Q&A: Loans to Air Carriers and Eligible Businesses 

July 15, 2020

CREDIT EVALUTION

1. Will Treasury apply credit standards in determining whether applicants are eligible 

to receive loans and the amount of such loans? 

Yes. Treasury will determine loan eligibility and maximum loan sizes based on uniform 

credit standards. 

For applicants that are able to provide unencumbered collateral to secure the loans from 

Treasury, maximum loan amounts will be based on the following loan-to-value standards 

on specific types of collateral:

 Real estate: 50% at closing

 Aircraft: 50% at closing

 Engines and spare parts: 50% at closing 

 Slots, gates and routes: 50% at closing

 Flight simulators: 50% at closing

 Ground support equipment: 25% at closing

 Accounts receivable: 85% at closing

 Loyalty programs: 50% at closing

Applicants that do not have available unencumbered collateral to secure the loans from 

Treasury will be eligible for unsecured loans only if they pass the following tests:

 Total outstanding debt divided by 2019 earnings before interest, taxes, depreciation, 

and amortization (EBITDA) is less than 6; and

 Either 2019 EBITDA divided by 2020 projected debt service is greater than 1.5, or 

total outstanding secured debt divided by total existing tangible assets is less than 75 

percent. 

The maximum amount of unsecured loans to applicants that pass the above tests will be 

determined by the maximum amount of additional debt such applicant could incur before 

it would not pass the tests. 

The Treasury Department will contact loan applicants that do not meet the credit standards 

and therefore are ineligible for loans. 

ELIGIBILITY

2. Should applicants also apply for a loan from a bank participating in the Federal 

Reserve’s Main Street Lending Program (MSLP)? 

Some businesses that applied for loans from Treasury will likely be better served by the 

Main Street Lending Program (MSLP), which the Federal Reserve established after the 

application deadline for Treasury’s loan program. Therefore, Treasury is encouraging 
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applicants that appear to be eligible for a loan from a bank participating in the MSLP to 

first apply for such a loan. If these applicants do not receive such a loan, Treasury will 

consider their application for a loan based on Treasury’s credit standards. For applicants 

that do not appear to be eligible for a loan from a bank participating in the MSLP, 

Treasury will continue to process their application pursuant to Treasury’s credit standards. 

3. Is there a minimum loan size for a loan from the Treasury Department? 

Yes. The minimum size of a loan from Treasury is $250,000. This minimum threshold is 

being imposed to avoid the administrative burdens and fixed costs associated with all 

loans, regardless of size, in the case of loans that provide relatively small economic 

benefits compared to larger loans.

4. Does the borrower have to be the legal entity that is eligible as a qualifying air 

carrier, MRO, or ticket agent, or can related corporate entities can be a borrower? 

The borrower must be a legal entity that is eligible for a Treasury loan under section 

4003(b)(1) or (2) of the CARES Act: specifically, a passenger air carrier; an eligible 

business that is certified under 14 CFR part 145 to perform inspection, repair, replace, or 

overhaul services; a ticket agent; or a cargo air carrier. However, a borrower’s parent 

company that directly or indirectly owns 100% of the equity of the borrower, or a 

borrower’s subsidiary in which the borrower directly or indirectly owns 100% of the 

equity, may be a co-borrower. Other affiliates of the borrower may be guarantors of the 

loan. 

All borrowers and guarantors will be jointly and severally liable for the loan obligation. 

In applying its credit standards, Treasury will take into account all co-borrowers and 

guarantors. However, in determining loan sizing, Treasury will consider only the 

operating expenses of the primary borrower.

TERMS AND CONDITIONS

5. Are there any restrictions on how borrowers can use loan proceeds? 

Yes. Loan proceeds must be used for general corporate purposes and operating expenses 

(including payroll, rent, utilities, materials and supplies, repair and maintenance, and 

scheduled interest payments on debt incurred before February 15, 2020), in each case in 

compliance with all applicable law.

Loan proceeds may not be used for non-operating expenses, including capital expenses, 

delinquent taxes, and debt principal payments, unless the borrower can demonstrate, to 

Treasury’s satisfaction, that payment of any such non-operating expense is necessary to 

optimize the continued operations of the borrower’s business and does not merely 

constitute a transfer of risk from an existing creditor or investor to the federal government.

The Treasury Department will provide additional guidance on terms and conditions on an 

ongoing basis.