How to Borrow Money From the Federal Reserve

by Contributor; Updated September 26, 2017
Your institution can perhaps qualify for a loan from the Federal Reserve.

The Federal Reserve Bank via its Discount Window grants extension of credit to depository institutions in need. All authorized depository institutions are eligible to get credit from the Federal Reserve Bank at an approved interest rate. There are several credit programs that depository institutions can use with different requirements.

Step 1

Have all the necessary authorizing documents and agreements as Federal Reserve rules require. The Discount Window provides these rules at frbdiscountwindow.org.

Step 2

Provide a list of collateral for preapproval to the Discount Window. Staff will determine if the assets are eligible for pledging to the Federal Reserve Bank.

Step 3

Assess if your institution is eligible for Primary Credit for the funding. Primary credit is available from the Federal Reserve Bank to generally sound depository institutions. This credit is provided on a short-term basis only and carries the lowest interest rate.

Step 4

Apply for Secondary credit if your institution is not eligible for Primary credit. This option is provided on a short-term basis to depository institutions ineligible for primary credit. The interest rate is higher than Primary credit.

Step 5

Apply for the Seasonal credit program if you are a smaller depository institution. You must show a recurring seasonal need for at least a four-week period and be in good financial condition.

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