What is an advance in terms of loan disbursement?

An advance in terms of loan disbursement refers specifically to a partial disbursement of funds under specific terms. This means that rather than receiving the entire loan amount at once, the borrower receives a portion of the funds, which may be contingent on certain conditions being met, such as reaching specific milestones in a construction project or meeting other loan requirements. This method allows for more controlled and manageable financing, ensuring that the borrower can use the funds for intended purposes without receiving the entire amount upfront.

In contrast, other options touch upon different concepts. A full disbursement of the loan amount would imply the borrower receives the total loan at once, which is not what an advance refers to. A payment made to the borrower before the loan closing denotes a different type of financial arrangement, often referred to as a "pre-closing disbursement," and does not align with the definition of an advance. A grant provided for renovation is also unrelated, as it denotes funds that do not need to be repaid, contrasting with the loan advancing process where funds are lent with the expectation of repayment.