financing

If an engine upgrade makes sense for your aircraft, you don’t necessarily have to foot the bill up-front. Gerrard Cowan, with AvBuyer, speaks to a selection of industry experts to find out when financing might make the most sense, and how to approach this.

There can be significant benefits to an engine upgrade for business aircraft where they are available. Operational performance is enhanced, fuel consumption lessened, and resale value can be boosted. But how can owners considering an engine upgrade set about financing their upgrade?

This is a complex area, with an owner’s decisions likely to be influenced by a variety of factors, such as their demands for the aircraft in the long-term, the age of the platform, and any existing financing arrangements.

For many business aircraft owners, it could make sense to simply acquire an entirely new aircraft. But for some, a good option is to remove their existing engine(s) and replace it/them with another.

Blackhawk Aerospace is a specialist provider of such engine upgrade work through its XP Engine+ Upgrade program. As of May 2024, the company had upgraded over 1,000 Beechcraft King Air, Cessna Caravan, Conquest and Piper Cheyenne aircraft with factory-new Pratt & Whitney Canada engines.

Edwin Black, the company’s President, explains that the company develops Supplemental Type Certificates (STCs) to take the stock engine out of an aircraft and install a brand- new engine with more horsepower.

“The demand is strong because everyone wants to go faster,” he says. “We are seeing more demand now than we ever have in Blackhawk's 25-year history and it’s because of the convenience of flying private vs commercial, especially when you are flying for your business.”
 

When is it Easiest to Finance an Aircraft Engine Upgrade?

The easiest way to finance an upgrade is “if you don’t have an aircraft already and are in the market, because you can buy the aircraft and engines at the same time and roll them into the same loan,” he suggests.

When you already have an engine, however, it takes more effort to get financing, though Blackhawk has been working with providers who have offered such solutions for just the engine for some time. “Financing helps customers enjoy the benefits of flying faster sooner rather than later,” Black adds.

Pratt & Whitney Canada (P&WC) has worked closely with Blackhawk for over 20 years, explains Geoffrey Corbeil, Executive Director for Commercial Services at the engine manufacturer, highlighting that Blackhawk celebrated its 150th upgrade of a Cessna Caravan in October 2023 with two options available: XP140 and Vy conversions, featuring P&WC PT6A-140 and PT6A-42A engines, respectively.

According to Corbeil, financing options will naturally depend on the owner’s circumstances. But, even when financing is involved, there can be a significant increase in aircraft value, he adds.

More broadly, Corbeil says owners should consider enrolling in an engine program, such as P&WC’s ESP.

Read full article here

This article was originally published by AvBuyer on June 24, 2024.

FOR IMMEDIATE RELEASE: June 27, 2024 

Contact: Tracey Cheek  
tlc@nafa.aero  
405-850-1292 

Tim Pollard 
Managing Member 
(817) 626-7000 
opportunity@apogeefinance.com 

NAFA Welcomes New Member: Apogee Finance  

Edgewater, MD –June 27, 2024—The National Aircraft Finance Association (NAFA) is pleased to announce that Apogee Finance has recently joined its network of aviation professionals. Apogee Finance, founded in 2013 by industry veteran Tim Pollard, provides specialized financial services for private and corporate aircraft transactions, offering comprehensive market knowledge, real-time valuations and streamlined processes.  

“NAFA members facilitate the financing of general and business aviation aircraft on a global scale,” said Ed Medici, NAFA President. “We welcome and support the services Apogee Finance provides that play a role in advancing the interests of NAFA members within the aviation industry.”  

About Apogee Finance: 
Apogee Finance, established in 2013, offers specialized financial services for the private and corporate aircraft markets. The company aims to facilitate efficient transactions in the time-sensitive aviation industry.  

With over 60 years of combined aviation experience, the Apogee team provides:  

• Comprehensive market knowledge 
• Real-time aircraft valuations 
• Personalized services 
• Streamlined paperwork processes
• Competitive rates  

To learn more, visit apogeefinance.com. 

About Tim Pollard: 
For over 30 years, Tim Pollard has been a reputable leader in the aviation industry. With over 900 transactions behind him, Tim is a market expert, passionate about airplanes and fostering exceptional customer satisfaction. After launching Pollard Aircraft Sales in 1993, Tim has continually evolved his company to accommodate customer needs and meet market demands. As a seasoned aircraft sales professional with a comprehensive view of the industry, he understands how difficult it can be to obtain financing for certain aircraft, especially in a timely manner. As a solution, he established Apogee Finance to provide customized and efficient financing options for aircraft dealers, brokers and end users. 

About NAFA: 
The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for over 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members on the most up-to-date industry trends and best practices. Government legislation, market influences, and industry insights allow member companies to provide the highest quality services the industry has to offer. 

Many buyers instinctively want to pay the full purchase price in cash when purchasing an aircraft. While this may seem like the simplest and most expedient option, there are several compelling reasons to consider financing your aircraft purchase instead of liquidating investments to pay all cash. 

In this article, we will explore ten key reasons financing an aircraft can be a smart financial move and how working with experienced aviation finance professionals can help you navigate the process with confidence.  

1. Keep your cash invested 

One of the most significant advantages of financing an aircraft is the ability to keep your cash invested. Selling stocks, cashing in investments and depleting cash reserves can come with big opportunity costs and tax implications. Even if you have enough liquidity to buy an aircraft outright, that money could, over time, likely generate far greater returns if you keep it invested in the market or your business.  

Discussing your plans with your investment advisor first may help you understand exactly what opportunities you may be foregoing and the consequences associated with divesting.  With interest rates spanning the 6% to 7% range, still comparatively low from a historical perspective, the cost of financing will often be less than the expected return you can earn on that cash if invested wisely. 

Additionally, financing can free up that capital for other investments or business opportunities. This can be advantageous for business owners who need to maintain liquidity to seize new opportunities or manage possible future cash flow gaps effectively. Keeping your capital invested in your business or other high-return investments can often yield better financial outcomes than tying it up in an aircraft.  

