokers specialize in finding loans by looking to a wide network of lenders.

15-35. What role do credit cards play in financing small business?

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Credit cards are a source of financing for entrepreneurs that may not be able to find other

options. Credit cards may be the entrepreneur’s only choice for financing.

Advantages of credits cards include:

 A source of easy–to–access funds that is quickly available

 Flexible repayment options

 Attractive short-term alternative to financing

15-36. Explain the dangers of using credit cards to finance the start-up costs of a

small business. (LO 6)

Disadvantages of using credit cards include:

Part 5: Case Studies

The following text cases may be used for lecture and assignments for topics presented in

this chapter.

 Case 2: Bark & Co.

 Case 4: ThinkImpact

Part 6: Online Videos and Podcasts

These online videos may enhance class discussion and provide additional insight for the

chapter topics.

 BioLumix: Investing Your Own Money First 6:54 minutes

http://www.youtube.com/watch?v=VR4khyTQrDc&feature=channel

 Find Investors – Which money Is Best Debt or Equity? 2:18 minutes

http://www.youtube.com/watch?v=ru8BNWiD13o

 What Angel Investors Want 6:02 minutes

http://www.youtube.com/watch?v=bR4XfgalYkw

 How to Find an Angel Investor 3:24 minutes

http://www.youtube.com/watch?v=z5g9XRATVSI

 Best Crowdfunding Sites 4:13 minutes

http://www.youtube.com/watch?v=GqVeh_CjjP0

 SBA Loans Explained (7 A Loan Program) 2:07 minutes

http://www.sba.gov/tools/sba-learning-center/video/sba-loans-explained

Links to additional online resources are available on the companion Web site at