Internal Loans Policy : University of Dayton, Ohio

Internal Loans Policy

Purpose

To provide the framework for units of the University to borrow money that may be available from the University’s cash, short-term investments or the long-term investment pool.

Scope

This policy applies to all units of the University.

Policy History

Effective Date: December 6, 1993

Approval: March 4, 2026

Policy History:

Approved in original form: December 6, 1993
Approved as amended: December 11, 1995
Approved as amended: July 24, 2000
Approved as amended: March 23, 2016
Approved as amended: March 4, 2026

Maintenance of Policy: Assistant Vice President & Treasurer, Finance and Administrative Services

Policy

All unit expenditures for capital items, long-lived assets, long-term purchases or long-term leases are to be funded within that unit’s annual operating budgets or through the use of reserve funds.

All uses of reserve funds must be approved by the Provost and the Executive Vice President for Business and Administrative Services.

A unit may request that funding of expenditures for capital items, long-lived assets, long-term purchases or long-term leases be “financed” through an internal loan from the University’s long-term investment pool or cash reserves.

All requests for internal loans must be approved by the Executive Vice President for Business and Administrative Services or his/her designee. Terms and conditions for such internal loans, including repayment plans, will be determined by the Executive Vice President for Business and Administrative Services or his/her designee on a case-by-case basis at his/her sole discretion, and will be dependent on, among other things, the University’s available cash on hand, current market conditions for investments, other pending University needs and similar factors.

The internal loan may bear interest at rates to be determined at the sole discretion of the Executive Vice President for Business and Administrative Services, or his/her designee.

The University will not borrow funds from true endowments for the purposes of providing internal loans.

Appendix A

Internal Loans- Operating Principles

This document outlines the operating principles regarding the use of the University of Dayton Internal Bank. In implementing its capital and operating programs, the University will make internal loans to an academic unit or department for a specific project or use. These loans are typically for capital projects. However, upon approval by the Executive Vice President for Business and Administrative Services, these loans may also be used for minor non-capital asset acquisitions or projects or to bridge operating deficits while academic units or departments are implementing corrective actions.

General Principles

Internal loans may be made to units for purposes consistent with the unit’s academic or strategic plan, or in support of the University’s strategic or operational goals.
Requests for an internal loan must be submitted to the Executive Vice President for Business and Administrative Services or to the Assistant Vice President and Treasurer by the authorized dean or vice president of the requesting unit.
All loans will be documented in the form of a Memorandum of Understanding (MOU) outlining the amount of the loan, the interest rate, the loan term, the source of repayment, and the repayment schedule.
All loans are subject to the approval of the Executive Vice President for Business and Administrative Services. The Executive Vice President for Business and Administrative Services will provide formal approval of the loan in writing on the MOU.
The minimum amount of all loans will be $1.0 million and will be made in 5-year, 10-year and 15-year terms. In extraordinary circumstances, the Executive Vice President for Business and Administrative Services may approve exceptions to these minimums and payment term and the reason for such an exception will be documented in the MOU.
All loans will be structured on a straight-line amortizing schedule with annual repayments unless the Executive Vice President for Business and Administration approves different payment arrangements.
Terms for repayment for each loan will be documented in an MOU and will not be dependent upon the timing or terms of University issuance of external debt.
The Executive Vice President for Business and Administrative Services and the respective dean or vice president must approve all MOUs.
An MOU must be fully executed by prior to funding being released.

Form of Memorandum of Understanding for Internal Loan

Requesting Department:

Amount of Loan:

Purpose of Loan:

Loan Term (in years):

Interest Rate:

Start Date:

Loan Repayment Schedule (Annual):

Recurring Payment Amount/Charge:

Source of Loan Repayment Funds:

NOTE: Loan may be paid in full in advance of indicated term without penalty.

_________________________________ _________________

[NAME] Date

[Dean or Vice President]

_________________________________ _________________

Andrew T. Horner Date

Executive Vice President for Business and

Administrative Services