Stop Losing Loans Over Income Docs: When a Profit & Loss Statement Works Better Than Tax Returns for Self‑Employed Borrowers

Self‑employed business owners in New York often make good money on paper in their business, but still get declined because their tax returns look “too low.” This article explains how a P&L Only loan works, when a profit & loss statement can help more than tax returns, and why it may be worth sitting down for an in‑person consultation in Flushing to go through your numbers together.

The income doc problem for NYC self‑employed

Many New York business owners and 1099 earners run into the same issues:

• Legal tax planning makes taxable income on returns look very slim, so the DTI fails under traditional guidelines.

• Income is mixed with cash, tips, 1099s, irregular deposits, and seasonal spikes that are hard to explain through W‑2s and standard pay stubs.

The result is that you either miss a purchase or refinance opportunity, or spend weeks going back and forth trying to “prove” your income to a lender.

What is a P&L Only loan?

A P&L Only loan uses the performance of your business – as shown on a profit and loss statement – as the primary way to document income, rather than relying heavily on personal tax returns, W‑2s, or long bank statement reviews. In practice, this means the lender focuses on:

• Whether your business is real, active, and reasonably stable.

• Whether your P&L reasonably reflects the level of profit your business is generating.

For many self‑employed New Yorkers whose taxable income looks low but business is strong, this can be a more realistic way to show repayment ability.

Who in New York is a good fit?

Looking at what is common in the NYC area, P&L Only programs often work best for:

• Restaurant, take‑out, grocery, nail salon, and beauty shop owners in Flushing, Brooklyn, and Queens.

• Small contractors: renovation crews, electricians, plumbers, auto shops, trucking and logistics companies.

• 1099 professionals such as real estate agents, loan officers, consultants, and other commission‑based earners.

• Business owners with cash‑heavy or seasonal income, or complex online and e‑commerce revenue streams.

If you have a real business, a professionally prepared P&L, but a personal tax return that does not tell the full story, a P&L Only structure is often worth exploring.

What do these programs generally look like?

Every lender has its own guidelines, and they change over time, but most P&L Only programs share a few common themes.

• Streamlined documentation

  • Often no full personal tax returns, W‑2s, or detailed pay stubs are required.

  • A profit and loss statement prepared and signed by a CPA, EA, or similar licensed tax professional is usually required (often for the most recent full year plus year‑to‑date).

  • You still need to show that the business exists and operates, for example through business registrations, Secretary of State searches, local licenses, or online presence.

• Basic profile and loan size ranges

  • Typically, at least 2 years of experience in the same line of work or running the same type of business.

  • Minimum credit scores often start around 660, with stronger credit helping you access better terms and higher LTVs.

  • Loan amounts commonly range from the mid‑$100,000s up into the low‑millions, depending on the specific program and property type.

• LTV and common NYC price points

  • For common NYC price ranges – roughly the mid‑$700,000s to $1.5M for a home or investment property – a strong P&L, reasonable credit, and manageable debt can often support purchase LTVs in the general 70–80% range, subject to program and scenario.

  • Rate‑and‑term refinances may allow similar or slightly lower LTVs; cash‑out refinances are often capped closer to around 70% LTV, with tighter rules as loan amounts go higher.

• Assets and funds to close

  • Many programs are flexible with gift funds for down payment, and some are less strict about sourcing every large deposit compared to traditional full‑doc loans.reference-marketing.pdf​

  • At certain loan sizes and LTVs, reserve requirements (months of mortgage payments in savings) can be more forgiving.

All these ranges are examples to illustrate the structure – actual numbers depend on the specific lender, property, and market conditions at the time you apply.

How is it different from traditional and bank statement loans?

One way to understand P&L Only is to compare it with traditional full doc and bank statement programs side by side.

Program type	How income is documented	Documentation level	NYC borrower examples	Typical structure (illustrative only)
Traditional Full Doc	Tax returns, W‑2s, pay stubs, bank statements	Highest	W‑2 employees, or self‑employed with strong taxable income	Higher LTV possible, but tightly tied to taxable income
Bank Statement	6–24 months of personal or business statements	Moderate	Owners with stable deposit patterns and clear inflows	Purchases often up to roughly 80–85% LTV
P&L Only	CPA/EA‑prepared profit & loss statement	Streamlined but detailed	NYC self‑employed and business owners with low reported income but strong business performance	Purchases often in the 70–80% LTV range; cash‑out often around 70%

None of these options is “better” in all situations; the right program is the one that best reflects how you actually earn and manage money.

What do underwriters actually look at?

Even with a P&L Only loan, the underwriter is still assessing the big picture, not just one document. Key focus areas typically include:

• Professional quality and reasonableness of the P&L: prepared and signed by a qualified tax professional, with margins and expenses that make sense for your industry and business size.

• Business reality and continuity: verifiable existence through registrations and public records, and a history that supports at least two years of operation.

• Overall borrower profile: credit history, existing debts, housing history, and whether the cash‑flow story makes sense when everything is viewed together.

A P&L Only loan is not about “writing any number you want.” It is about giving self‑employed borrowers a fair way to present their true business performance within a responsible underwriting framework.

Why an in‑person consultation in Flushing can help

New York has its own realities: higher property prices, unique tax structures, and very different rent and holding costs compared to many other states. On top of that, every self‑employed client has a different mix of business entities, tax strategies, family structure, and future plans. Those details are hard to solve through a generic online calculator.

Often the most useful step is to put your tax returns, P&L, current properties, target price range, and cash‑flow goals on the same page and walk through them together before choosing between P&L Only, bank statement, DSCR, or a traditional path.

Book an in‑person meeting in Flushing

If you:

• Run a business or earn most of your income as a 1099/cash earner in New York.

• Are thinking about buying a first home, moving up, or adding an investment property in the NYC area.

• Are unsure whether a P&L Only, bank statement, or DSCR loan structure makes the most sense for your situation.

You are welcome to book an in‑person consultation:

• Feng Capital has a physical office in Flushing, where we can sit down one‑on‑one, map out your income structure, property goals, and key questions in detail.

• If you prefer, we can start with a brief phone or online conversation to gather the basics, then schedule a time to meet at the office.

Want to see what your current tax returns and P&L could support in today’s New York market? Reach out to schedule an in‑person consultation in Flushing, and bring a rough picture of your income, properties, and target price range so we can run through the numbers together before you make a move.