Small Business An Entrepreneurs Plan 6th Edition By Ron Knowles – Test Bank

Chapter 11-Financing Your Business

MULTIPLE CHOICE

1. Which of the following can a bank give you?
a. an equity loan
b. a line of credit
c. preferred shares
d. micro-loan

ANS: B
PTS: 1
REF: p.286 | 305 | 307 | 299

2. Which of the following best defines financing which combines long-term lending with an equity position ?
a. bridge
b. mezzanine
c. factoring
d. inventory financing

ANS: B
PTS: 1
REF: p.304

3. Which of the following are an important source of financing for inventory?
a. venture capitalists
b. suppliers
c. angel investors
d. equity investors

ANS: B
PTS: 1
REF: p.290

4. Which of the following best describes venture capital firms?
a. are a major source of small-business financing
b. usually lend money that is secured by inventory
c. normally purchase equity in a business
d. invest in conservative, mature industries

ANS: C
PTS: 1
REF: p.300

5. What advice do the author’s provide regarding CSBF loans?
a. apply at a major bank
b. shop around for the best deal
c. negotiate the interest rate
d. apply online and save the face to face meetings

ANS: B
PTS: 1
REF: p.305

6. Which of the following is a definition of shareholder loans?
a. equity investments that confer part ownership
b. equity investments that earn dividends
c. a type of debt financing
d. loans that can be exchanged for common shares

ANS: C
PTS: 1
REF: p.290

7. According to the textbook, term loans are used by almost 50 percent of small businesses to help finance certain expenses. For which of the following could a term loan be used?
a. the purchase of fixed assets or cost of renovations
b. long-term business operational needs
c. equity investments
d. inventory and accounts receivable financing

ANS: A
PTS: 1
REF: p.306

8. According to the author, if you incorporate your small business, which of the following will occur?
a. no need to personally guarantee your business loan
b. receive interest payments in the form of dividends
c. be legally entitled to issue common shares
d. will not need collateral for a loan

ANS: C
PTS: 1
REF: p.307

9. Which of the following are the most likely source(s) of financing for small-business start-ups?
a. angel investors
b. savings and personal loans
c. CSBF program
d. government lending agencies

ANS: B
PTS: 1
REF: p.290

10. Which of the following services would a bank be LEAST likely to offer?
a. capital goods financing
b. short-term lending
c. equity financing
d. inventory financing

ANS: C
PTS: 1
REF: p. 301