What type of loans are typically covered by the term Interfund Loans?

Interfund loans refer to loans that are borrowed between different funds within a government or municipal entity. This practice allows one fund to provide temporary financial support to another fund that may be experiencing a shortfall. The goal of interfund loans is to ensure liquidity and maintain financial stability within the various funds that make up the governmental structure. This is particularly useful in situations where a fund may need immediate cash flow to meet obligations, but does not have sufficient resources at that moment.

This type of arrangement typically involves terms that dictate the repayment of the loan, which could vary based on the policies of the governing body. It is important to differentiate interfund loans from other types of borrowing, such as loans for long-term investments or those specifically secured by federal grants, which do not directly pertain to the movement of funds between internal accounts. Interfund loans are fundamentally about intra-agency financial management, providing a mechanism for funds to support one another as needed.