EEE 4653 EXAM 3 ACTUAL EXAM PAPER 2026
QUESTIONS SOLUTIONS GRADED A+
◉ Debt Financings Cons. Answer: -Personal Guarantees
-Fixed period repayment schedules regardless of business profits
-Lender can legally "force" business into bankruptcy
-Aggregate capital amounts oriented towards historical/current
performance not future - some form of underlying Collateral
-Use of Funds tends to be predominantly linked to business assets
◉ Debt Financings Sources. Answer: -Yourself
-Family/Friends
-Angels
-Banks (SBA)
-Foundations
◉ SBA Loan Programs 7a Loan Program *(Applicable uses of
funds)*. Answer: -Traditional working capital: Accounts Receivables,
inventory, materials
-Short-term working capital: contract performance, construction
financing, exports
-Purchase equipment, machinery, furniture, fixtures
, -Purchase land and buildings
-Build or renovate a building
-Business expansion/growth
◉ SBA Loan Programs 7a Loan Program (*Loan Amounts & Costs*).
Answer: -Maximum $5M (2012 avg. amount $337,730)
-Interest Rates (varies slightly based on loan balance & length)
--Prime rate + 2.75% for over seven years
-Upfront Fee on Guaranteed Loan Amount (varies based on loan
balance & length)
--3% on loans over $150K and over one year
-Percentage SBA Guarantee
Up to 85% below $150K loan & up to 75% to $5M maximum
◉ SBA Loan Programs 7a Loan Program (*Repayment Terms*).
Answer: -Loan maturities "matched" to assets
--25 years on real estate, 10 years on equipment, 7 years on working
capital
-Predominantly monthly amortization (limited interest only during
startup/expansion)
-Predominantly no pre-payment penalty
-Collateral required
-Personal guarantees for all owners over 20%
QUESTIONS SOLUTIONS GRADED A+
◉ Debt Financings Cons. Answer: -Personal Guarantees
-Fixed period repayment schedules regardless of business profits
-Lender can legally "force" business into bankruptcy
-Aggregate capital amounts oriented towards historical/current
performance not future - some form of underlying Collateral
-Use of Funds tends to be predominantly linked to business assets
◉ Debt Financings Sources. Answer: -Yourself
-Family/Friends
-Angels
-Banks (SBA)
-Foundations
◉ SBA Loan Programs 7a Loan Program *(Applicable uses of
funds)*. Answer: -Traditional working capital: Accounts Receivables,
inventory, materials
-Short-term working capital: contract performance, construction
financing, exports
-Purchase equipment, machinery, furniture, fixtures
, -Purchase land and buildings
-Build or renovate a building
-Business expansion/growth
◉ SBA Loan Programs 7a Loan Program (*Loan Amounts & Costs*).
Answer: -Maximum $5M (2012 avg. amount $337,730)
-Interest Rates (varies slightly based on loan balance & length)
--Prime rate + 2.75% for over seven years
-Upfront Fee on Guaranteed Loan Amount (varies based on loan
balance & length)
--3% on loans over $150K and over one year
-Percentage SBA Guarantee
Up to 85% below $150K loan & up to 75% to $5M maximum
◉ SBA Loan Programs 7a Loan Program (*Repayment Terms*).
Answer: -Loan maturities "matched" to assets
--25 years on real estate, 10 years on equipment, 7 years on working
capital
-Predominantly monthly amortization (limited interest only during
startup/expansion)
-Predominantly no pre-payment penalty
-Collateral required
-Personal guarantees for all owners over 20%
