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What is a P&L only loan?
A P&L only loan is an alternative-documentation mortgage that uses a profit and loss statement to evaluate a self-employed borrower's qualifying income, instead of tax returns or bank statements. The P&L must meet the program's requirements for who prepares it and what period it covers, and the file is still fully underwritten.
It's useful when a business's current earnings aren't reflected in last year's return, for example a business that has grown quickly, or when bank statements don't fit the borrower's situation. Programs set who can prepare the P&L, the period it covers and what supporting documents go with it.
"P&L only" refers to the income document, not the whole file. Credit, assets, the property and ability to repay are still reviewed.
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