Bankruptcy problem

[orangewarning]

As you can see from the screenshot,

the game claims that I am going bankrupt even though I have positive bank balance.

This makes it impossible for me to take out huge bank loans as the "bankruptcy warning" will be triggered...

Pretty sure this is a bug...

[SpaceVelociraptor]

I'm not so sure that it is a bug. You don't seem to have any prisoners, leading me to believe you don't really have any income. If the only money you have is from bank loans, you're definitely in financial trouble.

[orangewarning]

I don't quite agree with you there.

This clearly defeats the purpose of bank loans doesn't it?

And how is taking bank loans bankrupt?

Furthermore, the release notes state that you have to have both "negative bank balance and negative cashflow"
to be considered bankrupt.

[Barrows]

You can't get more bank loans from current bank loans... its borrowing money, not having actual income. Only time you should borrow is when you'll be investing and getting more money back faster in the long run compared to waiting to buy yourself. If you have to borrow money just to stay afloat till the next pay check you have to start balancing your decisions and prioritizing when you buy stuff.

TL;DR - Money you borrow will be subtracted from your over all bank balance. If you have 10k in your bank but used a 15k loan to stay afloat and are not making any income you are bankrupt. That 10k isn't yours plus you owe an additional 5k + interest. If the bank called in their loans tomorrow, you'd be in the negatives.

[5hifty]

Nah that defiantly seems like a bug. Wht happens if my prison is just making it along, and then I have an incident that drops me into the red (income but not available funds) for a few days? Even tho I would have the money to pay the loses until the income rose again, I would fail because I had a negative income with a loan on the books.

Think of it this way. I am a start up business. I have $1k in capital. I use that to take out a $2k loan. I run at a loss for the first month which costs $1k, but I construct all the infrastructure needed to turn a profit in month 2. Month 3 I earn $4k, pay back my loan and interest. How was I ever bankrupt? Why would I take the loan out in the first place if I couldn't spend it?

[christhekiller]

Yeah. I think the way its currently working is that cash you borrowed from the bank is not cash you own and thus bankrupt. Not so much a bug as an oversight or perhaps Chris trying to make it so that you don't rely on bank loans.

[orangewarning]

Oversight/bug whatever...

I agree that bank loans are not cash you own.
But what if you decide to build a cell block costing 200K but you only have 50K balance
Obviously you take out a loan so that you can build you cell block.

I don't call that "bankrupt"

I mean that's the way many business's work.

They take out a loan at the start to set up a shop/office/whatever.
I don't consider my business to be bankrupt if I am not making money on day 1.

I think the financial system still needs to be tweaked slightly...

[zarrrt]

Allowing bank loans could enable you to stay afloat whilst you 'turn around' your prison. If you have had a major fire for example this could be a valid reason to take out a large loan and spend some time in negative income. If in the long term you can repair the damage etc then you could pay off the loan and the debt... So 5hifty, in theory your argument is valid, but these circumstances are rare.

However, in most circumstances when our prisons end up in both debt (bank loans) and having a negative income loans do not provide a solution. Given the rate of interest it is difficult to see how you could make more money. Usually debt is caused by too many staff (overheads) and a lack of prisoners. A bank loan neither brings in more prisoners nor provides a long term solution to excessive overheads. Thus counting a bank loan as cash would merely extend the number of days before you went bankrupt. So Barrow I agree with statement.

Ultimately we can count or not count the load as valid cash, perhaps the value of your prison and its degree of success could influence if you go bankrupt. After all creditors frequently allow businesses that are in debt to continue trading because they are successful and can be turned around. In PA you would need at least a few days (PA time) to successfully turn around a prison as your would need to either have many more prisoners or redesign large parts of the prison so it works effectively with fewer staff.

Orangewarning... Yes the system needs tweaking, with loans, grants, higher prisoner allowances and share issues I can't see how you could go bust...

[Chris]

Hmm yes this does seem a little bit wrong. Currently the bank loan is subtracted from your balance, so a large bank loan will put you into bankruptcy, and therefore cannot be used to get you out of it. I think I'll change the rules in alpha 21 such that bank loans are not counted against your balance.

[5hifty]

Hmm yes this does seem a little bit wrong. Currently the bank loan is subtracted from your balance, so a large bank loan will put you into bankruptcy, and therefore cannot be used to get you out of it. I think I'll change the rules in alpha 21 such that bank loans are not counted against your balance.

Yay! Also, I'd love a way to be able to pay off my loan over time. Say, a way to pay an additional 10% on top of my interest payments so I could pay off a loan slowly, instead of just in bulk payments,