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What business owners will need to be prepared to explain any COVID-related loses to lenders

The Paycheck Protection Program aka PPP loans are something that a lot of people have taken advantage of to help their business during this period of economic uncertainty brought on by the COVID pandemic. 
AOPA Aviation Finance

If this is the case for you, then here's some advice:


First, if you’ve taken a PPP loan anticipate that you may have additional clarification or legwork to be done. That's why it's important to get ahead of it and have the additional paperwork ready, usually a narrative.

Remember, if you took out a PPP loan and have already paid it back, or it's been forgiven—and you have that documentation—you may still need to provide documentation.


However, if that loan is still on the books, it now becomes part of your overall financial picture, which means you'll have to account for it. Be prepared to talk to the bank about where you are in the process of paying off the loan or having it forgiven. The goal is always to remain proactive so as not to prolong the time it takes to get your aircraft loan.


Over the course of the PPP, certain loans could be forgiven. That forgiveness came with documentation. Include that documentation in your package. If you, or your company lacks that documentation, the aircraft lender may require you to have enough cash to be able to pay back the loan within the next 12 months and still have enough liquidity and cash flow to qualify for one of their loans.


Why? Because the lenders will look at that obligation as a liability and will consider that as part of the underwriting, unless you can provide proof otherwise.


Another issue relates to business losses in general. The lender will require you to prove they were, in fact, COVID-related. Moreover, your business will have to provide proof it has weathered the pandemic and is stable and profitable, even in this quasi-COVID period.


COVID has been just as fraught for bankers as it has been for business owners. That has meant lenders must conduct additional analysis. Besides the normal comparable analysis they may do for your industry, additional queries could include, "Why were your sales affected by COVID?" "How did COVID affect your supply chain?" "What are your current projections based on COVID's ongoing impact on your industry?"


That's why AOPA Aviation Finance strongly advises helping the lenders out by doing your own analysis and presenting it, in narrative form, along with your other loan documents. Doing so can only help the lenders make an assessment of your situation. Included in that narrative should be payments, if any—how many made, how many left, principal, interest, amortization. 


Great advice. Great rates. From helpful and responsive reps you can trust. Three good reasons to turn to AOPA Aviation Finance when you are buying or refinancing 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.

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