A cpa letter use of business funds tells a lender exactly how money will be used—and where it came from.
It confirms purpose, ties amounts to records, and states limits.
It supports line of credit, business loan, down payment, and even refinance requests.
What This Letter Covers (and Why Lenders Ask)
A licensed CPA issues a short, signed letter on firm letterhead.
It documents use of funds and source of funds with clear references.
Core confirmations
- Purpose: working capital, equipment, closing costs, down payment, or payoff.
- Amounts and ratio splits if multiple purposes apply.
- Source: operating cash, retained assets, owner contribution, or external proceeds.
- Records used: bank statement, profit and loss accounts, balance sheets, and filed tax return data.
- Limits: not an audit; no forward-looking promises.
Why lenders request it
- Improves accuracy in underwriting.
- Builds credibility through licensed third-party documentation.
- Supports financial reporting to investors and credit committees.
Scope, Standards, and Boundaries
This is accounting work, not assurance.
The letter stays inside professional limits.
What CPAs can do
- Compare amounts to financial statements and bank activity.
- Reconcile totals to the general ledger.
- Describe purpose and timing in plain language.
What CPAs will not do
- Perform auditing procedures unless separately engaged.
- Issue audit or review conclusions.
- Provide legal opinions on covenants or collateral.
Framework notes
- We align wording to AICPA ethics and third-party communication practices.
- If your books follow IFRS(International Financial Reporting Standards), we map captions to U.S. terminology for the lender’s worksheet.
Documents That Keep Turnarounds Short
Clean records reduce back-and-forth.
Borrower provides
- Latest bank statement set (typically 2–3 months).
- YTD financial statements: income statement and balance sheets.
- Most recent filed tax return (business and/or personal).
- For entities: limited liability company operating agreement or ownership schedule.
Use of Funds: Typical Scenarios We Document
Working capital and operating expenses
- Payroll, inventory, marketing, or maintenance.
- We note categories and estimated timing.
- We can add an expense ratio snapshot if the lender requests a margin view.
Equipment or build-out
- Purpose and vendor.
- Draw schedule if applicable.
- Link to quotes or invoices already in the file.
Real-estate related
- Down payment for a purchase, refinancing costs, or reserves for a home loan / home mortgage.
- We cite the account holding the funds and the period they were seasoned.
- If the lender asks, we reference the borrower’s mortgage calculator output as context (rates and payment estimates remain the lender’s domain).
Landlord or leasehold improvements
- For commercial tenants, some landlords request a use-of-funds note for build-out.
- We match the leasing checklist.
Source of Funds: What Underwriters Look For
Lenders want a clean, dated trail.
Common sources we confirm
- Operating cash flow shown on the P&L.
- Sale of assets or owner injection.
- Intercompany transfers with ownership detail.
- Proceeds from another loans facility (identified and segregated).
Red flags to avoid
- Unexplained large deposits.
- Mixing personal and business funds with no note.
- Inconsistent ownership records.
Expense Ratio Add-On (When Requested)
Some lenders ask for a margin view alongside the purpose note.
That’s where a cpa expense ratio letter helps.
What we provide
- Simple formula (e.g., Total Operating expenses ÷ Gross income for the period).
- Result as a percentage with the dates covered.
- Tie-out to the income statement and spot checks to deposits.
Why it matters
- Supports credit policy for mortgage lenders and business credit teams.
- Adds consistency across the underwriting workbook.
Use of Business Funds Sample
Subject: CPA Letter — Use of Business Funds & Source of Fund
I am a CPA for [Borrower/Company]. For the period [dates], I reviewed management financial statements (P&L and balance sheet) and recent bank statement activity.
Use of Funds: [Amount] is intended for [working capital/equipment/closing costs/down payment/refinance fees] during [timeline].
Source of Funds: Funds are held in [account], derived from [operating cash flow / owner contribution / asset sale] as shown in the attached statements.
Procedures were limited to comparisons and tie-outs. This is not an audit or review, and no opinion is expressed on future results
[Name], CPA — [Firm], License [State]
Delivery: PDF with esignature; hard copy available on request.
Workflow: From Request to Delivery
Step 1: Intake
- Lender checklist, recipient details, and due date.
- Confirm if expense ratio or seasoning notes are required.
Step 2: Review & Reconcile
- Tie planned use to accounting entries.
- Confirm ownership and entity structure.
- Align captions to financial reporting used by the lender.
Step 3: Draft, Sign, Deliver
- Draft concise language; add a one-line disclaimer on scope.
- Issue on letterhead with CPA credentials and signature.
- Send via secure link or portal; esignature supported.
Optional follow-ups
- Provide a sample redacted letter if the lender needs format clarity.
- Add a short bridge from IFRS to GAAP captions when relevant.
Risk, Controls, and Professional Notes
- Internal controls: the letter supports the lender’s documentation trail; it does not replace their testing.
- Professional liability: we avoid assurance language and keep procedures explicit.
- Accuracy: numbers are drawn from final books; if preliminary, they’re labeled.
- Auditing: any audit reports or assurance work are separate engagements.