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Funding Service Contract

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FUNDING SERVICE CONTRACT

This Funding Service Contract (the "Agreement") is made and entered into as of Effective Date: by and between Funding Provider: (Entity Type: ), Principal Place of Business: ; and Service Client: (Entity Type: ), Principal Place of Business: .

RECITALS

WHEREAS, Provider is engaged in the business of sourcing, arranging and facilitating funding, credit facilities and other capital solutions (the "Services"); and

WHEREAS, Client desires Provider to use commercially reasonable efforts to identify funding sources, assist with documentation, and coordinate disbursement of funding on the terms set forth herein; and

WHEREAS, the parties intend that Provider's role shall be limited to arranging and facilitating funding under the terms of this Agreement and that Provider shall not be deemed a lender or a fiduciary of Client except as expressly set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below: "Funds" means the principal amount of capital sought by Client, specified as Funding Amount: ; "Disbursement" means the transfer of Funds to the Beneficiary Account in accordance with Section 3; "Business Day" means any day other than a Saturday, Sunday or statutory holiday in the state identified in Governing Law: .

2. SCOPE OF SERVICES

2.1 Provider Obligations. Provider shall (a) identify potential funding sources reasonably suited to Client's stated purpose; (b) assist Client in preparing and submitting required documentation to prospective funders; (c) advise Client regarding material terms; and (d) coordinate closing and Disbursement activities. Provider shall perform Services in a commercially reasonable manner consistent with industry practice.

2.2 Client Obligations. Client shall provide complete and accurate information and documentation reasonably requested by Provider or any prospective funder, and shall cooperate in due diligence, representations, and closing activities. Client represents and warrants the accuracy of all such information and agrees to promptly notify Provider of any material changes.

3. FUNDING CONDITIONS AND DISBURSEMENT

3.1 Conditions Precedent. Provider's obligation to effect any Disbursement is subject to satisfaction or waiver of customary conditions precedent, including execution of definitive funding documentation satisfactory to Provider and the funder, completion of due diligence, and any required approvals.

3.2 Disbursement Instructions. Client directs that Disbursements, if any, be made to Beneficiary Name: into Account/Instructions:

3.3 Escrow and Holding. Unless otherwise agreed in writing, Provider may require that Funds be held in escrow with a mutually acceptable escrow agent. Provider shall not be liable for acts or omissions of any escrow agent selected in good faith.

4. FEES AND PAYMENT

4.1 Fees. Client shall pay Provider the following fees: Origination Fee: ; Success Fee: of the funded principal. Fees are earned upon the funder's unconditional disbursement of Funds.

4.2 Payment Mechanics. Fees shall be payable from the Disbursed Funds at closing, or if not disbursed, invoiced and payable within Payment Terms (days): days of invoice. Client shall be responsible for applicable taxes, and Provider may withhold or set off amounts required by law.

5. TERM AND TERMINATION

5.1 Term. This Agreement shall commence on the Effective Date and continue for Term (months): months, unless earlier terminated as provided herein.

5.2 Termination for Cause. Either party may terminate this Agreement on written notice if the other party materially breaches any obligation and fails to cure within Cure Period (days): days after written notice.

5.3 Effect of Termination. Termination shall not relieve Client of its obligation to pay Fees earned prior to termination, nor Provider's obligation to return unearned funds held in escrow except as otherwise required by definitive funding documentation.

6. REPRESENTATIONS AND WARRANTIES

6.1 Client Representations. Client represents and warrants that (a) it is duly organized and validly existing under applicable law; (b) the execution, delivery and performance of this Agreement have been duly authorized; and (c) any information provided to Provider is true and complete in all material respects.

6.2 Provider Representations. Provider represents and warrants that it has the authority to perform the Services and will perform such Services in good faith and in a commercially reasonable manner, but Provider does not guarantee funding.

7. CONFIDENTIALITY

Each party shall maintain in confidence all non-public information received from the other party that is designated as confidential or that reasonably should be understood to be confidential, and shall not disclose such information except as necessary to perform this Agreement or as required by law. Confidential information shall not include information that is or becomes public through no breach of this Agreement.

8. INDEMNIFICATION

Client shall indemnify, defend and hold harmless Provider and its affiliates, officers and agents from and against all losses, claims, liabilities, costs and expenses (including reasonable attorneys' fees) arising out of or relating to Client's breach of this Agreement, misrepresentations or failure to perform its obligations. Provider shall indemnify Client for Provider's gross negligence or willful misconduct in the performance of the Services.

