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  • Tracey Cheek posted an article
    How Can Borrowing More Cost Less? see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, explains the credit matrix when looking for an aircraft loan.

    An AOPA Finance client recently requested a quote for financing a single-engine aircraft. He was looking to finance $70,000, and was quoted what the interest rate would be based on that figure. However, had the client borrowed $75,000 instead of $70,000, the rate would have been a whole percentage point lower, saving him money. Why is that?

    Many borrowers believe the way to get the best interest rate is through a large down payment and a great credit score. But actually the No. 1 factor in determining the interest rate offered on a loan is the amount of money being lent. Lenders structure each loan around a credit matrix. The matrix is comprised--among other things--of ranges of loan amounts, the loan-to-value (LTV) ratio, an individual's total financial picture, and least of all, that person's credit score.

    Lenders group loans into "buckets," or ranges of loan amounts. For example, in the case of our client, one range included loan amounts from $50,000 to $74,999. Additionally, each range of loans has a default initial interest rate associated with it.

    In this case, the lender's next higher range had an interest rate one full percentage point lower associated with it. This client had said a top priority of his was to get the lowest possible interest rate. Therefore, we knew if our client had the flexibility to increase his loan by $5,000, it would put him in the higher range, where the default lending rate was better.

    Initially, he saw increasing the loan by $5,000 as beneficial only for the lender. We pointed out that this lender also had a loan structure that allowed for additional prepayments without penalty. If our client was willing to hold back $5,000 of his down payment and increase the loan to $75,000, he could, on Day 2 of the loan, take that held back $5,000 and apply it immediately to the principal. That would get him back to $70,000 on the loan while maintaining the lower interest rate of the $75,000 loan, thus saving him money. That’s one example of how borrowing more can cost less.

    Loan-to-value (LTV) is the second-most important element in constructing the credit matrix. LTV is a financial term used by lenders to express the ratio of a loan to the value of the asset purchased. Generally, an LTV of 80%-85% is deemed an acceptable risk. LTV requirements are most frequently influenced by the aircraft and how quickly it is likely to depreciate. In other words, LTV requirements may be applied on a sliding scale. Generally, the more quickly a plane is likely to depreciate, the more money down or lower an acceptable LTV and vice versa. Additionally, by putting even more money down and thus lowering the LTV you can frequently gain better interest rates and terms.

    The last, and least important, component of the credit matrix is one's credit score. Despite what retail financial institutions and credit reporting agencies pushing credit protection products advertise in the media, credit scores for aircraft loans have only a small influence on how lenders determine a loan's interest rate. The difference between a good credit score and a great credit score might be a mere quarter of a percent. It’s a lousy credit score that will hurt the most. A poor credit score may cost the borrower a full percentage point, or the loan itself.

    Ultimately, obtaining the best loan for you is about providing you the best perspective on all aspects of it. AOPA Finance brokers stand ready to share the kind of knowledge, nuance and expertise that can navigate you to the best loan for your situation.

    This article was originally published by AOPA Aviation Finance Company on May 28, 2019.

  • Tracey Cheek posted an article
    Is There a Minimum Purchase Price to Obtain a 10-Year Loan? see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, answers your aviation loan questions. 

    Q: What's the minimum purchase price to obtain a 10-year loan? I'm looking at aircraft in the $20K-$30K range after 1960.

    A: Thank you for reaching out. The minimum loan amount required for a 10-year term is $20,000. This is after the minimum 15% down payment. Therefore, the minimum purchase price should be around $24,000.  Please feel free to give us a call as you get closer to purchasing. We always recommend that AOPA pilots get pre-approved as they shop.

    Q: I'm thinking of buying my first plane. Would you finance an experimental one? The one I am looking at this moment is a SONEX 2016, tri-gear, with asking price of $39K. What is rate and term?

    A: A number of our lenders offer financing on experimental aircraft. In some cases, a lender may require that the aircraft have an appraisal. Our account executives will discuss that requirement with you early in the application process. A SONEX is common enough that an appraisal is not likely needed. For a purchase price of $39,000 rates will fall around 7.5% for 10 years. Keep in touch as you search. Our account executives can help with providing rate quotes and valuations as you shop around.

    This article was originally published by AOPA Aviation Finance Company on June 12, 2019.

  • Tracey Cheek posted an article
    Finding the Right Lender to Finance a Private Aircraft Purchase see more

    NAFA member, Lee Rohde, President and CEO of Essex Aviation, discusses finding the right lender when financing a private jet purchase.

    It is a truth universally acknowledged that private aircraft are expensive. Even those exploring part-time ownership options enter their search knowing that it will require a significant upfront investment. But for frequent fliers with the means to afford it, private aviation is the obvious choice.

    Before taking the first steps toward private aircraft ownership, potential buyers should take the time to carefully evaluate all of the financing options available to them.

