Borrowing

Last Updated: 5/13/2020

How does an institution request an advance from the Discount Window?

Call your Local Reserve Bank:

Requesting an advance requires a simple phone call to your Local Reserve Bank. An "Authorized Borrower" listed on your institution's borrowing resolution should call your Reserve Bank. If two authorized borrowers are required in order to request a Discount Window loan, please have a second authorized individual available.

Be prepared to supply the following:

Information Required for All Discount Window Advances

  • Your institution's name, ABA number, and location (city and state)

  • Your name and title

  • The type of credit you are requesting

  • The amount of the advance you are requesting 

Information Required for Loan Requests by Type of Credit

  • Primary Credit requires minimal information associated with a loan request. You must provide the term of the loan requested.

  • Secondary Credit loan requests require additional information:

    • The reason for borrowing

    • The number of days that funds will be needed

    • Any additional information necessary to confirm that borrowing is consistent with the objectives of the program (e.g., financial condition of the institution)

  • Seasonal Credit is available to institutions with an approved seasonal line of credit and no additional information is needed at the time of a loan request.

 

Who is authorized to borrow?

Your institution must specify who is authorized to borrow funds in the legal agreements submitted in order to obtain access to the Discount Window. The Authorizing Resolution for Borrowers and the Official OC-10 Authorization List (when applicable) contain the name(s) of the individual(s) who are authorized. In some cases more than one person is required to authorize an advance.

How long can an institution borrow the funds from a Discount Window loan?

The permissible term of a Discount Window loan varies by the type of credit.

  • Primary Credit is extended for periods as long as 90 days to depository institutions in generally sound financial condition.
  • Secondary Credit is generally extended on a very short-term basis, usually overnight. It may also be extended for a longer term if such credit would facilitate a timely return to reliance on market funding or the orderly resolution of a failing institution, subject to statutory requirements (FDICIA restrictions).
  • Seasonal Credit may be granted for a period of up to nine months of seasonal need during the calendar year with advances maturing on a monthly basis.

 

How is borrowing repaid?

An advance is issued with a stated maturity date. Discount Window loans must be repaid by the maturity date. Repayment of principal and accrued interest is charged to the account to which the loan was posted. (Details on use of a correspondent account for loan and payment debits and credits are contained in Appendix 5 of Operating Circular No. 10offsite link).

 

May an institution prepay a multi-day advance?


Borrowers may prepay all or a portion of the principal of a multi-day advance. Accrued interest will be charged at prepayment based on the amount of prepayment.


In order to prepay a multi-day advance, an “Authorized Borrower” must call your Local Reserve Bank's
normal toll-free discount window telephone hotline.  You should be prepared to specify the following information to a Discount Window representative:

  • Name and location (city and state) of your institution.
  • Borrowing institution's name and ABA
  • Authorized borrower(s’) name(s), title(s), and contact number(s)
  • Amount of the prepayment being requested.
  • Details of the loan

Prepayment amounts will be applied sequentially to the loans that have been outstanding the longest.