The game has several ways to finance your company if you run into money issues or if you're looking to expand without stressing your bank accounts. All of these financial operations are located in the Financial room, and you'll find more information about the GUI on the Financial page.
Lines of Credit
Line of Credit is a type of revolving debt, similar to a credit card. When you get a line of credit, the bank gives you a maximum spending limit. You're free to use to that limit. The money you use is called a balance, and you'll pay interest on that balance each month.
Lines of credit are good for small borrowing needs and last-resort options. You should always get larger lines of credit while your company is doing well. You can always increase your maximum while you have balances. Increasing your maximum is wise because if you ever find yourself in a situation where your company is failing, banks will not be willing to give you a line of credit, nor will they raise your maximums.
Loans are a medium-term type of debt. They have higher requirements than Lines of Credit, but you can borrow more money with them. Compared to bonds, the maximum amount you can borrow is less, and you have to pay more interest. However, you need less credit to get one, and they're shorter term.
With a loan, you will make monthly payments. These payments also include principal. So you will be paying down the debt with every payment, and the amount you have to pay each month never changes until the loan ends.
Loans are a good choice if you want a debt that you'll start paying off immediately, thus reducing the amount of debt on your books every month. Loans also have the benefit of not having a maturity date like Bonds, so there is no large one-time payment. The credit requirement for loans is also lower than bonds, and your credit will recover faster when taking a loan compared to a bond. Unlike bonds, you can also pay off a loan at any time.
Bonds are a special type of debt in which you sell a bond or a share of the debt. In return, you pay back a fixed rate of interest on that share, called a coupon. When you reach the end date for the bond, called the Maturity date, you’ll buy back all the bonds for the amount initially loaned to you.
For instance, if you issue $100 Million in bonds at a 3% interest rate, you’ll pay $3 Million per year until the maturity date. On that date, you’ll buy all $100 Million bonds.
Bonds are harder to raise but can offer you more money for longer periods at lower interest. You only pay the interest for the length of the bond until the end date. On that last date, you must purchase back the entire principal of the bond.
With that in mind, bonds are an excellent choice if you want to borrow large amounts of money and pay very little on that money each year. The amount of debt does not decrease with each payment until the maturity date when you pay back the entire principal. If you can not afford to pay the maturity amount back at once, take out an additional bond to cover the principal of the other bond.
You can pay Bonds back early, but you must wait 3 games years since the issue date before doing so.
IPO stands for Initial Public Offering. When you IPO, you break your company into small pieces called “shares,” and then you sell those shares to the general public. Each share is fractional ownership of the company. Essentially you're selling a part of your company to raise funds.
We cover IPOs in more detail on the Stock page.