    Something to Consider

    Before deciding which financing option to pursue, buyers should consider whether they want to contact lenders directly — a process that typically involves researching lenders, requesting and reviewing lender proposals and assembling a loan due diligence package — or to work with a third-party aviation consultant or aircraft finance broker. Although most high-net-worth individuals have a finance team capable of handling these responsibilities, individuals on the mid-to-lower end of the market might find it useful to partner with an aviation consultant or aircraft finance broker because they have the necessary industry relationships to simplify the financing process and to connect with the most appropriate lender candidates depending upon the buyer’s needs and requirements.

    Finding a Lender

    When seeking financing for a private aircraft purchase, buyers have two main options: traditional banks and non-banking aircraft financing lenders. In most cases, high-net-worth individuals will elect to first work with their existing bank — that way, the buyer can take advantage of their existing business relationship with the bank, which already has a comprehensive understanding of their financial situation.

    If a buyer’s bank is unable to finance the purchase, the next option would be to contact one of the major financial institutions that has an established aircraft finance group. These financial institutions manage a large aircraft portfolio and would be willing to work with a buyer to finance the aircraft even if the buyer does not have an existing relationship with the institution.

    The benefit to this option is that the bank already has an established aircraft financing team capable of working with the buyer to obtain the necessary information to evaluate the loan. 

    The downside to this option is that the buyer will need to prepare and provide the bank with a full package of information on the aircraft, as well as a full set of financial documents and disclosures for the lender to provide a formal proposal. 

    The third option is to finance the aircraft purchase through a non-banking aviation lender. There are decidedly fewer non-banking aviation lenders in the market than there are banking lenders. Currently, there are a few major non-bank lenders in the market that actively provide aircraft financing. These lenders will usually raise their capital in equity markets to support portfolio growth. When choosing a non-banking aviation lender, be sure to contact a private aviation consultant or aircraft finance broker to confirm the lender’s position in the market and whether they’re a viable option to consider.  

    Bear in mind that all aircraft lenders have portfolio parameters and requirements that they must follow and, in some cases, are limited by the age and types of aircraft they can finance. First and foremost, all lenders evaluate potential borrowers based on the “5 Cs” of credit: 

    • Character: What is their reputation as a borrower? Is their credit history stable?

    • Capital: What is the borrower’s net worth? What type of capital assets do they own?

    • Capacity: Does the borrower have sufficient cash flow to repay the loan? What is their debt-to-income ratio?

    • Collateral: What assets can the borrower pledge to secure the loan?

    • Conditions: How does the borrower intend to use the aircraft? What is the current state of the economy? Is there pending legislation that would affect this loan?

    Note that all lenders use the same criteria to evaluate individual borrowers who are looking to purchase private aircraft for personal reasons as they do corporate borrowers — at the end of the day, credit is credit and collateral is collateral. In either case, the selected lender will have specific loan covenants that the buyer must be aware of. In some cases, the lender might require periodic reviews of the aircraft market value or third-party inspections to ensure that the aircraft is being properly utilized and maintained.

    Whether they work with their existing bank, an aircraft financing bank or a non-bank lender, buyers who are able to secure financing to purchase a private aircraft are opening the door to a world of luxury, comfort and convenience. And for those who are still interested in private aviation but want to avoid the extra legwork with financing, there are plenty of viable alternatives to outright ownership to explore. 

    This article was originally published by AvBuyer on August 23, 2019.


  • Tracey Cheek posted an article
    Financing An Aircraft Before It's Moved To The U.S. With FAA Registration see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, answers your questions about loans for engine replacements and aircraft financing.

    Q: We are looking for financing options to purchase a pressurized Baron that is currently based and registered in Canada. I am writing to ask if you’d be willing to finance this aircraft before it is moved and transferred to the US with FAA registration?

    A: For aircraft being imported from Canada our lenders will require that the deregistration from Transport Canada and new FAA registration be completed prior to releasing funds to the seller. In most cases lenders are able to position funds in escrow while the import is completed. Imports from Canada typically only take a couple days. Give us a call to discuss further. We can also help you set up escrow with our AOPA Strategic Partner, Aero-Space Reports.

    Q: I own my aircraft outright. Do you provide loans for engine replacements?

    A: Yes, like avionics upgrades, our lenders will finance up to 85% of the aircraft value with an overhauled engine. Having no debt on the aircraft potentially allows for the lender to finance the full cost of the overhaul. Call us today so we can get you started on the application and approval.

    This article was originally published by AOPA Aviation Finance Company on July 30, 2019.

  • Tracey Cheek posted an article
    Is It Possible To Finance An Aircraft that Includes Avionics Upgrades? see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, answers your questions about financing aircraft in Alaska and financing an aircraft that includes avionic upgrades.

