PA 617: Week 2

I would make the loan out of the city funds. Among the reasons why the developer cannot access loans is due to his lack of experience in the field they intend to venture in. The bank might see this as a risky prospect since they are not sure whether the developer will be able to run a profitable business. The bank is more concerned about its ability to recover the money, and not the benefits that the community stands to gain.

As a city council member, I am concerned with the benefits that the community stands to gain. If the developer established the restaurant, it would be an attraction for other businesses to be established. This would result in increased economic growth due to the new businesses. The businesses will contribute to improved infrastructure and establishment of various support services among other things. Creation of employment in the area will also ensure that there are improved living standards.

This is a risk worth taking, but at some point, it might outweigh the benefits. The idea that the developer does not have prior knowledge about the restaurant business means that there is a high probability of failure. In this case, the tax payer’s money is likely to go down the drain. If the business fails, the developer will not be able to repay the loan provided by the city council. If the city council had held on to the money, it would have been used in other projects that would have helped the people in one way or another.

Therefore, the risk of the business failing outweighs the benefits involved since the city stands to lose in more than one way.

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