Loading
in Commerce, CA
Commerce self-employed borrowers have two main paths when tax returns don't show their true income. Bank statement loans use 12-24 months of deposits to calculate what you earn. P&L loans rely on a CPA-prepared profit and loss statement instead.
Both are non-QM products designed for business owners, contractors, and freelancers. The difference is how lenders verify your income and what documentation you need to close.
Bank statement loans calculate income from 12 or 24 months of business or personal deposits. Lenders apply a percentage (typically 50-75%) to your average monthly deposits to determine qualifying income. No tax returns required.
You'll need consistent deposits and clean banking history. Most lenders want 10-20% down, credit scores above 620, and six months of reserves. The trade-off for no tax returns is higher rates than conventional loans.
P&L loans use a CPA-prepared profit and loss statement to show current business income. Your accountant prepares a year-to-date P&L, and lenders verify income from that document. Some lenders also require business bank statements as backup.
These work well for seasonal businesses or borrowers with strong recent earnings. You'll typically need 15-20% down, credit above 640, and a CPA letter verifying they prepared your statement. Rates run similar to bank statement loans.
Bank statement loans look backward at historical deposits. P&L loans focus on current year performance. If your income is growing, a P&L might qualify you for more. If it's declining, bank statements showing the previous 24 months could work better.
Documentation is the other major split. Bank statements are straightforward but show everything—personal spending, transfers, everything. P&Ls are cleaner but require a CPA relationship and cost money to prepare. Most Commerce borrowers with established accountants prefer P&Ls.
Choose bank statement loans if you don't have a CPA, need to use 24 months to boost income, or prefer not involving your accountant. They're simpler for solo entrepreneurs and gig workers with consistent deposits.
Go with P&L loans if you work with a CPA, your income is trending up this year, or you want cleaner documentation. Contractors with lumpy deposits and seasonal businesses often get better treatment with P&Ls.
Some lenders allow it, but you'll use one as the primary income source. The other serves as supporting documentation to strengthen your file.
Typically 10-20% for bank statement loans, 15-20% for P&L loans. It varies by lender and your credit profile.
Bank statement loans usually close quicker. You already have the statements, while P&Ls require CPA preparation time.
Yes, if deposits come from business activity. Lenders prefer business accounts but will work with personal accounts showing clear income patterns.
Rates are typically similar, usually 1-2% above conventional loans. Your credit score and down payment matter more than which income method you choose.