DEFINITION of 'Revenue Anticipation Note - RAN'
A municipal bond that is repaid with expected revenues from the project being financed by the bond. RANs have a maturity of one year or less and the expected revenue can come from a variety of sources, such as sales, fees or rate increases. Typically, RANs are used to raise money immediately to finance a large project.
BREAKING DOWN 'Revenue Anticipation Note - RAN'
The interest income generated from RANs is typically tax-exempt to the holder. RANs are often issued by segments of local government when there is a discrepancy between tax revenues and current costs. Whereas government taxes are received sporadically throughout the year, construction costs and the associated labor costs arise more consistently. By offering RANs as part of the financing, projects can be started without having to wait for the funding. Examples include stadium renovations, recreation center improvements and the like.