Microenterprise 2/6

The maturity of a loan:

• how long it takes to receive loan approval from the bank

• the time frame by which the borrower must repay the loan

• the interest rate of the loan

• the balance of an outstanding loan

A guarantor:

• must be a business or individual in the state

• assumes no legal responsibilities

• has limited liquidity (liquid cash)

• is a creditworthy individual or business responsible for repaying a loan if a debt holder cannot

Bank Loan Application:

• can only be completed in the presence of a banker in regular work hours

• are easy to complete

• are short

• can be intimidating, complex, and detailed

Online loans are:

• only available to companies in a limited number of industries

• easier to obtain and less expensive than bank loans

• easier to obtain but more expensive than bank loans

• easier to obtain and about the same cost as a bank loan

Loan applications require

• applicants to provide personal and business information that must be truthful

• applicants to offer a guarantee to take whatever loan terms are offered

• completion in one sitting

• applicants pay for the right to submit an application

One critical difference between bank loans and online loans is:

• applicants only have to be completely truthful on a bank application

• none-pretty much the same

• the amount of information the application must provide

• the amount of money the applicant can request

To determine whether a business opportunity is realistic, the entrepreneur must:

• determine how much capital is required to launch the business

• determine the corporate officers of the competitors

• determine the color scheme of the company's proposed logo

• determine how the company will advertise

The fixed cost of a business

• must be different each month

• include the cost of production materials

• are the same no matter how many customers the business serves

• must exceed variable costs

A business plan has the following purpose:

• serves as collateral that a company can take to a bank to secure guaranteed loans

• serves as a required filing with the Internal Revenue Service

• describes in detail how the company's product or service will be differentiated versus its competition

• describes in detail how the company will set up its headquarters office

Businesses should always set their prices:

• lower than their competitor's prices

• low enough so that the revenues are below variable expenses

• to reflect the value of their goods or services, not just their costs

• higher than their competitor's prices