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in La Puente, CA
Both bank statement and P&L loans serve self-employed borrowers in La Puente, but they work completely differently. One pulls income straight from your bank deposits, the other from a CPA's prepared financials.
Your choice depends on how you run your business and what documentation you already have. Most borrowers qualify for one but not both—knowing the difference saves you time.
Bank statement loans use 12 or 24 months of business or personal bank statements to calculate income. Lenders average your deposits and apply a percentage—typically 50% to 75%—as qualifying income.
You don't need tax returns or a CPA. This works well for contractors, real estate agents, and small business owners who show strong deposits but write off most profit on taxes.
Credit requirements start around 620, and down payments typically run 10% to 20%. Rates vary by borrower profile and market conditions but expect slightly higher than conventional.
P&L loans require a CPA-prepared profit and loss statement covering at least one year. Lenders use your net profit as qualifying income, sometimes combined with a business balance sheet.
This option suits established businesses with clean financials and a CPA relationship. You'll still need a business license and proof the CPA is licensed in California.
Credit requirements mirror bank statement loans—around 620 minimum. Down payments also start at 10% to 20%. Rates vary by borrower profile and market conditions.
The core difference is documentation. Bank statement loans ignore your tax returns entirely—they only care about deposits. P&L loans rely on professionally prepared financials that show net profit.
Processing time differs too. Bank statements are straightforward—you download them and submit. P&L loans require your CPA to prepare current statements, which can add weeks if your books aren't ready.
Qualifying income calculations diverge sharply. Bank statement lenders apply a percentage to deposits, while P&L lenders use bottom-line profit. A contractor depositing $30,000 monthly but showing $10,000 net profit qualifies differently under each program.
Pick bank statement loans if you write off most income on taxes but show strong deposits. This fits contractors, real estate agents, and gig workers who maximize deductions.
Choose P&L loans if your CPA-prepared financials show solid net profit and you already maintain clean books. Established businesses with formal accounting usually prefer this route.
Most La Puente self-employed borrowers default to bank statements because they're simpler and don't require a CPA. But if your tax returns already show strong income, a conventional loan beats both options on rate.
Yes, many lenders accept personal bank statements if your business income flows through personal accounts. Business accounts work too—some borrowers submit both.
Most lenders require a California-licensed CPA for P&L loans. Out-of-state CPAs typically don't qualify unless they hold a California license.
Rates run similar for both—typically higher than conventional loans. Your credit score and down payment affect rate more than which non-QM program you choose.
Yes, but it restarts underwriting since the income calculation changes completely. Choose the right program upfront to avoid delays.
Most lenders require 12 or 24 months. Longer history sometimes helps if recent months show lower deposits than your average.