Would The bank agree

Discuss the Traveller RPG and its many settings
JMISBEST
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Would The bank agree

Postby JMISBEST » Tue Jan 08, 2019 1:10 pm

In a friends campaign The Noble Pc used his portfolio of 1 Cr 25 million estate, 1 Cr 10 million business and 1 Cr 5 million doubled to Cr 10 million for A 63 on Connoisseur Resident Complex as collateral to get The Cr 22,000,000 to fully repair The Harrier and have Cr 11.5 million left, with it registered as A Freelance Pirate Hunter. What I'm wondering is how easily do you guys think The Pc could convince a bank to loan Cr 33.5 million with Cr 45 million worth of property offered as collateral?
phavoc
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Re: Would The bank agree

Postby phavoc » Tue Jan 08, 2019 2:55 pm

I think it would be easier for us to ask you to re-state your question. The wording is atrocious and the question makes no sense.

Also, punctuation would be nice.
Galadrion
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Re: Would The bank agree

Postby Galadrion » Tue Jan 08, 2019 4:45 pm

Well, the bank would definitely check into how encumbered the collateral was (what sort of competing claims/legal impediments to the bank claiming said collateral), but if there would be no apparent legal difficulty with them claiming the collateral in the event of a default, they would undoubtedly take that offer... and be looking for opportunities to offer additional such services to the noble in question, particularly if they could all get such generous guarantees. (A 50% premium in the event of a default? Even if the bank had to sink a couple of megacredits into legal fees to secure their guarantee, they'd still come out well ahead. Good business, from their standpoint. And if the noble regularly makes such offers, he's an idiot, financially.)

Kinda reminds me of the old, old exchange - how do you make a small fortune in <risky endeavor>? (Answer: start with a large fortune.) This noble is apparently a trust fund baby turned "gentleman adventurer"... and a rational noble clan looking to maintain and/or build its status for the future would probably be looking at making him a remittance man. Much safer than allowing him to stay anywhere around policy-making!
Old School
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Re: Would The bank agree

Postby Old School » Tue Jan 08, 2019 7:24 pm

If you ignore everything other than the last sentence, you can get to the auestion.

Answer: Not a slam dunk. A 75% loan-to-value ratio, which you have, is a reasonable request of a bank when collateral is a secondary source of repayment. In other words, a bank needs to be very comfortable that there will be income to support the loan repayment, and the collateral is their backup.

If the collateral offered, (business value and real estate value) is the primary repayment source, a loan to value of 50% is a better rule of thumb, if Earth’s current economics are any guide.

Source: I lend money to large businesses for a living.
Old School
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Re: Would The bank agree

Postby Old School » Tue Jan 08, 2019 7:31 pm

Of course, in the OTU, a 40-year, 4% interest loan on a depreciating asset used for an extremely high risk venture is the norm, so. . .
ochd
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Re: Would The bank agree

Postby ochd » Tue Jan 08, 2019 8:58 pm

Admin or Broker, 8+, SOC.

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