Until financing or long-term refinancing is obtained, the capital expenditures of universities other than the Université du Québec and its constituent universities are usually financed by means of short-term loans from financial institutions.
Financement-Québec offers them line of credit borrowings when they are unable to borrow under the conditions stipulated in the Regulation respecting investments made by a body. The Regulation stipulates that the interest rate applicable to short-term financing may not exceed the Canadian bankers’ acceptances rate increased by 0.30%. When the universities obtain financing from financial institutions, they do so at rates that are lower than or equivalent to what the Regulation stipulates.
The daily rate of the one-month Canadian bankers’ acceptances of the CDOR page of Reuters’ Monitor Service at 10 a.m. (rate applicable according to Order in Council 238‑2000 (available in French only)), increased by a margin of 0.30%.
The interest rate applies to the daily balance of the bodies’ borrowings. The interest rate applicable on legal holidays is that determined on the preceding business day.
The borrower may increase or reduce daily the amount of its borrowings from Financement-Québec.
Interest is payable monthly on the last business day of the month, or capitalized on the first day of the following month.
Financement-Québec prepares and provides all of the documents.
he borrower must adopt a resolution to allow for the establishment of a line of credit with Financement-Québec.
Each participating body must first sign a master borrowing agreement, which defines the key terms and conditions governing borrowings and repayments.
Each body that borrows by means of a line of credit must also sign a promissory note, which acknowledges the body’s debt in favour of Financement-Québec.
The borrower must provide a letter indicating the instructions for payment.
The borrower must submit to Financement-Québec a confirmation when it wishes to increase or decrease the outstanding balance on its line of credit.
Financement-Québec gives borrowers the confirmation form.