DEFINITION of 'Advance Funding'

This refers to any advance made on a future commitment or payment. The term, advance funding, is used very broadly, ranging from personal or project loans, future contractual payments like annuities or royalties and government appropriations.

BREAKING DOWN 'Advance Funding'

Some examples of advance funding are: payday loans, viatical settlements and lawsuit settlement advances. Usually advance funding would involve an assignment of the contract or series of payments due in the future, or waiver of the amount of those payments sufficient to repay the advance. In most cases, the advance funding will be discounted for some imputed amount of interest.

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