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in El Segundo, CA
Self-employed borrowers in El Segundo face a choice: use bank statements or profit and loss statements to prove income. Both are non-QM loans designed for business owners who can't provide W-2s.
The right option depends on how you run your business and what documentation you already have. Your tax write-offs and cash flow patterns matter more than you might think.
Bank statement loans analyze 12 to 24 months of business or personal bank deposits. Lenders calculate your income from the money flowing through your accounts, not what you reported to the IRS.
This works well if you write off significant expenses but still show strong deposits. You avoid the expense of a CPA-prepared P&L, and underwriters can see your actual cash position.
Profit and loss statement loans require a CPA to prepare a current P&L showing your business income and expenses. This document becomes your primary income verification instead of bank statements.
P&L loans work when your bank statements don't tell a clean story but your books show solid profit. Some lenders prefer this method for businesses with complex cash flows or multiple accounts.
Bank statement loans focus on cash flow. P&L loans focus on profitability. If you have one business checking account with consistent deposits, bank statements are simpler and cheaper.
P&L loans cost more upfront because you're paying a CPA. But they can show higher income if your books are cleaner than your bank statements. Rates vary by borrower profile and market conditions for both options.
Choose bank statements if you have straightforward deposits in one or two accounts and want to avoid CPA fees. Choose P&L if your bank statements are messy but your CPA can show strong profit on paper.
El Segundo's aerospace and tech contractors often do better with bank statement loans because their billing cycles create uneven deposits. Service businesses with steady cash flow can use either method successfully.
Yes, though 24 months often gets better rates. Some lenders require 24 months if your income is inconsistent or you're near the minimum credit threshold.
Your CPA must be licensed and in good standing. They'll sign the P&L and may need to provide their license number for lender verification.
Rates are similar for both programs. Your credit score, down payment, and total debt matter more than which income documentation method you choose.
Yes, but it restarts underwriting. We recommend choosing your documentation method upfront based on which shows stronger income in your situation.
Yes, though down payment requirements increase to 20-25% minimum. Bank statement loans are more common for investor purchases in our experience.