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in Covina, CA
Self-employed borrowers in Covina face a choice: prove income with bank statements or a CPA-prepared P&L. Both bypass tax returns, which usually show less income than you actually make.
The right option depends on how you run your books. Most business owners default to bank statements because they're faster and need less paperwork.
Bank statement loans analyze 12 or 24 months of business or personal deposits. Lenders calculate income by averaging monthly deposits, then applying an expense factor of 25-50%.
You'll need consistent deposits and a decent credit score, usually 620 minimum. Down payments start at 10%, though 15-20% gets better rates.
Most Covina borrowers close in 21-30 days. This is the fastest non-QM option for business owners who keep clean bank records.
P&L loans require a licensed CPA to prepare a profit and loss statement covering 12-24 months. The CPA must have an active license and cannot be a family member.
Your P&L shows gross revenue minus business expenses. Lenders use net profit as qualifying income, so this works best if your books show strong margins.
Credit and down payment requirements mirror bank statement loans. The difference is documentation: you need a CPA relationship and organized financials.
Bank statement loans let lenders estimate your income directly from deposits. P&L loans use your official business profit, which means cleaner math but stricter documentation.
Timing matters: pulling bank statements takes days, while getting a CPA-prepared P&L can take weeks if you don't already have one. Rates vary by borrower profile and market conditions, but both programs price similarly at the same LTV.
The real split is control. Bank statements give you flexibility if your books aren't perfect. P&L loans require professional accounting but show lenders a clearer picture of business health.
Choose bank statements if you need speed, don't have a CPA relationship, or your tax filings don't match actual cash flow. This covers most self-employed borrowers in Covina.
Pick P&L loans if you already work with a CPA, keep detailed books, and your profit margins are strong. This option works well for established businesses with formal accounting systems.
Either way, expect higher rates than conventional loans. That's the trade-off for skipping tax returns and getting approved on real income instead of written-down figures.
Yes. Many self-employed borrowers use personal accounts where business income deposits. Lenders still apply the same expense deductions to calculate qualifying income.
No. The CPA just needs an active license in any state. Most lenders verify the license number directly with the state board.
Neither. Rates depend on credit score, down payment, and loan amount. Both programs price the same at identical borrower profiles and market conditions.
No. Lenders pick one income calculation method per loan. You can't mix documentation types to boost qualifying income.
Most lenders need 12 months minimum. Some programs accept 24 months, which can smooth out seasonal income swings for better qualification.