Loans Business Loans 2

Question 1

What is the maximum SBA 7(a) standard loan amount?

Accepted Answer

$5,000,000

Answer

The maximum loan amount for a standard SBA 7(a) loan is $5,000,000, with the SBA guaranteeing up to 85% of loans up to $150,000 and 75% of larger loans.

Question 2

What is a personal guarantee on a business loan?

Accepted Answer

A promise by the business owner to personally repay the loan if the business cannot

Answer

A personal guarantee requires the business owner to personally assume liability for the loan, allowing the lender to pursue personal assets if the business defaults.

Question 3

Equipment financing differs from a business line of credit because:

Accepted Answer

Equipment financing uses the purchased equipment as collateral

Answer

Equipment financing uses the purchased equipment itself as collateral, meaning the lender can repossess the equipment if the borrower defaults.

Question 4

A startup business with no revenue history will most likely qualify for funding through which source?

Accepted Answer

SBA Microloan Program or personal business credit

Answer

Startups without revenue history often rely on SBA Microloans, personal credit, or alternative lenders since conventional lenders require demonstrated cash flow.

Question 5

The SBA 504 loan program is specifically designed to fund:

Accepted Answer

Owner-occupied commercial real estate or major fixed assets for business expansion

Answer

The SBA 504 program provides long-term, fixed-rate financing for major fixed assets such as commercial real estate and heavy equipment.

Loans Practice Test

Loans Practice Test

Loans Business Loans 2