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in Orland, CA
Both 1099 loans and bank statement loans solve the same problem for Orland's self-employed borrowers: proving income without W-2s. The difference is what paperwork you show lenders.
If you're running an ag business, trucking operation, or consulting practice in Glenn County, understanding which documentation path works better can speed up your approval and potentially lower your rate.
1099 loans qualify you based on the gross income reported on your 1099 forms. Lenders typically average your last two years of 1099 income without taking business expense deductions.
This works best if you receive multiple 1099s throughout the year and keep clean records. Most programs require 620+ credit and accept down payments starting at 10-15%.
The challenge: your qualifying income matches what you reported to the IRS. If you wrote off expenses aggressively to minimize taxes, your taxable income may be too low to support the loan amount you need.
Bank statement loans calculate income from deposits into your business or personal accounts over 12-24 months. Lenders apply an expense factor (typically 25-50%) to your deposits to estimate net income.
This option shines when your actual cash flow exceeds what you report on tax returns. Many Orland business owners write off legitimate expenses but still have strong deposit patterns.
You'll need 12-24 months of consistent statements from the same accounts. Credit requirements start around 620, though some lenders go lower. Down payments typically start at 10-20%.
The core split: 1099 loans use what you told the IRS, bank statement loans use what actually hit your accounts. Rates are similar on both (typically 1-2% above conventional), but bank statement loans often run slightly higher.
Documentation effort differs sharply. With 1099 loans, you gather forms you already filed. Bank statement loans require printing or exporting months of transaction records, which takes longer to review.
Qualifying income calculations flip the script. A contractor who reports $80K on 1099s qualifies on $80K. That same contractor with $120K in deposits might qualify on $60-90K depending on the expense factor the lender applies.
Choose 1099 loans if your reported income already supports your loan amount and you want faster processing. This works for contractors, consultants, and freelancers who don't write off heavy expenses.
Go with bank statement loans if you maximize deductions for tax purposes but have strong cash flow. This fits many Orland ag operators, truckers, and business owners who reinvest profits or write off equipment and overhead.
Reality check: run the numbers both ways before deciding. Your CPA can show you last year's 1099 total. Your banker can estimate qualifying income from your deposit history. Whichever number is higher usually determines your best path.
No. Lenders use one income calculation method per loan. You pick the approach that qualifies you for the amount you need.
Many do. Typical prepayment terms run 1-3 years, though some lenders offer no-penalty options at slightly higher rates.
1099 loans typically close 3-5 days faster because bank statement underwriting requires reviewing every deposit and explaining irregular transactions.
Yes on bank statement loans. Lenders can use either or both, as long as you provide consecutive months from each account.
Lenders average the two years, so one lower year reduces your qualifying amount. Bank statements might work better if deposits stayed consistent.