Missing funding deadline for serious reasons: what to do? A friend of mine missed a deadline for applying for funding for a PhD positions. 

Funding applications are handled through a different channel wrt to program applications (I believe by some Research Council committee, I do not know if internal or external to the University) and a separate (but almost identical) application was required.

My friend completed the programme application (CV, statements, referees etc.), but did not complete the funding application. The main reason is that a close family member was diagnosed with cancer in the week previous to the deadline, everything got a bit messed up and he/she missed the deadline.

Is it acceptable to do one of the following and which is the best course of action:

1) Submit the application past the deadline, period. Hope is that if the PhD position is awarded the missed deadline for funding might be overlooked.

2) Submit past the deadline with a motivation letter explaining the issues (possibly, attaching a medical certificate or offer to provide one if required).

3) Suck it up and eventually discuss funding options once position is awarded.

Specifically, is there any downside of running with 1) or 2) (e.g. it might bar 3) or look bad or look just like an excuse)?

Context is UK middle to top ranking econ departments.
Of your options, I can think of no reasons not to try option 2. The worst thing that happens is that they say no. Option 1 is probably not going to work unless the deadline was missed by less than a day.

What your friend should do/should have done is emailed the committee as soon as they reasonably could regarding their situation. I would imagine that informing the committee of their situation and asking for a small extension has the best chance of going over well. The longer they wait to turn in their application or contact the committee, the less likely they are to be accepted.