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in Burbank, CA
Self-employed borrowers in Burbank face a common problem: your tax returns don't show your real income. Bank statement and P&L loans both solve this, but they verify income differently and work for different types of businesses.
Most Burbank freelancers and business owners prefer bank statements because they're simpler. But if you run expenses through your business or need to show higher income, a CPA-prepared P&L might be your better option.
Bank statement loans analyze 12 or 24 months of business or personal deposits. The lender calculates income by averaging your deposits and subtracting a standard expense ratio, usually 25-50% depending on your industry.
This works well for gig workers, contractors, and small business owners who take cash deposits. You don't need a CPA or formal bookkeeping. Just provide your actual bank statements and the lender does the math.
P&L loans require a CPA to prepare a profit and loss statement showing your business income and expenses. The lender uses your net profit as qualifying income, which can be higher than what bank statements show if you have legitimate business write-offs.
This works for established businesses with clean books. You'll need a licensed CPA to sign off, which costs money but lets you show income the way your business actually operates.
The biggest difference is how income gets calculated. Bank statements use a fixed expense ratio regardless of your actual costs. P&L statements use your real expenses, which matters if you run significant business costs through your books.
Documentation is simpler with bank statements but less flexible. P&L loans cost more upfront for CPA prep but can show higher qualifying income. Rates and down payments are similar, both typically require 10-20% down and price 0.5-1% above conventional rates.
Choose bank statements if you're a freelancer, consultant, or contractor with minimal business expenses. This works for most Burbank media professionals, real estate agents, and service providers who deposit client payments directly.
Go with P&L if you operate a business with real overhead: inventory, equipment, payroll, or office space. The CPA cost pays off when your actual expenses are much higher than the standard ratios lenders apply to bank statements.
No, you pick one income documentation method. Lenders won't combine them, so choose whichever shows higher qualifying income for your situation.
Bank statement loans typically don't require returns. P&L loans usually want one year of business returns to verify the CPA's numbers.
Bank statements close quicker because you skip the CPA step. Expect 21-30 days versus 30-45 for P&L loans.
Rates are nearly identical, both price as non-QM loans. Your credit score and down payment affect rate more than documentation type.
Use bank statements. Always choose the method that qualifies you for more, assuming you can document it properly.