Business Name: Loans
Staff/Proprietor:
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Goods/Services: LOANSAny world larger than an outpost will have banking facilities available. The Pan-Galactic Bank, Streel Bank, Greater Vrusk Mutual Prosperity Institution, and First Bank of Cassidine are the largest financial institutions in the Frontier, but there are many others. All of these banks make loans, and all charge 4% interest compounded every 40 days. This is about 23% per year. This high interest rate is justified by the volatile economy in the Frontier and offset by the possibility of making a quick fortune. A character cannot just walk into a bank, demand a loan and walk out with money. A bank will not lend money unless it has a reasonable guarantee that the loan will be repaid. Depending on the size of the loan and the borrower's reputation, the bank may ask for collateral equal to the value of the loan, a personal guarantee, a tracer implant or a combination of these.
Applying For A Loan With Collateral
A bank will lend money to any character who can leave collateral with the bank. Any valuable item that the character owns can be used as collateral. Before the collateral will be accepted, the bank's appraiser must inspect the item or items and verify that their combined value is at least equal to the value of the loan. The referee must use some discretion when deciding what a bank will accept as collateral. Valuable jewelry, buildings or a percentage of ownership in a space station orbiting the planet the bank office is on are good collateral. A spaceship that the character intends to take to the far end of the galaxy is unacceptable. Collateral (or the deed or stock certificate representing it) remains with the bank until the loan is completely repaid. When the loan is paid off, the collateral is returned. If the character misses a loan payment, the bank will issue a warning. If the character misses two payments in a row, the bank will close the loan and seize the collateral. The character loses both his collateral and all the loan payments he has already made. Someone who has lost his collateral can try to recover it by resuming payments on the loan. The bank will charge at least a 10% fine on each payment that was missed, if it is willing to reopen the account at all. The referee must decide whether the bank is willing to renegotiate the loan.
EXAMPLE: Disan, a Yazirian, needs a loan for 50,000 Cr. As collateral, she offers the bank a gold and platinum statue recovered from alien ruins in the Dramune system, and the jewel-encrusted Twin Laurels for Manifest Gallantry given to her by the governor of Terledrom. The bank's appraiser places their value at 37,000 Cr and 16,000 Cr respectively. Together, they are worth 53,000 Cr, so the bank will accept them as collateral on a loan of up to 53,000 Cr.
Applying For A Loan Without Collateral
A character who tries to get a bank loan without collateral must meet some minimum qualifications to be eligible for the loan. The character must have a good reputation (or, at the least, no criminal record). The character also must meet a bank loan officer and describe to him in detail how the loan will be invested, and how it will be repaid. After the character has presented his plan, the referee makes a simple die roll to determine whether the bank will extend the loan to the character.
Interviews. A bank loan officer will set up an interview with a character when the character applies for a loan. Loan interviews are good situations for role playing. The referee plays the role of the loan officer, and should thoroughly question the character applying for the loan. If the character gives dubious answers or is rude, the loan officer will be suspicious. (Bank loan offices are routinely monitored by computer, so any attempts to hypnotize the loan officer will be noticed and the loan officer will be notified.)
Securing the Loan. After the interview, the referee must determine whether the loan officer will recommend lending money to the character. The referee rolls d100. If the result is equal to or less than one-half of the character's Personality score, the bank will lend him money. Otherwise, the loan is refused and the character cannot try to borrow money from that bank until he has accomplished some new deed worthy of public notice and praise.
The referee can modify this die roll to match the situation. Modifiers should be based on whether the character's plan has a good chance to succeed, the current economic conditions in the Frontier and the character's attitude and treatment of the loan officer during the interview. These modifiers should not exceed plus or minus 10%.
Reapplication. Note that large population centers will have at least four major banks, and that having a loan turned down at one bank will have no effect on an application at another bank. The actual number of banks in any city, and any particular lending policies of those banks, are left to the Referee's discretion.
Character's Reputations
To receive a loan, a character must have no criminal record and be considered by the bank to be "a good risk." The character's reputation is very important in this regard, A bad reputation or a criminal record can prevent a character from getting a loan anywhere, while a character known for heroism may be able to get a loan on the strength of his reputation alone.
Fame. The most critical consideration for the referee is whether a character's deeds are widely known. The loan officer will automatically discover any permanent criminal record by checking police files. On the other hand, even a character who has committed many crimes will have no police record if no warrants were ever issued for his arrest and he has never been caught. Likewise, a character who performed heroic deeds in a remote corner of the Frontier cannot expect the loan officer to know about them. However, if the story was broadcast by the news media, the loan officer will have heard it.
Earning a Reputation. A character will earn a good reputation by performing acts that are seen to be in the public service, such as capturing pirates, killing Sathar, saving a child's life, or doing other "good deeds."
