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in Cloverdale, CA
Self-employed borrowers in Cloverdale face a common problem: tax write-offs tank their reported income. Both bank statement and P&L loans skip tax returns, but they verify income differently.
Bank statement loans calculate income from deposits. P&L loans rely on a CPA's profit statement. The right choice depends on how your business runs and what your accountant already prepares.
Bank statement loans pull 12 or 24 months of business or personal bank statements. Lenders apply a percentage to your deposits to determine qualifying income.
This works well for cash-heavy businesses or contractors who don't keep formal P&L records. You avoid the CPA prep fee and the income calculation is straightforward.
P&L statement loans require a CPA-prepared profit and loss statement covering 12-24 months. The lender uses your net profit as qualifying income.
This option suits established businesses with clean books. If your accountant already produces monthly or quarterly P&Ls, you've got what you need without hunting down bank statements.
The documentation split is the main difference. Bank statement loans need statements you already have. P&L loans need a CPA to prepare formal financials, which costs $500-$2,000.
Income calculation differs too. Bank statement lenders apply 50-75% to deposits depending on business type. P&L loans use your bottom-line profit. If you write off everything, bank statements usually show more qualifying income.
Choose bank statement loans if you're a contractor, cash business, or don't use a CPA regularly. The process is faster and you skip the prep fee. Most Sonoma County self-employed borrowers go this route.
Pick P&L loans if your accountant already produces them or your business has complex income streams. Multiple revenue sources, partnerships, or S-corps often look cleaner on a formal P&L than raw bank deposits.
Yes, most lenders accept either. Personal statements work if you run income through personal accounts. Business statements show cleaner separation.
No, just CPA-prepared. A full audit isn't required. Your CPA signs off on the statement they create from your books.
Rates are similar since both are non-QM programs. Your credit score and down payment matter more than documentation type.
Most lenders want 12 months minimum. Some require 24 months for stronger income verification or higher loan amounts.
P&L loans handle this better. They smooth out seasonal fluctuations by looking at annual profit instead of month-to-month deposits.