> ## Documentation Index
> Fetch the complete documentation index at: https://cameron.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# What is a P&L Loan

> An overview of profit and loss statement mortgage programs for self-employed borrowers

A P\&L loan is a specialty mortgage that uses a CPA-prepared profit and loss statement as the primary income documentation. Instead of tax returns or bank statements, the lender bases qualifying income on the net profit shown in your accountant-prepared financials.

## Why P\&L Loans Exist

Tax returns and bank statements don't always tell the full story. A business owner might have:

* Bank deposits that include pass-through payments, client retainers, or reimbursements that aren't true income
* A tax return that applies aggressive deductions, reducing reported income well below actual earnings
* Financials that are cleaner and more accurate when summarized by a CPA than when derived from raw deposit activity

A CPA-prepared P\&L addresses these situations by providing a formal accounting of revenue and expenses, resulting in a net profit figure that the lender uses directly.

## How It Works

The lender receives a profit and loss statement covering a defined period—typically 12 or 24 months—prepared by a licensed CPA. The net profit figure on the P\&L becomes the qualifying income base.

The P\&L must meet specific lender requirements:

* Prepared and signed by a licensed CPA (not self-prepared)
* Covers the required period (typically the most recent 12 or 24 months)
* Includes a breakdown of revenue and expenses
* Recent preparation date (within 60-90 days of application)

Some lenders require the P\&L to be reviewed or audited rather than simply prepared.

## P\&L vs Bank Statement Loans

| Factor            | P\&L Loan                                          | Bank Statement Loan                   |
| ----------------- | -------------------------------------------------- | ------------------------------------- |
| Income source     | CPA-prepared financials                            | Bank deposits                         |
| Expense treatment | Actual expenses per P\&L                           | Applied expense factor                |
| CPA involvement   | Required                                           | Optional (helps lower expense factor) |
| Best for          | Borrowers with clean books and low actual expenses | Borrowers with strong deposit history |

The key difference: bank statement lenders estimate expenses using a factor; P\&L loans use your actual reported expenses. If your real expense ratio is lower than what a bank statement lender would assign, a P\&L loan may qualify you for more.

## When a P\&L Loan Makes Sense

* Your actual business expenses are lower than bank statement lenders' default expense factors for your industry
* Your deposits include non-income items that inflate the total (and would require extensive documentation to exclude)
* Your CPA maintains well-organized financials that accurately reflect net profit
* You want a cleaner income documentation process with less statement-by-statement analysis

## P\&L as Supporting Documentation

Even in bank statement and 1099 programs, a CPA-prepared P\&L often plays a supporting role—helping justify a lower expense factor or providing supplemental income verification. A dedicated P\&L loan program makes the P\&L the primary document rather than a supplement.