P & L Loans
Secure Your Mortgage with Business Income
Customized financing options for business owners
Utilization of profit and loss statements for income verification
Competitive rates and flexible terms
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P & L Loans
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No Hidden Fees: We believe in clear and upfront communication about all costs associated with your mortgage.
Tailored Solutions: Our advisors work closely with you to find mortgage solutions that are customized to your financial situation.
Tailored Solutions: Our advisors work closely with you to find mortgage solutions that are customized to your financial situation.
Get Expert Advise, every time from a licensed loan officer with a suite of products to choose from.
Our Team strives to deliver excellence, reach us day or night about any of your mortgage questions, we’re here for you when you need.
Working with us or just thinking of it, we will always be honest and transparent. No sales targets means way better service!
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Across multiple states our Licensed Loan officers will help you from the application to the funding and beyond.
We work on your schedule, with streamlined technology and support staffing, your mortgage request will always be a priority!
Available When & Where You Want!
Across multiple states our Licensed Loan officers will help you from the application to the funding and beyond.
We work on your schedule, with streamlined technology and support staffing, your mortgage request will always be a priority!
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Angle Ogbele
Natasha Staplowski
Darnell Smith
Arlan Zuberi
What is P & L Loans?
'P and L Loans,' which likely refers to 'Profit and Loss' loans, is a term that isn't standard in the mortgage industry. However, it could be a colloquial or informal reference to a type of loan that relies on a borrower's profit and loss statements as a key document for income verification. This is particularly relevant for self-employed individuals or business owners who may not have traditional W-2 forms to demonstrate their earnings.
How Does P & L Loan Works?
Eligibility: To start, a borrower must obtain a Certificate of Eligibility (COE) from the VA to prove they meet the service requirements for a VA loan.
Loan Application: The borrower then applies for a mortgage through a VA-approved lender. The lender will evaluate the borrower's credit, income, and other financial information to determine loan qualification.
No Down Payment: One of the most significant benefits of a VA loan is the potential for 100% financing, meaning the borrower may not need to make a down payment.
No Private Mortgage Insurance (PMI): Unlike conventional and FHA loans, VA loans do not require borrowers to pay private mortgage insurance, even with no down payment. This can result in substantial savings over the life of the loan.
Limited Closing Costs: The VA limits the closing costs that veterans can pay and requires that some fees be covered by the seller or the lender, further reducing the cash needed to close.
VA Funding Fee: While there's no PMI, VA loans come with a VA funding fee, which can be financed into the loan amount. This fee varies based on factors like the type of service, the size of the down payment, and whether it's the borrower's first VA loan.
Loan Guarantee: If the borrower defaults on the loan, the VA guarantees a portion of it, reducing the risk for the lender and often resulting in better interest rates for the borrower.
Special Assistance: In the event of financial hardship, the VA offers assistance to help borrowers avoid foreclosure.
By focusing on the cash flow of a business rather than tax returns, P&L Loans can be a viable option for borrowers who have significant tax write-offs or deductions that lower their taxable income, making it difficult to qualify for a traditional mortgage.
Benefits of P & L Loans
These are the features of Profit and Loss Loan:
Income Verification: Instead of relying on tax returns, lenders use the borrower's profit and loss statements to verify income. This is particularly beneficial for those who may have significant business deductions that lower their taxable income
Documentation: Borrowers must provide a P&L statement, for the most recent 12-month period, prepared by a certified accountant or through recognized accounting software.
Credit Consideration: A good credit score is still important, but the specific score requirements can vary by lender. Some flexibility may be offered depending on the strength of the P&L statements and other factors.
Debt-to-Income Ratio (DTI): Lenders will calculate DTI using the net income from the P&L statements along with any other personal or business debts. Acceptable DTI ratios are usually in line with conventional loan standards but can vary.
Down Payment: P&L Loans may require a larger down payment compared to traditional loans, often around 20-30%, to offset the perceived higher risk by lenders.
Interest Rates: The interest rates for P&L loans might be higher than those for conventional loans due to the alternative method of income verification.
Loan Terms: Terms for P&L loans can be like conventional loans, with 15-year, 20-year, and 30-year fixed-rate mortgages being common options.
Reserves: Borrowers may be required to have significant cash reserves in the bank after closing, sometimes as much as six months to a year's worth of mortgage payments.
Loan Limits: There may be limits on the amount that can be borrowed, which can vary by lender and the financial strength of the borrower's business.
Property Types: P&L Loans can be used for a variety of property types, including primary residences, second homes, and investment properties.
These features make P&L Loans a flexible option for those with non-traditional income streams, allowing them to leverage their business's financial performance to secure financing for real estate purchases or refinancing.
Features of P & L Loans
The benefits borrowers can get from a Profit and Loss Loan include:
Easier Qualification for Self-Employed: It's often easier for self-employed individuals to qualify for a P&L loan than a traditional loan because the qualification is based more on the current profitability of their business rather than their personal tax returns.
Flexibility with Income Documentation: These loans provide an alternative for borrowers who may not have the traditional W-2 forms or consistent income streams that lenders look for in a loan application.
Potential for Higher Loan Amounts: Since the loan is based on the profitability of the business, borrowers may qualify for larger loan amounts if their business P&L statements show strong net income.
Quick Approval Process: The approval process can be faster since it relies on a more straightforward review of the business's P&L statements rather than a detailed analysis of tax returns.
Access to Capital: P&L loans can provide access to capital for business owners who need to leverage their business income to invest in real estate, consolidate debt, or use for other financial needs.
Tailored for Fluctuating Incomes: For businesses with incomes that fluctuate, P&L loans can be a more accurate reflection of their current financial standing, allowing for financing that might not be possible with traditional loan underwriting criteria.
No Tax Return Adjustments: Since the loan is based on P&L statements, borrowers do not need to adjust their tax returns to qualify for the loan, which can be beneficial for tax planning purposes.
Potential Tax Benefits: Interest on these loans may still be tax-deductible if the loan is used for business purposes, like traditional business loans.
Overall, P&L loans can provide a valuable financing tool for borrowers who are self-employed or own small businesses, offering a more tailored approach to borrowing based on the financial health of their business.
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