Sources of Funds for Entrepreneurs

An entrepreneur uses ₦500,000 in personal savings and gets ₦300,000 from supplier credit. What percentage of the startup capital comes from personal savings?

• 60%

• 62.5%

• 40%

• 50%

Chika started a catering business and borrowed ₦250,000 from her aunt without a written agreement. She now finds it hard to repay. Which funding disadvantage is this situation showing?

• Limited access to funds

• Loss of business control

• Risk to personal relationships

• Unpredictable interest rates

A tech company rents computers and servers rather than purchasing them outright. What source of funding is the company using?

• Equipment leasing

• Credit purchase

• Hire purchase

• Sale of debentures

A company raised ₦10 million by issuing debentures. It now has to pay back interest quarterly. What is the major implication of this?

• The business must share ownership

• The business bears financial pressure despite profits or losses

• The business avoids regular cash outflow

• The debt converts to equity

Which of the following is the MOST financially risky for an entrepreneur if sales fall?

• Credit purchase

• Government grant

• Personal savings

• Bank loan

Why might an entrepreneur prefer retained earnings over selling shares?

• Selling shares leads to tax advantages

• Shares offer more long-term stability

• Retained earnings increase ownership

• Retained earnings avoid giving up control

If Tolu needs ₦1,000,000 to start a business and has ₦600,000 in personal savings and gets ₦200,000 as a supplier credit, how much more does she need?

• ₦200,000

• ₦400,000

• ₦800,000

• ₦1,000,000

Which of the following would be the least advisable source of funding for a new entrepreneur who does not want external control?

• Sale of shares

• Personal savings

• Government subsidy

• Bank overdraft

Which of the following is a short-term source of finance?

• Sale of debentures

• Equipment leasing

• Credit purchase

• Retained earnings

Which of the following is a major disadvantage of using personal savings to finance a business?

• Interest payments must be made regularly

• Ownership is shared with investors

• The government controls spending decisions

• The amount may be limited