    Q: I am exploring financing options for an aircraft to be based in Alaska. I recall around 8 years ago, AOPA finance would not do business in Alaska. Does that remain the case?

    A: While most lenders stick to the contiguous US, we do have a lender that can offer aircraft financing in Alaska. Their financing options will depend on the aircraft age, make and model, as well as the aircraft usage. Call us today and we can give you more specifics.

    Q: Is it possible to finance an aircraft that includes avionics upgrades? For example, $60k for the aircraft and $30k for the avionics that would be installed in the aircraft? I am in the initial stages and would like the answer to this before I begin my search

    A: Yes lenders are often willing to include additional funds for upgrades. Our lenders will finance up to 85% of the total upgraded value with distributions split between the seller and the avionics shop. Please keep in mind that while it may cost $30,000 for the upgrades, only about 50%-70% of the equipment cost is added to the total value. Labor and installation costs are not included in the financing.  When you call and speak to our account executives, they can help prepare a valuation that will help determine the value of the airplane with the upgraded avionics.

    This article was originally published by AOPA Aviation Finance Company on July 8, 2019.

  • Tracey Cheek posted an article
    Why Does Usage Matter? see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses how the use of your airplane affects your financing.

    How are you going to use your airplane? It's a question AOPA Finance asks its clients early and often. The airplane’s intended mission determines which finance companies will lend to you and the terms of the deal.

    It could be said that there are only two types of airplanes to a lender—a “nice-to-have asset” or a “working asset.” Personal use planes—shuttling company employees or the family for travel—are examples of “nice-to-have assets.” The expectation of the lender is the aircraft will fly a normal number of hours per year. An aircraft put on a Part 135 charter certificate or on leaseback with an FBO, however, will fly significantly more hours per year. They are considered “working assets” because of their high usage. The risk profiles of the two are very different.

    From the lender’s perspective, should the borrower go into default or the business into bankruptcy on the former, the airplane can be parked, turned over and sold without adversely impacting any creditors. The employees and the boss can return to flying commercial airlines. That’s why it’s called a “nice-to-have asset.” It’s not essential to the function of the business.

    The depreciation trajectory for these planes is less steep and more predictable. No lender can predict the absolute future value of an aircraft. But for this type of financing, lenders can predict a worst-case scenario of a reasonable return on the asset should they need to turn the airplane over. That’s an acceptable loan risk for many aircraft financers. An example of that acceptable risk is a 20-year amortization with 15% down on a relatively new plane. This is typical of what AOPA Finance helps its clients get.

    Unfortunately, AOPA Finance has worked with a number of clients who allowed a well-meaning accountant or friend suggest that additional use of the asset might have tax benefits and midway through the deal, they informed us that they’d changed their mind. We recently had a client who did just that.

    Well into the financing process, he decided he wanted to now leaseback the aircraft for rental. The financing had been structured around normal usage. Once the client decided on a high usage scenario, AOPA Finance was left presenting him with a worse loan package for the altered scenario than originally submitted. Had AOPA Finance known sooner about his leaseback intentions, a better option from a different lender could have been negotiated.

    The higher number of hours flown per year increases operational wear, which speeds up diminution of the airplane’s value, which accelerates the loss in equity. If the buyer gets a loan like the one above based on personal/business use but then puts the plane on a charter certificate, the likelihood of them being upside down on the equity of that plane within four years could be significant. When the time comes for them to sell and upgrade they can’t without bringing money to the table. Alternatively, should they go into default, the lender would be stuck, unable to recoup the loan amount.

    It's also harder for a lender to step in and turn over a high usage aircraft put on a charter certificate. That business exists to fly planes. In the case of a bankruptcy, a bankruptcy judge may acknowledge the revenue-generating potential of the airplane as a working asset. The judge could then rule that the airplane must remain in service. The plane would continue to fly, its value would continue to decline, and the lender would be forced to stand by while its asset continues to lose money from the additional use. That’s an unacceptable risk profile for many.

    Knowing which lenders will finance working asset aircraft is part of AOPA Finance’s expertise. Lenders that do these particular deals do so because they have an intimate knowledge of the makes and models of aircraft used for such operations. They know financing high usage aircraft is more akin to financing a business loan for a business. That’s an acceptable risk to them.

    That’s why it’s important to know early in the process how you intend to use your airplane and to stick with that decision. It's far better to know up front if the plane is a nice-to-have or a working asset rather than being inadvertently misled into thinking you can do something which will end up costing you dearly.

    Great rates. Great terms. Helpful and responsive reps. Three good reasons to turn to AOPA Aviation Finance when you are buying an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (75263) or click here to request a quote.

    This article was originally published by AOPA Aviation Finance Company on March 28, 2019.

