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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?
Copyright © 2019 Pearson Education, Inc.
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
Copyright © 2019 Pearson Education, Inc.
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?
Copyright © 2019 Pearson Education, Inc.
Chapter 15, Page 256
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