2. Preserve liquidity for necessary or unexpected ownership costs  

Buying an aircraft involves many more expenses beyond the purchase price, including taxes, registration fees, hangar costs, maintenance, insurance, crewing and more. Paying all cash upfront can leave you cash-strapped when these additional ownership costs arise.   

For example, investing in a comprehensive aircraft maintenance/engine program can provide significant benefits when owning a turbine aircraft. These programs are prepaid hourly services that help make sure your aircraft remains in top condition, which is important for maintaining its value. By keeping the engine hours at a "zero level" through regular maintenance, you can maximize the appraisal value of your aircraft when it comes time to sell.  

Financing preserves liquidity, so you have cash on hand for this as well as any future upgrades or unforeseen issues. This financial flexibility is important, especially in the aviation industry, where unexpected costs can be significant.  

3. Preserve liquidity for risk mitigation  

Consider how cash on hand can help cover unexpected expenses outside of the aviation world. Individuals should think about how they will deploy their cash reserves if a potential issue arises that might deplete their remaining liquidity. For example, a reversal of fortune related to changing economic circumstances or paying for an unexpected family health event that could significantly change your financial situation.  

Financing up-front could potentially avert the need to sell the aircraft or obtain cash-out financing in order to raise funds to address unforeseen events down the road. Note that obtaining cash-out financing after the fact is not guaranteed due to many factors, such as collateral depreciation. Furthermore, there is rate risk associated with cash-out financing at a future date down the road. Last, economic downturns may impact your financial capacity and future ability to obtain cash-out financing.   

Business owners may need to maintain cash reserves to satisfy liquidity covenants and fulfill any prior financing commitments, such as lines of credit or long-term financing obligations. When considering the interest rate offered to your business, it’s important to recognize that having a cash cushion serves as a buffer to cover these potential future requirements.  

4. Tax advantages of financing  

The interest on an aircraft loan is often a tax-deductible expense, and financing lets you take advantage of not only depreciation deductions but also interest expenses, which offset income.  

Under current bonus depreciation rules, you may deduct for eligible aircraft, up to 60% of the purchase price in the first year, which is further enhanced by the addition of those interest expenses. For business aircraft, these benefits can be substantial, making financing an attractive option from a tax planning perspective.  

5. Easier to resell 

Keeping your cash invested provides greater flexibility if you need to resell the financed aircraft. You won’t be pressured to liquidate the aircraft quickly, often at a discount, to recoup the capital invested in the aircraft. This flexibility can be beneficial in a volatile market where aircraft values can fluctuate.

6. Easier than you think 

Many buyers dread the paperwork and hassle of financing an aircraft. However, working with an experienced aviation lender, like the professionals at the National Aircraft Finance Association (NAFA), makes the process easier. From brokers, lenders, accountants and more, NAFA members understand aircraft purchases and can walk you through the process. This knowledge can streamline the acquisition process, especially making it easier and less stressful for first-time buyers.  

7. Manageable monthly payments 

Aircraft financing typically offers manageable monthly payments, which can be easier to handle than a large lump-sum payment. This lets you spread the cost of the aircraft over time, making it more affordable and less of a financial burden. Fixed interest rates on loans can also provide predictability in your financial planning. 

8. Potential for better aircraft 

Financing can enable you to leverage your cash to buy a better aircraft than you could afford with cash. A larger down payment often translates to better interest rates and terms. This can mean better performance, newer technology and greater comfort, which can enhance your flying experience and potentially increase the aircraft’s desirability in a future resale environment. By spreading the cost over time, you can access higher-quality aircraft that better meet your mission.  

9. Avoid unwarranted tax consequences  

As broadly discussed above, paying cash for an aircraft often requires liquidating investments, which can trigger capital gains taxes and reduce your overall investment portfolio. Financing lets you avoid these tax implications and keep your investment portfolio intact, continuing to grow and generate returns. This can be important for individuals nearing retirement or those with significant investment portfolios.  

10. Professional guidance and support 

Working with specialized aviation finance professionals can provide valuable guidance and support throughout the financing process. These experts understand the unique parts of aircraft financing and can help you navigate the complexities, ensuring you get the best terms and conditions for your loan. This professional support can make the financing process smoother and more efficient.  

Lenders have developed standardized compliance checklists and processes to ensure judicious steps are taken before the sale is finalized. These steps include but are not limited to confirming the aircraft's airworthiness is certified, verifying that annual inspections have been completed, review of Appraisal, pre-buy inspections, title searches and escrow instructions related to the sale. Professionals will ensure these forms and procedures are properly completed throughout the process. By following these established protocols, you can take flight in a timely manner while remaining compliant with all legal requirements. 

Conclusion

While paying cash for an aircraft may seem like the simplest option, financing offers many advantages that can make it a smarter financial decision. From preserving liquidity and taking advantage of tax benefits to keeping your cash invested and maintaining financial flexibility to pay for aircraft expenses and taxes, financing can provide significant benefits for aircraft buyers.  

By working with experienced aviation finance professionals, like NAFA members, you can navigate the financing process with confidence and make your dream of aircraft ownership a reality.  

The best financing choice depends on your unique financial situation, tax status, liquidity needs and aircraft usage. Consult your financial advisor, but for many aircraft buyers, financing is the smartest way to make airplane ownership a reality.  

About Keith Graham:  

Keith Graham is Senior Vice President at Salem Five Bank in Georgetown, Massachusetts, where he has served as Manager of the Aviation Finance Division for almost 20 years. Keith has over 35 years as a licensed pilot and aviation financial professional.  

About NAFA:  

The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for over 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members on the most up-to-date industry trends and best practices. Government legislation, market influences, and industry insights allow member companies to provide the highest quality services the industry has to offer. 


