Profit and Loss Statement Loans

A Profit and Loss Statement Loan is a type of non-QM loan that requires business profit & loss statements rather than traditional income verification such as tax returns or W2s. By analyzing your business's profit & loss statements, lenders assess your average income over a specific period to determine your ability to repay the loan. P&L statements are great for business owners and can be used to verify income from a business, which can be used toward loan qualification purposes.

Check out more on P&L loans in our Complete P&L Loan Guide!

A profit and loss statement provides a comprehensive view of a company’s financial health by detailing revenue and expenses over a certified period. Unlike tax returns, it offers a more accurate picture of a business owner’s or self-employed individual’s true earnings. This statement balances income with deductible expenses, revealing both the actual financial situation and the strategic use of tax benefits. As a result, it presents a clearer representation of an entrepreneur’s earning potential than other financial documents. Borrowers need to have a business that produces P&L statements and have them prepared for and signed by a Certified Public Accountant (CPA).

You do have the opportunity as a business owner to qualify for a P&L loan if you need the required lending criteria and loan requirements set by the lender. Loan requirements vary by lender but typically include: CPA prepared and signed P&L, borrowers must be self-employed for at least two (2), business must be in existence for at least two (2) years, down to 640 FICO, up to 90% max LTV, etc. 

Please note that these numbers for us at Defy Mortgage and are meant to provide you with a better idea of what you can expect from lenders.

No. However, P&L loans and bank statement loans are fairly similar in several ways. They’re both non-QM loans, geared toward business owners and self-employed individuals, and don’t need any traditional income documents to qualify. However, they differ in terms of what type of documents are required for income verification. As their names suggest, P&L loans require P&L statements and bank statement loans require bank statements where as P&L loans don’t require bank statements and vise-versa (unless you have a credit score of less than 700 for P&L loans)

Due to their requirements, bank statement loans are available for a wider range of borrowers since most people have a bank account. 

Valid question. If you are looking to purchase or are a current homeowner looking for a rate-and-term refinance or to get cash-out AND you are either a business owner, self-employed or entrepreneur in search of an easy, streamlined and flexible loan process, a Profit and Loss Statement loan might be for you! 

Have more questions on P&L loans? We are here to help. Hit us up!

100%. Keep in mind that the maximum LTVs for cash-out will depend on your FICO score and the loan amount. At Defy Mortgage, we offer up to 80% LTV, 640 min FICO and loan amounts from $150K - $3.5M (pending meeting loan criteria). For a $3.5M loan, the max LTV for cash-out would be 70% with a 740+ FICO.