Kentucky Department for Libraries and Archives

Borrowing Money

​ General:

  • Most local banks aren't able to finance a major construction project at a competitive rate.
  • Libraries usually finance construction through loans or an issuance of bonds.
  • In reviewing borrowing options, the library may want to consider the following items among others:
    • Fixed versus variable interest.
    • Early payment options.
    • Amount of paperwork required.
  • Determine borrowing capacity at the beginning of the process.  This is a crucial element in determining what you will be able to do.



Contact a financial advisor to determine borrowing capacity.



  • Contact a financial advisor at the beginning of the planning process to determine borrowing capacity.
  • The bonds are issued in the library's name, but your financial advisor will oversee and guide all parts of the process.
  • The library should hire a bond attorney to review all papers.
    • The financial adviser can assist in hiring a bond attorney.
  • The library should adopt a reimbursement resolution allowing self-reimbursement from the bond sale for hard costs such as land, demolition, etc.
    • This cannot be used for architect fees.
  • Items that may improve bond rating:
    • Maintain a cash reserve of 10% - 15%.
    • Ensure adequate revenue to cover construction loan costs.
    • Practice good management in general (i.e. documentation, policies, etc.)
  • Do not sell bonds before getting a firm construction bid.