What financial instrument serves as a short-term funding solution using future bond proceeds?

The correct financial instrument for short-term funding that utilizes future bond proceeds is bond anticipation notes. These notes are essentially short-term debt instruments issued by a governmental entity with the expectation that they will be repaid when future bond proceeds are received. They serve a crucial role in allowing municipalities and other public entities to access funds before they issue long-term bonds. This is particularly useful in funding immediate needs or projects while waiting for the formal bond issuance process, which can take time.

In the case of the other options, while they each play unique roles in financing, they do not specifically serve the function of borrowing against future bond proceeds in the same way. Defeasance bonds generally relate to paying off existing debt rather than funding new initiatives. Grant anticipation notes focus on expected grant revenues rather than bond proceeds. Construction loans are more aligned with project financing and does not depend on the future revenue from bonds. Thus, bond anticipation notes stand out as the specific instrument designed for the purpose mentioned in the question.