The pilot reported that on his first low-pass attempt, he had missed picking up an advertising banner with the airplane’s grapple hook assembly. On the second pass, he thought he had again missed the aerial pickup towline, so he made a shallow climb. A steep climb is required when a banner is picked up to quickly lift the banner off the ground. The pilot was unaware that during the airplane’s second pass, the nose gear had inadvertently snagged the forward end of the 300-foot-long towline. The banner could not be jettisoned, and it was dragged on the ground during the shallow climb, creating additional drag on the airplane. The pilot reported an abrupt downward pull on the nose of the airplane, which caused him to lose control. The airplane impacted terrain about 1,000 feet south of the pickup location. The impact resulted in substantial damage to the lower fuselage, the engine mount, and the forward firewall. The pilot also reported that there was no preimpact mechanical malfunction or failure that would have precluded normal operation.