Broker Outreach & Proof of Funds

February 14, 2025

by a searcher from East Carolina University - College of Business in Raleigh, NC, USA

Hello everyone,

When doing broker outreach, it's clear that having proof of funds can help tremendously.

In your experience, is that proof of funds related to having some sort of preapproval from the SBA or just the capital you plan to inject to secure the loan?

I'm sure there may be nuances I am not considering, so any and all feedback is welcome.

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Reply by a professional
from University of Pennsylvania in San Francisco, CA, USA

Thanks for the tag, ^redacted‌. ^redacted‌ I think the best approach is an all of the above solution - 1) a bank account with a balance of [as high a percentage of the purchase price as you can show], 2) soft equity commitment letters from investors, and 3) debt pre-approvals (note that the last 2 have the added benefit of showing that you've spent some time thinking about the process and coordinating financing). Agree with ^redacted‌ that there's more than one way to skin a cat here, but the point is to show 1) you can close and 2) you're a serious buyer who understands the process.

Reply by a searcher
in Rindge, NH 03461, USA

I have a contrarian view on proof of funds requests. I believe 99% of proof of funds requests are a trick question, cleverly used by brokers to see who is a newbie and who has experience with acquisitions. Experienced people don't fall for the trap. Newbies fall for it and try to provide a POF and thereby reveal that they are new at acquisitions and have not figured out that POF's are totally pointless and are 99% not needed. Experience buyers respond and talk in a way that answers the brokers question, which is 'are you a qualified buyer'. I don't provide them and I get right through the 'gate' just fine, coming out the other side with a higher level of respect from the broker.

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