Disclaimer:

The information given in this article is for general informational purposes only and is not professional financial, tax or legal advice. While we strive to provide accurate and updated information, it is not a substitute for professional advice tailored to your specific financial situation. Before deciding on the purchase or financing or an aircraft, we strongly recommend consulting with a qualified financial advisor, tax professional or legal expert who can provide guidance based on your individual circumstances. Neither the author nor the publisher assumes any responsibility or liability for any financial decisions made based on the information in this article.  

Financing is a complex area for aircraft owners to navigate. Beyond the interest rate involved, how can you tell if you’ve got a good deal that’s fair to both parties? Gerrard Cowan asks aviation finance experts for their tips.

Aviation lending is considered a specialty in the banking industry. And, since not all banks offer the service to their clients, loans vary in terms of how favorable they are – but they are almost always structured to mitigate risk for the lender.

“This means banks include covenants, clauses, interest rates, and terms that are favorable to the lender until the note has been repaid,” Chris Lee, President of the Aircraft Division at 1st Source Bank says.

Still, “competition in the marketplace helps to keep the general terms of many deals fairly close to one another”.

There are a range of factors that could influence a bank’s ability to offer favorable loans to individuals or businesses, Lee adds. A good bank will evaluate each aviation finance deal individually, based on many factors. Some deals are more attractive to banks than others. 

Aircraft usage is important, he says, because some aircraft loans are made for Part 135 commercial uses while others are for personal and business transport (Part 91).

On top of this, there are factors that are common for essentially any financing deal, not just aviation. For example, the applicant’s credit score will have an impact, as will income and employment history, debt-to-income ratio, loan-to-value ratio, and any collateral involved.

Read full article here

This article was originally published by AvBuyer on April 15, 2024.

Likely we have all been involved in an aircraft transaction in which a new party pops up at the last minute that has not previously been part of the transaction process or known to be involved in the transaction. These last-minute revelations can affect transaction complexity and the parties’ ability to maintain the integrity of the transaction. Since spring brings the excitement of a new baseball season, a baseball analogy seemed an appropriate title for an article about transaction integrity. Who is responsible for maintaining transaction integrity? 

Closing and funding aircraft transactions can become a hectic process, as all the parties work toward a successful conclusion often expected in a very short timeframe. While all desire a successful closing of the transaction, each party has its own motivation and interests. The seller wants to sell the aircraft and get paid, the buyer wants to acquire the aircraft, the brokers want to ensure their clients are buying/selling the aircraft at the right price, the attorneys want to make sure the loan documents are correct, the lender wants to ensure that they have a quality transaction where their lien is perfected, and the escrow agent wants to ensure that the closing process proceeds smoothly and timely.

At Huntington National Bank, we often ask, “Who owns risk?” Our standard answer is, “We all do.” It is much the same in aircraft transactions. All the parties have the responsibility to maintain the integrity of the transaction. Each party needs to understand who is involved and their role in the transaction. It’s not just the escrow agent’s responsibility to be diligent and understand the transaction parties and the flow of funds.  Everyone must do their part to ensure transaction integrity is maintained throughout the process.

To ensure transaction integrity, here are some helpful tips from a lender’s perspective:

1. Know who all the parties to the transaction are to ensure there are no surprises at closing.
2. Communicate throughout the transaction process. Don’t just assume that because you understand what is going on or who is involved that all the parties to the transaction have clarity.
3. Don’t just rely on the escrow agent to vet all the parties. While the escrow agent is expected to do appropriate due diligence to ensure transaction integrity and the proper flow of funds, all the other parties should do their own due diligence as well. The last thing anyone wants is for some surprise to pop up on the day of closing.
4. Trust, but verify. Bad actors are becoming more and more sophisticated. The more rushed you feel, the more likely a mistake will be made. Take the time to verify all aspects of the transaction.

The answer to the question “Who’s on First?” is We ALL ARE. All parties to a transaction should work together to move the process from first, to second, to third, and hopefully all the way to home and a successful closing. When all the parties communicate effectively and are diligent in their efforts, transaction integrity is made easier and helps eliminate the potential for bad actors to insert themselves into the middle of a closing. As members of NAFA, we all bear the responsibility to ensure that the integrity of aircraft transactions is maintained to protect the clients who count on our services and products.

Greg Wallis

Vice President-Portfolio Management Team Lead

Huntington National Bank

Disclaimer: The views expressed in this article are intended for informational purposes only and should not be construed or used as legal advice nor as a solicitation of any type. Readers are advised to consult with qualified legal professionals regarding their specific circumstances and legal questions and with respect to the currency of this information. The author, the author's employer and NAFA disclaim any liability for any loss or damage incurred by readers who rely on the information provided in this article.

FOR IMMEDIATE RELEASE: March 18, 2024 

Contact: Tracey Cheek
tlc@nafa.aero  
405.850.1292

Terrence D. Eissfeldt 
President 
250.230.8288 
tdeissfeldt@boundaryaviation.com 

 
NAFA Welcomes New Member: Boundary Aviation Solutions 

Edgewater, MD –  National Aircraft Finance Association (NAFA) is pleased to announce that Boundary Aviation Solutions, Ltd. has recently joined its network of aviation professionals. Boundary Aviation Solutions provides aircraft appraisal, brokerage and consulting services throughout the aircraft purchasing process.  

“Boundary Aviation Solutions joining NAFA is a step forward in advancing our mission to improve and facilitate the financing process to support aircraft buyers,” said Ed Medici, NAFA President. We welcome Boundary Aviation Solutions to our growing organization and enhancing opportunities for all our members.”  

About Boundary Aviation Solutions: 
Boundary Aviation Solutions, a new aviation consulting firm, is proud to announce its launch under the leadership of Terrence D. Eissfeldt, a highly experienced aviation professional with over 40 years of industry knowledge.  

Boundary Aviation Solutions offers a wide range of consulting services, including special projects, expert analysis, aircraft comparisons, technical records review, lease documentation and pre-lease and post-lease equality system reviews. With Eissfeldt’s extensive maintenance systems experience and operational and business knowledge, clients can expect real solutions tailored to their specific needs.  

