Mortgage LOX Maker: Business Loss Letter

Make your own Letter of Explanation (LOX) for business losses. Explain self-employment losses on tax returns and business recovery for mortgage applications. Generate instant PDFs for your lender with digital signature capture.

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Your Information

Borrower Name*

Borrower Email Address*

Borrower Phone Number*

Lender Name*

Business Name*

Year of Business Loss*

Loss Amount*

Reason for Business Loss*

Borrower Signature*

Signature Date*

Letter Preview

To: {{lenderName}}

I, {{borrowerName}}, am self-employed as the owner of {{businessName}}.

My {{lossYear}} tax return shows a business loss of ${{lossAmount}}, which was due to {{lossReason}}.

Since then, my business has recovered. My recent tax return and year-to-date Profit & Loss statement show positive net income. Supporting documentation is attached.

{{borrowerName}}
{{borrowerEmail}}
{{borrowerPhone}}

Borrower's Signature: {{signature:borrowerSignature}}
Date: {{signatureDate}}

Tips for Success

Keep explanations brief and factual
Attach supporting documentation when possible
Review all information before signing
Submit within 48 hours of your loan officer's request

Important Reminders

All information must be truthful and accurate
False statements may result in loan denial
Keep copies for your records
Contact your loan officer with questions

Borrower Name*

Borrower Email Address*

Borrower Phone Number*

Lender Name*

Business Name*

Year of Business Loss*

Loss Amount*

Reason for Business Loss*

Borrower Signature*

Signature Date*

When To Use A Business Loss Explanation Letter

Startup Costs

Your new business had high initial expenses and equipment purchases that created losses in the first year.

Pandemic Impact

COVID-19 or other economic disruptions significantly reduced your business income.

Equipment Purchase

You made large equipment or technology investments that created temporary losses.

Market Downturn

Economic conditions or industry changes temporarily reduced your business revenue.

Business Expansion

You invested in business growth, hiring, or new locations that created short-term losses.

Common Scenarios Requiring Multiple Letters

Business Loss + Employment Gap:

Use this business loss letter to explain tax return losses
Use our employment gap letter to explain any work transition period
Use our self-employment verification to confirm current business status

Business Recovery + Source of Funds:

Use this business loss letter to explain past losses
Use our source of funds letter to document current business income
Use our large deposit letter to explain business income deposits

How to Use This Business Loss Explanation Letter Generator

Gather Your Information

Collect all necessary details and supporting documentation before starting the generator.

Complete the Form

Fill out all required fields in the generator. The preview will update in real-time as you type.

Review and Sign

Review your letter for accuracy, add your digital signature, and download the PDF.

Submit to Your Lender

Send the completed letter to your loan officer along with any supporting documentation.

Supporting Documents Your Lender May Need

Document	What It Tells Your Lender
Recent tax returns showing recovery	Provides additional verification and context for your situation
Year-to-date Profit & Loss statements	Provides additional verification and context for your situation
Business bank statements	Provides additional verification and context for your situation
Contracts or invoices showing current income	Provides additional verification and context for your situation
CPA letter confirming business stability	Provides additional verification and context for your situation

Frequently Asked Questions

When will I need a business loss letter?

Your loan officer will request a business loss letter if your tax returns show business losses that reduce your qualifying income.

How do business losses affect mortgage qualification?

Business losses reduce your qualifying income, but lenders may accept them if you can show the losses were temporary.

How long do I need to show business recovery?

Many lenders want to see at least 12 months of positive business income after the loss period.

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