Private Equity Financing
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Questions and Answers

What is a key difference between a business credit card and a personal credit card?

  • Business credit cards require a business bank account, while personal credit cards do not. (correct)
  • Personal credit cards offer interest-free credit for up to 56 days, while business credit cards do not.
  • Personal credit cards come with additional offers like airmiles and cashback, while business credit cards do not.
  • Business credit cards have higher interest rates than personal credit cards.

    • How does a bank overdraft differ from a bank loan?

  • A bank overdraft allows for quick access to funds, while a bank loan does not.
  • Bank overdrafts are cheaper than bank loans due to their fixed interest rates.
  • Bank loans require repayment whenever the bank demands, unlike bank overdrafts. (correct)
  • A bank loan accrues interest each day, unlike a bank overdraft.

    • What is a characteristic of a cash advance that makes it more flexible than a credit card?

  • Cash advances are linked to future income, making payback more flexible. (correct)
  • Cash advances have lower interest rates compared to credit cards.
  • Cash advances require collateral while credit cards do not.
  • Cash advances do not have late payment charges like credit cards.

    • Why is it important for business owners to carefully monitor employee spending and access to cards?

    <p>To ensure employees do not use the cards for personal expenses.</p> Signup and view all the answers

    In what way does the total amount to be paid back for a cash advance differ from a bank loan?

    <p>The total amount for a bank loan is fixed, while for a cash advance it varies based on income.</p> Signup and view all the answers

    What are some advantages of using internally generated capital for funding?

    <p>Simplicity, autonomy, less dilution of ownership</p> Signup and view all the answers

    Why might startups and small companies struggle to self-finance large investments or rapid growth?

    <p>Generating sufficient retained earnings may be challenging for startups and small companies.</p> Signup and view all the answers

    What is the key characteristic of venture capital funding for startups?

    <p>Venture capital firms typically take equity stake positions in return for their investment.</p> Signup and view all the answers

    How do angel investors differ from venture capitalists in terms of the amounts of capital they offer?

    <p>Angel investors tend to offer smaller amounts of capital compared to venture capitalists.</p> Signup and view all the answers

    Explain the difference between grants and traditional forms of funding in terms of repayment obligations.

    <p>Grant recipients aren't obliged to repay the funds unless specific conditions outlined in the agreement fail to meet.</p> Signup and view all the answers

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