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What is a business bank statement loan?
A business bank statement loan is an alternative-documentation mortgage that uses a borrower's business bank statements to calculate qualifying income in place of tax returns or W-2s. Lenders review eligible business deposits over a set period and account for business expenses using an expense factor or another method the program allows.
This is the program for self-employed borrowers whose tax returns understate what the business brings in, usually because of legitimate write-offs. Underwriting reviews the deposits, removes ones that aren't business revenue and adjusts for expenses.
The difference from a personal bank statement loan is the account. Business statements show gross revenue, so expenses have to come out. Personal statements generally show what the owner has already paid themselves. The number of months and the expense method depend on the program.
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