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in Santa Monica, CA
Santa Monica self-employed borrowers face a choice when tax returns don't show enough income. Bank statement loans use deposits to prove cash flow. P&L statement loans lean on CPA-prepared financials instead.
Both are non-QM products designed for business owners, contractors, and commission earners. The right pick depends on how you run your business and what paperwork you already have.
Bank statement loans calculate income from 12 or 24 months of business or personal bank deposits. Underwriters apply expense ratios to deposits, usually 25% to 50% depending on your industry.
You don't need a CPA or formal financial statements. Lenders review actual money moving through accounts. This works well if you deposit most business income and keep lean tax returns.
P&L statement loans use a licensed CPA's profit and loss report to document income. The CPA reviews your books and certifies earnings over 12 or 24 months.
Underwriting focuses on net income from the P&L, not deposits. This option suits borrowers with complex business structures or multiple income streams that don't all hit one bank account.
Bank statement loans look at deposits minus estimated expenses. P&L loans use certified net income from your books. The first measures cash flow. The second measures profitability.
Cost and timeline differ too. Bank statements just need PDFs from your accounts. P&L loans require hiring a CPA to prepare and certify financials, adding time and fees to the process.
Choose bank statements if you deposit consistently and don't have a CPA on retainer. The process is faster and you avoid preparer fees. Works best for straightforward sole proprietors and single-member LLCs.
Go with P&L if you have multiple entities, keep detailed books, or already work with a CPA. Also better when deposits don't tell the full income story—like if you leave cash in business accounts or have complex expense timing.
Either works. Most Santa Monica self-employed borrowers use business accounts, but personal statements work if that's where income deposits land.
Expect $500 to $2,000 depending on complexity. If you already have a CPA doing your books, they can usually turn it around for the lower end.
Rates are comparable since both are non-QM products. Pricing depends more on credit score, down payment, and property type than documentation method.
Most lenders want at least two years self-employed. Some accept 12 months with strong financials and higher down payments.
Yes, but it restarts underwriting. Pick your doc type before applying to avoid delays and duplicate effort.