Revolving Loan Fund

Revolving Loan Fund

A Revolving Loan Fund (RLF) is a source of money from which loans are made for small business development projects. A loan is made to one person or business at a time and, as repayments are made, funds become available for new loans to other businesses. Hence, the money revolves from one person or business to another.

The fund is often established with capital that does not need to be repaid. Borrowers tend to be small producers of goods and services — typically farmers and artisans who have no credit history or access to commercial bank loans.

RLFs provide the initial loans for business start-up and expansion. Often, they are used to fill a "financing gap" in a business development project. The ultimate goal is for these entrepreneurs to become financially independent and eligible for loans from commercial banks.

Reference: http://ohioline.osu.edu/cd-fact/1229.html


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