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in Long Beach, CA
Long Beach self-employed borrowers have two strong paths when tax returns don't show enough income. Bank statement loans use deposits to prove cash flow. P&L loans rely on a CPA's income statement.
Both skip traditional W-2 verification. The right choice depends on how you document income and whether you have a CPA relationship. We'll break down which option makes sense for your business structure.
Bank statement loans analyze 12 to 24 months of business or personal deposits. Lenders calculate income from total deposits minus known transfers. This works if you run cash through your accounts regularly.
You don't need a CPA or formal bookkeeping. Most lenders accept personal bank statements for sole proprietors. Business accounts work for LLCs and S-corps. Expect 10-20% down and rates 1-2% above conventional.
P&L loans use a CPA-prepared profit and loss statement covering 12-24 months. Your accountant certifies the income shown. This works best if you already maintain formal books and have an established CPA relationship.
The P&L shows net business income before personal draws. Lenders verify the CPA's license and may request a balance sheet. Down payments start at 10-20%. Rates run similar to bank statement loans but some borrowers qualify for better terms with strong financials.
Bank statement loans look at cash flow. P&L loans look at reported profit. If you write off aggressively, bank statements show more income than your P&L. If you keep clean books with conservative expenses, the P&L might show stronger income.
The CPA requirement is the biggest split. Bank statement loans need no accountant involvement. P&L loans require a licensed CPA to prepare financials. Cost differs too—expect to pay your CPA $500-2000 for a compliant P&L versus nothing extra for bank statements you already have.
Choose bank statement loans if you don't use a CPA or run most income through your accounts. This fits contractors, consultants, and cash-heavy businesses. Skip this if you move money between accounts frequently—transfers inflate deposit totals.
Go P&L if you already maintain formal books and have a CPA relationship. This works for established businesses with clean accounting. Also use P&L if bank deposits look messy due to loan proceeds, partner distributions, or non-income transfers that would confuse underwriting.
No. Lenders require one income documentation method per loan. Pick the option that shows your income strongest and stick with it through underwriting.
Yes. Both loan types work for 1-4 unit properties including duplexes and fourplexes. Some lenders cap at single-family for bank statement programs.
Most lenders don't require a multi-year CPA relationship. Your accountant just needs a current license and must prepare the P&L covering the required period.
Use the P&L loan. Bank statement programs would calculate lower qualifying income. Always choose the method that shows stronger cash flow for your situation.
Rates vary by borrower profile and market conditions. Generally similar, but some lenders offer slightly better terms for P&L loans with very strong financials.