Boundary Aviation Solutions also offers services for importing and exporting, pre-buy inspections, and advice on aircraft purchases. All services are conducted with experienced and reliable attention to detail, ensuring complete transactions with no loose ends.  

About Terrence D. Eissfeldt: 
Eissfeldt began his career as an Aircraft Maintenance Engineer at Okahagan Helicopters in Richmond, B.C., Canada. Throughout his career, he has gained extensive experience in various parts of aviation, including field maintenance, heavy overhaul, quality assurance, technical records, inventory control, buying, shipping and receiving and project management.  

In addition to his hands-on experience, Terrence has written and amended various Transport Canada, F.A.A. and E.A.S.A. compliant maintenance control and policy manuals, quality assurance manuals and other associated manuals. In 2021, he successfully completed the American Society of Appraisers (ASA) Aviation Appraisal courses, further enhancing his knowledge in this field.  

Before launching Boundary Aviation Solutions, Terrence was a founding partner at West Coast Helicopters Maintenance and Contracting Ltd., where he served as the Chief Executive Officer from 2017 to 2021.  

For more information, visit boundaryaviation.com.   

About NAFA:  
The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members on the most up-to-date industry trends and best practices. Government legislation, market influences, and industry insights allow member companies to provide the highest quality services the industry has to offer. 

It all started with a one-line job ad at Indiana State University’s Career Center that jumped out to upcoming Aerospace Administration graduate Bryan Byers— Branch Analyst, and the phone number to Cessna Aircraft Company. Byers, now a tenured Aircraft Lender and Vice President at Scope Aircraft Finance and NAFA Vice President, had found the diamond in the rough he’d been searching for.  

When he called the number, the human resource agent at Cessna said he was the first person who had applied for the job. Byers was shocked. That one small break brought Byers to the launch pad for his career in aviation finance.  

The launch of a career in aviation financing 

Byers came on board in the aviation industry at the right time. The General Aviation Revitalization Act of 1994, which jumpstarted manufacturing of small aircraft after a period of extended liability restrictions against manufacturers, started to open new positions for Byers. After answering the one-line ad, Cessna hired him to learn the basics of aircraft financing. While there, Cessna transferred Byers to Wichita, where he was immersed in the aviation industry that surrounded him, growing in his knowledge of the aviation industry.  

Unfortunately, the role Cessna placed him in focused on banking, which steered Byers away from aviation. Byers was persistent, taking every opportunity to ask for a position in aviation. Finally, Cessna offered him the Regional Service Manager role, which first seemed more of a mechanical and maintenance position. But after looking at the job closer, the role entailed following up with customers behind on their payments to the bank-AKA a repossession agent, or “Repo Man.”   

Byers’ unconventional role as the ‘Repo Man’ 

Byers worked for two years as a repossession agent for small aircraft, working personally with the customers the bank represented. This experience gave Byers plenty of colorful stories and close calls, including when the electrical went out in the plane he was flying during the busiest time at Louisville International Airport without direction on when and where to land.  

It was sometimes a dangerous job that came with unexpected twists and turns. One time, Byers went to take a plane, expecting not too much hassle since he constantly communicated with the owner about his late payments. Byers found the airplane, inspected it, and got it ready to fly home. “I’m checking everything out with the plane when I hear these size 17 shoes coming up quickly behind me. A big man is coming right up to me with his fist ready to punch me as I turn around. I see him ready to grab ahold of me and immediately go into defense mode—"Wait, Wait, Wait, Wait, Wait!”  

Thankfully, after picturing waking up in a hospital after “lights out,” Byers expertly and nervously talked the owner into calming down and giving up the plane.  

Overcoming ‘no’ and finding a home in aviation finance 

After some time, Byers’ family was ready to leave Wichita and return to family in Indiana, so he began the search for work back home. He reached out to 1st Source Bank but was met with a solid no to any opportunities. But Byers doesn’t take no for an answer, especially after learning that “No” in lending is the norm, and a skilled professional will know how to work around it. So, Byers contacted that person’s boss and was offered a position. “Have him make you coffee,” the manager said. “I don't care what you do with him, but how many qualified aviation people do you know that also want to live in Indiana?”  

After some time, 1st Source gave Byers a try at aircraft financing and sales. He had to call on everybody who owned an airplane in Indiana and Michigan to see how many people he could get to refinance their planes with the bank. Byers worked at 1st Source for almost 19 years before being recruited to work for Scope Aircraft Finance, where he has worked for four years. Throughout his career in aircraft finance, Byers has made his mark by constantly looking for the next person to buy or sell an airplane to and offering personable and excellent service throughout the life of the lending relationship. 

According to Byers, everyone starting in aircraft financing will have challenges when they start. His advice for newcomers is to get comfortable with hearing no. “No is not necessarily a bad answer because it's just the law of averages that eventually you're going to get a yes from somebody,” Byers said. 

NAFA’s role: Byers’ second home in aviation finance 

Through the highs and lows, Byers found a second home in aviation finance with the National Aircraft Finance Association (NAFA). The connections made, the camaraderie with competitors, and the invaluable mentorship within the NAFA community have been pivotal to his success.  

As an aircraft lender, Byers began attending NAFA events over 20 years ago. Because the aviation industry is small and connected, NAFA was a big help to him when he first got started. According to Byers, the NAFA connections he has made have helped him tremendously throughout his career, from the people he has met to learning more about his role and how to do his job better.  

“It’s odd that you end up becoming friends (or Frenemies) with your competitors,” Byers said. “You can share stories and understand that everyone has the same goal of advancing the industry and doing a better job.”  

Byers met one of his strongest supporters while attending NAFA. Charlie Sauter worked for a competitor, Scope Aircraft Finance. While they were competitors, Charlie saw they were like-minded in their love of aviation, values and work ethic. Byers found a valuable mentorship relationship, and Sauter helped guide Byers, eventually recruiting him to join Scope Aircraft Finance. 

