A Revolving Loan Fund (RLF) is a source of money from which loans are made for multiple small business development projects. Revolving loan funds share many characteristics with microcredit, micro-enterprise, and village banking, namely providing loans to persons or groups of people that do not qualify for traditional financial services or are otherwise viewed as being high risk. Borrowers tend to be small producers of goods and services: typically, they are artisans, farmers, and women with no credit history or access to other types of loans from financial institutions. Organizations that offer revolving loan fund lending aim to help new project or business owners become financially independent and eventually to become eligible for loans from commercial banks.
The fund gets its name from the revolving aspect of loan repayment in which the central fund is replenished as individual projects pay back their loans, creating the opportunity to issue other loans to new projects.
Popularity in academia
Green Revolving Fund (GRF) The revolving loan fund is often referred to as a green revolving fund, or GRF, when it is initiated on college and university campuses. These types of funds target projects that improve campus energy-efficiency, reduce resource use, and implement other projects and programs that fall under the category of sustainability. In recent years, GRFs have become increasingly popular on campuses in the United States. The funds operate and are managed by the university, with loans issued to university departments or campus groups.
In February 2013, the Association for the Advancement of Sustainability in Higher Education (AASHE) released a database of campus sustainability revolving loan funds. As of March 2013, there were 84 revolving loan funds at 80 institutions in North America containing $118,737,518.
Sample of Green Revolving Funds
Harvard University (MA) - The Green Loan Fund was created in 2001 and has $12,000,000. Western Michigan University (MI) - WMU's Quasi GRF was created in 1980 and has $365,000. Oberlin College (OH) - The student-run Green EDGE Fund was created in 2007 and has $344,000. Lane Community College (OR) - Lane's Energy Management Fund was initiated in 2006 and has $122,000 available. Oregon State University (OR) - Oregon State Universities Sustainable Energy Revolving Loan Fund was initiated in 2010 and has $300,3000.
Carleton College (MN) - The Sustainability Revolving Fund (SRF) began in 2007 and has $71,101. College of Wooster (OH) - The Revolving Environmental Efficiency Fund (REEF) was developed in 2010 and has $5,000.
Greening the Bottom Line: the Trend towards Green Revolving Funds on Campus
In February 2011 the Sustainable Endowments Institute published the paper "Greening the Bottom Line: the Trend toward Green Revolving Funds on Campus." The paper researched the 52 active green revolving funds in the US, with findings based on a series of interviews and surveys with sustainability directors and administrators involved in green revolving fund development and operation at the college and university level.
Greening the Bottom Line reports on a green revolving fund's formation, operation, and financial performance. The report was written with the explicit purpose to provide a baseline for tracking the continuing emergence of green revolving funds in higher education to act and to act as a resource for institutions interested in establishing their own.
Greening the Bottom Line found that for those institutions with green revolving funds: the number of institutions with green revolving funds is growing. Out of the 52 reported active green revolving funds, 37 funds were created between 2008 and 2011. an institution does not have to be wealthy to create a green revolving fund: over 32 percent of funds reported in Greening the Bottom Line are $100,000 or less. there was a range of college and university endowment size, from $7.6 million (Lane Community College) to $25 billion (Harvard University). there was a range of college and university student population, from 1,381 students (Kalamazoo College) to 42,000 students (the University of Illinois Urbana-Champaign). schools reported a range on their GRF project portfolio's return on investment from 29 percent (Iowa State University) to 63 percent (the University of Denver).