Interim borrowing involves taking out a short-term loan that is repaid using additional revenue sources that are expected to materialize in the short-term. Municipalities often use interim borrowing, like bridge loans, as a way to finance the early stages of projects.
For example, suppose that a municipality would like to build a new school, but needs to prepare a feasibility study before that happens. Interim borrowing can provide the funding needed to finance this study and then can be paid back using the proceeds of a longer-term bond.