Byers emphasized the significance of holding onto mentors who provide insights into the trade, guiding newcomers through the intricate world of aviation finance. Especially in the first years in the aviation finance industry, the mentors available within the NAFA member community are invaluable. “Many people in this industry have high levels of knowledge and experience,” Byers said.  “If you can hold on to mentors to give you those little tips and tricks of the trade, you can find the right path for yourself, and I find that invaluable.”  

Byers continues to go to NAFA events and become involved in areas such as the Light Aircraft Roundtable and in his role as Vice President. “I've met some of the most fascinating people that I never would have met any other way,” Byers said.  

Beyond job titles 

As Bryan Byers reflects on his journey from that one-line job ad at Indiana State University to becoming a tenured Aircraft Lender and Vice President at Scope Aircraft Finance and NAFA, the warmth for the aviation finance industry runs deep. “I still fly and look up every time something goes over my head to see what it is,” Byers said. “I just love the line of work we're in and can't imagine what I would have done without it.” Byers' path illustrates that a career isn’t just a series of job titles but a collection of experiences, challenges met head-on, and relationships built along the way.  

This article was published by NAFA on March 4, 2024.

FOR IMMEDIATE RELEASE: February 28, 2024 

Contact: Tracey Cheek 
tlc@nafa.aero  
405.850.1292

Jared Hasty 
Co-Founder 
770.233.7518
Sales@piedmontjets.com  
https://www.piedmontjets.com 
 

NAFA Welcomes New Member: Piedmont Jets    

National Aircraft Finance Association (NAFA) is pleased to announce that Piedmont Jets has recently joined its network of aviation professionals. Piedmont Jets is a highly specialized, boutique aircraft brokerage and acquisition firm.  

“Piedmont Jets joining NAFA is a step forward in advancing our mission to improve and facilitate the financing process to support aircraft buyers,” said Ed Medici, NAFA President. We welcome Piedmont Jets to our growing organization and enhancing opportunities for all our members.”  

About Piedmont Jets: 
Piedmont Jets leverages experience, efficiency and expertise to navigate clients through aircraft transactions. Driven by a team of experienced pilots with a love of aviation and building lasting relationships, Piedmont Jets aims to make transactions simple and seamless. 

After careful analysis backed by industry-leading data, the Piedmont Jets team will source worldwide, on and off-market opportunities while managing the details of the procurement process.  

Piedmont Jets provides a roadmap so clients are informed and empowered throughout the acquisition. The Piedmont Jets team uses its tools, processes and industry relationships to ensure maximum exposure and return on clients' investments. 

For more information, visit piedmontjets.com.  

About NAFA:  
The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members on the most up-to-date industry trends and best practices. Government legislation, market influences and industry insights allow member companies to provide the highest quality services the industry has to offer. 

FOR IMMEDIATE RELEASE: February 23, 2024 

Contact: Tracey Cheek   
tlc@NAFA.aero   
405.850.1292   

Scott Walter 
scottwalter@shorepremierfinance.com 
757.995.0452

NAFA Welcomes New Member: Shore Premier Finance 

The National Aircraft Finance Association (NAFA) is thrilled to welcome Shore Premier Finance, the specialty lending division of Centennial Bank focused on passion assets. With $1.2B in assets, Shore Premier Finance is one of the nation’s largest marine lenders, and they’re adding aviation finance to their portfolio. 

“NAFA members proudly finance, support or enable the financing of general and business aviation aircraft throughout the world, and we are happy to add Shore Premier Finance to our association,” said Ed Medici, President of NAFA.   

Shore Premier Finance has joined NAFA as part of their efforts to expand into aviation and perform better due diligence, and representatives from Shore Premier Finance will be attending the NAFA52 Annual Conference as part of that initiative and to connect with industry leaders. 

About Shore Premier Finance:
Since 2012, Shore has provided financing for high-end power boats, sail boats, and superyachts and inventory finance for marine dealers. In 2022, Shore began providing financing for luxury motorhomes as a complement to its marine business.  As its focus on passion assets has expanded, Shore intends to add the finance of personal and business aircraft to its offerings as well. 

To learn more about Shore Premier Finance, visit www.shorepremierfinance.com.  

About NAFA:   
The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members on the most up-to-date industry trends and best practices. Government legislation, market influences and industry insights allow member companies to provide the highest quality services the industry has to offer. To add your company to our world-class network of the best in aircraft finance, sign up at https://www.nafa.aero. 

FOR IMMEDIATE RELEASE – February 23, 2024 

Contact: Tracey Cheek     
tlc@NAFA.aero     
405.850.1292     
 

John Moran 
Senior Vice President, Integrated Communications 
John.Moran2@firstcitizens.com 
212.461.5507 
 

NAFA Welcomes New Member: SVB Private 

The National Aircraft Finance Association (NAFA) is pleased to announce that SVB Private has recently joined its network of aviation professionals. SVB Private, part of First Citizens Bank and its First Citizens Wealth division, provides customized structured loans on turbine powered private aircraft to high-net-worth clients.  

“NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world,” said Ed Medici, NAFA President. “We’re excited to welcome SVB Private to our growing organization. Their services enhance NAFA’s available offerings, and we support their services to advance our members.” 

About SVB Private: 
SVB Private’s team of dedicated and specialized aircraft finance lenders can help optimize aircraft investment by providing customized lending solutions. These solutions allow clients to optimize their balance sheet by redeploying the capital they have invested in the aircraft. In addition, SVB Private competitively prices and structures loans commensurate with their clients’ personal and corporate banking relationships.   

SVB Private provides a single point of contact, keeping the client fully informed throughout the loan approval and closing process. The bank leverages its deep understanding and connections within the private aircraft industry to help navigate the acquisition process, understand accounting treatments and FAA regulations, and align with other professionals to help make aircraft acquisition and ownership seamless and efficient.   

