Business Studies Multiple Choice Question – 6 January 2022

The UK Government tries to encourage banks to increase lending to small businesses.

Which one of the following is true about bank loans given to small businesses?

They are ….

Select ONE answer:

1. often secured against assets
2. an internal method of finance
3. usually short term compared to overdrafts
4. a form of trade credit

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – A loan is a method of finance which is repaid over a specific period of time/medium or long term/with interest. Lending to small businesses can be risky. Therefore banks often require security/collateral to reduce the risk.
2. Not correct
3. Not correct
4. Not correct

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