Pandemic homework
What business owners need to be prepared
Anticipate that you may have to do additional clarification or legwork when applying for an aircraft loan. It’s important to have the additional paperwork ready ahead of time, usually as a narrative.
If that loan is still on the books, it 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 to be proactive so as not to prolong the time it takes to get your aircraft loan.
If your PPP loan has already been repaid or forgiven, you may still need to provide documentation.
Over the course of the PPP, certain loans could be forgiven. Include documentation of that in your package. If you, or your company, lack that documentation, the 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 prove otherwise.
Another issue relates to business losses in general. The lender will require you to prove the losses were, in fact, COVID-related. Moreover, your business will have to provide proof it has weathered the pandemic and is stable and profitable.
COVID-19 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 comparables analysis, additional queries could include, “Why were your sales affected by COVID?” “How did COVID affect your supply chain?” and “What are your current projections based on COVID’s ongoing impact on your industry?”
That’s why AOPA Aviation Finance strongly advises helping lenders by doing your own analysis and presenting it, in narrative form, along with your other loan documents. Doing so can only help the lenders assess your situation. Included in that narrative should be payments, if any—how many made, how many left, principal, interest, and amortization.
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