Cooperative Financing—External Sources of Capital
We have now explored sources of equity capital needed in our cooperative. It was suggested that about half of these funds—those needed for fixed capital uses such as land, buildings, and equipment, and those needed for operating the cooperative for at least the first year in paying such items as salaries, taxes, office and other supplies—should come from the members. This means that about half of the needed funds will have to come from outside or external sources. Let’s now examine those sources of borrowed funds or debt capital. Although net worth generally provides the major part of their capital, cooperatives would not be able to develop their services to the fullest extent without the use of borrowed funds.
KeywordsInterest Rate Unique Credit Money Market Credit System Loan Fund
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