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in South Gate, CA
South Gate's self-employed borrowers face a common problem: strong income that doesn't show up on tax returns. Both bank statement and P&L loans solve this, but they pull income from different sources.
Most brokers push one over the other based on commission. We look at your actual cash flow and documentation. The right choice depends on how your business handles money and what you can verify.
Bank statement loans use deposits to calculate income. Lenders pull 12 or 24 months of statements and average the inflows. They typically apply a 50% expense factor unless you show higher margins.
This works best when your business runs money through one account. Mixed personal and business deposits create problems. You need consistent monthly deposits, not one huge quarterly payment.
P&L loans require a CPA-prepared profit and loss statement covering 12 to 24 months. The lender uses your net business income figure. No arbitrary expense deduction like bank statement programs.
Your CPA must be licensed and provide contact info for verification. The statement needs to match your business structure. Lenders spot inflated P&Ls fast, so keep numbers realistic.
The main split is control versus documentation cost. Bank statements are DIY—you just download them. P&L statements cost $500 to $2,000 depending on your CPA. But P&Ls often show higher qualifying income.
Bank statement programs assume 50% expenses even if you run leaner. P&L loans use your actual margins. If your business nets 60% or 70%, the P&L route puts more income on paper. That means higher loan amounts or easier debt-to-income ratios.
Choose bank statements if you want speed and low cost. They work when 50% of deposits still qualifies you. Skip them if your margins are better than 50% or your deposits are erratic.
Go P&L if you need maximum qualifying income or run a high-margin business. Also use it when you have multiple accounts or complex cash flow. The CPA fee pays off when it unlocks $50K to $100K more buying power.
Yes, but it restarts underwriting. If bank statements aren't showing enough income, ordering a P&L can salvage the deal.
Usually 10% to 20% minimum for both. Exact requirement depends on credit score and loan amount, not documentation type.
Bank statement loans typically close 3 to 5 days faster. P&L loans add time for CPA verification and statement review.
Only if a licensed CPA prepared it and will verify it. Self-prepared or bookkeeper statements don't qualify for most lenders.
Use bank statements. Lenders let you choose the method that works better, as long as documentation is solid.