SBM I Test 3

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studytaz
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176210
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SBM I Test 3
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2012-10-08 13:49:28
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SBM I Test 3
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  1. 3 Sources of funding from  within  your business?
    • Profits
    • Customers
    • Suppliers - Trade credit
  2. 3 general sources of equity funds available to  corporation
    • common stoock
    • preferred stock
    • ????????
  3. 7 (m) Microloan Program 
    the SBA's primary bsiness loan program  to help qualified small businesses obtain financing 
  4. adantages of internal sources of funding
    • 1. low cost, may save money
    • 2. careful mgmt makes external  sources more available
    • 3. low risk
    • 4. maximum flexibility
    • 5. you retain control
  5. asset based loan
    a line of credit secured by working capital assets
  6. chattel mortgage
    a loan  for which items of inventory or other movable property serve as collateral
  7. Circulating capital
    Working capital
    the difference between current assets and current liabilities

    cash reserves.

    all assets that can be readily  converted into  cash.

    the current asset items consisting of cash,  inventories, and A/R.
  8. commercial notes
    issued by banks and other lending institutions for short periods, generally thirty to ninety days, but given up to six months

    these notes are usually repaid in one lump sum on the maturity date.

    often there is no collateral on these loans, although some may be required, depending on the borrower's credit standing.

    a compensating balance may also be required.

    this means that some portion of the loan must remain in one of the business's accounts at the bank.
  9. common stock
    represents ownership in the corporation.
  10. corporation
    a legal form of organization whereby  legal entity is authorized by a state to operate a business under the entity's charter or articles of incorporation.
  11. debt financing
    debt is classified by the length of  time that you have to pay it back.
  12. equity
    capital invested by owner(s)

    those that are generated by the invested capital of a firm
  13. examples of circulating capital
    cash, inventories, A/R
  14. examples of fixed capital
    buildings, land/property, machinery, furniture, etc.
  15. examples of intermediate debt
    vehicles, fixtures, etc.
  16. examples of short-term debt
    commercial notes, A/R financing, factoring, inventory loans, line of credit, etc.
  17. factoring
    obtaining cash before payments are received from customers by selling off one's acounts receivable to a third party

    another type of accounts receivble.
  18. fixed capital
    long-term capital that is invested in the small business

    funds invested in long-term assets

    assets that will be retained for a very long time
  19. initial public offering
    the issuance of stock that is to be traded in public financial markets
  20. interal sources of funding
    profits, customers, suppliers-trade credit
  21. externnal sources of funding
    equity, debt financing, banks
  22. limited liability
  23. line of credit
    an understanding between a bank and the business indicating the maximum amount the bank is willing to loan the borrower
  24. long term debt
    debt with a maturity date beyond five years
  25. mortgage loan
    a loan secured by a mortgage on property
  26. needs for business financing
    • 1. to start a new business
    • 2. the establishment & maintaining working capital
    • 3. seasonal peaks
    • 4. equipment
    • 5. physical expansion
  27. partnership
    a form of legal organization in which a business association made up of two or more persons is formed for the purpose of carryinng on as co-owners
  28. sole proprietorship
    proprietorship
    a legal form of organization whereby the business is owned and operated by one person
  29. unsecured term loan
    issued to a company that can prove it has financial strength & profitability to repay the loan

    owners contribute 40-50% of the required equity
  30. working capital
    circulating capital

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