Letter of Credit

Most federal agencies authorize Letter of Credit (LOC) as the cash mechanism for providing cash disbursements to award recipients. For Federal sponsored awards, payment is requested and received on a cost reimbursement basis via an LOC. The OSP Cash Team is responsible for preparing and performing the LOC draws across the over twenty federal agencies that utilize an LOC. The Cash Team processes these drawdowns through each agency’s respective online LOC system.

LOC Drawdown Deadlines

Most of the federal agencies allow grantees to draw the funds up to 90 days after the award expiration date. NIH and NSF allow for an additional 30 days to draw funds, allowing for a total of 120 days after the awards expired. Any LOC draw requests that exceeds the draw deadlines of 90/120 days will be rejected by the agencies. In addition, the federal agencies require the total LOC draw amounts for each award to match the total expenditures reported on the final Federal Financial Report (FFR), which is filed using the SF-425 financial reporting template.

The OSP Cash Team coordinates draws with the OSP Research Finance Financial Analysts as drawdown deadlines approach. The Financial Analysts work closely with the department grant managers to ensure the LOC funds are fully drawn to offset the award expenditures (Final Figures) within the 90/120 day draw deadlines. As part of this process award expenditures reported on the final FFR are reconciled to the amount drawn for the expired award.