Cooperative bylaws may place such retains in a revolving capital fund, providing that when the cooperative has adequate finances, the fund will be revolved. Revolving Fund Financing allows cooperatives to constantly renew their capital structures, to provide an unending source of member capital, and, at the same time, assure that the oldest equities would be paid back first. Under this financing method, members' revolving equities are allocated to them on the cooperatives' books, and these equities are used to conduct the business. Sources of Borrowed Funds Cooperatives may often find equity capital sources are not adequate either to begin or to maintain a sound and stable financial structure. As a result, many co-ops must find permanent external sources.
Some cooperatives raise external funds from non-member investors and creditors.
The member thus has a lower investment and the creditors share a greater portion of the risk. The Banks for Cooperative are farmers' own cooperative credit institutions. These banks provide all necessary types of credit for cooperatives such as facility, operating and commodity loans. In 1970, banks for cooperatives provided 65 percent of all borrowed funds. The National Rural Utilities Cooperative Finance Corporation was established in 1970 to meet rural electric cooperatives' critical financial needs.