What figure should he get?

[JMISBEST]

Hi

I am working on a idea for A Noble who decides to get a loan and is willing to use his portfolio, which has took his famiy 593.7 years to get, as security for A 2,800 or more ton ship to use for a top-secret mission that if it works will net him enough to pay more then Cr1.5 billion to the bank and still get him Cr 10.57 million profit. His portfolio is worth just over Cr 1,303,440,800, he has agreed to pay Cr 1,505,662,390 back within 18.2 years, which will definitely net him at least at least Cr 10,577,600 profit, more likely just under Cr 18,860,900 profit and a maximum potential profit of just under Cr 33.2 million profit, if his scheem works, and if he fails they get his estate. What is the maximum size loan could he get

 

[Rick]

Ok, you've outlined his portfolio, but what is his annual income from that portfolio (and any other means)? Loans will rarely be made on traded shares, although they may take into account fixed assets (such as a % share in a business, estate or property). The most common way of looking at loans is that they will never be higher than 4.5 times the borrower's income and when it comes to repayments, your total outgoings (business costs, bills and repayments, not living expenses) as a percentage of your total income (if my income was £3,000 and my total outgoings were £1.200 then that would be 40%) should not exceed 43%. At least those are the guidelines used these days, they might be a good rule of thumb in a campaign.

 

[Jak Nazryth]

I'm not an economist, but I have borrowed money to buy a couple of homes.
If you uses his families portfolio as a down payment/collateral, you can go anywhere from a 'safe" 20% (the way it typically used to be in the 70's and 80's) down to 5% or even 3% (if government backed loans are involved)

If you are the GM and this is a NPC, do what ever you want with virtually no restrictions. I would stick with 5%

If you are a player and this is your character, you'll have to argue your point to the GM.

Now when it comes to repayments from a 30 year loan to a 18 year loan... (shrug) like I said, I'm no economist.

 

[Condottiere]

Pledge it to the local subsector duke, Angus of Wardshaven, since he's less likely to foreclose.

 

[locarno24]

Who is the mission for? And who does he want the loan from.

The problem is, you're offering collateral to a loan (good) in order buy a ship to do [redacted] which will net you over one and a half billion credits.


If you go to a bank asking for a big loan, they have a not unreasonable desire to know what it's for.
You want a loan to found a business, they'll want to see the business plan.

Does he specifically have to own this kiloton ship? Because it'd probably be cheaper to lease it (unless it's not coming back).

 

[steve98052]

Even the maximum profit isn't worth risking a starship loan of that size. If I were the noble's financial counselor, I'd do my best to talk him out of the venture.

In a noninflationary economy, a portfolio of 1.5 billion could return 15 million per year in an extremely conservative (1% interest) money market. More likely, it would be invested in a mix of conservative money market investments (1% to 3%), mid-range bonds (4% to 5%), junk bonds (7% to 9%, with substantial risk of being wiped out by economic recessions), conservative stocks (-3% to +6%), medium stocks (-10% to +20%), aggressive stocks (-15% to +30%), speculative stocks (most of which are total losses, but a few of which return many times the original investment), and real estate (which I know nothing about, except that it's often better to own one's residence than to rent).

But if the noble had a worthwhile plan for the money, what would such a portfolio be worth as collateral? The money market and bonds are typically worth their face value, except the junk bonds. The stocks are typically worth half their market value as collateral. Real estate is normally held with mortgages, so it is already tied up as collateral, but real estate that's owned outright would be worth about 80% of its market value, assuming it's in a stable government.

 

[Condottiere]

If all or part of the estate is entailed, you'll need the heir to sign off on it as well.

 

[JMISBEST]

Just double checked

Its been in the family for 2,926 years, he has had it for 41 years, its worth around Cr 2,538,794,600 and earns him Cr 14,228,690 per month or Cr 170,744,280 per year and the single biggest item is A estate thats 44% Agriculture, 34% Viniculture and 22% Hunting, is worth Cr 308,640,000 and earns him Cr 1,543,200 per month or Cr 18,518,400 per month. Can you recalculate what he can get

 

[Rick]

Cheeky!

Ok, so what are his outgoings (not personal living expenses, but upkeep and maintenance, staff costs, energy/fuel bills and insurance, etc) on that?

When you've got his net income sorted out, go through the suggestions above and make a single concept model for working out how much he can borrow and the % repayments, then apply it.