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Business and Financial Policies and Procedures

Internal Loan Guidelines

Loan Purpose - Internal loans may be approved for major equipment purchases, remodeling or new construction projects, and other approved uses. Internal loans are not made for working capital.

Individual Loan Amount - May not exceed $10,000,000 for any individual capital project.

Maximum Loan Term - 10 years. Interest and principal must be paid off during the term of the loan.

Interest Rates

  • Loans Less than 3 years - The interest rate for loans up to three years is set at the time of the loan, for the life of the loan (rate is not reset each year). The interest rate is based on the institutional money market fund utilized in the operating funds pool and is never less than 1%.
  • Loans More than 3 Years - Treasury Operations - Investments annually recalculates the interest rate for loans of more than three years (each March, to become effective the following July 1). The interest rate is based on the Barclays Capital Intermediate Aggregate Bond Index yield and is never less than 3%. The interest rate for loans for more than three years is adjusted annually if the rate from the preceding year differs from the current rate by 1% or more.
  • Quarterly Interest Calculation - The quarterly interest calculation is based on the average quarterly outstanding loan balance. The Office of Business and Financial Services (OBFS) charges quarterly interest payments to the funding source designated in the loan agreement.

Total Loan Amount Limitations

  • The total amount for outstanding internal loans (current balance plus approved, undisbursed funds) may not exceed the lesser of 10% of the adjusted average balance of the University of Illinois System’s operating funds investment pool from the prior fiscal year or $125,000,000.
  • The individual internal loan limit for the University of Illinois at Urbana-Champaign, the University of Illinois at Chicago, and the University of Illinois at Springfield shall be determined by their proportional ownership (percentage1) of the System's adjusted average balance of the operating funds investment pool. To determine each limit, the percentage shall be multiplied by the total limit of System's internal loans.

Contact Capital Financing for the current Urbana-Champaign, Chicago, Springfield, and System internal loan limits.

1 Average percent total claim on adjusted cash from the prior fiscal year.

Last Updated: March 13, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 2010

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