Question 1

What if my CPA is local and not a big firm?

Accepted Answer

Any licensed CPA works. Lenders verify the license number and signature. Small local firms are fine as long as the statements follow standard accounting practices and show clear income calculation.

Question 2

Can I use P&L statements if my business is less than two years old?

Accepted Answer

Most lenders require 24 months of history. A few accept 12 months if you have strong reserves and at least 20% down. Newer businesses typically need bank statement loans instead.

Question 3

How do lenders handle business expenses that vary by season?

Accepted Answer

They average monthly income over 12 or 24 months. Seasonal swings cancel out in the average. Problems only arise when year-over-year trends show declining revenue or inconsistent profit margins.

Question 4

Do I need business tax returns in addition to P&L statements?

Accepted Answer

Yes. Most lenders want both. The P&L shows recent performance. Tax returns verify historical income and that you actually filed. Discrepancies between the two documents trigger underwriter questions.

Question 5

What if my P&L shows profit but I took distributions that reduced cash flow?

Accepted Answer

Lenders look at net profit before distributions. Owner draws don't count against you. They care about the business generating enough income to support your mortgage payment, not how you took money out.

P&L Statement Loans in Tulelake: Flexible Financing for Self-Employed Borrowers