Using P&L Only Loans for Business Owners Without Filed Taxes

Securing a mortgage as a self-employed borrower is often an uphill battle—especially for those who haven’t filed recent tax returns. Traditional mortgage underwriting leans heavily on W-2s, pay stubs, and tax filings to verify income. But this outdated framework leaves a growing class of entrepreneurs, freelancers, and small business owners underserved. For these borrowers, a P&L Only loan can be a game-changing solution.

A Profit and Loss (P&L) Only loan allows borrowers to qualify based solely on a CPA-prepared income statement, eliminating the need for filed federal returns. These loans are especially valuable for high-income entrepreneurs who are behind on taxes, have filed extensions, or strategically defer filings for legal reasons. NQM Funding offers a competitive P&L Only loan under its Flex Select program—designed specifically for self-employed borrowers who need financing now, not after tax season.

Why Many Business Owners Haven’t Filed Taxes Yet

There are many legitimate and strategic reasons a business owner may not have current federal tax returns on file. One common reason is the use of IRS Form 4868, which grants a six-month extension on filing tax returns. Many high-income self-employed individuals use this extension to finalize documentation, optimize deductions, or await necessary forms like K-1s from business partnerships.

Additionally, newly formed businesses may not yet have a full tax year on record. Others may operate on a fiscal year basis, leading to temporary gaps in documentation. In some cases, business owners are simply transitioning from sole proprietorship to LLC or S-Corp status, and their books are still being finalized. Regardless of the reason, lack of a filed tax return should not disqualify an otherwise qualified borrower from accessing mortgage financing.

What Is a P&L Only Loan and Who Can Use It

A P&L Only loan allows borrowers to document their income using a profit and loss statement prepared by a certified public accountant (CPA), enrolled agent (EA), or licensed tax preparer. This option is especially advantageous for self-employed borrowers who have yet to file their taxes but can substantiate strong monthly or annual income through their business financials.

Unlike full-doc loans that require extensive IRS documentation, or even bank statement loans that demand up to 24 months of deposit history, the P&L Only loan relies on a clean, CPA-prepared statement reflecting the borrower’s income and expenses over either a 12- or 24-month period. This enables the lender to determine a monthly qualifying income without needing to review IRS returns.

NQM Funding accepts both 12- and 24-month P&Ls, depending on borrower preference and eligibility. The P&L must be signed, dated, and include the contact information of the preparer. It must also be accompanied by verbal verification from the preparer before closing (for wholesale submissions).

P&L Loan Program Guidelines at NQM Funding

Under NQM Funding’s Flex Select program, the P&L Only option provides a structured, transparent path to approval for business owners. Here are the core underwriting guidelines:

• Credit Score: Minimum 680

• Maximum Loan Amount: $1,500,000

• Maximum LTV:

  • 80% for primary residences (700+ FICO)

  • 75% for second homes or investment properties (700+ FICO)

  • 75% for primary, 70% for others if FICO is 680–699

• Required Documentation:

  • CPA-, EA-, or tax-preparer-signed P&L statement (12 or 24 months)

  • Verbal verification of tax preparation status

  • Ownership documentation showing borrower holds 25% or more of the business

• Income Calculation: Net income divided by the number of months on the P&L

• Add-Backs: Depreciation, amortization, depletion, and casualty losses may be added back to income

• Reserves: May be required based on borrower profile and loan size

The program is available for purchase, refinance, and cash-out transactions and is ideal for borrowers seeking a streamlined alternative to full-documentation underwriting.

Why This Program Matters for Mortgage Brokers

As a mortgage broker, the ability to present alternative documentation loans like this gives you a competitive edge in today’s market. Many brokers walk away from deals the moment they hear “no tax returns,” but that’s where P&L Only loans shine. This product is an opportunity to serve an underserved but financially capable borrower segment—unlocking more closings and greater client satisfaction.

Additionally, this program accelerates loan velocity. Without the bottleneck of IRS transcripts, these loans can move through underwriting faster, especially when the P&L is well-prepared and clean. It also opens doors to borrowers who may otherwise wait months for their next tax season—giving you the ability to close them today.

