The state of New Jersey is negotiating a credit line for up to $2.5 billion to cover a shortfall in the state budget, according to Andy Pratt, a Treasury spokesman.
New Jersey is set to issue bonds over the summer, but the state is facing a cash shortage in the next few weeks and is considering an alternative financing arrangement to tide it over, the spokesman said.
Pratt called the situation a "routine cash management issue" and said the tactic had been used before.
"We borrow every year because cash flow doesn't come in from tax revenue" on the same schedule that spending requires, Pratt told NBC news.
Repayments on the loan would be made following the bond auction in the summer.
The state arranged a similar $2 billion bridge loan in 2009, but did not use the facility. Under Municipal Securities Rulemaking Board guidelines, issuers should disclose any bank loans they take out if they intend to sell more debt.