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in Ukiah, CA
Self-employed borrowers in Ukiah face a common problem: their tax returns don't show their real income. Both bank statement and profit & loss loans solve this, but they work differently.
Bank statement loans pull income directly from your deposits over 12-24 months. P&L loans use a CPA-prepared financial statement to show what your business actually earns.
Bank statement loans analyze your business and personal account deposits over 12 to 24 months. Lenders calculate income by averaging those deposits and applying an expense ratio.
This works best if you run most income through your accounts and keep consistent deposits. No CPA required, just your actual bank statements from your financial institution.
Most programs accept personal accounts, business accounts, or both. The lender reviews every deposit to separate business income from transfers or loans.
P&L statement loans require a CPA or licensed accountant to prepare your profit and loss statement. This shows your business revenue minus expenses over 12-24 months.
Your accountant must be licensed and typically needs to provide a letter confirming the numbers. Some lenders also want a balance sheet or year-to-date statements.
This route works if you already work with a CPA and have clean books. Your P&L becomes your income verification instead of deposits or tax returns.
The main split comes down to documentation cost and control. Bank statements cost nothing extra but expose every deposit to lender scrutiny. P&L loans cost CPA fees but present income in a cleaner format.
Bank statement programs usually have slightly higher rates because they rely on raw data interpretation. P&L loans may price better since a licensed professional vouches for the numbers.
Approval speed differs too. Bank statements can move fast if your deposits are clean. P&L loans add time for CPA preparation and review, especially if your books need cleanup first.
Choose bank statements if you deposit most income directly, don't currently use a CPA, or need to close fast. This works well for contractors, consultants, and service providers in Ukiah with straightforward cash flow.
Pick P&L if you already maintain books with an accountant, have complex business expenses, or want to present income in the strongest light. This fits established businesses with proper accounting systems.
Some borrowers qualify both ways. Run both scenarios with your broker to see which produces better buying power and rates for your situation.
No, you pick one income verification method. Some lenders want to see both for context, but your qualifying income comes from either deposits or the P&L calculation.
Yes, both are non-QM products with rates typically 1-2% above conventional. Rates vary by borrower profile and market conditions based on credit, down payment, and income strength.
Most programs require 12-24 months. Lenders want to see consistent income patterns, not just a few good months before you applied.
Large one-time deposits, transfers between accounts, and loan proceeds get subtracted from income calculations. Clean, regular business deposits work best for qualification.
Yes, your accountant must be a licensed CPA, EA, or certified public accountant. Bookkeepers without professional licenses don't meet lender requirements for income verification.
It depends on your books. Bank statements might show more income if you have high deposits. P&L might work better if you have legitimate business expenses that reduce deposit amounts.