Which of the following is true of Small Business Administration (SBA)?
A) It involves no explicit obligation or expectation, on the part of the investors, to be repaid their investment.
B) It represents a legal obligation to repay the original debt plus interest.
C) It involves pledging some assets-such as a home, real estate, machinery, and plant-as collateral.
D) It specifies the amount of money to be repaid within a specific time frame for a specific interest rate.
E) It guarantees a portion of the loan to its partners that include private lenders, microlending institutions, and community development organizations.

Question

Quizplus · Accepted Answer

Small Business Administration (SBA) guarantees a portion of the loan to its partners that include private lenders, microlending institutions, and community development organizations. This means that in case of default by the borrower, SBA will reimburse the lender for the guaranteed portion of the loan. Option A is incorrect as SBA loans involve an explicit obligation to repay the loan amount along with interest. Option B is partially correct as it represents the legal obligation to repay the original debt plus interest, but it does not apply to SBA loans only. Option C is incorrect as pledging assets as collateral is a requirement of most loans, not just SBA loans. Option D is incorrect as SBA loans do have a specific repayment amount and time frame, but this is not unique to SBA loans only.

Which of the Following Is True of Small Business Administration