  • Tracey Cheek posted an article
    Preparing for an Aircraft Purchase: How to Become the Most Prepared and Qualified Buyer see more

    NAFA member, Amanda Applegate, Partner at Aerlex Law Group, shares tips on how you can become the most prepared and qualified buyer when purchasing an aircraft.

    As the supply for quality pre-owned aircraft inventory has begun to shrink (especially in certain large cabin models), I see more buyers devoting time to advance preparations to ensure that they are perceived by sellers as the most qualified, attractive buyer. If you are in the market for an aircraft and want to expedite your purchase and closing, consider taking the following steps prior to making your first offer.

    Aircraft Broker/Consultant – Select a consultant or broker who knows the global market for the aircraft type you are purchasing. The broker/consultant must also be respected among his peers. There are certainly instances when an offer is not taken as seriously if the broker representing the buyer lacks experience with the particular category of aircraft being sought or has had previous conflicts with the broker on the other side.

    Aviation Counsel – Retain counsel in advance so she is ready to jump into a deal once the aircraft is selected. This will save valuable time later. Including a provision in the Letter of Intent (“LOI”) that the buyer will have an initial purchase agreement to the seller within three days of signing of the LOI will be very appealing to a seller. But this can only happen if aviation counsel has already been identified, retained, and is up-to-speed on the specifics of the deal.

    Technical Representative – Hire the right technical expert so that he is ready to start immediately once the aircraft is identified. The technical representative will review aircraft maintenance records and identify any inspection items that must be rectified. The technical representative can also help determine which aircraft is the best aircraft to make an offer on, based on aircraft pedigree.

    Lender – As in all transactions, sellers prefer cash deals. But if the aircraft is going to be financed, contact lenders and select a lending partner before a specific aircraft is chosen so that lenders are able to close quickly once the aircraft is identified.

    Management Company – Is the aircraft going to be managed by a third-party provider? Will charter be allowed on the aircraft when not being used by the aircraft owner? Selection of a management company early in the process means you will have the management company acting as your advocate throughout the acquisition. Many management companies don’t start charging management fees until the aircraft is acquired, so there is valuable advice available at little cost by selecting early.

    Insurance Broker – Decide if the insurance will be procured through the management company or if you need an insurance broker to provide the comprehensive coverage to diminish liability concerns.

    Escrow Agent – Identify your escrow agent and obtain their wire instructions so you are ready to send a deposit as soon as you have an accepted LOI. This demonstrates to the seller that you are a committed buyer.


    Your aviation counsel can help you determine the following: What entity will own the aircraft? Does the proposed structure make the most sense, based on the intended use of the aircraft and the potential tax implications for those who will use the aircraft? Is the ownership structure legal under the Federal Aviation Regulations?

    Retain a qualified aviation tax attorney and CPA who can review the ownership structure to make sure it is the best tax-plan available. 

    What are the sales and use tax consequences of the ownership structure?

    Are there adequate liability protections under the ownership structure or at least adequate insurance for all parties involved in the ownership structure?


    There are a number of miscellaneous items that often get negotiated in the LOI and purchase agreement. These items comprise a small amount of the overall transaction cost, and having flexibility on them may make your offer stand out. Understanding the cost of these items and your position on them before the LOI may allow your offer to appear more competitive than another offer. One approach is to have the seller pay all of these costs and then adjust the purchase price higher since that is the number the seller will most likely focus on. Some of the small items are Escrow Fees, Aircraft Movement Costs, Customs and Registration Change Fees (if applicable), and Registration Number Change Fees.

    Spending time and effort at the beginning of the aircraft acquisition process to prepare as much as possible, can lower the naturally-occurring stressors related to aircraft transactions.

    Please contact Amanda Applegate at 310-392-5200 or

    This article was originally published in BusinessAir Magazine, May 2019, Volume 29, No. 5.

  • Tracey Cheek posted an article
    A Decade of Aircraft Finance Evolution see more

    NAFA member, Ford von Weise, Global Head of Aircraft Finance at CIti Private Bank, shares why now is a good time to buy your business aircraft.

    A decade ago, the question of whether or not you could finance your business aircraft acquisition had a complicated answer. With the economic crash of ’08, the bubble burst and the lending industry became harsh, especially for what were deemed illiquid investments, including business assets such as aircraft. Unless you met the significantly increased financial requirements, encompassing net worth and capital liquidity, as well as having “investment grade” credit and a well-established relationship with the bank, then financing an aircraft likely wasn’t an option for you.

    Many banks raised interest rates across the board or got out of aircraft lending completely. This move was due to much tighter regulations that more than doubled the capital reserves requirement (new Basel III loan reserves), along with the quickly declining market value of both new and used aircraft. With these developments, coupled with heightened loan covenants (restrictions on borrower activities that could jeopardize their ability to repay), lending decreased and fewer transactions resulted. If you still pursued that aircraft investment, you either paid with cash, or waited for the aircraft market to shift again.

