Proof of funds
Proof of funds is documentation a buyer supplies to show they genuinely have access to the money needed to complete a purchase, whether from savings, a loan pre-approval, investor commitments or a government-backed financing program. Sellers and brokers commonly ask for it before granting access to sensitive information or entering exclusive negotiations.
Anyone can express interest in buying a business, but far fewer buyers can actually pay for one. Proof of funds is how a seller separates serious buyers from people still exploring an idea. It might be a bank statement, a mortgage or business loan pre-approval letter, a line of credit confirmation, or evidence of committed investor capital.
When it is requested
Sellers and brokers often ask for proof of funds before releasing a confidential information memorandum or scheduling a management presentation, since those steps involve real time and sensitive information. For financed purchases, this may be a conditional approval rather than cash in hand, since final financing approval frequently only comes after due diligence.
Why it protects both sides
For the buyer, having proof of funds ready signals credibility and can speed up how quickly a seller engages. For the seller, it reduces the risk of spending weeks in a process with someone who was never going to be able to close.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Innovation, Science and Economic Development CanadaGovernmentCanada Small Business Financing Program
- 02Business Development Bank of CanadaIndustryHow to sell your business
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.