Should my private lender set up a business entity

[Eric Sugrue]

So, I have been trying to get started for a while now, still looking for my first deal. However, I have found a couple private investors willing to fund the deals when I do find them. My question is, should they set up some type of lending entity? What type? For those that use a private lender, what do you use as proof of funds when making an offer, particularly those made on the MLS through an agent? A bank statement? Letter? Something else? Any suggestions/help is greatly appreciated!