Loans

Bonds

Selling Bonds (borrowing) is unlocked at Level 5. Buying Bonds at Level 8.
Gold Accounts unlock at Levels 3 and 6.

Bonds are how companies lend and borrow money. The basic instrument is the Zero Coupon Bond.
All bonds are handled by a central bank. Anyone who meets the level requirements can borrow or loan at any time, and the bank will match up the loan and the investment. You cannot directly loan to or borrow from a specific company.
"Zero Coupon" means interest is not paid daily. Instead interest is built in to reflect the difference between the Face Value and the Present Value.
Face value is always β 1,000,000 per bond, and Duration (how long the loan lasts) is 21 days. That means a borrower will get a discounted value now, and the payoff in 21 days is always β1 million.
Bonds can be paid back early for the discounted value at this time.

Example: Suppose the rate on a new bond is a daily rate of 2% per day.

A bond has a face value of β 1,000,000. One day before it's due, the Present Value would be β 980,000, or 2% less. Two days before due the value is 2% less than that. Working backwards can calculate any value:

Days until due	Value
0	β 1,000,000.00
1	β 980,000.00
2	β 960,400.00
3	β 941,192.00
4	β 922,368.16
5	β 903,920.80
6	β 885,842.38
7	β 868,125.53
8	β 850,763.02
...
21	β 654,255.81

So if your company took a loan (issuing a bond) it would receive β654,256 and then owe β1,000,000 in 21 days. Or you could pay β868,125 in 14 days. The reverse is true if you are loaning money (buying a bond) - you would invest β654,256 and receive β1,000,000 in 21 days.

(This is an example in a fixed-rate environment. True interest rates vary. See the section below for more information.)

There is an upfront β10,000 fee for each new bond transaction.

Interest Rates

The central rate that controls bonds is called the Simunomics Interbank Rate, or SIR for short. Lending and borrowing is based on that rate. The current SIR is always visible through the Finance department and it changes with each new bond sold.
- Any time a bond is issued (borrowing money), this demand for money causes SIR to rise.
- Whenever a bond is purchased (lending money) this new supply of money causes SIR to drop.
A second component of the interest rate is the Bank Spread, which is the profit the bank makes between borrowing and lending. It is fixed at 0.1%.
When borrowing money, there is an additional component based on your Credit Rating, costing you from 0.00% to 1.00% on each loan. See the section on Credit Rating below. Credit Rating has no effect on investments.
As the SIR shifts, all outstanding bonds (loans and investments) will have their present value shift. However, face value will never change.
Interest is compounded continuously. (Not daily, as in the example above.) The formula for this is:

PV = FV / e^{i * t}
Where PV is Present Value, FV is Face Value (or Future Value), e is the mathematical constant (roughly 2.7), i is the interest rate, and t is the number of days left.

Example:You issued a bond (borrowing money) at 2%. 3 days have passed since the issue, so it is now 18 days from expiration.

Present Value = 1,000,000 / e^{0.02 * 18} = β 697,676.32

Then the interest rate changes. Now it is 3% per day (compounded continuously). Now the Present Value (still 18 days out) is:

Present Value = 1,000,000 / e^{0.03 * 18} = β 582,748.25

So if you wanted to, you could pay off the loan now for less money than you'd expected. However, if the interest rate goes down to 1% instead:

Present Value = 1,000,000 / e^{0.01 * 18} = β 835,270.21

Which means it would cost more money to pay the loan back now that what was expected. This shift in value also affects investors, who would receive different amounts based on the changing rates. Some investors may specifically look to rate changes as an opportunity. But remember that regardless of any rate changes, the amount due at expiration will always be exactly β 1,000,000.

