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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16538
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Dear CPA, I have my small business (S-corporation) related

Customer Question

Dear CPA,

I have my small business (S-corporation) related to specialty food. I get 30% of my income as W2 and remaining 70% as K1 income at the end of year which is common practice advised by accountants.


For the loan eligibility, do lenders consider K-1 Income (average of last 2 years) from small business as a qualifying income OR do they only consider W2/1099 as the qualifying income?

I am checking as some people have told me that lenders don't use K1 income for the loan eligibility.

Thanks,
Kumar
Submitted: 2 years ago.
Category: Finance
Expert:  Megan C replied 2 years ago.
Hello, Kumar

The K-1 income is considered by lenders, although it is not the same as wages. However, lenders consider all sources of income.

Please let me know if you have any further questions. If not, please rate my response as "excellent" so that I may receive credit for assisting you today.
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16538
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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