Should I still apply for a phd if the PI can't confirm if he is able to fund? I have found a potential advisor that is keen on advising me for Phd and has offered to fund me. However, he isn't sure if he has sufficient funds and budget to do so (something he is still figuring out and things don't seem too hopeful). He has told me to proceed with the application nonetheless. 
Should I go ahead with the application and continue waiting on the news about the funds, knowing that there is a good possibility that there wont be sufficient funds? Or would it be better to turn down the offer early on and apply for jobs instead? 
I'm asking because I don't want to wait too long for something that might not work out, but the PI has gone through the trouble of working out plans to make things work and I feel really bad if I backed out now. Furthermore, I am really interested in the projects the group has to offer, and everyone in the lab were lovely. I've also heard many good things about the PI as a Phd advisor. So I was really looking forward to joining the lab. On the other hand, I feel that if I were to decline the offer, I should notify the PI as soon as possible so it saves the PI further time and trouble.

Thanks in advance for any advice!
If the cost and time are reasonable by your standards the I'd suggest you do it for the experience if nothing else. There is little else to lose in this. 

Applying isn't a commitment on your part, it is just an expression of interest. Even in the worst case the professor will probably continue to have good feelings towards you, which can help in the future if you work in related areas. 

But there is no reason to wait for a decision. You can explore other opportunities in parallel with this. Decline only when you must.