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.