Commission Flow - Lending vs Funding

Businesses are faced with a number of varying situations as they move through the business life cycle – from start-up to growth, to maturity. All these stages tend to have different and specific financial needs. With each business cycle, timely cash injections can be crucial to perhaps fund a new marketing initiative or due to slowing market conditions.

Whatever the reason, it’s always important to consider what financing options are available and what is the right fit for your real estate agency. Below we consider the differences between Lending and Funding.


Lending, by definition, is the process of granting the use of something with the express understanding that it will eventually be returned. Essentially this means that you’ve found someone who can give you the funds you need under the assumption that you will eventually be paying it back.

It’s important to note that a loan requiring regular repayments can actually cause greater cash flow constraints on your business and it also sits as a liability on your balance sheet — affecting your capacity to borrow again in the future.

Traditionally businesses have turned to the banks to get a bit of financial help. With this scenario, the bank lends money to the business up to a certain limit, for a fixed period and with strings attached. In most cases, the bank will require you to put up real estate as security.

Depending on the situation, this option may be the more difficult of the two due to the ever-tightening federal regulations along with the strict criteria banks hold small businesses too.


Funding, on the other hand, is money that you are provided with for a particular purpose. Take a commission advance facility for example. In this situation, you would essentially find a commission advance provider to “buy” your current commission entitlements (invoices) for a fee.  

A commission advance is a financial service whereby an agency sells a pending sales commission for a fee. In exchange, funds are advanced before settlement.

This option provides you with immediate access to your future but earned commission entitlements. The key difference here is that commission advances are directly linked to the sales you have closed. Therefore you are not restricted by a predetermined limit.

Lending vs Funding: the conclusion

Both lending and funding have advantages and disadvantages, depending on what you’re trying to accomplish.

Lending, for example, adds an immediate financial strain to your business however on the flip side you get immediate access to the funds.

Funding, on the other hand, gives you a much higher chance of securing the money you need — particularly if you don’t fit into the bank’s strict lending criteria. Funding is also less intrusive on the business in general with a simple application and approval processes.

Overall, the main difference is, lending is using someone else’s money whereas funding is using your own money. This means funding is not a liability on your balance sheet.

At Commission Flow, we find that those who go ahead with alternative funding methods such as advance commissions say that it’s easier, more flexible and provides better rates than traditional bank loans.

Planning your business and making sure you have enough funds to support you is essential for a successful business. If you’re starting a new business venture or need some additional funding for an established business, why not talk to us about your options.

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