11.437 | Fall 2016 | Graduate

Financing Economic Development


Phoenix Forge Role-Play

This role play exercise will provide an opportunity to simulate the decision-making process for a community loan fund and apply the business finanace skills you have developed in the previous case studies. In the Phoenix Forge case, the Community Loan Fund (CLF) has before it a financing request from Phoenix Forge. The specif roles are indicated below.

The Loan Officer is responsible for presenting the loan request to the Community Loan Fund Board in a concise, clear manner that summarizes the request, why the loan is desirable for the CLF, key lending issues, and makes a recommendation. The President of the company will discuss Phoenix Forge’s business plan and why he/she believes the plan is sound and the company will succeed. The City Economic Development Director will discuss the benefits to the city, the city’s role in project financing, and why the city supports the project.

The CLF Chair is responsible for running the meeting, calling on individuals to speak, maintaining order and getting the CLF Board to reach a decision on what action to take on the loan request. THe balance of the CLF Board is composed of the following individuals:

  • A small business owner
  • The Chamber of Commerce Executive
  • 2 bankers (including the loan officer from First National Bank, which is providing a line of credit to Phoenix Forge)
  • A community activist
  • A city councilor
  • A labor union representative

The role of the CLF Board is to ask questions regarding the proposed loan, the business plan, the financial projections and financing plan, and to make a decision on the loan request. Prior to class, each CLF Board member should consider the CLF mission, the issues raised in the case, specific concerns that their member would bring to the Board meeting, and be prepared with questions to ask.

After the role play we will discuss how the process worked and what it suggests about how the CLF might best structure its decision-making process. Please be prepared to discuss items that you thought should have been raised but were not, what issues were not addressed adequately, as wellas observations on how the process worked. Also consider what challenges were faced by the CLF Board in balancing community benefits and the project’s financial risks. How well did the baord balance these issues? How could CLF staff, the company, and local officials help make the CLF Board job easier? The role-play will last about 50 minutes with the balance of class time used to discuss and reflect upon it and the case. The presentations should be brief, with the Loan Officer taking 5-7 minutes; the Company President taking 3-5 minutes; the City Economic Development Director taking 3-5 minutes, and the Phoenix Forge Employee and Community Leader each hacing 1-2 minutes. The CLF Board will then have 30 minutes to ask questions, discuss the loan request, and make a decision.

Course Info

As Taught In
Fall 2016
Learning Resource Types
Lecture Notes
Projects with Examples