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in Hollister, CA
Self-employed borrowers in Hollister face a common problem: tax returns don't show your real income. Both bank statement and P&L loans solve this, but they work differently.
Bank statement loans pull income straight from deposits. P&L loans need a CPA to prepare financial statements. Your business structure and record-keeping determine which path makes sense.
Bank statement loans use 12 to 24 months of business or personal bank statements to calculate income. Lenders average your deposits and apply an expense ratio, typically 25-50% depending on your business type.
This works best for contractors, real estate agents, and small business owners who deposit most revenue into one account. You avoid CPA fees and the approval process moves faster since statements are easy to verify.
Most lenders require 10-20% down and credit scores above 620. Rates run 1-2% higher than conventional loans, but you qualify based on actual cash flow, not write-offs.
P&L statement loans require a CPA-prepared profit and loss statement, usually covering the most recent 12-24 months. Some lenders also want a balance sheet and a CPA letter certifying your income.
This option suits established businesses with complex financials: multiple LLCs, partnerships, S-corps with K-1 distributions, or companies with significant equipment depreciation. The CPA calculates income using actual business accounting.
Down payments typically start at 15-20% with credit scores of 640 or higher. Rates are similar to bank statement loans, but the documentation process takes longer due to CPA involvement.
The main split is documentation complexity versus income accuracy. Bank statement loans are faster and cheaper since you skip CPA fees, but lenders use a blanket expense ratio that might understate your actual income.
P&L loans take longer and cost more upfront for CPA prep, but they capture your true net income. If you have multiple entities or significant non-cash expenses like depreciation, the P&L often shows higher qualifying income.
Approval odds shift based on your setup. Clean deposits in one account? Bank statements win. Multiple LLCs funneling income through partnerships? You need a P&L to make the numbers work.
Choose bank statement loans if you run a simple operation with most income deposited to one account. Think solo contractors, agents, or consultants who don't have complicated corporate structures.
Go with P&L loans if you operate through an S-corp, have multiple LLCs, or take distributions that don't show as deposits. The CPA cost pays off when it reveals income that bank statements miss.
Many Hollister self-employed borrowers start with bank statements since they're cheaper and faster. If the income calculation doesn't work, we shift to a P&L lender who can capture more qualifying income.
Yes, if business income deposits into your personal account. Most self-employed Hollister borrowers use personal statements since that's where revenue lands.
Expect $500-$1,500 depending on complexity. Multi-entity structures with partnerships cost more than single S-corps with straightforward books.
Rates are nearly identical, usually 1-2% above conventional. Your credit score and down payment matter more than whether you choose bank statements or P&L.
Most lenders want two years, but some accept 12 months of statements or financials. Shorter history usually means higher rates or larger down payments.
This happens with S-corps taking distributions or businesses with receivables timing. The P&L loan captures income that doesn't hit the bank every month.
Yes, we do this often when initial income calculations fall short. The P&L route takes a few extra weeks but might unlock better loan amounts.