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in La Mirada, CA
Both bank statement and P&L loans solve the same problem for self-employed borrowers in La Mirada. You write off business expenses that tank your tax returns, so traditional lenders reject you.
The difference comes down to how you prove income. Bank statements show actual deposits over 12-24 months. P&L statements require a CPA to prepare financials for your business.
Most self-employed borrowers qualify under one approach but not the other. Knowing which documentation path fits your business structure saves weeks of headache.
Bank statement loans pull 12 or 24 months of business or personal bank statements. Lenders calculate income from average monthly deposits, minus a percentage for expenses.
This works best for service businesses, contractors, and sole proprietors. Your bank account tells the real income story that tax returns hide.
Credit minimums usually start at 620. Expect 10-20% down depending on loan amount and income stability shown in statements.
The catch: inconsistent deposits hurt you. Lenders want to see stable or growing monthly income patterns across the full statement period.
P&L loans require a CPA-prepared profit and loss statement covering one or two years. Some lenders also want a balance sheet and business bank statements as backup.
This path works better for LLCs, S-corps, and partnerships. Your CPA creates financials that show true business profitability before write-offs.
Credit requirements match bank statement loans around 620. Down payments start at 10-20% but can go higher if the P&L shows declining income.
The kicker: you need a licensed CPA to prepare the statement. Many lenders reject P&Ls from in-house bookkeepers or unlicensed accountants.
Bank statement loans look only at deposit activity. P&L loans examine full business financials including expenses, assets, and liabilities.
Documentation speed differs drastically. Bank statements download instantly from your account. Getting a CPA to prepare compliant P&L statements takes 2-4 weeks minimum.
Cost matters here. Bank statement loans just need your statements. P&L loans require paying a CPA for proper preparation, adding $500-2000 to your upfront costs.
Income calculation methods vary. Bank statements use gross deposits minus an expense factor. P&Ls use net profit from the bottom line after all business deductions.
Choose bank statement loans if you're a sole proprietor, contractor, or service provider with steady deposits. This path works when your business income flows through one or two accounts consistently.
Pick P&L loans if you run an LLC or corporation with complex financials. This makes sense when you already have a CPA doing your books and can get statements prepared quickly.
La Mirada self-employed buyers often start with bank statements because documentation comes faster. You can always switch to P&L if deposit inconsistency becomes an issue.
We run both scenarios during pre-approval. Sometimes bank statements show higher qualifying income. Other times the CPA P&L nets better numbers after accounting for business structure.
Yes, if business income deposits into personal accounts. Lenders prefer business accounts but accept personal statements when that's where revenue lands.
Most lenders don't require returns, but some ask for them to verify the P&L makes sense. They won't use tax return income for qualification.
Rates vary by borrower profile and market conditions. Both loan types typically price within 0.25% of each other at the same credit level.
Yes, but it restarts underwriting. Have your CPA prepare statements before applying if you think P&L is the better route.
P&L loans work better for seasonal or project-based businesses. The CPA statement can explain income fluctuations that bank deposits don't capture well.