Best Practices When Preparing a P&L for Mortgage Use

Preparing a mortgage-ready P&L statement is critical to loan approval. A hastily assembled document or one that lacks consistency with the borrower’s deposits will only raise questions with the underwriter. To ensure success:

Work directly with the borrower’s CPA or tax preparer to prepare the P&L using real revenue and expense figures. Avoid rounded numbers or estimates unless you can explain them. The P&L should cover either 12 or 24 full months, and the net income should be clearly delineated. If possible, include depreciation and amortization amounts separately so they can be added back for qualification purposes.

Ensure the document is signed and dated by the preparer, on their letterhead or with their license and contact information included. When possible, provide business bank statements as supporting documentation—even if not required. This strengthens the file and may reduce underwriter conditions.

Comparison with Other Income Documentation Options

P&L Only loans are one of several alternative documentation programs offered by NQM Funding. For borrowers who cannot provide a P&L but have strong bank cash flow, the Bank Statement Loan option is often ideal. This program evaluates personal or business bank statements over 12–24 months and uses deposit history to establish qualifying income. It’s especially useful when borrowers have clean, high-volume banking activity but no formal accounting.

Meanwhile, for real estate investors, the DSCR Loan may be more appropriate. These loans qualify borrowers based on the cash flow of the subject property—not personal income. This is ideal for borrowers who own rental property or are acquiring new investment units. Learn more about DSCR loans.

Finally, borrowers using an ITIN rather than a Social Security number may still qualify through NQM’s foreign national lending program. View ITIN Loan details here.

Each of these options plays a specific role. The P&L Only loan bridges the gap for borrowers who generate significant income but do not have their taxes filed—whether due to timing, business complexity, or strategy.

Where P&L Only Loans Are in High Demand

Certain regions in the U.S. have a significantly higher concentration of self-employed borrowers, freelancers, and gig economy professionals. Brokers in these markets will find P&L Only loans especially relevant.

In California, metro areas like Los Angeles, Orange County, San Diego, and San Jose are home to a large number of independent business owners in industries such as real estate, marketing, design, and technology. Many of these borrowers manage their finances through LLCs or S-corps and operate on a fiscal year calendar—making them prime candidates for P&L documentation.

In Florida, cities like Miami, Orlando, and Tampa are hotspots for real estate entrepreneurs, hospitality workers, and contractors. Many earn strong monthly income but are cash-based or have irregular filing habits. P&L loans give these borrowers the opportunity to leverage their real income toward purchasing or refinancing property.

Texas cities like Houston, Dallas, and Austin are seeing rapid growth in self-employed sectors such as logistics, construction, personal services, and tech consulting. Borrowers here are often income-rich but file returns strategically. Brokers who understand the nuances of P&L loans can tap into a high-demand borrower base across the state.

Even in smaller markets, there’s opportunity. Agricultural entrepreneurs, ecommerce sellers, and local service-based businesses—like landscapers, repair specialists, and wellness practitioners—may not have filed their taxes but can document their income professionally with the help of a CPA.

Common Pitfalls to Avoid

P&L Only loans are flexible, but they are not “no-doc.” NQM Funding still conducts rigorous underwriting to ensure the borrower’s income is reasonable and their business is legitimate. To avoid delays or denials:

• Do not submit self-prepared P&Ls unless explicitly allowed

• Avoid large swings in monthly income unless they’re supported by business type (e.g., seasonal work)

• Make sure the business is active and verifiable through a third-party source (state registration, website, or utility bills)

• Check that business ownership documentation clearly shows a 25% or greater ownership share

Most importantly, do not try to use P&L Only documentation for a borrower who lacks any supporting financial data. This program is designed to serve those with real income and real businesses, not those seeking to obscure their financials.

Start the Process with NQM Funding

If you’re a mortgage broker working with self-employed clients, the P&L Only program can help you close more loans—faster. You can get started today by submitting a Quick Quote or reaching out to an NQM account executive for guidance.

NQM Funding is a trusted Non QM Lender with tailored loan products built for today’s borrowers. From business owners and investors to foreign nationals and freelancers, our flexible underwriting opens the door to financing when traditional methods fall short.

With the P&L Only loan, you don’t need to wait for April 15th. If your client has income, we have a path to funding.