Leasing Funds For A Proof Of Funds Deal

Leasing Funds for a Cash-Backed Proof of Funds Account

When a party enters into a lending agreement for leasing funds for a proof of funds cash account they are using funds that cannot be used for anything but the proof of funds transaction at large. A company or individual may use the leased funds to show there is cash for collateral, security, and readiness to proceed with funding, trades, acquisitions, and purchases.

Leasing Funds are to be Non Depleted

The proof of funds account is a non depletion bank account, giving it certain restrictions and limitations as to the asset’s purposes and uses. No drafts against the funds can ever occur. Neither can checks, ATM cards, debit cards, credit cards, or withdrawals be issued or made against the bank account.

Leasing Funds are to be Non Transactional

Additionally leased proof of funds accounts are considered “non transactional”. This does not mean deposit history cannot be evidenced; instead it means the account usage of the account is restricted and limited specific to the terms of the borrower agreement. As an example, if the borrower agreement shows a bank comfort letter is to be issued from the banker of the account and provided to a third party for a import/export deal, that is what the account is to be used for. It is only to be used for proof of funds related matters. The account can only be used for the use of funds agreed to. At no time can the funds be used for transactions to pay bills, lenders, or used as a deposit or down payment, and specifically it shall not be moved out of the account where the cash is held.

Keeping the proof of funds account restricted to non depletion and non transactional protects the investor of the funds, known as the asset holder. The asset holder has to ensure that the funds will only be used for the intended proof of funds transactions according to the loan agreement. This is a reasonable request particularly since the borrower is paying only a fraction of the face value in service charges compared to the leverage gained.

Leasing funds from institutional, private, or short term bridge money lenders for project finance and trade finance are different transactions altogether. In these situations security, exhaustive underwriting, and credit grading are all considered as safety measures to the financing company or bank. With loan financing, the underwriting guidelines of lenders are designed to enhance the probability the borrower will not fail to pay and be able to make timely interest payments and principle repayment.

Proof of Funds Cash Accounts Can Be Used For Leasing Funds for Project Finance

When a party utilizes a proof of funds cash accounts or bank instrument to back financing it is referred to as cash collateral accounts. In this way the bank funds are used more like a cash asset backing a loan. The borrower is actually leasing funds, or borrowing funds two separate times, first for the cash collateral account that credit enhances the borrower’s ability to then achieve project finance loans and lines of credit.

Balboa Trade provides cash collateral proof of funds accounts from top world banks supplying credit enhancement needed when leasing funds for your project or trade. Use these bank funds to help you leverage larger transactions.

Proceed to Proof of Funds Procedures

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