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in Industry, CA
Self-employed borrowers in Industry face a choice between two non-QM income doc paths. Bank statement loans analyze deposits over 12-24 months while P&L loans rely on CPA-prepared financials.
Both bypass traditional tax return requirements that hurt self-employed income. The right choice depends on your banking habits, business structure, and how you track expenses.
Bank statement loans calculate income from 12 or 24 months of business or personal account deposits. Lenders apply an expense factor of 25-50% depending on your business type.
This option works when your deposits tell a clear income story. Cash-heavy businesses and contractors with steady deposit patterns qualify easily without extensive CPA documentation.
Most programs accept either business or personal statements. Rates vary by borrower profile and market conditions, typically 1-2 points above conventional loans.
P&L statement loans require a CPA-prepared profit and loss statement covering 1-2 years. Your accountant certifies the numbers, which lenders use to calculate qualifying income.
This path suits borrowers who already maintain detailed books and work with CPAs. The statement must follow standard accounting practices and match business tax structure.
P&L loans often support higher income calculations when you track legitimate business expenses carefully. Rates vary by borrower profile and market conditions.
Bank statement loans look at gross deposits minus a flat expense factor. P&L loans calculate net profit based on actual tracked expenses, which can show higher income if you document costs well.
The documentation burden differs sharply. Bank statements just need 12-24 months of account history while P&L loans require ongoing CPA involvement and formal bookkeeping.
Industry borrowers with inconsistent deposits or seasonal businesses often fare better with P&L loans. The CPA can smooth income over time and explain business cycles lenders might otherwise question.
Choose bank statement loans if you run a simple business with consistent deposits and no CPA relationship. Contractors, consultants, and cash businesses fit this profile.
Pick P&L loans when you already maintain books with a CPA and have significant deductible expenses. The extra documentation work pays off through higher qualifying income and lower rates in some programs.
Most lenders require one income doc method per loan. You pick the path that shows your income most favorably based on your business accounting.
Most P&L programs want one year of business returns to verify the CPA-prepared statement. Some non-QM lenders waive this if your credit and assets are strong.
Rates depend more on credit score and down payment than income doc type. Both typically run 1-2 points above conventional financing.
Standard programs use 12 or 24 months. Longer periods smooth out income volatility and may support higher loan amounts.
Your CPA must be licensed and in good standing. Most lenders verify the license directly and may contact the accountant during underwriting.