Financing entity is one of a two major parties in a financial arrangement. It is entity that provides assets, property or money to financed entity or to other entities that serve as intermediate entities.
For example, the financing entity can use money of some financial institutions or banks and it uses assets as collateral. Upon that, the financing entity remits the funds from bank to business, after what the business repurchases the inventory to provide the financing entity financially. As the official title for the business’ inventory was switched to the financing entity, due to intents and purposes, the business will still own the inventory.
Insurance has underwriters, lenders and purchasers that directly own a life insurance, included by financing entities. The main function of a financing entity in a life insurance is to provide funds, which is involved in the business of viatical settlement. In it, the activities in connection to the offering, purchasing, financing, selling, investing and underwriting of life insurance policies are included.
Because actions that misrepresent the financial situation of a financial entity as considered fraudulent, regulators are looking for a way to ensure that the financial entities are in a good shape. The IRS regularly reviews arrangements of that king, so that they can decide whether the reason the intermediaries are entering the transactions are healthy or not. If the IRS considers the reason to be lowering withholding tax, it decides if the intermediate entities can act as conduits.