The Council of the Isles of Scilly is to temporarily borrow up to £3 million for a period of three months to ease its current cash flow situation.
Senior Finance and S151 officer Andy Brown told a meeting of Full Council last week that the Authority is forecast to run out of cash before the end of the year.
It has just £531,000 in its General Fund Reserve, considerably below the £1 million minimum previously set.
Mr Brown asked Members to authorise an increase in the borrowing limit from £500,000 to £3.5 million to give him some latitude to rectify the cash flow situation.
He told This is Scilly later: "I want it to be clear that this treasury management is no different from any other Council and indeed no different from any other business.
"We are not borrowing to get us out of a black hole, but temporarily borrowing to smooth our current cash flow position so that we have sufficient cash resource to meet commitments in the remaining months of the financial year.
"Come April, cash will start to flow back in again from council tax, business rates receipts and government grants."