Proof of Funds Questions: The Asset Holder

How will the Asset Holder Get Involved on My Proof of Funds Transaction?

It is not always asked, but now and then we get the question as to whether the asset holder will actually sign on to the transaction the borrower is endeavoring.

Reasons for this may include scenarios like the borrower needs a proof of funds cash collateral account, and the lending bank requires the owner of the assets either sign on to the loan, or at least provide personal information about themselves and the bank instruments for underwriting purposes. Perhaps the lending bank wants to make sure the origin of the proof of funds is not criminal, such as obtained by money laundering schemes.

Another scenario may include a situation where the borrower does not have the personal credit worthiness under their own name, and they need a co-signer to assist them qualify not only with the cash asset credit enhancement, but with personal banking credibility, history, and experience.

In both of these scenarios the borrower is actually looking for a capital partner to joint venture with them on their proof of funds transaction.

Most proof of funds providers do not get involved in the transaction directly or even indirectly. Their involvement is simple: they want to ensure the borrower client does not have a criminal history, will be using their assets legally, can pay for the lease of the proof of funds, and will ensure the asset will be returned unencumbered and free of liens or restrictions come time the lease is expired.

In this way a proof of funds provider is typically no different than if an applicant went to their bank to get a standby letter of credit issued against their own cash assets for, say an import/export deal, the bank is only interested in payments after the transaction is complete. Or in the case of a bank guarantee, the bank is only interested in ensuring their is security guarantee in place on behalf of the beneficiary bank should their be a default on payment for which they would stand behind and pay on the applicant’s behalf.

With regard to the first scenario where a lending institution or third party wants to ensure the lending party of the proof of funds did not originate the funds by illicit means, there is only one answer. The third party may review the lending agreement of the borrower and do their background checks on the lender in order to get comfortable.

Otherwise the borrower should treat the transaction as they would any other lending transaction used to fund a a deal. The borrower during the term of the lease has rights to the non-depletion proof of funds non-transactional account and can claim ownership during that lease term.

May A Third Party Bank Contact the Lender that Provided the Proof of Funds?

In most cases the answer is simply, “No,” the bank or third-party may not contact the asset holder with regards to the transaction or asset. This is not an attempt at secrecy; it is for privacy and for practical purposes of providing proof of funds cash assets to many borrower and clients.

The asset holder is providing a lending agreement to the client and does not usually, except perhaps under extenuating circumstances, allow the borrower’s parties to contact them to make general inquires.

Will the Lender Return Proof of Funds Lease Money if the Transaction is Unsuccessful?

The asset holder does not make guarantees that by providing a proof of funds asset to the borrower that the borrower’s transaction will be successful, any more than an entrepreneur can guarantee that their own personal money invested in a deal will turn out to be profitable.

Will the Lender Allow Deferred Payment for the Proof of Funds Lease Fee?

Many proof of funds providers require the borrower not only place fees into escrow up front, but actually require there to be at least a portion of fee money to be released for the bank issuance fees. These asset holders do not want to have to front cash for movement of money or issuance of an instrument and then find out later the borrower does not go forward and pay their fees.

Balboa Trade does not want its clients to loose any money. We do not work with asset holders that require any upfront money to be released from escrow for bank issuance fees.

However, because there are expenses up front to the asset holder in banking fees they will not take a risk to allow a client to defer payment of fee money to after a successful transaction. Not all transactions close, regardless that the proof of funds cash asset was adequate.

For this reason, the borrower is under contract to place all fees into escrow up front prior to arranging the service. All funds stay in the escrow account until the proof of funds account verification has been delivered, confirmed, and verified. When everyone is happy, the funds are released from escrow and the term of the proof of funds service begins.

For more information on the procedures of engaging the asset holder for the purpose of a proof of funds lease, please visit our Procedures page.

Proceed to Proof of Funds Procedures

Contact Balboa Trade Here