Imagine you are on vacation, and you have to sit with your lender and lawyer to do a mortgage deal? You came here to know what is table funding and now wondering how these two are related? Well, you may not get me. This is not a travel blog. Just stay with me.
You are welcome if you are thinking about a new business or looking for a loan. In case if you are neither of them, we are going to know something new today!
Suppose you have an excellent idea and you need money to make something out of your excellent idea. Yes, we are talking about funding. We all know what funding means- managing money from any available source that can be used in one specific business or project.
I am going to introduce you to a new word, as well as a new concept- Table Funding. Recall the traditional funding procedures. Now, you are going to terminate some of the key factors from the process in your mind. You would get your ideas your own way about ‘Table Funding.’
What is Table Funding?
At first, let’s take an internet tour. You will find this definition all over the internet.
“Table funding means a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds.”
You may not like to understand this way the concept of table funding. Let’s try an easier way.
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In the traditional process, you have to sit with the parties, take approval from the authority, and finally, you get your loan. In table funding, you cut the authority at first from the to-do list. You don’t need to submit any paper at the beginning. Just contact your lawyer and arrange a meeting with your lender.
You will have your funds ready once you meet the lender for the very first time. So, it doesn’t necessarily require the documentation at first. Interestingly, the paperwork starts from the time when the borrower is receiving the fund. Isn’t it interesting that a borrower always expects that the lender is ready with the money?
The whole process would be coordinated by a lawyer or an escrow manager. After getting the funding, you may start processing the paperwork. So, in a short and easy way, we can define ‘Table Funding’ like below:
Table funding is a process that at first ensures funding to the borrower with the presence of two parties and the lawyer and normally starts the documentation process just afterward. So, it is like- you get the key of your car before it has any license plate is on the process.
You may not have heard of another two word-groups- ‘Wet Funding’ and ‘Dry Funding.’ Think of a mortgage deal, as if the contact is on the way to close. Once it is done, the new owner gets possession of the property.
We have more new concepts from the difference of transaction rules and quickness- the distinction between wet funding and dry funding.
How the Funding Procedure is?
The question arises, how the funding procedure is? We all know more or less, don’t we? Let’s recap.
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For example, you need to mortgage your property against an expected loan. At first, you have to contact the lender via your lawyer and ask for the loan. Then, you have to prepare some relevant papers and documents.
After both ends agree via signing all the papers, the document is sent for approval by an authority. It can be any government office, court, or bank. Only after the formalities regarding the paperwork are done, you would be able to collect your funding from the lender via your lawyer.
Now, what we were talking about at the beginning? You might be busy, or you really wouldn’t want to terminate your holiday happiness just for paperwork. Or, you really don’t want to wait for 2 or 3 days.
You may check for an alternative option that is time-saving and provides you the funding without any hassle. Have you ever thought of something that could be an available option for you?
Wet funding is actually the strict side of the table funding. In this funding, all the paperwork is needed to be fully completed the day exactly when the loan is closing. The borrower gets the money immediately or within two days of the completion of the paperwork. It is a fast process.
In all the states of the US, wet funding is permitted but, in Alaska, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington, wet funding is not allowed.
Dry funding is like the opposite side of table funding. It is not necessary for dry funding to complete all the paperwork on the day of closing.
After the initial day, the possession does not get transferred the loan or funding until the paperwork is officially done. The borrower gets the loan-money on the very day or within two days. It takes a little more time than wet funding.
Where Table Funding is Legal
The question may arise, is table funding allowed everywhere? And what are the advantages of table funding? Is there any risk or disadvantage?
The fast answer is, No. Actually, this answer lies within the idea of wet funding and dry funding. Like wet funding, table funding is allowed in all the states except Alaska, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington.
Table Funding in California
It’s bad news that table Funding is not permissible in California, according to the California Finance Lenders Law. While it is a welcoming and highly preferable funding process, anyone living in this state cannot try this option.
Advantages and Disadvantages of Table Funding
- Table funding is time-saving.
- New business is encouraged by the table funding process.
- The submission of the paperwork from the lender may sometimes take too much time.
FAQ: What is Table Funding
Question-01: Is Table Funding Legal in California?
Answer: Table Funding is not permissible in California, according to the California Finance Lenders Law. While it is a welcoming and highly preferable funding process, anyone living in this state cannot try this option.
Question-02: What Does Dry Funding Mean?
Answer: Dry funding is like the opposite side of table funding. It is not necessary for dry funding to complete all the paperwork on the day of closing.
Question-03: What is Warehouse Funding?
Answer: It is a kind of inventory financing. In this funding, loans are normally provided to manufacturers or processors.
Question-04: What are Funding Conditions?
Answer: After a sitting between the lender and the borrower, paperwork must be submitted after or before for any kind of funding.
Funding plays a vital role in any project or business. The more flexibility is ensured, the more profitability and productivity are achieved. So, one must be suggested to apply table finding if that is available in his or her state considering individuals’ business nature.
There might be some limitations in this process. But, from history, there is no such significant harmful outcome from this kind of funding. It is also can be stated that people prefer table funding more than the conventional funding process.
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So, let people know today what you learned today. Your friends are one step closer to new funding when they come to know what is table funding.