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in Redondo Beach, CA
Both loan types let self-employed borrowers qualify without tax returns. The difference is what documents you provide and how quickly you can close.
Bank statement loans use deposits to calculate income. P&L loans rely on a CPA-prepared financial statement. Your choice depends on how you manage your business finances.
Bank statement loans analyze 12 or 24 months of business or personal deposits. Lenders average your monthly deposits and use that as qualifying income.
Most programs accept either business or personal statements. Some lenders even blend both if it strengthens your application. You don't need a CPA involved.
These loans work best for borrowers with consistent deposit patterns. Rates typically run 1-2% above conventional loans. Rates vary by borrower profile and market conditions.
P&L loans require a CPA-prepared profit and loss statement covering 1-2 years. The CPA must be licensed and can't be related to you.
Lenders use your net profit as qualifying income. If your P&L shows stronger earnings than your deposits suggest, this route makes sense.
You'll also need a balance sheet and CPA letter. The process takes longer because lenders verify your CPA's credentials. Rates match bank statement loans in most cases.
Bank statement loans look at cash flow. P&L loans look at profit. If you write off heavy expenses, your P&L might show less income than your bank statements.
Bank statements require no third-party prep work. P&L loans need a licensed CPA who charges $500-2,000 for the documentation.
Processing speed differs significantly. Bank statement files close in 25-35 days. P&L loans add 1-2 weeks for CPA verification and underwriter review.
Choose bank statements if your deposits reflect your real income. This works for consultants, contractors, and service providers who don't carry inventory or major expenses.
Choose P&L if you have an established relationship with a CPA and your net profit exceeds your visible cash flow. This fits retail businesses, restaurants, or operations with high cost of goods sold.
Most Redondo Beach self-employed borrowers start with bank statements. It's faster and cheaper. We only suggest P&L when your accountant confirms it will show higher qualifying income.
No. Lenders pick one documentation method per file. You can't mix income verification approaches on a single application.
Rates are nearly identical for both programs. Pricing depends more on credit score, down payment, and property type than documentation method.
Yes. Both typically need 10-20% down. Investment properties require 20-25% regardless of which income documentation you use.
Most programs require 12 months. Some lenders offer 24-month averaging if it improves your qualifying income.
No. The CPA must be licensed in any U.S. state and unrelated to you. Location doesn't matter as long as credentials verify.