    That shift began taking place with the recovering economy. The demand for light and mid-size aircraft increased. New (non-bank) lenders began filling the space in the middle of the aircraft market, capital started flowing back into aircraft finance, and loans on aircraft once again became an appealing investment. The diversity in lenders brought diversity in financing options, and opened up the aircraft market to older models (although mandatory avionics technology upgrades – cost-prohibitive for some – now had to be considered).

    More customized financing, in the form of capital leases, operating leases, or traditional loans with varied terms, became available. The big banks leaned toward financing new or “like new” aircraft with secured loans, while non-bank lenders trended toward more varied aircraft and types of loans. Credit quality, along with the aircraft’s residual value, still were big factors for both. However, credit requirements lessened and residual values rose, preparing the aircraft lending market to take off. It wasn’t an awful time to buy a business aircraft anymore, but it also wasn’t the best, yet. 

    The big variable in financing terms had to do with the unpredictability of aircraft residual values. While it became easier to know what an aircraft was worth (compared to the years following the recession), residual values still were inconsistent. This situation was largely informed by the increasingly faster technology cycles in avionics, combined with new manufacturers’ discounting. Because banks look at an aircraft as an asset and need to secure collateral for its underlying worth, the make, model, and technology with which it is equipped (among other factors) influenced residual value and financing terms accordingly. 

    Demand for business aircraft continued to grow, along with financing capital in the aircraft finance market. Combined with more varied loan options and increasingly favorable terms, competition in the space soared. Banks revised their risk acceptance criteria in order to buy more volume, reducing financial requirements even more. Now, with lower interest rates, lower market values for business aircraft, mostly stable residual values, and an increasing number of buyers, “covenant light” transactions are increasing. 

    The developments in the aircraft finance market during the last decade may be complicated. Yet the question of whether or not to buy a business aircraft no longer is complicated: there’s no better time to buy! While we’re not back to the crazy deals of non-recourse lending seen prior to ’08, there’s little reason to wait to make an investment in business aircraft. However, borrow with caution. If you’re on the verge of acquiring a business aircraft, be sure to seek a lender with aviation specialization.

    This article was written by Ford von Weise and originally appeared in Business Aviation Advisor May/June 2019.

  • Tracey Cheek posted an article
    Airplane Acquisition Checklist Series: Part Two: Purchase and Delivery see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, follows up with part two of the Airplane Acquisition Checklist covering Purchase and Delivery.

    In Part 1 of this series on airplane acquisition, we discussed the most efficient way to approach buying an aircraft by using three checklists—Pre-purchase, Purchase and Aircraft Delivery. We also detailed the Pre-purchase Checklist.

    You're now staring at your ideal airplane on your screen. Time to run the Purchase Checklist:

    • Escrow, Letter of Intent and Purchase Agreement
    • Notify Lender
    • Pre-purchase Inspection
    • International Registry (if applicable)
    • Insurance
    • Title Search and Background Checks

    Escrow, Letter of Intent and Purchase Agreement. Escrow appears in all three checklists. Before it was a reminder to get your down payment together. Now it triggers you to move money into an escrow account that you set up through your escrow agent. If you're unfamiliar, AOPA has a strategic partnership with Aerospace Reports and as a member you’ll get discounted pricing and we can help get things set up. Likewise, if you’re working with another escrow company AOPA Finance can help coordinate that too. Plan on a deposit of 5%-10% of the aircraft's asking price.

    The letter of intent puts a clock on the deal, enables you to withdraw from it without penalty under certain conditions you and the seller negotiate, and establishes the parameters for the final price.

    This is also time to have your aviation attorney to draw up a detailed purchase agreement. If you don't have one, AOPA has a sample purchase agreement you can view here. You may want to consider signing up for Pilot Protection Services which includes consultation with an attorney regarding your purchase of an aircraft specific to your state and the legal requirements there. What it covers includes, but is not limited to, purchase amount, refund terms, deadlines for the process, representations and warranties, even the location of aircraft delivery.

    Notify Lender. The sooner you notify the lender, the sooner the lender can convert the pre-approval into an approval. Your lender will conduct background checks, damage history queries, etc. If the aircraft is missing logbooks, that may affect the stipulations of the pre-approval with the lender. Each has a set of tolerances for missing logbooks. Ask before you commit to a particular lender. AOPA Finance may be able to help.

    Pre-purchase Inspection. Even before you go to the airplane, have the logbooks sent to you. Nowadays, most sellers have their airframe and engine logbooks scanned into PDF format for ease of emailing. Get your mechanic started perusing those logs. You and your lender will want to know whether the logbooks are complete as soon as possible. An incomplete set can frequently impact the final price, and it may also affect the plane's insurability.

