Banking and Finance Chapt. 14

What are the four main categories of Financial Services? Savings, payment, Borrowing system, and other financial services.
What are a few electronic banking services? ATM and stored value cards.
What do commercial banks do? Serve businesses and individuals.
What did S&L’s traditionally do? Traditionally specialized in savings account and mortgage loans.
Credit Unions are what? nonprofit and owned by its members.
What classification do life insurance companies fall under? Non-depository institutions
What are two problematic financial businesses? Payday Loans and Rent-to-Own center
Why are payday loans problematic? You must pay interest to borrow against a future paycheck.
What is wrong with a Rent-to-Own center? They charge a high interest rate, and customers can only own items if the make payments.
What is a common trait of regular savings? Frequent deposits and withdrawals.
What does SBA stand for? Small Business Administration
What does the SBA do? They offer assistance to people who are starting small businesses or people who want to expand their business.
What is a LowDoc program? Requires less paper work for loans under $150,000
What is a business credit card? Card issued to businesses instead of individuals which offers short-term financing for businesses.
What is a private investor, or “angel?” Someone who is interested in helping a new business succeed?
What is a drawback to a private investor? They want to own part of your company in return for getting your business going.
What is a Venture Capital Firm? A company that provides private funding for small businesses that need a substantial amount of immediate cash.
What is a problem for Venture Capital Firms? They take risks, but expect large returns on investment.
What does SBIC stand for? Small Business Investment Companies
What does the SBIC do? Works with the SBA to provide longer term funding for small businesses.

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