Doh! Forgot to state WHY we dont see more game businesses get loans in that regard in my message. My apologies. 2 Fold-
The statement "people dont try for loans" is actually shockingly accurate (yes, by your account I is da retarded now)
->
http://www.huffingtonpost.com/2012/08/15/small-business-loans_n_1778206.html 59% of small businesses in NYC that needed capital did not even try getting a loan. Think about that. You are a business in a highly competitive area who really wants to do XYZ as it could really help you out. You would exhaust all possible means correct? ... Well apparently not, they totally say screw loans to the point of not even going in to talk about it. 59%! And from the article - "Lenders also were less likely to lend to small businesses that could not show constant or rising sales or existing bank relationships." - there's that character and capital, shits important and if you have banks will work with you no matter what like I said.
And
http://finance.yahoo.com/news/inaugural-quarterly-index-reveals-decline-130000673.html We see that total business demand for loans has dropped 4%. Really demand across the board is falling. And in the first article, yes there is risk in what a bank will take on even if you meet all criteria, but as said in the article - that's start up risk. Start ups are having next to impossible times getting loans. We arent talking about a hypothetical start up game company getting a loan. No bank wants start ups right now. We are talking about broad video game risk... which leads to point number two!
The CAMELS shit and all that. Yeah it works, yeah its shit, its whatever, haha. BUT Collateral is one aspect that can't be ignored. How do you value virtual IPs/virtual collateral/virtual assets? That's a major problem with the industry right now, hello Zynga again and hellooo Curt Schilling and 38 studios. I jokingly said Fargo would definitely get approved, but honestly if the agent said "Ok list your assets/liabilities collateral and all that" and he wrote down Bards Tale and Chop Lifter, do you think the bank would even know how to approach that? Hell, remember Fallout 3? There were industry people valuing it as high as $30mm saying Microsoft is gonna grab it for that much and others saying Troika for 500k. Someone mentioned asymmetrical distribution of knowledge, that's here as much as possible.
Risk aversion has come up on both sides of the argument and in my opinion BOTH loan parties are also extremely risk averse so you get this situation - a small business who wants to expand but is afraid of any loans handicapping him/whatever else business loan stigmata brings, and you have a bank who has no idea how to truly value any of the IPs they will be funding other than a cash flow analysis using marketing data from other similar games. But this doesnt mean banks hate the video game industry. Loans to the industry are more common than you might think -
http://www.shacknews.com/article/73960/konami-autumn-games-accused-of-bank-loan-fraud Konami gets loans for production on its games as do many others I'm sure of (and look at that! The bank didn't know how to value the transaction). The more I think the more maybe Fargo used the KS and capital he raised for that to maybe go to a bank and hey we need a loan and look at what we accomplished.