NAFA member Preston Holland, President and Founder of Prestige Aircraft Financing, shares his latest article about aircraft financing.
The business jet buyer is acutely aware of the interest rate environment. Whether the core business is commercial real estate, construction, or goods and services, the cost of borrowing is top of mind for growing a company. That awareness is especially sharp right now given the volatility of the past few quarters. My goal here is to lay out the core fundamentals of borrowing for corporate aircraft so you have a framework for your decision making.
How Business Jet Rates are Priced
There are a few benchmarks lenders use to determine the pricing of debt on aircraft. The most popular today is SOFR, which tends to be the most reactive to market movements. For instance, I had a deal recently that reduced by 20 bps between proposal and closing in the buyer's favor in a matter of thirty days. To achieve a fixed rate on a SOFR based loan, lenders wil typically use some sort of swap contract index, such as the 5-year SOFR Swap Rate or the ICE Swap Rate.
Another popular benchmark is the 5-year Treasury yield. The reason for this is that most aircraft transactions are structured as commercial loans with a term of 5 years, with a balloon payment due after the 60th month. This typically aligns well with the bank's cost of funds regardless of how they actually fund their loans.
This article was originally published in OGARAJETS' The Jet Whisperer, Summer 2026, page 14-15.