Loan products for turboprops and jets include: 

• Fixed and variable rate loans 

• Acquisition financing 

• Loan refinancing 

• Pre-delivery payment financing for new aircraft 

To learn more about SVB Private, visit https://www.svb.com/private-bank/. 

About NAFA:   
The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members on the most up-to-date industry trends and best practices. Government legislation, market influences and industry insights allow member companies to provide the highest quality services the industry has to offer. To add your company to our world-class network of the best in aircraft finance, sign up at https://www.nafa.aero. 

FOR IMMEDIATE RELEASE:   February 22, 2024 

Contact: Tracey Cheek    
tlc@NAFA.aero    
405.850.1292    

Melissa Wier 
Marketing Manager 
melissaweir@mvalaw.com   
704.331.2419  

NAFA Welcomes New Member: Moore & Van Allen, PLLC 

The National Aircraft Finance Association (NAFA) welcomes Moore & Van Allen, PLLC (MVA), a leading law firm with a dedicated aviation finance practice. MVA's team of over 400 attorneys brings extensive experience in complex aircraft financing transactions, including cross-border deals and structured financing for high-value assets. 

“NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world,” said Ed Medici, NAFA President. “We’re excited to welcome Moore & Van Allen to our growing organization. Their services enhance NAFA’s available offerings, and we support their services to advance our members.” 

MVA's extensive experience in facilitating aircraft financing transactions will directly benefit NAFA members by providing access to invaluable legal expertise in navigating the intricacies of these transactions.  

About Moore & Van Allen, PLLC: 
An unwavering focus on their clients has led to steady growth as one of the largest law firms in the Southeast. Over 400 lawyers and professionals in over 90 areas of focus represent clients across the country and around the globe, including Blue-chip Fortune 500 organizations, financial services leaders, domestic and global manufacturers, retailers, individuals, and healthcare and technology companies. MVA clients benefit from a strategic, innovative approach to significant business transactions, complicated legal issues and difficult disputes. 

MVA’s value is rooted in the experience gained over seven decades. Nationally recognized, culturally inclusive and community-spirited, they understand that success for their clients comes from investing in the strength of ideas and the power of collaboration.

To learn more about Moore & Van Allen, PLLC, visit mvalaw.com  

About NAFA:   
The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members on the most up-to-date industry trends and best practices. Government legislation, market influences and industry insights allow member companies to provide the highest quality services the industry has to offer. To add your company to our world-class network of the best in aircraft finance, sign up at https://www.nafa.aero. 

FOR IMMEDIATE RELEASE:  February 5, 2024

Contact:  Tracey Cheek
tlc@nafa.aero
405.850.1292

Rhonda Maggiacomo
Partner
Rhonda.Maggiacomo@lewisbrisbois.com
Office:  401.406.3321

NAFA Welcomes New Member: Lewis Brisbois Bisgaard & Smith LLP

National Aircraft Finance Association (NAFA) is pleased to announce that Lewis Brisbois Bisgaard & Smith LLP has recently joined its network of aviation professionals. Lewis Brisbois’ experienced Business Aviation Practice serves as a strategic client partner with a comprehensive understanding of the federal regulatory and business matters surrounding the financing, acquisition, and operation of business aircraft. 

“Lewis Brisbois Bisgaard & Smith LLP joining NAFA is a step forward in advancing our mission to improve and facilitate the financing process to support aircraft buyers,” said Ed Medici, NAFA President. We welcome Lewis Brisbois to our growing organization and enhancing opportunities for all our members.”  

 
About Lewis Brisbois Bisgaard & Smith, LLP:  
Lewis Brisbois is actively engaged in the representation of clients in more than 40 different practice areas with a multitude of sub-specialties associated with each practice area including an experienced Business Aviation Practice Group. The firm serves as a strategic client partner with a comprehensive understanding of the federal regulatory and business matters surrounding the financing, acquisition, and operation of business aircraft from structuring complex transactions (including drafting and negotiating corporate aircraft purchase and sale agreements) to understanding the intricacies of aircraft financing agreements and reducing liability exposure while capitalizing on both federal and state tax planning options. 

Lewis Brisbois’ Business Aviation Practice group has experience assisting Fortune 500 companies, large international corporations, ultra-high net-worth clients, and family offices with all aspects of aviation financing for large long-range business jets, commercial aircraft, helicopters, and aircraft engines, including structuring, documenting, negotiating and syndicating aircraft financing transactions for various types of finance structures. 

To learn more about Lewis Brisbois Bisgaard & Smith LLP, visit https://lewisbrisbois.com.  

  
About NAFA:   
The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members on the most up-to-date industry trends and best practices. Government legislation, market influences and industry insights allow member companies to provide the highest quality services the industry has to offer. To add your company to our world-class network of the best in aircraft finance, sign up at https://www.nafa.aero. 

Rising interest rates, supply chain challenges and wars in Europe and the Middle East have created a turbulent time for the global economy. What has this meant for aviation finance? Gerrard Cowan learns what the industry experts are expecting in 2024...

According to Brian Macbean, AOPA Aviation Finance’s Director of Credit and Sales, while the aircraft market is subject to macroeconomic conditions there is often a lag between changes in other markets and the aviation sector.

“If things are steady on a macro level, the aircraft market will likely follow the same path,” he says. “If we see drastic changes in other major asset values (real estate, for example) which are sustained over time, we can expect to see changes filter into the aircraft market as well.

“Keeping an eye on the economy as a whole will give aircraft buyers an indication of what to expect in the aircraft market in the coming months.”

A Reasonable Baseline for 2024 Expectations...

The main trend of 2023 was a general slowing of the market, Macbean says, primarily as a response to anticipated moves by the US Federal Reserve.

“The cost of funds for lenders increased in 2023, and there may continue to be a slight increase into early 2024. That being said, the expectation is that costs will not rise as quickly, or comparatively as high as they did in 2023 – so the current market condition is a reasonable baseline for 2024 expectations.”

Read full article here

This article was originally published by AvBuyer on December 11, 2023.

