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Commercial Banks
Loans
Debt Financing
5 C's of Credit
Types of Funds
100
The backbone of the credit market that offers the widest assortment of loans.
What is a commercial Bank
100
What eligible businesses must show to receive a loan.
What is creditworthiness.
100
The use of borrowed funds to finance a business.
What is Debt Financing?
100
The applicants willingness to pay.
What is Character?
100
Also known as liabilities, borrowed from a creditor and must be repaid.
What are debt funds?
200
Loans in which the bank does not require any collateral, as long as you have a good credit standing.
What is unsecured loans?
200
A loan made to a business by an insurance company using the businesses insurance policy as collateral.
What is a policy loan?
200
The original amount of money to be borrowed.
What is the principal of a loan?
200
The applicants personal financial strength.
What is Capital?
200
Money supplied by investors in exchange for an ownership position in the business, and does not need to be repaid.
What equity funds?
300
An agreement between a bank and abusiness that specifies the amount of unsecured short temr funds the bank will make available.
What is Line of credit
300
This is the most active government lender.
What is the SBA.
300
This determines the "price" of the borrowed funds.
What is the interest rate?
300
Assets owned by the applicant that can be pledged as security for the repayment of the loan.
What is collateral?
300
Money you can borrow against moeny you already have.
What is leverage?
400
A loan made to a small business for a specific period of time, to be repaid in a lump sum at maturity.
What is a Demand Note?
400
This is what SBA stands for.
What is the Small Business Administration?
400
This refers to the intervals at which you pay interest.
What is the compounding of interest?
400
The ability to repay the loan.
What is Capacity?
400
The use of equity funds reduces this of the business owner.
What is autonomy?
500
Loans made to businesses in which only small periodic payments are required over the life of the loan, with a large sum payment due at maturity.
What is a balloon note?
500
This simplifies paperwork, provides $350,000, and provides a response if you received the loan or not within 36 hours.
What is the SBA Express Program?
500
The purchase of goods from suppliers that do not demand payment immediately.
What is Trade Credit?
500
The general economic climate at the time of the loan application.
What is the condition?
500
Payments based on the net profits of the business and made to the providers of equity capital.
What are Dividends