Both let self-employed borrowers qualify without using tax returns. A bank statement loan counts your deposits; a P&L loan uses a profit and loss statement, usually prepared by a CPA or tax preparer.
Side by side
| Bank statement loan | P&L loan | |
|---|---|---|
| What counts as income | Deposits over 12 or 24 months, less an expense factor for business accounts | Net profit on the profit and loss statement |
| Main documents | 12 or 24 months of personal or business bank statements | A profit and loss statement, often signed by a CPA or tax preparer |
| Who prepares them | Your bank | Your CPA or tax preparer, sometimes you |
| Works best when | Deposits are steady and clearly business income | Deposits are lumpy or mixed, but the books are clean |
| Availability | Widely offered by non-QM lenders | Offered by fewer lenders |
When a bank statement loan fits
- Your business deposits are steady month to month.
- You don’t have a CPA-prepared profit and loss statement.
- Personal and business money are kept in separate accounts.
When a P&L loan fits
- Your CPA keeps current books.
- Deposits include transfers or non-income money that would confuse a bank statement review.
- Your margins are higher than a lender’s standard expense factor assumes.
Guides and calculators
- Self-employed loans
- Bank statement income calculator
- Self-employed income calculator
- CPAs and tax advisors
- Document checklists
Questions
Which gives a higher qualifying income?
It depends on your margins. A bank statement loan applies an expense factor to deposits; a P&L loan uses your actual net profit. Run your numbers in the bank statement income calculator and compare.
Do I need a CPA for a P&L loan?
Most lenders want the statement prepared or signed by a CPA, enrolled agent or tax preparer. Some accept a borrower-prepared statement with supporting bank statements. See also: Bank statement income calculator.
Can I use tax returns instead?
Yes, if they show enough income: a traditional loan usually costs less. Both of these programs are for when returns understate what you earn.
