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Minnesota's Nonmetro Cities Use Revolving Loans as a Development Tool

Author

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  • Stinson, Thomas F.
  • Lubov, Andrea

Abstract

Nearly 100 of Minnesota's nonmetro towns use revolving loan funds as a way to spur local economic development. Here's how they work: a town makes the initial loans to qualified businesses, and as the loans are repaid, the money is loaned out again and again to other businesses. A few problems need to be worked out: default rates somewhat higher than those experienced by other lenders, slow accumulation of funds needed to make second-generation loans, and slow turnover in "revolving" the funds to the next round of businesses. In city-based programs, there is also the risk that viable projects are going unfunded in towns without access to a revolving fund.

Suggested Citation

  • Stinson, Thomas F. & Lubov, Andrea, 1992. "Minnesota's Nonmetro Cities Use Revolving Loans as a Development Tool," Rural America/ Rural Development Perspectives, United States Department of Agriculture, Economic Research Service, vol. 8(2), June.
    • Handle: RePEc:ags:uersra:310978
    DOI: 10.22004/ag.econ.310978
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    Cited by:

    1. Duncan, Marvin R. & Fischer, William R. & Taylor, Richard D., 1996. "Rural Economic Development: New Opportunities And Challenges For Commercial Bankers," Agricultural Economics Reports 23354, North Dakota State University, Department of Agribusiness and Applied Economics.

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