    In most instances, it's best that a mechanic other than the regular mechanic for that airplane perform the pre-purchase inspection. That may mean flying your assigned A&P to the airplane's location, with a hotel stay.

    International Registry. If your plane is subject to the Cape Town Treaty (see here for more info), you should begin the International Registry process simultaneously with contacting your escrow agent. It's complex and time-consuming and may affect the timing of your closing date. Subject to some exceptions, an aircraft must be registered with an appropriate aviation authority before it can be legally operated in any country. Suffice it to say, better to have your team of experts handle this checklist item.

    Insurance. As far as your lender is concerned, typically, they’ll require you to maintain full ground and flight insurance, as well as "Breach of Warranty Coverage" for the amount of the loan with a carrier acceptable to the lender.

    The lender must be named as "loss payee" and be protected by a "lien holder's endorsement." Once you have been placed with the appropriate lender, we will send you the specific insurance requirements for that lender.

    Title Search and Background Checks. Usually, this will be a straightforward process. If a plane has been in an incident, involved in an estate dispute or part of a bankruptcy, though, then things could get complicated. Your prospective insurer, your lender and your escrow agent may all play a part in these searches and checks. We've heard too many stories of airplane deals falling through at the last minute because of lack of due diligence by the buyer, so be thorough.

    All that complete, what's left is to take delivery. There's one last checklist to run—the Aircraft Delivery Checklist:

    • Punch List
    • Technical Acceptance
    • Escrow
    • Closing and Delivery

    Punch List. Here's where the due diligence of your title, escrow or insurance representatives pays off. They'll work with you to clear up any liens or estate claims. Similarly, the list of deficiencies and discrepancies your mechanic delivered will have been either rectified or negotiated into a lower price.

    Technical Acceptance. Once the Punch List is complete, the buyer then executes and delivers a Technical Acceptance Certificate to the seller. This says the buyer accepts the condition of the aircraft, subject to "no material damage and/or total loss affecting the aircraft upon or prior to arrival of the aircraft at the delivery location." The deposit usually becomes non-refundable at this stage.

    Escrow. The remaining purchase price is deposited into the escrow account, and the seller is paid.

    Closing and Delivery. The title is transferred and the aircraft is registered to the new owner, once the new owner insures it. Finally, the aircraft is turned over or delivered to you. Congratulations.

    Considering aircraft ownership? AOPA Aviation Finance will make your purchase experience as smooth as possible. For information about aircraft financing, please visit the website ( or call 1-800-62-PLANE (75263).

    Click here for The Acquisition Checklist: Part One

    This article was originally published by AOPA Aviation Finance Company on March 5, 2019.

  • NAFA Administrator posted an article
    AINsight: What First-time Bizjet Buyers Need To Know see more

    NAFA member, David G. Mayer, Partner at Shackelford, Bowen, McKinley & Norton, LLC, shares what first-time business jet buyers need to know.

    Virtually all first-time business jet buyers are sophisticated, successful, and motivated. Often consisting of high- and ultra-high-net-worth individuals and diverse private companies, these prospective buyers might be prompted to buy a business jet by fears of Covid-19 exposure or missing the 100 percent bonus depreciation deduction.

    As vaccine injections spread across the globe, some buyers have entered the market with the optimism that more personal/business travel lies ahead. Some first-time buyers, including millennials, buy jets of all sizes simply because they can.


    Buying a business jet is complicated but feasible and worth the effort if you can afford it. Private aircraft can inspire thoughts of positive life-changing possibilities. A jet is a time machine, a tool for productivity, and a haven of health and safety—especially during Covid-19. With the right purchase, a jet is a mode of travel that enhances convenience, security, autonomy, and comfort above and beyond any airline offering.

    Many first-time buyers recognize or admit, and most others quickly learn, that buying a jet is unlike purchasing real estate, automobiles, businesses, or other assets. You encounter unique, technical, and complex issues when purchasing and owning a jet.

    Some buyers insist that, having closed many other complex deals, they can buy a jet with little or no help, only later to discover the error of their ways. But first-time buyers will benefit if they educate themselves and ask for guidance. In any case, do not embark on this journey alone.


    How do you buy a jet? And who can help you figure out whether a jet will provide the benefits you seek rather than become an albatross? Before you begin a search for a jet or assemble a team of experts to help you, write down why you need or want a jet, where you will go, how many seats you need, and the number of hours you expect your aircraft to fly annually. In aviation jargon, you thereby establish your “mission profile.”

    As you progress into the purchasing effort, you should, as basic principles, insist on transparency from all people involved, keep an open mind, participate (there are no “dumb questions”), and be patient. The purchase will probably take longer and be more demanding on your time than you may anticipate.


