Retirement Planning Annuities
Advance Funding
By Julia Kagan
Updated December 19, 2021
Review by Marguerita Cheng
What is Advance Funding?
Advance funding is any advance that is made in anticipation of the future of a agreement or payment. The term”advance funding” is broadly used and can involve a wide assortment of financial scenarios ranging from personal or project loans, future contractual payments, such as annuities or royalties and government appropriations.
Advance financing can come in various kinds. Some examples of advance funding include: payday loans, viatical settlements and lawsuit settlement advances. In general, advance funding will include an assignment of the contract , or series of payments due in the near future or a cancellation of those payments sufficient to pay back the advance. Most of the time, the advance funding will be discounted for some imputable amount of interest.
Key Takeaways
Advance funding is any advance made on a future commitment or payment.
The term”advanced funding” is used very broadly and can refer to an array of financial scenarios, ranging to personal as well as project loans and future contractual payments such as royalties or annuities, as well as the appropriations of government.
Some examples of advance funding are: payday loans, viatical settlements, and lawsuit settlement advances.
Advance funding is also described as the ongoing process of accumulating funds to fund the account to pay for future benefits, such as for a retirement plan.
Understanding Advance Funding
Many people have probably heard of the concept of lawsuit funding because advertisements for these services air frequently on many televisions stations. A person who is the litigant in the lawsuit can request advance funds to help cover the cost of living or other expenses while they are waiting for their anticipated settlement or the amount of damages they might be awarded. In some instances the money may be used to cover the costs of surgeries or other medical treatments an injured or afflicted person may require.
Artists, writers, producers and other people involved in the creation or publication of literary or artistic works also frequently receive some form of advance financing. In this instance they are paid an initial, in-person payment that is arranged as an advance to future royalties or proceeds of future sale.
There are also suppliers who offer payroll financing services. The funding of payroll can be helpful for companies with cash flow problems and want to keep their payroll processes running smoothly and consistently. This type of finance is also used extensively by staffing companies. Payroll funding services offer this capital with a credit in accordance with the company’s assets. The applicants must meet certain criteria and receive approval prior to receiving any funds.
As the different types of advance funding structures vary all over the place, so are the terms and conditions associated with these financial arrangements. The eligibility requirements, interest rates and fees, and the obligations of the individual or company receiving advance funds can differ greatly based on the circumstances.
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