A bank proof is the short form for saying bank proof of funds; and it is often what people are referring to in import/export trade when they say you need a POF. This is a bank document providing evidence a party has the capability and cash assets ready to use for a transaction. It is frequently prepared in the form of a bank, security or custody statement. The purpose of the financial document is to ensure that the funds for the transaction are accessible and genuine.
Additionally, a proof of funds is a form of vetting used to determine if a party has the wherewithal to engage or complete a transaction. The requesting party may ask that a bank, security or custody letter be provided showing cash or cash denominated assets worth at least the value of the transaction is readied. This can come simply in the form of a bank statement, escrow statement if you had funds at an escrow, a bank letter stating readiness, or a verification of deposit showing funds on deposit are able to satisfy demands for reserves, down payment, contingency funds, etc.
There are times when a broker may be performing a back to back transaction where a buyer and seller are lined up and the broker needs to engage them through a third party contract. In order to engage the seller or the buyer the broker may be required to show bank proof of funds. Once achieved the broker may be able to take down a contract with each side and close. The only money exchanged in the transaction would be that of the end buyer.
There are also times when a party needs to collateralize a cash account as security for financing, cash not currently in their possession.
For both the broker transaction and the financing scenario getting access to lease funds, where one can actually borrow funds for a limited term, like any asset, is the key to success. The cost of getting a leased proof of funds costs a fraction of the costs of going out and getting a capital partner, whom is likely to take at least 50% of the profits of the transaction.
Getting a lease bank proof of funds makes sense…
There are investors and asset holders whom allow parties for a reasonable fee, usually 1-3% per month, to use their capital for lawful proof of funds purposes. In many cases a borrower may rent, or lease funds for 12 months or more at greater discounts in order to provide cash collateral guarantees against loans, import/export shipments, or other financial obligations.
While it is always cheaper to use your own money, if you don’t have it, it makes good financial sense to borrow it. The accessibility of borrowed proof of funds cash accounts is easier than that of private or institutional borrowed money. The asset holder of the lease money makes certain their funds are minimally at risk, are never moved from the established borrower account, and often ensures through bank undertakings the money will be guaranteed protected from liens or encumbrances past the contracted term.
This makes the underwriting process and timing to get access to the cash accounts very quick and light. Usually the process is as easy as opening a regular business banking account where the borrower only needs show they have a clean background history, show their purpose and use the borrowed funds is not criminal, and provides the regular business documentation banks require in order to know their client when opening a bank account.
The trade off for the lightness and speed of these transactions is of course in fees, but usually they are not as hefty as private hard money or bridge money, nor is collateral required.
Providing a bank proof of funds does not ever need to get in the way of closing a legitimate deal, especially when money is available through lease funds.