9. LIMITATION OF LIABILITY

EXCEPT FOR LIABILITY ARISING FROM GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR INDEMNIFICATION OBLIGATIONS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR LOST PROFITS, INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES, AND EACH PARTY'S AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL BE LIMITED TO THE TOTAL FEES ACTUALLY RECEIVED BY PROVIDER UNDER THIS AGREEMENT.

10. NOTICES

All notices under this Agreement shall be in writing and delivered to the addresses above by hand, nationally recognized overnight courier, or certified mail (return receipt requested), and shall be deemed given upon receipt.

11. ASSIGNMENT

Neither party may assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other party, except that Provider may assign to an affiliate or in connection with a merger, sale of substantially all of its assets, or financing transaction, provided that the assignee assumes Provider's obligations hereunder.

12. AMENDMENTS; WAIVER

This Agreement may be amended only by a written instrument signed by both parties. No failure or delay by either party in exercising any right will operate as a waiver of that right.

13. GOVERNING LAW; VENUE

This Agreement shall be governed by and construed in accordance with the laws of the state specified above without regard to its conflicts of law principles. The parties agree that any action arising out of or relating to this Agreement shall be brought exclusively in state or federal courts located in the county of the governing state.

14. ENTIRE AGREEMENT; SEVERABILITY; COUNTERPARTS

This Agreement, including any schedules or exhibits executed by the parties, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings. If any provision is held invalid or unenforceable, the remaining provisions shall continue in full force and effect. This Agreement may be executed in counterparts, each of which shall be deemed an original.

MISCELLANEOUS

The parties acknowledge that Provider may, in the course of performing the Services, introduce Client to third-party funders. Client agrees that any agreement with a funder shall be directly between Client and such funder and that Provider shall be entitled to the Fees set forth herein irrespective of whether Provider is a party to the funder agreement, unless otherwise agreed in writing.

Provider (Printed Name):

By:

Date:

Client (Printed Name):

By:

Date:

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What a Funding Service Contract Is and When It Applies

A Funding Service Contract is a written agreement that sets the terms, conditions, and procedures for disbursing funds between a payer (lender, issuer, or funder) and a payee or service provider. It typically covers funding triggers, required approvals, timing of disbursements, documentation the recipient must provide, representations and warranties, conditions precedent, any escrow or trustee role, and remedies for noncompliance. The contract can be used for single disbursements, milestone-based funding, or ongoing payment facilities and often coordinates with escrow instructions, security agreements, or servicing arrangements.

Why a Clear Funding Service Contract Matters

A clear Funding Service Contract reduces ambiguity about who funds what, when, and under which conditions, lowering execution risk and dispute costs. For electronic execution, the agreement is enforceable under the federal ESIGN Act (15 U.S.C. ch. 96) and state UETA rules where adopted; check state-specific exceptions before relying solely on e-signatures.

Why a Clear Funding Service Contract Matters

Typical parties and teams that complete a Funding Service Contract

Organizations and individuals who regularly prepare or sign these contracts include lenders, fund administrators, brokers, corporate finance teams, and outside counsel; they coordinate approvals, documentation, and compliance.

  • Lenders and funders: credit, compliance, and treasury teams managing funding conditions and disbursement schedules.
  • Borrowers and recipients: finance and legal contacts assembling conditions precedent and required deliverables.
  • Intermediaries and counsel: escrow agents, trustees, and outside counsel handling document review and closing logistics.

Understanding who on each side must review, approve, and sign avoids last-minute delays and misrouting during funding events.

Authorized signers for funding agreements

Authorized Officer

An officer such as CEO, CFO, or Treasurer who has corporate or organizational authority to bind the entity. Confirm corporate resolutions or board minutes that delegate signature authority and provide a copy with the contract when required.

Designated Agent

A named representative (e.g., VP Finance or outside counsel) with written delegation to sign on behalf of the party. Ensure the delegation is current, signed, and attached to the contract to avoid acceptance disputes.

Core sections to include in a professional Funding Service Contract

A complete contract groups obligations, funding mechanics, and protections into discrete sections so parties can quickly verify compliance before release of funds.

Parties and Definitions

Precisely identify each party and define funding-specific terms (e.g., Funding Date, Escrow Agent, Conditions Precedent) to avoid interpretation disputes later.

Funding Conditions

List exact conditions precedent and deliverables required for each disbursement, including approvals, certificates, and evidence of insurance or liens being cleared.

Payment Mechanics

Describe amounts, frequency, recipient details, payment method (wire, ACH, escrow), and any holdback or milestone release schedule.

Representations & Warranties

State the factual and legal assurances each party makes before funding, including authority, solvency, title, and accuracy of provided documents.

