What a P&L loan is
A profit-and-loss loan lets a self-employed borrower qualify on a P&L statement prepared by a licensed tax professional, instead of on tax returns. If your business is doing better than your last return shows — or your returns are built around deductions — the P&L tells the lender what the business earns today.
Who can prepare the P&L
The statement has to come from an independent, licensed professional — not from you:
- A licensed CPA
- An IRS Enrolled Agent
- A registered tax preparer, such as a CTEC-registered preparer in California
The preparer cannot be you, a relative or an employee of your business. Many programs also ask the preparer to confirm they prepared or reviewed your recent tax filings. A P&L you prepare yourself will not qualify for this program.
How it is reviewed
The P&L usually covers the most recent twelve or twenty-four months. Lenders commonly check it against recent business bank statements — the revenue on the P&L should be consistent with the deposits — and some apply a minimum expense ratio so the net figure is realistic for your industry.
P&L or bank statements?
Both are built for self-employed borrowers. A P&L can count more of your income when your business carries real expenses that a flat bank-statement expense factor would overstate — or less, when it would not. We run both and use whichever presents your income most accurately.
Refinancing with a P&L
P&L programs work for purchases and refinances, including cash-out. Expect most to require at least six months of ownership before a cash-out refinance; we will confirm what applies to your property before you apply.
Every file is different. Guidelines, pricing and eligibility vary by lender and are subject to credit approval and property eligibility — we’ll walk you through exactly what applies to yours.