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in Encinitas, CA
Both bank statement and P&L loans solve the same problem for Encinitas self-employed borrowers: getting approved when tax returns show minimal income. The difference is how you prove what you actually make.
Bank statement loans pull income directly from deposit history over 12-24 months. P&L loans require a CPA to prepare profit and loss statements that show your business earnings.
Bank statement loans calculate income by averaging monthly deposits over one or two years. Lenders typically count 50% of business deposits as qualifying income to account for expenses.
You provide 12 or 24 months of personal or business bank statements. No CPA letter required. Underwriters review every page to ensure deposits are consistent and legitimate business revenue.
P&L loans use a CPA-prepared profit and loss statement to establish income. The CPA must be licensed and typically needs a relationship with your business spanning at least two years.
Underwriters verify the CPA's credentials and review the P&L against your business type. This approach works best when you have clean books and an established accountant relationship.
Bank statement loans are faster and simpler if you don't already work with a CPA. P&L loans show higher qualifying income because you're not limited to the 50% deposit rule.
Most Encinitas self-employed buyers choose bank statements for speed unless they already have a CPA preparing annual financials. P&L loans make sense when your deposits don't reflect true income due to transfers between accounts or non-deposited revenue.
Choose bank statement loans if you have consistent deposits and want approval in three weeks. This works for most contractors, consultants, and small business owners who keep straightforward accounts.
Choose P&L loans if you already file CPA-prepared financials or your deposit patterns don't capture full income. This matters for borrowers who receive wire transfers, hold revenue in business accounts, or have complex cash flow timing.
No, you pick one documentation method per application. Most lenders require you to choose bank statement or P&L verification at the start of the process.
P&L loans usually qualify you for more because 100% of documented profit counts as income. Bank statements cap income at 50% of deposits.
Yes, both accept all business structures. Bank statement loans let you use personal or business accounts depending on how you run income through your books.
Bank statement loans close in 21-30 days. P&L loans add 5-10 days for CPA letter preparation and credential verification.
Rates are nearly identical. Both are non-QM products priced on credit score, down payment, and loan amount rather than documentation type.