Loans and Tax Farming

I just can’t figure out the concept of loans or tax farming in EvE.

There’s no way to truly invest in anything, because to build trust, you have to exchange something of equal value? Word of mouth isn’t good enough and there’s no law and order (game mechanic) to enforce contract.

So what’s the point of a loan, if the person you’re loaning to (or as the person borrowing) you have to already have that much money?

And same goes for a corporate ownership/tax-farm. Why would anyone give you the ownership of a corporation for money and not just disband after they get their isk?

Some people acquire assets which they do not want to part with, but are not currently using. A collateralised loan is a way to access the equity in that particular assets while not having to part with it. For instance (this may be a bad example because I have experience in neither of these things), if I owned some capital ships in null sec, and I dont’ want to part with them but have come up with some money-making idea which requires money to begin the process, I would put those ships up as collateral and take my loan. Some trustworthy third party would hold the ships until I pay back the money. If I don’t pay the money back, the trusted third party can then transfer the asset to the wronged party or sell it and transfer the isk to the wronged party.

After doing the above successfully with no foul business for however many number of times, people may grow to trust me on these forums, and I may then be able to obtain an uncollateralised loan or people may start to notice what I’m doing to make money and buy shares of my corp if I offer them up for sale, so that they can get in on the money making process too.

There are other instances where the reward is high and the risk is low. For instance, if someone came on these forums asking for a 1 billion loan with the offer of 5% interest over 3 months, uncollateralised, 1 billion is not a lot to some folks, and so some folks may take the risk of losing that billion in order to gain (does the math) $5,000,000??? That doesn’t seem right…

Well, anyways, all about risk vs reward.

As for the corporate ownership/tax-farm thing, I’m assuming again that the purchaser would want to use a trusted third party to hold the money in trust until the transfer of the corporation was completed.

There are a number of trusted third parties that use these forums. I only lurk and have just returned, so I don’t know the names of any of these trusted third parties, except I remember there being Elizabeth Norn or something like that, and Chribba (though not sure if either are still around?).

In both situations, the person putting up the isk can gain more isk by risking what they have. The person asking for the loan or selling the corp can gain isk as well as trust and the potential to expand. Number 1 rule in business: if you’re not expanding, you’re dying.

I’m sure others have more answers, but that’s how I see this all.

so sad, also rich

Correct, currently there are third parties that hold items, or you go the unsecure loan route. Eve’s market system is old and needs some updating, but I think a loan and corporate stock trade system are something that we could really use.

A month or so ago someone mentioned that using SP as collateral could suffice, but I would think this would only be enforceable as a means for CCP to give out loans through PVE Corps.

Like you stated it is not an easy means to acquire ISK through a loan atm, I have had 3 since 2007, and had to pay upwards of 8-10% each time just to find takers. Even long standing borrowers could at any moment decide to not pay back…

Just had a thought, what if they added a collateral contract, where an item is held in contract for a duration of time and, if not paid back before hand, at the strike date the item would be delivered. This would bypass third party, the borrower would not have to worry about getting their items back from a third party upon completion, and an investor would have comfort that items were secured for their loan.

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This already exists in game. It is called an item exchange contract, where you hand over 10b worth of goods for a 10b loan.

Not really, the receiver can strike on the contract at any point, or if left open the issuer can remove at any point. I am suggesting put the contract in statis for the duration of the terms. This way there is collateral, and both the lender and the lendee can be assured.

Not sure what is your concern here, once accepted, the borrower has 10b isk and the lender has 10b in items. Loan contracts will simply make it less flexible (can’t repay earlier/later or change maturity, or pay part of the principal earlier).

Item exchange contracts have work splendidly in this regard for me,

If you’re interested in loans, do check out my loans discord https://discord.gg/C6trCb2

Thats not true, why couldn’t you add a repay button.

I have done loans for the last 12 years. I have no issue with them. My goal is to move them from a forum posting to an in game function. Why not have an in game tab under contracts for loan proposals. This would make it easier for inquires to fill out their loans.

Additionally, what if you only want a 1b isk loan, and put up a Providence as collateral. Why would a lender want to give back something of greater value. If it is held in a virtual floating contact then there is security on the lendees side.