Types of Financing
Who does the money for debt financing come from?
Banks, Finance Companies, and Trade suppliers. (at least 2)
What is a guarantor?
Someone who is responsible for a person's unpaid debts if they are unable to pay them.
What is an unsecured loan?
A loan with no collateral.
What type of financing does not need to be repaid?
Equity Financing
In which country are the world’s 10 coldest cities located?
Russia
What are debt instruments?
Financial contracts that represent borrowed funds.
What are some types of identification new customers can provide banks? (name 2)
- Birth certificate
- Driver's licence
- Medicare card
- Passport
What is a line of credit?
Certain amount of funds you can withdraw for business expenses without having to apply for an additional loan.
What are some benefits of having investors? (name at least 2)
- Money
- Expertise
- Networking Opportunities
- And More... (that Finn Knows)
Which continent is home to the most countries?
Africa
What is the difference between preferred stocks and common stocks? (provide at least 2)
- Preferred stock owners has less power in company decisions
- Preferred stock is used in developing companies and common stocks in developed companies
- Preferred stock generally gives more equity for less price
What process will non-residents have to go through to apply for a loan?
Confirm visa details and ensure visa expires at least one month after the loan duration. Further verifications may be necessary.
What is the standard interest rate for a secured loan.
Why do companies need at a balance of both financing methods?
Optimising capital
Reducing risk
Ensuring control over business
Which country has three capital cities—Pretoria, Cape Town, and Bloemfontein?
South Africa
What two types of investors are most likely to invest in a developing company?
Angel investors and venture capitalists
What does ABN, ACN and PAYG stand for?
Australian Business Number, Australian Company Number, Pay As You Go Tax.
What are the advantages of a secured loan over an unsecured loan? (there are 4)
- Take out more money
- Lower interest rates
- More flexibility in payment options
- Less negative impact on credit rating
What are some pros of debt financing? (name at least 4)
Does not need to sell ownership of company
Interest payments can be deducted off tax, reducing your taxable income
Usually considered cheaper than equity
Useful for covering short term expenses
No further obligations once debt is repaid
Lender/bank does not gain any control over the company
Thanks to its overseas territories, which country technically spans 12 time zones?
France
What happens to assets when a company goes bankrupt? What does this entail for creditors and equity owners?
Assets are liquidated, and creditors have a high claim to the money from liquidating assets, while equity owners may receive much less.
What is necessary for new self-employed individuals to provide if they have not yet gotten their first financial year's tax return?
A letter from your accountant showing your annual taxable personal income from the most recent financial year and your accountant's ABN.
What is a favouree?
They are someone you have to pay, that the bank promises will receive their money when you take a guarantee.
Name at least 5 cons of equity financing.
Surrendering a portion of your company’s revenue
Forfeits a part of the control of your business
Ongoing consideration of your investors when making decisions
Selling too much of your equity may lead to ownership issues
Long term expenses
With an area of less than0.5 square kilometer, which is the smallest country in the world?
Vatican City