The utilization of “Stated Income” commercial loans is a critical technique to avoid one or two business mortgage loan issues.

For instance, many borrowers will simply not qualify for a commercial property loan if tax returns are used due to high business costs ( and low net income ). Many / most commercial banks will perform an exhaustive earnings corroboration as an element of their underwriting process. Most non-traditional commercial banks don’t need tax returns or any earnings corroboration for a Stated Earnings commercial loan. Normal bank commercial loan underwriting conditions will sometimes include copies of tax returns as well as a duty to sign IRS Form 4506 which sanctions the bank to get tax returns straight from the IRS. The more untrustworthy use of this form is when banks make a point of not requiring tax returns but separately ask the commercial borrower to sign this form.

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