Unit quiz: Business funding structures

Check understanding, separately from reading

5 questions · 80% to pass · no timer. This quiz checks the lessons in this unit. 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

Fictional Harbor is offered a receivables purchase with estimated debits. Ask what happens when sales fall, whether reconciliation is meaningful, and what recourse applies. Do not say “not a loan, so no rules apply.”

Owner: “So an MCA can never be treated as a loan?”The name alone does not decide that; the actual terms, conduct and jurisdiction need legal review.Correct. Calling it a purchase automatically exempts it from all lending laws.

Question 2

A wholesaler repeatedly buys inventory before customer collections. A monitored line may match the cycle, but a borrowing base or covenant can limit draws even when the headline limit looks large.

Owner: “The limit means all that cash is always available?”Yes. The limit is guaranteed spendable cash forever.Not necessarily; let us verify available credit, borrowing-base conditions and draw restrictions.

Question 3

For an oven expected to serve for years, Harbor compares a conventional equipment term loan with a short remittance product. The longer term may reduce immediate strain but can increase total cost; it is not automatically preferable.

Owner: “A small monthly payment proves this loan is cheaper?”We also need total payments, fees, maturity and any balloon to compare cost.Yes. The smallest payment always gives the lowest cost.

Question 4

Fictional Ridge Manufacturing can prepare records and discuss a 7(a) option with a participating lender. A broker may assist truthfully within its role but must not call an ordinary MCA “SBA approved.”

Owner: “Does the government guarantee mean I cannot lose?”Yes. SBA approval makes the transaction risk-free for you.No. The guarantee supports the lender; you still need to understand your repayment and guarantee obligations.

Question 5

Harbor’s oven offer includes a buyout; another requires return or renegotiation. The word “lease” alone does not reveal the final cost. Ask for the option price and whether it is mandatory or elective.

Owner: “After the last lease payment, the oven is mine?”Only if the written ownership and end-of-term terms say so; let us verify them.Every equipment lease automatically transfers ownership.

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