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in Woodlake, CA
Both bank statement and P&L loans help self-employed borrowers qualify without tax returns. The main difference is how you prove income—one uses bank deposits, the other uses a CPA's financial statement.
Woodlake's small business owners—from farming operations to local service providers—often write off too much to qualify with W-2 income docs. These non-QM programs look at actual cash flow instead of taxable income.
Bank statement loans use 12 or 24 months of business or personal bank statements to calculate income. Lenders average your monthly deposits and apply an expense factor (usually 25-50%) to estimate qualifying income.
This works well if you have consistent deposits but aggressive tax write-offs. You don't need a CPA—just statements from your bank. Most programs accept either business accounts or personal accounts showing business income.
P&L statement loans require a CPA-prepared profit and loss statement covering 12-24 months. The lender uses your net profit to determine qualifying income, similar to how they'd read a tax return but without actually requiring one.
This option makes sense if you already work with a CPA and keep clean books. The income calculation is often more favorable than bank statements because it reflects true business profit, not just gross deposits.
Bank statement loans look at gross deposits. P&L loans look at bottom-line profit. If you have high revenue but low margins, bank statements usually give you a higher qualifying income because lenders only subtract a standard expense factor.
Documentation is the other split. Bank statements are simple—download PDFs and send them in. P&L loans require a licensed CPA to prepare formal financials. That adds cost and time but gives you more control over how income is presented.
Choose bank statements if your books are loose, you don't have a CPA relationship, or your deposits are strong. This is the path for contractors, gig workers, and cash-heavy businesses where tracking every expense isn't realistic.
Go with P&L if you already pay a CPA, keep detailed records, and your net profit tells a better story than raw deposits. Farm operators and established small businesses with real accounting systems often prefer this route.
No. Lenders pick one method per loan. You choose which documentation route to take based on what shows stronger income for your situation.
Most programs want two years in the same business or industry. Some accept one year if you have strong reserves and credit.
Rates are similar. Both are non-QM loans priced on risk factors like credit score, down payment, and debt-to-income ratio.
P&L loans require a licensed CPA or EA. Bookkeepers and unlicensed accountants don't meet lender requirements for income verification.
Yes, but it restarts underwriting. Better to choose the right path upfront based on which method shows your income best.