Proof of funds letter, bank statement, or verification: which to send

There are four options in common use: a bank or brokerage statement (fastest, exposes the most), a proof-of-funds letter from your bank (days to obtain, easy to forge), a lender pre-qualification letter (the right answer for an SBA-backed purchase), and a third-party balance verification (minutes, discloses only the figure you choose).

Four options are in common use. They differ in what they prove, how long they take, and how much they give away — and those three things rarely point the same way.

A bank or brokerage statement

Proves: a balance on a date, if the reader trusts the file. Takes: minutes. Exposes: account numbers, every transaction, usually your address.

The default, and the worst trade of the four. It is also trivially editable, which sharper brokers know — a PDF from a portal carries no proof it was not altered on the way.

A proof-of-funds letter from your bank

Proves: that a banker was willing to write it. Takes: days, sometimes a branch visit. Exposes: little.

Well established and easy to read. Its weakness is that it is a static document on letterhead, and letterhead is not hard to reproduce; some brokers now treat these with the same caution as statements.

A lender pre-qualification or commitment letter

Proves: that a lender has looked at you. Takes: days to weeks. Exposes: that you are financing, and roughly on what terms.

The right answer for an SBA-backed purchase, and often what the broker means. It answers a different question from the other three: not what you hold, but what you can borrow.

A third-party balance verification

Proves: balances read directly from your institutions on a stated date. Takes: minutes. Exposes: the figure you choose, and which institutions hold it.

The reader is not being asked to trust a file you sent them, because you did not assemble it. The trade-off is that it requires connecting your accounts read-only, which some buyers will not want to do — and that is a fair objection to weigh.

Which to send

• Financing the purchase? The lender letter, and say so early.
• Paying from liquid assets and want it done today? A verification.
• Have a week and a good relationship with your banker? A letter is perfectly respectable.
• Considering sending a statement? Only after flattening it to an image, and only a single account for a single month.

Common questions

Is a proof-of-funds letter better than a bank statement?

It exposes far less, but takes days to obtain and is a static document on letterhead that is not difficult to reproduce, so some brokers now treat it with the same caution as a statement. A third-party verification of your balances is faster than a letter and harder to fake than either.

What proof of funds do I need for an SBA-backed acquisition?

Usually a pre-qualification or commitment letter from the lender, which answers what you can borrow rather than what you hold. Brokers typically also want to see the equity injection and working capital evidenced separately.

How long does each form of proof of funds take to get?

A statement takes minutes. A bank letter takes days and sometimes a branch visit. A lender pre-qualification takes days to weeks. A third-party balance verification such as FundStamp takes about three minutes.