The journey toward aircraft ownership can be an exhilarating prospect. Whether you’re a seasoned pilot or an aviation enthusiast with dreams of taking to the skies, owning an aircraft is enticing. However, before you can spread your wings and soar through the clouds, there’s an important part to consider— financing your aircraft.  

Navigating the intricacies of aircraft financing can be challenging for beginners. The process involves a unique set of considerations, from understanding the financing options available to evaluating your financial capacity. This blog post breaks down the basics of aircraft financing, giving you the knowledge and confidence to make informed decisions on your journey toward aircraft ownership. 

Prepare your financial picture  

The first step in the aircraft buying process is having a clear picture of your financial situation and how this looks to a lender loaning money for an aircraft. Some things to consider at this point include:   

     1.  Interpreting your tax returns   

One part of understanding what your financial picture looks like is what your tax returns convey to a lender. It’s fairly common to encounter individuals with large earnings who, due to their CPA and tax advisor’s expertise, show minimal income on their tax returns. While this is a testament to the financial team’s skill, it can present a challenge for aircraft lenders.    

To navigate this, it’s imperative to view your tax returns from a lender’s perspective. This insight will dictate how much of an aircraft you can realistically afford, letting you set a budget for your purchase. Sometimes, it may even require a few years of financial planning to optimize your financial statements, particularly if you’re a business owner or plan to register the aircraft under a business entity.    

     2.  Planning and preparation   

Preparation is key. Consult with business aviation and tax consultants, CPAs or financial advisors, who can shed light on your current financial state and what changes might be needed to enhance your financial standing for the eventual purchase. This knowledge can make a substantial difference in your ability to secure the financing you need.  

     3.  Consider your timeline   

Understanding when you plan to buy an aircraft is equally important. For example, waiting until the last minute, as tax deadlines loom, to realize the need for an aircraft can lead to unnecessary financial stress. It’s beneficial to have these conversations well in advance to align your financial situation with your aircraft goals.    

     4.  Evaluating liquidity   

Liquidity, as perceived by lenders, primarily revolves around cash on hand or in non-retirement investment accounts readily available in your bank. Lenders want assurance you have the liquidity to cover the required down payment, typically 15 to 20 percent. Moreover, they expect your down payment won’t deplete your liquid assets, and you will have additional funds set aside for related expenses, such as taxes, maintenance and hangar fees.    

     5.  Understanding taxable income   

Lenders will also look at taxable income. This usually comes into play with business owners, where the difference between reported income on tax returns and the actual financial state of the business can be significant. Aircraft lenders focus on underwriting the individual rather than the business, which may require seeking lenders with expertise in underwriting businesses specifically.  

Apply for a loan and get an approval   

Your financial picture and standing also carry significant weight in the loan application process, which is the next step in financing an aircraft. Unlike more conventional loans for items like cars or houses, aircraft financing is in a league of its own.    

This distinction comes primarily from the size of the aircraft market relative to other loaned assets. The aviation market is relatively small, and this has a profound impact on how lenders perceive risk. In aircraft financing, lenders do not have the luxury of spreading their risks across vast portfolios.    

Due to the limited market size, aircraft lenders take a hands-on approach to portfolio management. The consequences of a loss on an aircraft are felt much more intensely compared to other asset classes. This reality is why the process for applying for an aircraft loan is markedly different and more comprehensive than for other, more commonplace loans.    

Given the intricacies of the aircraft loan application process, it’s important to factor in the potential extra time it will take for approval. This means including ample time to complete the application and collect your supporting financial documents.    

Documentation requirements for aircraft loans are usually demanding, especially if you have multiple businesses. Lenders typically ask for two to three years’ worth of comprehensive financial records, including tax returns and business financials. While long-term liquidity is rarely a major focus, recent bank statements may be needed to confirm the liquidity figures in the financial documents.    

The next part of applying for an aircraft loan is the approval time frame. Lenders will provide an approval valid for up to 90 days, giving you time to identify an aircraft if you haven’t done so already. Some lenders, depending on the aircraft, may provide approval without a firm date but lock rates in before closing. Both of these pre-approvals will play into your overall purchasing timelines and goals. 

Negotiate the purchase and creating a purchase and sales agreement   

The next step in the aircraft financing process is to negotiate the purchase. This phase involves considering what should be included in the purchase and sales agreement.    

Consider a few key elements in this phase, such as if a deposit or earnest money will be required to hold the aircraft; if so, is this refundable or non-refundable, and who will hold the deposit?   

The purchase and sales agreement should include the four fundamental elements:   

1. Identifying the buyer
2. Specifying the seller
3. Describing the aircraft  
4. Stating the purchase price   

Purchase agreements come in various lengths. The level of detail is less important than including these four essentials. Beyond these four elements, the agreement’s specifics are largely negotiable between the buyer and seller. Some buyers prefer comprehensive outlines, while others are more flexible.     

Lenders will want to review a copy of the purchase agreement to ensure it is an arms-length transaction but also to provide critical information to determine the financing amount they should extend, gauge the down payment you can afford and outline the terms of the agreement.    

One significant part that needs to be discussed in the purchase agreement is the pre-purchase inspection, especially on larger acquisitions. Lenders typically require this inspection to be conducted by a fair third party. Even if you have an A&P on staff, it’s advisable to use an independent party to reduce potential biases.    

An important part of the negotiating process and the financing you receive from a lender revolves around the aircraft’s valuation. While the true value of an aircraft ultimately hinges on an agreement among the buyer, seller and lender, having a valuation serves as a useful first benchmark for estimating the general retail worth of an aircraft. A valuation considers a range of intangible factors, such as the model’s availability, its damage history, maintenance record and refurbishments and upgrades. Hiring a professional aircraft valuation service can help determine a good valuation for the aircraft you are considering.  

Obtain insurance   

A critical step in the aircraft financing process is insurance. Lenders will invariably insist on insurance as part of the financing arrangement. They will require both motion and not-in-motion coverage, which encompasses on-ground and in-flight scenarios.    

