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in La Canada Flintridge, CA
Self-employed borrowers in La Cañada Flintridge face a choice: prove income through bank statements or a CPA-prepared P&L. Both are non-QM loans designed for business owners who can't use tax returns.
The right pick depends on how you run your books and what documentation you already have. One prioritizes cash flow evidence, the other needs formal accounting.
Bank statement loans calculate income from 12 to 24 months of business or personal bank deposits. Lenders apply a percentage to your average monthly deposits to determine qualifying income.
You avoid needing a CPA and formal financial statements. This works well if you write off heavy expenses but have strong deposit patterns. Rates vary by borrower profile and market conditions.
P&L statement loans require a CPA-prepared profit and loss statement covering at least 12 months. The lender uses your net income from the P&L to calculate what you can borrow.
You need existing accounting infrastructure and a CPA relationship. This route makes sense if you already maintain detailed books for your business. The documentation feels more traditional to underwriters.
Bank statements show cash flow regardless of how you structure deductions. P&L loans reflect net profit after expenses, which might be lower if you maximize write-offs for tax purposes.
Bank statement loans require less upfront prep but face more scrutiny of deposit sources. P&L loans need a CPA but present income in a format lenders recognize from traditional deals.
Choose bank statements if you write off aggressively and your tax returns show minimal income but deposits tell a different story. This works for contractors, consultants, and small business owners without formal accounting.
Go with P&L if you maintain clean books with a CPA and your net income supports your loan amount. Medical professionals, attorneys, and established businesses often prefer this path.
Yes, most bank statement programs accept personal accounts if that's where your business income deposits. Lenders look for consistent income patterns regardless of account type.
Most P&L programs still want to see your tax returns for verification. The difference is they qualify you based on the P&L income, not what you reported to the IRS.
Rates are similar across both programs and depend more on credit score and down payment. Neither has a consistent rate advantage over the other.
Standard is 12 months, though some lenders require 24 months. More history can strengthen your case but isn't always mandatory.
Yes, but it restarts underwriting and delays closing. Pick your documentation path early based on what you already maintain for your business.