Cumulative level test: Qualifying, declining and re-deciding: disciplined decisions before and after an application

Check understanding, separately from reading

12 questions · 80% to pass · no timer. This longer test revisits both units in the level. These authored questions assess recognition and application of the taught distinctions, not professional qualification. You may review the lessons and retry. Repeat attempts reuse the question bank; a remembered answer is not proof of transfer to a new situation.

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Question 1

A merchant with $58,000 in monthly deposits, an unsatisfied $9,200 judgment, three open advances and no UCC search asks for an application today to fund a dated equipment purchase in eleven days. Assemble the correct sequence of actions.Screen first and state both conclusions: the three open obligations and the judgment are blocking, the UCC search is documentation-only, and the eleven-day date cannot be met on this file — then write the note naming each condition, the evidence that would clear it, and the amount the deposits support.Submit the application immediately because the purchase date is fixed, and ask the funder to hold the file open while the judgment is satisfied.

Question 2

A merchant is declined after a funder asked for her spouse's signature and said the file “didn't meet internal criteria.” She wants to re-apply at three other funders this week. What do you advise and why?Re-apply at all three funders immediately while the file is current, and pursue the reasons request in parallel in case it produces useful information.Ask for a written statement of specific reasons within the request window, question the signature requirement because she qualified on her own, and hold the three applications until the reason is known — the alternative costs three sets of document fees and hours with no new evidence.

Question 3

A merchant takes a $30,000 advance while an advance with $27,000 outstanding runs at $2,250 a week, on weekly receipts of $11,538.46 and contribution of $4,038.46. State the combined load, the coverage, and what a fifteen percent declining month does to it.Combined remittances $3,892.86, which is 33.74 percent of receipts and 96.39 percent of contribution, for coverage of 1.04; after a fifteen percent receipts decline the load is 39.69 percent of receipts with coverage of 0.88 and a $460.16 weekly shortfall.Combined remittances $3,892.86 with coverage judged against receipts rather than contribution, since contribution margins vary by business and receipts are the objective measure.

Question 4

A merchant says the last two offers he received were “the same rate”: one is a factor of 1.40 repaid over twenty weeks and the other a factor of 1.28 repaid over thirty weeks, both on $60,000 of net proceeds. Explain the cost difference in compliant terms.Convert both factors to an annual percentage rate so the merchant can compare them on the same basis as a bank loan, then choose the lower one.Compare dollars rather than labels: the first repays $84,000 at $4,200 a week, which is $140 per $100 of net proceeds, and the second repays $76,800 at $2,560 a week, which is $128 per $100, while noting that a factor is not an interest rate and that no annual percentage rate is computed here.

Question 5

A merchant needs $18,000 for equipment and is offered $40,000 at a factor of 1.30 on a twenty-six-week schedule. What does right-sizing look like and what is the counter-argument?Size to the use: $23,760 of repayment at $990 a week and $132 per $100 of net against $52,000 at $2,000 a week for the oversized version, while stating the counter-argument that a genuine liquidity buffer may be needed — and answering it with a drawn facility or a reserve rather than a lump sum held at full cost.Take the larger amount and repay the unused portion early, since a purchase of receivables can always be settled ahead of schedule to remove the extra cost.

Question 6

A non-owner shareholder holding twenty percent of the equity asks whether she will have to sign a personal guarantee and what she would be taking on. What is the correct explanation?Explain that a guarantee only becomes relevant if the business fails to pay, so her exposure is effectively contingent and her twenty percent interest means twenty percent of any shortfall.Explain that a guarantee is a separate obligation enforceable against her whether or not she benefits from the proceeds, that a joint-and-several guarantee allows collection of the whole outstanding amount from either signer while a limited guarantee caps it, and that she should ask for a cap matching her real interest before signing.

Question 7

An advisor's message says an offer is “available today only”, that pricing will rise tomorrow, and that the merchant should “sign now and finalise the documents afterwards.” Rewrite the substance of the message and give the reason.Replace it with a comparison the merchant can check: total repayment and weekly remittance for each option, dollars per $100 of net proceeds, and either a written expiry with its date or no time reference at all — because an unsourced deadline is a material claim without evidence and signing before review removes the comparison entirely.Keep the deadline but add the comparison, since warning the merchant about a possible price increase is more protective than staying silent and the decision remains the merchant's.

Question 8

A merchant's application was funded in April and a financing statement was filed that day. Eighteen months later the facility is repaid and the merchant wants to apply elsewhere. What should be done, and on what clocks?Wait for the five-year effectiveness period to lapse, because a financing statement expires automatically once there is no obligation secured by it.Obtain a current search, and if the filing remains of record and the conditions are met, send an authenticated demand for a termination statement, which the secured party must comply with within twenty days; note that the filing would otherwise remain effective for five years from the filing date, with continuation possible only in the six months before expiry.

Question 9

A regulator's office receives a complaint about a broker's disclosure and asks the funder to respond. What is the correct order of work?Establish which agency has authority over the entity complained about, then produce the disclosure as delivered with its delivery date and the correspondence that followed, and give specific reasons for any action taken — in that order, because jurisdiction is determined before merits and the record is what answers the merits.Draft the response on the merits first, then confirm which regulator has jurisdiction, since a thorough answer will satisfy any agency that reviews it.

Question 10

Take a file with monthly deposits of $76,000, existing obligations of $2,100 a week, a 32 percent contribution margin and a request for $95,000 at a factor of 1.35 over thirty weeks. Determine the answer at a 1.20 coverage floor and name the change conditions.Approve at $95,000 with a condition that the merchant produce the missing bank statements, since the deposit level itself demonstrates the capacity to service the facility.Not yet at the requested size and yes at about $57,000: the floor permits $4,676.92 of total remittance, leaving $2,576.92 a week, which over thirty weeks supports $77,307.69 of repayment and $57,264.96 of net proceeds — conditional on retiring or sizing around the existing obligation, producing the missing statement months and the search, and reshaping the schedule around a trough that still leaves coverage of 0.91 at the reduced size.

Question 11

A merchant declines an offer because the deadline is real and documented. Was the decision reasonable, and how should it be recorded?Reasonable, and it should be recorded as a two-part statement: the deadline is authentic and documented on the offer, and the proposed schedule would have carried a fixed weekly remittance through the merchant's weakest two months, so the structure rather than the credibility of the deadline is the reason.Unreasonable, because a documented deadline creates a cost of delay that the merchant should weigh against the structural concern before deciding.

Question 12

A merchant asks for one sentence explaining what he is signing: two claims on the same receipts, a personal guarantee from his wife, a factor of 1.36, and a weekly debit. What is the accurate answer, and what must accompany it?Two advances share one receipts stream at $2,720 a week, a factor of 1.36 corresponds to an interest rate of about thirty-six percent, and the guarantee is a formality that only applies if the business stops trading.Two purchases of receivables will be repaid from the same weekly receipts at $2,720 a week in total, a factor of 1.36 is a multiplier rather than an interest rate and repays a stated total on a stated schedule, and the guarantee makes his wife liable for the outstanding balance if the business does not pay — and it must be accompanied by the cash amounts, the guarantee's cap or absence of one, and the filing dates.

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