Repayment and Consequences

Each Company has a Credit Rating, which starts at A- and varies from D- to AAA+.
Every time a loan is repaid before the due date, your Credit Rating will improve. However, every time a loan becomes overdue your Credit Rating will decrease.
When a loan expiration date passes, it becomes an Overdue Loan. An overdue loan stops gathering interest. However, you will not be able to build or expand any facilities until that loan is paid back. This is a protection so that if life gets in the way, your business won't be crippled by a runaway loan. However, it is advised to always pay your loans back before they are due because a bad credit score will hurt you in the long run.
Loan repayment is your responsibility, it is not automatic. A reminder will appear on the main Office page when less than 24 hours are left.
Bonds owned (investments) will be cashed in for you automatically after expiration. However, you also have the option to cash it at any time sooner than that.
If you have Overdue debt and you attempt to borrow more money (issue new bonds) that money will be used to pay off your overdue debt before you receive any cash.

Mortgages

Borrowing via mortgage is unlocked at Level 7. Building banks to make loans is unlocked at Level 16.

Unlike bonds, which use a central clearing house for anonymous buying and selling, mortgages allow companies to lend directly to each other by the use of banks.
Mortgages require the use of collateral, which is property that's used to guarantee repayment. Once mortgaged, lands can't be sold until the mortgage is repaid. (They can be expanded or converted.)
Every mortgage requires weekly payments. Missing a payment casuses penalties. (See below.)
- Interest rates on mortgage are quoted in daily rates. This makes it easy to compare them to the SIR. However, they are accrued in weekly bills based on 7x the daily rate.
The terms of a mortgage loan are set by the bank making the offer. Once accepted by a borrower they cannot be changed.
- A term loan has a fixed length. Repayment plans are based on making equal payments over a number of weeks, so that after that number all the interest and principle are repaid.
- An interest-only loan only requires weekly payments of interest. Because principle doesn't have to be paid down, it can continue forever.
- On either type of a mortgage the borrower may make extra payments at any time, reducing the principle and thus the interest charged on it for future weeks. Interest-only loans are easier to maintain due to the lower requirements, but can accidentally overwhelm someone who hasn't planned for the repayment schedule and cost much more in the long-run.

Example: A β1 million mortgage is borrowed at 0.2% daily interest (1.4% per week) on a term loan of 5 weeks.

The 1st week's payment is 208,477.85, which is 14,000.00 in interest and 194,477.85 in principle.
The 2nd week's payment is 208,477.85, which is 11,277.31 in interest and 197,200.54 in principle.
The 3rd week's payment is 208,477.85, which is 8,516.50 in interest and 199,961.35 in principle.
The 4th week's payment is 208,477.85, which is 5,717.04 in interest and 202,760.81 in principle.
The 5th week's payment is 208,477.85, which is 2,878.39 in interest and 205,599.46 in principle. This pays off the mortgage in full.

An interest-only mortgage at the same interest rate would require payments of only 14,000 each week, but go on forever.

Banks also determine who can borrow based on credit rating and how much can be borrowed compared to the value of the collateral. This is to protect them from default.
When a mortgage is first taken out, an origination fee is charged by the system. This one-time fee is 0.6% for a term loan and 0.9% for an interest-only loan.
Banks themselves are also charged a daily fee to cover government fees and systemic charges.
- The fee is equal to 0.1% of all outstanding mortgages plus 0.01% of all bank cash that's in reserve (not loaned yet).

Mortgage penalties

When payment is made each week the "amount due" is set to zero until the next billing period. Paying the amount due on time increases your credit score.
If payment is not made by the due date each week, a penalty will be assessed.
- If the system detects you have extra cash in your account but didn't pay, it will make the payment for you to avoid penalties. However, this is risky and will not help your credit rating as a proper repayment would. Do not rely on it.
For the first 3 missed deadlines a fee is assessed equal to 0.5% of the total amount outstanding. It is added to the amount due, as is the new bill. This can add up quickly so don't borrow more than you can handle.
If payment is missed for the 4th consecutive time, the collateral properties go into foreclosure.
- Under foreclosure, the property is put up for auction. The former owner cannot bid and cannot cancel.
- Foreclosure auctions are system-guaranteed. That means if no buyer is found, the system will purchase the property at the end for the "system buyback price".
- The money received from the sale is used to pay off the mortgage. If extra is left over after setting the debt, it will go to the borrower. If the proceeds are insufficient to pay off the loan, the bank takes a loss and the mortgage is closed anyway. Either way, the end of a foreclosure auction ends the mortgage.