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in Norwalk, CA
Both bank statement and P&L loans solve the same problem for self-employed borrowers in Norwalk: proving income without W-2s. The choice between them usually comes down to how clean your books are and whether you've got a CPA relationship.
Most self-employed borrowers default to bank statement loans because they're simpler to document. P&L loans require more formal accounting but can paint a better income picture if your deposits don't tell the full story.
Bank statement loans calculate your income by averaging deposits over 12 or 24 months. Lenders take the total deposits, subtract a percentage for business expenses (usually 25-50%), then divide by months to get qualifying income.
You don't need a CPA or formal bookkeeping. Just pull your business or personal bank statements showing consistent deposits. Most Norwalk borrowers close these in 25-35 days because there's no waiting on third-party accounting.
P&L loans require a CPA-prepared profit and loss statement covering at least one year, often two. The lender uses your net profit as qualifying income. If your CPA shows $120k annual profit, that's what underwrites to.
This route makes sense when your deposits understate income—if you've got receivables, equipment purchases, or business expenses running through the same account. The formal accounting captures real profitability that raw deposits might miss.
Documentation is the biggest split. Bank statement loans need zero formal accounting—just login credentials or PDFs. P&L loans require an ongoing CPA relationship and prepared financials, which adds cost and time.
Income calculation differs too. Bank statements use gross deposits minus a flat expense ratio. P&L uses actual net profit after all deductions. If you write off everything, P&L might show lower qualifying income than bank statements.
Choose bank statement loans if your deposits are consistent and you don't have a CPA preparing regular financials. Most gig workers, contractors, and small business owners in Norwalk go this route because it's simpler and closes faster.
Go with P&L if you already work with a CPA, have complex business structures, or need to show higher income than your deposits suggest. This matters when large business expenses or receivables distort what hits your bank account.
Yes, most lenders accept either or both. They'll average all deposits together and apply the same expense deduction across the board.
No, just CPA-prepared statements. Full audits aren't required, but the P&L must be signed by a licensed CPA.
Rates are identical—both are non-QM loans priced the same way. Your credit score and down payment matter more than documentation type.
Most programs want 12 or 24 months. The 24-month option usually qualifies more income since it smooths out seasonal fluctuations.
You can, but it restarts underwriting. Decide upfront which route shows your income best to avoid delays.