    With the benefit of referrals and research, you can find quality professionals to hire for your transaction. But first, do not sign anything, not a letter of intent (LOI), an aircraft purchase agreement (APA), or other documents before engaging and obtaining input from both an aviation lawyer for new and used aircraft and an aircraft broker primarily for used aircraft. These individuals constitute the core of your team.

    A quality broker will evaluate aircraft of interest to you, parse your mission profile, advise you on appropriate jets for sale, both on and off-market, and guide you on the best make, model, price, and terms for you. Your broker will be your chief aircraft negotiator and usually will lead off the deal.

    Even though you have other lawyers whom you may think can handle the purchase—stop. Instead, rely on an aviation lawyer. He or she should practice extensively in business aviation, describe how and when to structure, negotiate, and document the legal aspects in the transaction.

    The subjects include, among others, FAA regulatory, tax, insurance, risk management, pilot services, international, finance, and aircraft management. Non-aviation lawyers lack the required knowledge to support you properly.

    Although transaction cost is a factor, do not choose a broker or lawyer based on the lowest fees. Choose on value, integrity, responsiveness, years of relevant experience, technical knowledge, and extensive resources in business aviation. These attributes also apply to any other specialist you may engage such as aircraft analysts, aircraft inspectors and appraisers, aviation insurance brokers, management companies, and aviation tax accountants. Ask your lawyer and/or broker for ideas.


    Your aviation lawyer should provide an overview of the steps from inception through the delivery of your aircraft. As a priority, she or he should propose structures for managing and operating your jet that complies with the Federal Aviation Regulations (FARs), including Part 91 (private operations) and Parts 119 and 135 (commercial/charter operations), as applicable; plan for tax minimization (IRS federal, international, state, and local); and develop strategies to mitigate your personal liability, including, when appropriate, forming a limited liability company (LLC).

    Liability insurance coverage is a critically important risk management tool. In the tight insurance market today, the insufficiency or unavailability of insurance can disrupt or stop your purchase. Engage one aviation insurance broker to find and place coverage acceptable to you after assessing your legal risks.

    If you intend to lease or finance your jet, you should ideally obtain a financing commitment before you sign an LOI to avoid negative ramifications such as lacking adequate cash to close or loss of your purchase deposit. Most financiers require strong aircraft collateral, so ask upfront if your jet passes muster.

    Try to remain objective no matter how strong your relationship with the financier–at least on your “hot button” issues. Amid a long list of loan or lease issues, for example, ask your lawyer to explain how the terms in your financier’s documents, including guaranties, might adversely affect your non-aircraft business operations, reach extra non-aircraft collateral, and limit how, when, and where you can use your aircraft.

    In short, your broker, lawyer, and other specialists on your deal team should enable you to achieve optimal after-tax results and protect you from making avoidable mistakes.


    Although a jet offers great benefits, it is essential to understand fully what you are getting into as a new or used jet owner—financially, emotionally, and operationally. Be prepared to hit some cost turbulence, including untimely or unexpected cash demands for capital improvements, maintenance, repairs, and compliance with FAA mandates.

    You can manage some of these expenses with an engine and other maintenance programs, attentive management company work, and manufacturer’s warranties. Importantly, you might be able to charter your aircraft to generate cash flow that partially offsets your costs and even pays some debt. But forget about making a profit or breaking even on chartering. In all events, you should feel comfortable that buying a jet makes sense without relying on unguaranteed charter cash flow to defray your costs.

    Work hard to avoid buyer’s remorse. Beware that you might feel some rush to buy and fly. While some first-time buyers cannot wait to take off, others realize that they should find other travel solutions. In all cases, as a first-time buyer, throttle your actions with a sober analysis of the costs and benefits.


    Buying a jet is a long-term proposition. So think about your missions and basics of other options to fly privately like purchasing a fractional share or a jet card, chartering, joining a membership or club program, trying a shared-use model, or traveling on a commercial airline. If you buy, you might still consider using these options to supplement or substitute private aircraft to operate your jet most efficiently and economically, or when it is unavailable, possibly as a result of chartering or repairs.


    Buying your first jet can be an exhilarating, emotional, and exhausting experience. It is a complicated and unique transaction, demanding plenty of patience and the use of skilled advisors. If you do obtain the help you need and travel the distance to closing, though, you will likely feel fortunate to reach your destination and satisfied when you arrive.

    This blog is purely informational and reflects the author’s experience and legal practice. It does not, and should not be construed to, provide advice of any kind, express or implied, create a lawyer-client relationship, or suggest or direct you to plan a course of action without expert guidance. Each person involved directly or indirectly in any issue, transaction, or other matter covered in this blog should inquire of, and rely on, his or her aviation professionals and other trusted advisors.

    This article was originally published by AINonline on March 12, 2021.


