Bell Ringer: Chapter 7 Financial Planning Lessons 4-5

What is one type of bootstrapping that cannot be used for a business start-up?

• Bartering, factoring, and use of credit cards

• Factoring, personal loans, and bank loans

• Bank loans, credit card debt, and leasing equipment

• Trade credit, crowdfunding, and bartering

What are two methods of bootstrapping

• Minimizing waste and acquiring new resources

• Applying for a bank loan and using crowdfunding

• Efficiently utilizing the resources you have and minimizing waste

• Efficiently utilizing the resources you have and acquiring new resources.

What is bootstrapping used for

• It is an inventory management tool.

• It is used to avoid paying taxes on business financing

• Gaining financial resources to start and grow your business

• It is used as an employee incentive.

What is one type of bootstrapping that cannot be used for a business start-up?

• Factoring

• Personal loans

• Bartering

• Credit card debt

When is bootstrapping used?

• Anytime that a small business needs to raise cash or access resources

• It is only used to purchase inventory

• It is only used to buy real estate

• During the start up phase of a business.

Which of the following is typically an acceptable asset used to guarantee an asset-based loan?

• Client lists

• Intellectual property

• Credit score

• Accounts receivable

Which of the following is TRUE of a company that is young and lacks significant assets?

• A young company is more likely than an established company to use asset-based lending

• It will have difficulty obtaining financing with asset-based lending

• It can obtain an asset-based loan solely on the basis of the owner's credit score

• The only asset-based loan available will be a line of credit

Which of the following is TRUE of asset-based loan product lenders?

• As the loan amount increases, it costs the lender more to originate and service the loan

• Asset-based lenders focus solely on the value of the pledged assets

• It costs about the same to manage a large loan as it does a small one

• Asset-based lenders only consider highly liquid assets such as inventory.

Which of the following is a common use for the proceeds of asset-based lending?

• Purchase inventory for upcoming high demand period

• Make payroll during a slow business period

• All of these answers are correct

• Purchase tools and equipment to launch a new product

Which of the following is an example of a form of asset-based lending?

• Mortgage

• Bonds

• Line of credit

• Signature credit card