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in Clearlake, CA
Both bank statement and P&L loans serve self-employed borrowers in Clearlake who can't verify income with W-2s. The difference comes down to what documents you have and how your business reports income.
Most self-employed borrowers qualify for one option better than the other. The right choice depends on your business structure and what paperwork you can produce.
Bank statement loans use 12 to 24 months of personal or business bank deposits to calculate your income. Lenders typically use 50% to 75% of average monthly deposits as qualifying income.
You need consistent deposits and reasonable business expenses. This works well for contractors, consultants, and small business owners who run most revenue through bank accounts.
No CPA required, no tax returns needed. You're qualifying on cash flow, not what you reported to the IRS.
P&L statement loans require a CPA-prepared profit and loss statement covering 12 to 24 months. Your accountant must be licensed and provide their credentials.
Lenders use net income from the P&L to qualify you. This approach works better for businesses with complex structures or significant write-offs that don't show in bank deposits.
You'll also need a business license and sometimes an accountant's letter. More paperwork than bank statements, but may result in higher qualifying income.
Bank statement loans are faster and cheaper upfront since you skip the CPA. P&L loans require paying an accountant to prepare formal statements with their license on the line.
Income calculation differs dramatically. Bank statements use gross deposits with a standard percentage. P&L uses net income after expenses, which can be higher or lower depending on your business.
Approval odds shift based on your business model. Cash-heavy businesses do better with bank statements. Service businesses with low overhead but high write-offs often qualify for more with a P&L.
Choose bank statements if you're a sole proprietor or single-member LLC with straightforward deposits. This option is faster and costs less since you skip CPA fees.
Go with P&L if you have an S-corp, partnership, or business with significant legitimate expenses that reduce your bank deposits. Your CPA can structure the statement to maximize qualifying income.
Some borrowers in Clearlake qualify for different loan amounts depending on which method they use. Run both scenarios before deciding.
Yes, most lenders accept business bank statements for LLCs and corporations. Personal accounts work for sole proprietors who run income through personal banking.
Expect $500 to $2,000 depending on business complexity. Factor this cost into your decision since bank statement loans skip this expense entirely.
Rates are typically similar since both are non-QM loans. Your credit score and down payment affect rates more than which documentation method you choose.
Most lenders want 24 months in the same business or industry. Some accept 12 months with strong financials and reserves.
Yes, but you'll restart underwriting and pay for CPA preparation. Better to choose the right path upfront based on your business structure.