Financing a Business

What is start-up capital?

• Money borrowed from banks only
• Cash used to start a business
• Profits earned in the first year
• Monthly business expenses

What does equity in a business represent?

• The total debt of the business
• Monthly revenue streams
• Amount of ownership in a business
• Number of employees

Sophia is starting a tech company and is looking for investors. She finds an investor who typically invests at least $3-5 million and requires 25% equity. Which type of investor is this?

• Angel investors

• Bank lenders

• Venture capitalists

• Family members

What is the term for assets that can be taken if a loan isn't repaid?

• Trade credit
• Equity financing
• Start-up costs
• Collateral

What is equity financing?

• A bank loan with interest
• A short-term business loan
• Raising money in exchange for ownership percentage
• Monthly payment plans

What is the maximum typical investment amount for angel investors?

• $1 million
• $5 million
• $10 million
• $500,000

Aiden is looking to expand his online business and is considering different sources of debt financing. Which option involves creating an online business profile?

• Trade credit

• Bank loans

• Social lending

• SBA loans

Grace runs a small bakery and needs to purchase flour and sugar from a supplier. The supplier offers her a credit line to pay for these goods at a later date. What is this arrangement called?

• A government grant

• Trade credit

• Stock market trading

• Personal savings investment

What organization helps negotiate loans for businesses that don't qualify independently?

• Federal Reserve
• Angel investors
• Venture capitalists
• Small Business Administration

What is self-funding?

• Using loans from multiple banks
• Getting investors from online platforms
• Using only personal funds for 100% equity
• Borrowing from family members