Banks

Cost to Operate: 0.1% of outstanding loans plus 0.01% of available-for-loan cash. (Daily)

Expansion: Allows more money to be loaned.

Conversion: Yes

Upgrades: No upgrades.

Other Factors: Banks must be funded with lendable cash.

• Banks allow companies to lend money to each other. They exist as an alternative to bonds.
• Bank loans take the form of mortgages, secured by the borrower's property.
  • Mortgages require payment every week.
  • Each borrower pledges one or more lands as collateral on the loan. The value of those properties determines how much can be borrowed.
  • If the mortgage defaults, the property will be put up for auction and the proceeds used to pay off the loan.
• Each bank is allowed one type of loan plan, with the details determined by the lender. Only properties in the same city as the bank can be used as collateral.
• Banks can loan up to 10,000,000 per 100ft². They can expand even while loans are ongoing. However, banks can not be sold or converted while a mortgage plan is outstanding.

Mortgage Plans

• In order to lend, a bank must create and fund a Mortgage Plan. This determines the conditions under which other companies can borrow.
  • Interest Rate determines how much profit you make on the principle (amount you loan).
    • The selected interest rate is quoted as a daily figure for comparison to SIR and the bond market, but interest is billed weekly.
    • The system charges you 0.1% per day for outstanding loans, so if you aren't charging at least that much you will lose money. (This is taken daily.)
  • The Term of the loan sets how fast you require it to be paid back.
    • A Term Loan is set for a number of weeks, requiring the payment each week to incluce both interest and a part of the loaned principle.
    • An Interest-only mortgage doesn't require principle to be paid back on any schedule.
    • Interest-only loans can seem appealing due to the low weekly payments and long-term duration. However, they are also the most risky since the loan isn't being repaid with any regularity. The shorter the term, the less likely a default (failure to repay) is.
    • Borrowers can make extra payment at any time regardless of the loan type. This reduces their principle and future payments.
  • Lenders choose the availability of their mortgage plan. It can be offered to anyone with property in that city, or only to Trade Group members. It can also be turned off (not lending to anyone) but you will still have to pay fees during that time unless the cash is withdrawn as well.
  • Your plan allows you to set a minimum Credit Rating. Because borrowers who have missed payments in the past will have reduced credit scores, setting this limit will help you avoid defaults.
  • The loan amount is based on the value of the mortgaged building, in a percentage determined by the Mortgage Plan.
    • The higher the percent, the more prospective borrowers can borrow.
    • Foreclosed properties are sold at auction with a guaranteed system buyer. That means if there are no bids on the auction, the system will buy the property automatically. However, this is only for a fraction of the appraised value. So even a number less than 100% is no guarantee of full repayment. (See the Land & Buildings section for more information.)
    • This means a high value can make your loan more apppealing than competitors, but at risk of losing money. A low value can keep you safe.
• Other than the rules in your plan you cannot determine who may or may not borrow. Anyone eligible will see your plan in the list of options.
• The plan must be funded after being created. Funding can be changed at any time, and the plan can be changed or withdrawn as long as there are no current borrowers. If there are mortgages out, you can turn off new lending but cannot force them to repay. (This is another reason to favor term loans, because it guarantees they will repay on a schedule.)

Mortgage Payments

• See the Borrowing & Lending section for more information.
• Every day 0.1% of the loaned total and 0.01% of the available-but-unloaned total is charged by the system.
  • If you don't have enough in your cash pool, it will go negative - to be counted against future payments by your borrowers.
• Every week the borrower receives a bill.
  • Interest paid goes into your company's cash and is recorded as interest profit on your accounting statement.
  • Principle paid goes back into your bank's Mortgage Plan fund.
• Because interest goes to your company's cash but fees come from the bank's cash, bank pools will deplete over time even though they are profitable. This requires you to replenish them every so often.
• Borrowers who miss payments are charged a fee. If paid, this fee counts as additional profit for the bank. (Just like interest.)
• All billing and foreclosures are handled automatically by the system. You do not have control over mortgaged properties, only a claim on their auction proceeds. However, you may bid on an auctioned property if you like.