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in Avenal, CA
Self-employed borrowers in Avenal face a choice between two non-QM income verification paths. Bank statement loans pull income directly from deposits. P&L statement loans rely on CPA-prepared financials.
Both options bypass W-2 and tax return requirements that block many business owners. The right choice depends on how you run your books and what documentation you already have.
Bank statement loans calculate your income from 12 to 24 months of business or personal bank deposits. Lenders average your monthly deposits and apply an expense ratio—typically 25% to 50%—to determine qualifying income.
You don't need tax returns or a CPA. Just provide consecutive months of statements showing consistent deposits. Most lenders accept personal accounts if that's where business income flows.
This works best for contractors, real estate agents, and small business owners who write off substantial expenses. Your actual cash flow matters more than what you report to the IRS.
P&L statement loans require a CPA-prepared profit and loss statement covering 12 to 24 months. The lender uses your net profit figure to calculate qualifying income—no guessing at expense ratios.
You need a licensed CPA to prepare and sign the statement. Some lenders also want a balance sheet. The financials must match your business structure and show consistent profitability.
This path suits established businesses with formal accounting systems. If you already work with a CPA for quarterly reviews or year-end books, you have what you need.
The documentation split is the biggest difference. Bank statement loans need zero CPA involvement—just raw deposit history. P&L loans demand professional financials signed by a licensed accountant.
Income calculation also varies. Bank statements get an expense haircut applied by the lender. P&L loans use your CPA's net profit number directly. If your books show strong profit margins, P&L often yields higher qualifying income.
Cost and speed differ too. Bank statement loans close faster because there's no waiting on CPA prep. P&L loans add 1-2 weeks for financial statement preparation if you don't have current ones ready.
Choose bank statement loans if you don't have a CPA relationship or your tax returns show minimal income due to aggressive write-offs. This works for newer businesses without formal accounting and anyone who wants to close quickly.
Go with P&L loans if you already maintain CPA-prepared books and your net profit margins look strong. Businesses with clean financials often qualify for better terms because the income picture is clearer to underwriters.
Most Avenal self-employed borrowers land in the bank statement category. Farming operations, trucking outfits, and small retail businesses typically run lean on paper but show solid deposits. P&L loans shine for professional services and established contractors with formal accounting.
No. Lenders structure each program differently and require one documentation path. Pick the method that shows your income strongest.
Rates vary by borrower profile and market conditions. Down payment minimums run similar—typically 10% to 20%—but P&L loans sometimes qualify for slightly better pricing with clean financials.
Most lenders want 12 to 24 months consecutive. You can't skip months or cherry-pick your best periods.
Yes. The accountant must hold an active CPA license. Bookkeepers and unlicensed tax preparers don't meet lender requirements.
It depends on your specific numbers. Run both calculations with a broker to see which documentation method yields higher qualifying income for your situation.