Every company requires capital to run its business, and it is impossible to continue business without injection of money from time to time. There are different ways to collect money and keep the business running. Sometimes, companies borrow loan from banks and other financial institutions, or they can also take funds from investors in the form of share capital. Retained earnings are also utilized for this purpose. No matter what way they use for to collect money, it can be done either by funding or financing.
Generally, funding and financing are interchangeably used in the financial world, but there is a difference between these two terms. Funding is actually the money provided by companies or by a government sector for a specific purpose, whereas, financing is a process of receiving capital or money for business purpose, and it is usually provided by financial institutions, such as, banks or other lending agencies.
