Bank-statement financing
Estimating income from deposits when tax returns understate the cash a business actually generates.
What it is
Bank-statement programs look at deposits over a documentation period — commonly 12 or 24 months — and apply an expense factor to estimate income, instead of relying on taxable income from returns. They exist because write-offs that are smart for taxes can understate a healthy business's real cash flow.
How it's generally evaluated
A lender reviews qualifying deposits (excluding transfers and non-business income), applies an assumed expense ratio, and derives an income figure. Whether personal or business statements are used, the number of months, and the expense factor all vary by lender and business type.
When it may fit
Self-employed borrowers with strong, consistent deposits but significant deductions, or whose returns don't reflect current income. It's frequently compared against a full-documentation read to see which represents you better.
Questions to ask a professional
- Do you use personal or business statements, and how many months?
- What expense factor applies to my business type?
- Which deposits count, and which are excluded?
What it does not mean
A deposit-based estimate is not a final qualifying income or an approval. The lender's specific calculation and guidelines govern the outcome. A dedicated bank-statement tool is planned; for now, the explorer helps you prepare.