Loading
in Grass Valley, CA
Grass Valley's self-employed borrowers—contractors, consultants, business owners—face a documentation choice that affects approval odds and rate. Bank statement loans and P&L statement loans both skip tax returns, but they verify income differently.
Your business structure and how you manage cash flow determine which path closes faster. One uses raw deposits, the other uses accountant-prepared financials.
Bank statement loans use 12 or 24 months of personal or business bank statements to calculate income. Lenders apply a percentage—typically 50% to 75%—of your average deposits as qualifying income.
This works for borrowers who show strong cash flow but write off most income on taxes. You need consistent deposits and enough down payment—usually 10% to 20%—to offset the higher risk pricing.
Rates run 1% to 2% above conventional. Credit score matters more here since you're not providing CPA-verified financials.
P&L statement loans rely on a CPA-prepared profit and loss statement covering 12 to 24 months. Lenders treat the net income from your P&L as qualifying income, often with less aggressive discounting than bank statement programs.
This path suits established businesses with clean books and a relationship with a licensed accountant. You'll need a signed CPA letter and often a business license or proof of self-employment duration.
Rates typically sit slightly below bank statement loans because the documentation carries more credibility. Down payment requirements range from 10% to 20% depending on credit and business type.
Bank statement loans move faster—no waiting for a CPA to prepare documents. But lenders discount your deposits heavily, so you need higher cash flow to qualify for the same loan amount. P&L loans take longer to document but preserve more of your income for qualification.
Credit score impacts bank statement pricing more aggressively. P&L loans favor borrowers with established businesses and professional accounting relationships. If you're new to self-employment or lack a CPA, bank statements are often your only non-QM option.
Both require 10% to 20% down and accept lower credit scores than conventional loans. Rates vary by borrower profile and market conditions, but neither option hits conforming loan pricing.
Choose bank statement loans if you're a sole proprietor without a CPA, show strong deposits, and want to close in 30 days. This works for contractors, freelancers, and cash-heavy businesses who write off aggressively but bank consistently.
Go with P&L loans if you have an accountant, run an LLC or S-corp with clean books, and want to maximize qualifying income. The extra documentation time pays off in better pricing and higher loan amounts for the same business income.
No. Lenders structure these as separate programs with different underwriting guidelines. You pick one income documentation method per application.
P&L loans typically qualify you for more because lenders discount your income less. Bank statement programs can cut your usable income by 25% to 50%.
Most lenders require a licensed CPA or EA to sign the P&L and verification letter. Self-prepared statements don't qualify for P&L loan programs.
Both accept scores as low as 600, but bank statement loans penalize lower scores harder on rate. Above 680, pricing gaps narrow between the two.
Bank statement loans close in 25 to 35 days. P&L loans add 5 to 10 days for CPA document preparation and verification.