Types of Credit
The Federal Reserve administers three major loan programs through its Discount Window. Program eligibility is primarily determined by an institution's financial condition. Further information is available on the Federal Reserve’s Discount Window website.
- Primary Credit is a backup source for short-term funds granted to sound depository institutions on a minimally administered basis.
- Secondary Credit is available to depository institutions not eligible for primary credit. Secondary credit is granted under a higher level of administration.
- Seasonal Credit, for institutions under $500 million in deposits with limited access to national markets, provides a reliable source of credit for periods of up to nine months.
The Federal Reserve Bank extends credit in the form of an advance, payable on demand, and secured by acceptable collateral. An institution that expects to borrow must have on file with their Reserve Bank the necessary authorizing resolutions and agreements, as described in our Operating Circular 10: Lending. A request for an advance may be made by an authorized employee of the institution, as noted by title in the borrowing resolutions, one or two may be designated, and identified on an OC-10 Authorization List. Requesting an advance takes the form of a simple phone call. When a Discount Window representative answers, please be prepared to supply the following information:
- Borrower Identification: Name and location (city and state) of your institution, your institution’s ABA and telephone number, and the authorized borrower’s name and title. If a second officer is required per your institution’s borrowing resolution, please have a second authorized official available.
- Loan Request Information: The amount of the advance you are requesting. Primary Credit loans are generally extended on an overnight basis; however, lending requests up to a few weeks may be considered for sound depository institutions that cannot reasonably obtain such funding in the market. If the advance is drawn under the Seasonal Credit program, the maturity will generally occur on the first business day of the following month.
- Collateral Information: In the event there has not been collateral pledged to secure the proposed borrowing, a general description of the type of collateral that will be pledged is required. To complete the borrowing request, all collateral must have been pledged to the Discount Window and placed in a loan collateral account.