P&L Only Loans: The Ultimate Self-Employed Hack

For self-employed borrowers, the Bank Statement loan is the most common Non-QM option. However, Bank Statement loans have a massive flaw: they operate on automated math. If your business grosses $50,000 a month in deposits, the Bank Statement underwriter automatically slashes that in half to account for your business expenses, leaving you with only $25,000 of qualifying income.

What if your actual profit margin is much higher than 50%? Or what if your bank statements show large, sporadic withdrawals for massive equipment purchases that trigger a red flag for the underwriter?

The Clean Slate

The P&L Only Loan ignores the messy transactional history of your bank accounts. Instead, the underwriter relies entirely on the bottom-line net income figure declared on a 12-to-24 month Profit & Loss statement.

Because the lender is handing you hundreds of thousands of dollars without looking at your IRS filings or bank accounts, they require a trusted, third-party intermediary to verify the numbers.

You Cannot Use QuickBooks

You cannot simply log into your own accounting software, export a PDF, and hand it to the lender. The P&L must be formally prepared, reviewed, and signed by a licensed professional.

• Certified Public Accountant (CPA): The most universally accepted preparer.
• Enrolled Agent (EA): A tax practitioner authorized by the US Treasury.
• Licensed Tax Preparer: Commonly accepted, provided they hold a valid state PTIN (Preparer Tax Identification Number).

The Professional Verification Letter

In addition to the P&L statement itself, the professional who prepared it will be required to sign a brief, standard letter confirming that they prepared the document, that they have reviewed your business financials, and that the business is still actively operating.

The Single Bank Statement Rule: While they don't average your deposits, the underwriter will still ask for your 1-to-2 most recent business bank statements right before closing. They do this simply to verify that the business is currently open and generating active revenue.

To utilize the P&L Only program, you must have an established footprint as a business owner.

2-Year Business History

You must prove that you have owned the business for a minimum of two years. This is usually verified via Articles of Incorporation, a state business license, or a letter from your CPA confirming the timeline of ownership.

Credit Scores and LTV

This program leans heavily on equity and credit to offset the lack of documentation. Borrowers typically need a minimum 680 FICO score to qualify. The maximum Loan-to-Value (LTV) is usually capped at 80% (requiring a 20% down payment), though exceptionally strong borrowers with 740+ scores may find programs offering up to 85% LTV.