Org's Caution That Current Requirements Of The Section 4003 Loan Program May Hinder Survival Of Operators

NBAA has joined a coalition of industry groups seeking flexibility in the eligibility criteria for a loan program created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act that will ensure pivotal sectors of aviation continue to serve the national interest during the COVID-19 pandemic.

NBAA has been at the forefront of efforts to protect the economic integrity of the aviation industry throughout the COVID-19 pandemic and led a significant initiative to secure general aviation's inclusion in key provisions of the CARES Act, including the Air Carrier Payroll Support Program, which has been a critical aid for aviation during the pandemic.

The CARES Act also includes an important stimulus for the aviation community through the Section 4003 direct loan program, which supports air carriers, including FAR Part 135 operators, FAR Part 145 repair stations and other parts of the industry impacted by the pandemic.

While the major airlines are actively working with the Treasury Department on loan terms, NBAA and leaders from across the aviation community have found that major segments of the industry, notably general aviation and regional airlines, are facing significant challenges accessing the loan program, in part because many of the applicants have limited liquidity.

In a joint letter to Treasury Secretary Steven Mnuchin, NBAA, the HAI, the NATA and the RAA caution that the current requirements of the Section 4003 loan program may hinder the survival of operators conducting key services during the COVID-19 pandemic.

"With many regional airlines and general aviation commercial operators having limited liquidity and few assets to collateralize, we respectfully request additional flexibility to allow these operators access to the Section 4003 loan program," the associations said in their letter.

"For example, a two-tiered approach similar to what the Department used for the Payroll Support Program offers a model for unsecured loans. The Department could provide unsecured loans for smaller air carriers up to a limited lending amount, at an appropriate interest rate. For lending above that amount, a pledge of assets and security agreement would be required," the associations added.

"The Treasury Department has been an important partner for the aviation community during the COVID-19 pandemic and we appreciate Secretary Mnuchin's direct efforts to provide relief to our industry," said NBAA President and CEO Ed Bolen. "However, this pandemic is relentless and its continued impact on aviation puts undue stress on operators providing essential services. We look forward to working with Treasury to broaden access to the loan program to allow our industry to retain employees and continue critical operations."

FMI: www.nbaa.org, www.nata.aero, www.rotor.org, www.raa.org