Loan Values
A character's reputation determines how large a loan the character can apply for. Several examples are outlined below. The referee should use these as guidelines only; they can be modified to fit circumstances in the game. A character who has been credited with at least two good deeds can apply for a loan of up to 10,000 Credits. If the character passes the required Personality check, the bank wilt lend him the money on his personal guarantee alone. A character who has been credited with at least five good deeds can apply for a loan of up to 100,000 Credits. The character must pass the required Personality check to receive the loan. The bank also will require that the character accept a tracer implant. A character who, in addition to five or more good deeds, has performed a truly spectacular task, such as saving a city or colony at great risk to himself, can apply for a loan of up to 500,000 Cr. The character must pass the Personality check, and the bank will require that he accept a tracer implant.
Vouchers. A character who has a long-standing position with a corporation can get a letter of recommendation from his employer when seeking a bank loan. In this case, the character uses his employer's reputation instead of his own when asking for a loan. The referee must use discretion when players try this. Most importantly, an employer will not write a letter of recommendation unless an employee has proven his loyalty over a period of several years.
GuaranteesBefore lending money, banks require some sort of guarantee that they will be repaid. Two types of guarantees are used commonly in the Frontier: personal guarantees and tracer implants.
Personal Guarantees. Banks will settle for a personal guarantee on a loan of 10,000 Cr or less. This is simply a signed, sworn statement by the loan recipient that he will repay the loan according to the agreed-upon schedule, and understands the penalties for breaking the agreement. A character who defaults on a personally guaranteed loan will be placed on a wanted list. The bank will offer a reward for his capture.
Tracer Implants. Banks require that any character who receives a loan of more than 10,000 Credits without offering collateral must accept a tracer implant. A tracer implant is a tiny transmitter that is surgically embedded in the character's skeletal system. The tracer emits a radio signal that identifies the character and the bank which loaned him money. The tracer's signal is weak, but it can be picked up by tracer scanners from a range of several meters. Tracer scanners are common in any populated area of the Frontier. All banks and spaceports, and most stores, restaurants and other businesses, have tracer scanners at their entrances. They are standard equipment for police officers. As long as a character keeps making payments on his loan, the tracer's signal will register as "OK" on scanners. If the character skips payments and does not respond to warnings, the bank will notify all its branches to issue warrants for that character's tracer. From that point on, if any scanner detects that tracer it will trip an alarm, either in the business manager's office or the police station. Because banks offer large rewards for the capture of loan defaulters, police and independent loan agents will close in on the character immediately. No reputable hospital or medical clinic will remove an implant unless the operation is authorized by the bank.
Bounties. In order to further discourage people from not repaying their loans, banks offer rewards for the capture of loan defaulters. For small loans, the reward usually is equal to the value of the loan. For loans over 15,000 Credits, the rewards become proportionally smaller. For example, the reward for a character who defaulted on a 75,000 Credit loan may be only 25 or 30,000 Credits. These rewards are paid only if the defaulter is captured alive.
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Characters can arrange to repay their loans on a schedule lasting from 1 to 20 years. Payments usually must be made once every 40 days. Interest is assessed at the rate of 4% every 40 days. To figure out what the monthly payments are for a loan, use the Interest Table. This table shows the monthly payments that must be made on a 10,000 Cr loan, depending on how many years the loan lasts.
To use the table, find the "Monthly" entry that matches the number of years the loan lasts. Divide the amount of the loan by 10,000 Cr. Multiply this number by the monthly payment from the table. The result is the monthly payment for the loan. To find out how much money the loan will have cost when it is completely paid off, multiply the number in the "Total" column by the amount of the loan divided by 10,000 Cr.
EXAMPLE: Lemuel Fairbanks III needs 200,OOO Cr to remodel his starship. He applies for a loan at the First Bank of Cassidine. He has no collateral, but his excellent reputation and well-known adventures defending the Frontier make him eligible for a loan of up to 500,000 Cr. He is extremely courteous during the interview, and his investment plan seems well thought out. The referee rolls d100, and the result is 32. One-half of Fairbanks' Personality is 40, so the bank will lend him the money. Fairbanks agrees to pay off the loan over a period of three years. To find his monthly payments, the player divides the amount of the loan (200,000 Cr) by 10,000. The result is 20. This is multiplied by the monthly payment for a three-year loan. The result is (20 x 578.3 =) 11,566 Cr every 40 days. At the end of three years, Fairbanks will have paid (20 x 17,349 =) 346,980 Cr to the bank, and the loan will be completely paid off.
As the example shows, paying off a loan is expensive. Players should make every effort to guarantee they can repay a loan before actually taking the loan. Loans that are repaid over many years have lower monthly installments, but short-term loans are less expensive overall.
Multiple Loans
It is possible for characters to receive more than one loan. This can be done by getting loans from more than one bank, or by getting one loan on collateral and another on reputation. In fact, this may be the only way characters can finance very large purchases.
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