1. The preferred source of repayment for most small business loans is

Cash flow from operating activities.

Inventory liquidation.

Sales.

Collateral.

2. When evaluating whether to extend a loan to a business, a lender's most important criteria should be

The collateral backing the loan.

The borrower's cash flows and business forecasts.

The general economic conditions that might affect the business forecasts.

The borrower's resolve and determination to repay the loan.