Tax returns and the dreaded 100 pages

AOPA Aviation Finance, (“AAF”) works annually with thousands of members on aircraft financing. We know it’s common practice for airplane lenders to require tax documents and credit reports as part of credit-based loan applications. 

Of the thousands of members we service each year, over fifty percent submit tax documents to us that exceed 100 pages. Processing that much information is part of AAF’s normal business practice.

In fact, we’ve built a robust and secure online portal for uploading sensitive documents to make the process as safe and efficient as possible. The portal is designed to be capable of accepting massive file sizes.

That’s all well and good, but the question remains: Why do lenders require tax returns instead of accepting my P&Ls? After all, isn’t a credit-based loan application all about cash flow?

Aircraft financing institutions require tax returns as part of the financing process because of what those tax returns imply. Financial statements like P&L’s can be finessed in a way tax returns cannot. Signed documents submitted to the federal government represent a verifiable financial picture. Anything less than accurate and there’s a risk of being audited or succumbing to other unwanted problems with the IRS. Lending institutions can be confident from a tax statement that the financial picture presented should be a conservative estimate of what the financial situation is.

That’s also why the full return, including all Schedules, are part of the loan package. Submitting a partial tax statement raises doubt. A lender is left to wonder, “Are there any losses there? Are you throwing money after something that we didn’t know about?” All those nuances get vetted by going through the entire tax return. 

And remember, if assets are held in a business entity rather than in your name personally, the lender will also typically need a copy of those tax returns, or they may need a copy of a debt schedule for any debt related to an entity which you might own or in which you might have significant ownership.

Some of our members tell us they don’t have access to their tax returns. Perfectly fine. We liaise with accountants, CPAs, and CFOs all the time. As long as borrowers grant us permission to work with their designees, we can coordinate with them and remove all the hassle involved. 

Regardless of our experience and our precautions, we still encounter members who will never be comfortable sharing their tax returns. We understand. For them, their option would be a collateral-based type of financing. With this type of financing, there are more limiting options, and the terms are going to be a little different. For example, the borrower will need to put more money down. Also, the amortization will likely be shorter. Regardless, there are several good, collateral-based options. Have a conversation with somebody like us to find out your best options.

Great rates. Great terms. Helpful and responsive reps. Three good reasons to turn to AOPA Aviation Finance when you are buying an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (800.627.5263) or click here to request a quote.

Adam Meredith

Adam Meredith

President of AOPA Aviation Finance Company
Adam Meredith, the longtime president of AOPA Aviation Finance Co., died after a long battle with cancer in December 2023. He is remembered for his passion for helping fellow pilots, leading a team devoted to putting flight training and aircraft ownership within everyone’s reach.
Topics: AOPA Aviation Finance Co, AOPA Products and Services, Ownership

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