SOURCES OF FUND

Question 1

refers to the amount of money needed by a
business in order to achieve its goals.

Answer 1

Capital Requirements

Question 2

capital requirements
also refers to non-monetary requirements such
as

Answer 2

ideas

Question 3

money needed to purchase fixed
assets or capital goods.

Answer 3

Fixed Capital

Question 4

fund needed to finance the daily
operations of the business

Answer 4

Working Capital

Question 5

fund needed in expanding,
diversifying or changing the directions of the
business.

Answer 5

Growth Capital

Question 6

Forms of Monetary Capital

Answer 6

Fixed Capital
Working Capital
Growth Capital

Question 7

(Sources of Capital) safest way to raise capital for funding a
business that is by investing the money that comes
from your own pocket.

Answer 7

Informal

Question 8

(Sources of Capital) Are from the legal entities, institutions or
establishment.

Answer 8

Formal

Question 9

External Sources of Capital

Answer 9

Pawnshops
Credit Cooperatives
Money Lenders
Lending Investors
Formal Sources of Credit

Question 10

Types of Credit Extended by Formal Lending Institutions

Answer 10

Short Term
Intermediate Loans
Long-term Loans

Question 11

• loans that are basically payable in one
  year or less. These are normally self-liquidating, may
  come in the form of revolving credit line

Answer 11

Short Term

Question 12

These loans are repayable in
one to three years and requires collateral securities
and is paid back in installments over the lie of the
loan agreement

Answer 12

Intermediate Loans

Question 13

These loans are extended only to
enterprises assured to exist over the longterm period
of the loans. These types of loans a repayable up to
10 years

Answer 13

Long-term Loans

Question 14

Forms of Long-term Loans

Answer 14

Mortgage
Bonds
Long-term Commercial Papers (LCP)

Question 15

pledging a designated property as security
or collateral for the loan

Answer 15

Mortgage

Question 16

requires approval from SEC or other legal
entities, done by issuing bonds to lenders in the form
of a fixed amount of interest to the bondholders upon
maturity or call by its holders

Answer 16

Bonds

Question 17

carries a fixed
return promised by the issuer regardless of the
operational outcome of the business of the issuer.

Answer 17

Long-term Commercial Papers (LCP)

Question 18

Sources of Short Term Loans

Answer 18

1. Commercial banks
2. Merchandise suppliers
3. Credit card companies
4. Capital equipment suppliers
5. Leasing companies
6. Receivable factors
7. Deferral of payables in general

Question 19

Guidelines in Borrowing

Answer 19

1. Evaluate yourself whether you are in good position to borrow.
   Be prepared to put up capital.
2. Estimate accurately the amount you need to borrow.
3. Choose the bank to borrow, preferably the one nearest to
   your place of business
4. Choose bank depending on the size and status of the
   business and the purpose of the loan.

Question 20

5C’s of Credit

Answer 20

Collateral
Capacity
Character
Contract
Conditions

Question 21

refers to the fixed assets or real properties that
serve as the borrowers guarantee to the creditors, such that in
case the borrower fails to repay the loan, this may be
seized by the creditor.

Answer 21

Collateral

Question 22

refers to the ability of the borrower to repay the
loan, This may be determined by the value of the business, the
borrower’s work, real property value and others

Answer 22

Capacity

Question 23

• refers to the personal standing. Of the borrower
  in his community, as well as his own personal credibility.

Answer 23

Character

Question 24

an agreement which defines the obligations of
parties.

Answer 24

Contract

Question 25

refers to the terms and conditions set forth in
the contract or agreement in terms of the amount, mode of
payment, interest rates, penalties, and sanctions.

Answer 25

Conditions