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in Walnut, CA
Both loan types help self-employed Walnut buyers qualify without tax returns. Bank statement loans analyze your deposits. P&L loans use a CPA's financial summary.
The right choice depends on how your business runs and what documentation you already have. One shows cash flow directly. The other presents formal accounting.
Bank statement loans calculate your income from 12 to 24 months of business or personal account deposits. Lenders average your monthly deposits and apply an expense factor, typically 25-50%.
This works well for cash-heavy businesses or contractors who show consistent deposits. You avoid the write-offs that crush tax return income. Most programs accept personal bank statements if you run funds through your personal account.
P&L statement loans use a CPA-prepared profit and loss statement to document your business income. The CPA signs off on your earnings. Lenders verify the CPA's credentials and review the statement's methodology.
This approach suits established businesses with formal accounting systems already in place. Your CPA becomes part of the approval process. Some lenders also require a balance sheet alongside the P&L.
Bank statement loans look at raw deposits. P&L loans present calculated net income. Bank statements show what actually hit your account. P&L statements show what your accountant says you earned after proper expense allocation.
The CPA requirement is the biggest divider. Bank statement loans need no third-party professional. P&L loans require an active CPA relationship. Rates vary by borrower profile and market conditions, but bank statement programs often have slightly higher rates due to the less formal documentation.
Choose bank statements if you run a cash-flow business without a dedicated CPA or if gathering 12 months of statements is easier than commissioning formal financials. This route works for contractors, consultants, and small operators.
Go with P&L loans if you already work with a CPA and maintain clean books. Your accountant can prepare the statement quickly. HousingWire recently covered how some non-QM lenders now accept crypto holdings for reserves — relevant if you hold digital assets alongside your business income.
Neither option guarantees approval or specific terms. Both require solid credit and reasonable debt ratios. The documentation method just changes how you prove income.
Yes, most bank statement programs accept personal accounts if you run business income through them. Lenders separate business deposits from personal transfers.
No, you need a CPA-prepared P&L statement, not a full audit. The CPA reviews your books and signs off on the income calculation.
Bank statement loans often close faster because you're not waiting on a CPA to prepare formal statements. You just submit existing account records.
Yes, both handle conforming and jumbo amounts. Your income calculation determines how much you qualify for regardless of documentation method.
Most lenders let you pivot if one method shows stronger income. You'll restart underwriting with the new documentation package.