Covenants & Reporting

Obligations after funding such as reporting, use of funds, audits, and ongoing compliance covenants that can trigger acceleration or remedy rights.

Indemnity & Remedies

Define indemnification, limitation of liability, interest on late payments, and dispute resolution procedures including governing law and venue.

Essential data and compliance elements to capture

Encryption: TLS 1.2/1.3 in transit; AES-256 at rest
Audit Trail: Detailed timestamps, IP, and action logs
Authentication: Email, SMS code, or advanced signer authentication
HIPAA / BAA: BAA required for PHI-handling workflows
Regulatory Certs: SOC 2 Type II, ISO 27001 available
Retention Controls: Immutable records and exportable PDFs

Step-by-step: completing a Funding Service Contract

Follow this sequence to prepare, review, and execute a funding agreement with standard controls to reduce execution risk and ensure enforceability.

  • 01
    Assemble documents: Gather exhibits, certificates, and resolutions before drafting.
  • 02
    Draft funding triggers: Specify clear, objective conditions for each disbursement.
  • 03
    Review legal and credit: Obtain counsel and credit approval for representations and covenants.
  • 04
    Execute and record: Sign using authorized signers; deliver to escrow/trustee and retain copies.

Configuring an electronic approval workflow for funding

Set workflow elements to reflect required approvals, authentication, and notification rules before sending for signature.

Field Configuration
Signing Order Sequential signing — lender then borrower then trustee
Auth Method Email + SMS code for core signers; KBA optional
Conditional Fields Show payment details only after conditions satisfied
Notifications Automated notices to treasury and escrow on completion

Digital signing and secure delivery considerations

Choose a platform that supports required signer authentication, audit trails, and the ability to attach exhibits and verification documents.

  • Integrations: Salesforce, NetSuite, Microsoft 365, Google Workspace
  • Formats: PDF, DOCX, and exportable signed PDF/A
  • Authentication: Email, SMS, KBA, or SSO per risk profile

Where to send executed Funding Service Contracts

After execution, deliver copies according to the contract’s delivery instructions and any regulatory or internal recordkeeping requirements.

  • Escrow Agent: Send executed master and escrow instructions to the designated agent for release actions.
  • Funding Bank: Provide payment instructions and completed signature pages to the executing bank operations team.
  • Treasury / Finance: Archive copies and update payment schedules in treasury systems.
  • Legal / Compliance: Retain signed contract and supporting documents for audits and regulatory review.

Common timelines and deadlines in funding workflows

Timing terms in a Funding Service Contract determine when funds move and when rights or remedies trigger; set clear calendar rules to avoid disputes.

Funding Date:

Date funds are disbursed per contract schedule

Acceptance Window:

Period for funder to accept documentation (commonly 3–10 business days)

Due Diligence Period:

Time allotted to verify conditions precedent before fund release

Notice Period:

Advance notice required for termination or suspension (e.g., 30 days)

Cure Period:

Time allowed to remedy breaches before remedies apply

Common mistakes that delay funding

  • Missing or inconsistent party names across documents cause bank or title rejections and tax reporting errors.
  • Unclear funding conditions or vague milestones lead to disputes over whether triggers were met.
  • Incomplete payment instructions (routing or account numbers) prevent timely wire or ACH processing and may incur fees.
  • Failure to attach required supporting exhibits or certificates prevents escrow release and requires re-execution.

Risks and potential penalties for errors

Breach Liability: Damages and interest
Regulatory Fine: Enforcement penalties possible
Tax Consequences: Reporting errors trigger penalties
Wire Reversal: Bank fees and recovery costs
Escrow Delay: Storage and administrative charges
Reputational Risk: Loss of counterparty trust

Real-world examples of funding contracts in use

These short cases show how different organizations use electronic execution and clear funding terms to reduce friction and preserve compliance.

Optica Ventures — COO

Optica used a standardized funding contract for repeat investments that reduced documentation time.

  • The interface was simple and easy-to-use.
  • The result was faster investor funding cycles and consistent recordkeeping across portfolio companies, enabling the finance team to close more rounds without in-person signings.

Tech Data — CEO

Tech Data implemented a funding workflow tied to ERP controls to align disbursements with invoice approval.

  • It improved internal and external service.
  • This alignment increased speed to revenue, reduced manual reconciliation, and provided a defensible audit trail for compliance reviews.

eSignature vendor comparison for Funding Service Contracts

Compare core pricing and compliance attributes for common eSignature vendors; signNow is listed first per comparison conventions.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies Varies Varies Varies
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently asked questions about Funding Service Contracts

Answers to common execution, signing, and compliance questions when preparing funding agreements and using electronic signatures.


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