Effective Date: June 7, 2007
Signature/Position: Assistant Vice-President, Finance and Services
In order to meet day to day operating cash disbursement requirements the University may at times be required to obtain external temporary financing. This requirement is due to potential timing differences between expenditures and receipt of revenues that create the need to provide temporary liquidity. These conditions normally will not last for more than several months in any fiscal year. This policy describes the conditions under which borrowing for non-capital purposes is permitted.
This policy applies to borrowing by the University for non-capital purposes. Capital borrowing is addressed in Policy FI17.0 Capital Debt Policy.
The University may issue bankers’ acceptances, enter into lines of credit, short term loans, overdraft facilities or other forms of short term borrowing.
1. Lender Concentration
The University should not obtain all of its external financing from any one lender. Although no specific limits are set, the University should obtain funds from a number of different institutions in order to avoid undue influence of any single lending source.
2. Demand vs. Term
Term loans shall be used instead of demand loans wherever and whenever possible.
3. Security
Whenever possible, loans should be made on an unsecured basis. Security will only be granted with prior approval of the Board.
4. Financial Covenants
All borrowing is to be completed without financial covenants that impair or restrict University assets or revenue. Any borrowing which includes financial covenants shall require prior approval by the Board.
5. Reporting
The administration shall report at least annually through the Finance Committee to the Board of Governors on:
This policy will be reviewed by the Board at least once per year. If any amendments are necessary, these amendments may be made only after approval by the Board of Governors of the University.