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Annuities for Retirement Planning

Advance Funding

By Julia Kagan

Updated on December 19, 2021

Review by Marguerita Cheng

What Is Advance Funding?

Advance funding is any advance that is made to the future of a obligation or payment. The term”advanced funding” is broadly used and can involve a wide range of financial situations ranging from personal or project loans and future contractual payments, such as annuities or royalties and the appropriations of government.

Advance financing can come in many forms. Some examples of advance funding are: payday loans, viatical settlements and settlement advances for lawsuits. Usually, advance funding would require an assignment of the contract , or series of payments due in the near future or the cancellation of the payments that is sufficient to pay back the advance. Most often the advance funds will be discounted in exchange for an estimated amount of interest.

Important Takeaways

Advance funding refers to any advance on the future of a agreement or payment.

The term advance funding is used very broadly and can refer to an assortment of financial scenarios ranging to personal as well as project loans as well as future contractual payments such as royalties or annuities, and the appropriations of government.

A few examples of advances in funding include: payday loans, viatical settlements, and lawsuit settlement advances.

Advance funding can also be used to refer to the continuous process of building specific funds to finance an account for future benefits, such as for an retirement plan.

Understanding Advance Funding

Most people are aware of the lawsuit funding concept since commercials for these services are shown often on a variety of television stations. A person who is a defendant in lawsuits can apply for advance funding to pay for their living expenses or for other reasons in the meantime they await their anticipated settlement or the damages that they could be awarded. In some instances the money may be used to help pay the cost of surgeries or other medical procedures the injured or affected victim may require.

Artists, writers, producers as well as others involved in the production or publication of artistic or literary works are often also rewarded with some form of advance financing. In this case they are given an initial initial payment, which is structured as an advance to future royalties or revenue of future sale.

There are also suppliers who offer payroll financing services. Payroll financing can be advantageous to businesses that have cash flow problems and want to keep the payroll process operating smoothly and continuously. This kind of financing is also used extensively by staffing firms. The payroll funding services provide this capital with a credit in accordance with the company’s assets. Applicants would need to meet certain criteria and obtain approval prior to receiving any funds.

The various types of advance funding structures run across the spectrum, so do the terms and terms that are associated with these financial arrangements. The requirements for qualifying, the fees and interest rates, and obligations of the person or entity that receives the advance funding can vary widely depending on the situation.