Buyer-screening terminology
Proof of Funds vs. Prequalification vs. Financeability
Proof of funds confirms that money appears to exist. Lender prequalification gives one lender's preliminary view based on limited information. Financeability evaluates the buyer, target economics, transaction structure, and likely lender fit together. None is a loan approval.
Transparent methodologyPolicy as of 2026-08-15Preliminary, not a loan approval
What each signal answers
What each signal answers
| Signal | What it answers | What it does not answer |
|---|---|---|
| Proof of funds | Does the buyer appear to control stated liquid funds? | Whether the funds are eligible, sufficient for total cash to close, or supported by target cash flow |
| Lender prequalification | Would one lender consider the buyer or a preliminary request? | Whether the final target, valuation, documents, structure, and eligibility will be approved |
| Financeability review | Do buyer capacity, deal capacity, structure, and likely lender fit form a credible path? | A binding lender decision or commitment |
| Loan approval | Has the lender approved the complete request subject to stated conditions? | Whether every closing condition has been satisfied |
Why brokers need more than proof of funds
Why brokers need more than proof of funds
A buyer can have enough cash and still pursue a price the target's cash flow cannot support. A buyer can also have an economically viable deal but lack the experience, ownership eligibility, documentation, or lender fit required to advance. Screening should therefore connect the buyer to the specific business, not only inspect a bank statement.
Best next step by stage
Best next step by stage
- No target yet: establish buyer capacity and readiness range.
- Evaluating a listing: screen target cash flow and structure before the LOI.
- Under LOI: organize a complete package and approach relevant lenders.
- In underwriting: respond to the lender's conditions and do not substitute third-party screening for lender requests.
Authored and reviewed by Emporio Partners
Policy basis: SBA SOP 50 10 version 8, effective 2025-06-01. Version 8.1 is published for 2026-10-01 and is not treated as current policy before that date.
Primary policy source
Educational planning guidance only. Emporio Partners is not a lender and does not issue approvals, pre-approvals, commitments, or guarantees. Lenders determine eligibility, eligible cash flow, structure, terms, and approval.
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