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in Cerritos, CA
Most Cerritos self-employed borrowers hit the same wall: tax returns show less income than they actually make. Both bank statement and P&L loans skip tax returns entirely, but they verify income differently.
Bank statement programs analyze deposits over 12-24 months. P&L programs rely on a CPA-prepared financial statement. Your business structure and accounting method determine which path closes faster.
Bank statement loans use 12 or 24 months of business or personal bank statements to calculate income. Lenders apply an expense ratio—typically 25% to 50%—to your average monthly deposits. The remaining amount becomes your qualifying income.
This works well for service businesses, contractors, and Uber drivers who run most revenue through one account. You need consistent deposits and clean statements. Large unexplained transfers or NSF fees can hurt approval odds.
P&L statement loans use a CPA-prepared profit and loss statement covering the most recent 12 months. The CPA must be licensed and can't be related to you. Lenders verify the CPA's credentials and may request a balance sheet or business tax ID.
This route suits established businesses with formal accounting systems. Retail shops, medical practices, and restaurants often prefer P&L programs because their financials are already CPA-reviewed. You avoid the scrutiny of every deposit hitting your accounts.
Bank statement loans require zero CPA involvement but expose every deposit and withdrawal in your accounts. P&L loans demand a licensed CPA but keep your banking activity private. Rates vary by borrower profile and market conditions, though approval requirements stay similar.
Bank statement programs offer more flexibility for newer businesses or those without CPAs. P&L programs move faster when your books are already CPA-maintained. Credit score minimums—typically 620 to 640—apply to both. Down payment requirements start at 10% for both loan types.
Choose bank statement loans if you're a newer business owner, don't use a CPA, or run most income through one account. This path gives you control—you provide the statements directly. It works well for gig workers, contractors, and small service businesses.
Go with P&L loans if you already have a CPA doing your books, want to keep banking activity private, or run a complex business with multiple accounts. Retail, medical, and restaurant owners in Cerritos often prefer this route because their accountant handles the documentation.
Yes, if business income flows through your personal account. Lenders accept either business or personal statements, depending on where you deposit revenue.
Most lenders require a P&L dated within 90 days of application. The statement must cover the trailing 12 months of business activity.
Yes, both programs support purchase and cash-out refinance transactions. Cash-out limits vary by lender but typically max at 80% loan-to-value.
Large one-time deposits need explanation letters. Consistent monthly patterns work best. If your income is erratic, P&L loans may provide cleaner approval.
No. Lenders require a licensed CPA to prepare and sign the profit and loss statement. The CPA must be third-party—not related to you.
Rates vary by borrower profile and market conditions. Both are non-QM loans, so expect rates 1-2% above conventional mortgages regardless of documentation type.