Even if you plan to park the aircraft for an extended period, for example, an overhaul of the interior or new paint, the lender will still require comprehensive coverage. This includes liability coverage along with hull coverage. The specific limits for hull coverage will typically be set at either an amount equal to the loan or the purchase price. Note that these limits may vary from one lender to another. Some lenders are content if the loan amount is covered, while others may mandate coverage up to the full purchase price.    

In addition to the breadth of coverage, lenders pay close attention to certain parts of the insurance policy. They look for breach of warranty coverage, meaning that even if the aircraft owner engages in activities not covered by the policy, the lender is still protected. Lenders insist on being listed as the loss payee on the insurance policy.    

Additionally, some lenders may restrict the maximum allowable deductible, usually based on a percentage of the purchase price. As long as the deductible falls within a specified dollar limit or a percentage threshold, the lender will generally be comfortable. However, if the deductible exceeds these parameters, it may require further discussion with the lender.    

If the insurance provider cannot offer a deductible within reasonable bounds, it’s worth considering and discussing with the lender. This open communication ensures all parties are on the same page and that the insurance coverage aligns with the lender’s expectations.  

The closing

With the approval secured and the negotiations finalized, you’re on the cusp of finalizing the acquisition of your aircraft. At this point, lenders will require the use of a title and escrow service for closing the transaction.     

The title company plays a pivotal role by conducting a comprehensive title search on the aircraft, verifying there are no encumbrances or title discrepancies. This title search ensures the lender maintains a first lien hold on the aircraft.    

Additionally, they can navigate the complex and often challenging FAA paperwork process. Their familiarity with FAA requirements guarantees the documentation submitted meets the agency’s standards. Many title companies have offices near the FAA records building in Oklahoma City, enabling them to file paperwork quickly on closing day. This expedites the confirmation of ownership, leaving no room for ambiguity in filed documents or the seller’s residual interest in the aircraft.    

Ultimately, an escrow service eliminates uncertainties, benefiting the buyer and seller. The escrow service assumes the important role of helping transfer funds for the purchase, acting as an impartial intermediary.    

After closing, the escrow service’s involvement ends. Unlike a mortgage scenario, there is no ongoing escrow account for taxes and insurance. These are independently managed outside of the purchase process. The lender remains focused only on receiving payments for the loan.    

Prior to the closing process, you’ll want to make sure all aircraft documentation is complete. This includes Log book entries, maintenance records and annual inspections. Lenders typically request copies of the most recent annual inspection and any required phase one, two or three inspections.    

Closing costs, including fees for the lender and sometimes brokers, will be factored into the transaction. These costs vary depending on the lender. Some may have a fixed fee despite transaction size, while others base the cost on a percentage of the transaction. This percentage can range from a quarter point to three-quarters of the transaction size.    

It is strongly encouraged to involve professionals who specialize in aircraft title and escrow services. Without this expertise, mistakes can occur, potentially causing frustrating complications. For example, one common mistake is trying to include the aircraft under a business insurance umbrella without understanding the necessary coverages. Seeking insurance quotes from multiple aircraft insurance providers can help.    

Conclusion 

If you are considering purchasing an aircraft, it is important to understand the basics of the aircraft financing process. Aircraft financing stands apart from conventional transactions. Familiarizing yourself with the basics of aircraft financing sets the stage for a smoother and more enjoyable buying experience.    

Understanding the five main steps outlined above empowers you to align your expectations. It lets you to determine the aircraft within your financial reach and timeline for making the deal and taking to the skies. From organizing your financial picture for potential lenders to ensuring all required paperwork is in order for the FAA, understanding the process can be rewarding.     

Given the unique nature of aircraft financing, entrusting the process to specialized professionals is instrumental. Aircraft financing experts have the knowledge and experience to guide you through every facet of the journey with precision and professionalism. Their expertise adds immense value, ensuring your aircraft acquisition is a seamless and stress-free experience.

Many thanks to Brian Macbean Director of Credit and Sales and Emily Meczkowski, Director of Operations & Marketing at AOPA of AOPA Aviation Finance Company for their contribution to this article.  

Can you be sure a pre-existing lien on your aircraft won’t come back to bite you? Gerrard Cowan polls a selection of experts to understand the nature of liens, how to check and safeguard against them, and what to do if a notice of foreclosure is served...

Liens can be a complex factor in business jet ownership, posing financial challenges for aircraft operators. Owners must ensure they fully understand the nature of any liens on their own aircraft, according to industry experts, while buyers should secure the best possible industry advice in any transaction.

There is a wide array of liens that can attach to an aircraft, its engines, or related components. But it is liens relating to financing that tend to be enforced more than other types, according to Brian Macbean, Director of Credit & Sales at AOPA Aviation Finance.

“Any time the aircraft is used as collateral for a loan, the lender will file a lien on the aircraft. Lenders that specialize in aircraft financing often file liens on the aircraft, the engines, and the avionics,” he adds, pointing to the prevalence of mechanics’ liens, also.

Liens on US-based aircraft should always be filed with the FAA, Macbean notes. “Depending on the specific scenario, a Uniform Commercial Code (UCC) filing could also be an effective method to assert interest or influence relating to an aircraft.”

Liens generally fall into two categories, according to Lori McGee, Partner at Jetstream Aviation Law, including consensual and non-consensual liens.

Consensual liens are typically agreed-upon between a lender and an owner, or another party with an interest in the property, McGee elaborates. For example, this could include aircraft mortgages and security agreements.

Non-consensual liens arise by operation of law, not as the result of an agreement between the parties – mechanics’ liens being primary examples. In the US these are governed by state law and vary from one state to another.

“Although the specifics of this type of lien are different in each state, generally speaking [they] are meant to provide a person that performs work or supplies materials for an aircraft with an interest in that aircraft to secure payment for such work or materials," McGee says.

Read full article here

This article was originally published by AvBuyer on November 20, 2023.