  • Tracey Cheek posted an article
    Enhance Your Chances of Aircraft Financing see more

    NAFA member, Greg Holst, President of 1st Source Bank's Aircraft Financing Group, discusses what prospective borrower's should know when it comes aircraft financing in an interview with Matt Harris, Commissioning Editor with AvBuyer.

    There are some obvious points and some less obvious ones a prospective borrower should know with regard to getting aircraft financing. What are these, and what do they all have in common? We asked Greg Holst, President, 1st Source Bank’s Aircraft Financing group.

    When searching for a financier to provide a loan for your next aircraft purchase, the natural thing would be to scrutinize the lender – and rightly so… Often, though, prospective borrowers fail to check their own expectations and commitments, which can lead to disappointment.

    With this in mind, Greg Holst spoke with us to offer more insight into what a borrower can do to send the right signals to a finance provider.

    AvBuyer: What are the basics that a borrower can expect all creditors to be looking for before approving an application for financing?

    Holst: There are various items that allow the lender a basic understanding of the loan request, a background and credit check, and some indication of the financial capacity and trends of the borrower. These include the following:

    • The name, address and State of organization, along with the date of birth and tax ID of the borrowing entity and any guarantors;
    • Information on who the principals of the primary borrowing/operating entity are, with brief bios;
    • Three years of financial statements and tax returns for each borrower/guarantor; and
    • Some details on the aircraft you wish to purchase, its purpose, and any loan structure preferences.

    AvBuyer: Presumably the ‘basics’ differ slightly from one lender to another. Where can borrowers get the information that will enable them to approach a preferred lender prepared?

    Holst: The best place to get the specific items a lender will be seeking is to go to the lender’s website or, better yet, call them and ask by phone.

    Each borrower’s situation is different. A conversation with an aircraft loan officer can help you learn specifics needed to properly evaluate your unique situation without unnecessary document production.

    AvBuyer: Moving beyond the basics, what are some of the less well known items someone seeking aircraft financing could do to enhance their chances, and make a lender’s decision easier?

    Holst: Most folks prefer to keep the activity of borrowing money as simple as possible. Actually, most lenders have this same goal too.

    However, having a few added details on you or your business can greatly benefit the processing speed of your request and may improve the terms or rate for which you qualify. Some topics to address or share may include:

    • The history/background of your business.
    • A business forecast, information on recent expansions or new contracts.
    • Detail on any previous whole aircraft ownership, fractional ownership or charter experience.
    • Reviewed or audited financial statements.
    • A synopsis of the pedigree/maintenance history of aircraft being purchased.
    • A pre-buy inspection or independent appraisal.
    • Detail on whether the aircraft is a beneficial business tool – and if so, how? Will it be required to generate revenue of its own?

    Borrowers should also research which lenders are leading activity in the aircraft category they’re pursuing financing in. Reputable dealers and brokers should be able to offer at least a couple of names that are knowledgeable and consistent lenders, and will provide good service - not just in the good times, but year-in, year-out.

    The bottom line is to seek a relationship, not just a rate.

    AvBuyer: With the used aircraft market picking up at this time, presumably there are plenty of lenders looking for opportunities. How can a borrower distinguish one seeking to cherry-pick opportunities in an up-market, versus one they can build a relationship with? What are the tell-tale signs a borrower should look for?

    Holst: This is difficult to determine at best. In favorable times most lenders are aggressive and put their best foot forward.

    A phone call to multiple lenders may tell you little about who is who in this field. Your best resource, however, is a seasoned dealer or a reputable aircraft broker. They will know who was doing business when the markets were on their knees and which lenders consistently work with their clients through challenging business cycles.

    Borrowers who expect to be long-term aircraft owners should seek a relationship with a lender that carries them through their successes and their setbacks with a minimum of pain.

    Essentially, experience and transaction volume are strong positive indicators.

    While rate-driven lenders may be inclined to cherry-pick opportunities, a relationship lender should be there for the long-haul, even in a down-market when you may need to renew your loan, or finance an engine or an upgrade.

    In Summary

    It’s clear that a prospective borrower should be thinking not only about their immediate need for financing, but for the longer-term. A good business plan for buying and operating an aircraft will also include a forecast on when it may be necessary to sell the aircraft and upgrade into something more capable.

    You can use that plan to assess whether a potential lender could also help with your projected need for your next purchase beyond the current one.

    The more prepared and open you are with your lender as to your present and future needs, the higher the likelihood both you and your lender will be able to develop a mutually beneficial relationship that can keep both parties happy for many years to come.

    More information from

    This article was originally published by AvBuyer on June 4, 2018.

  • NAFA Administrator posted an article
    Pay Off Loan or Invest? see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, answers your aircraft loan questions.

    If you’re in an airplane already, and you’re uncertain as to whether you should pay off your aircraft loan or keep the cash and invest it, our advice would be to hang on to the money.

    You might consider refinancing, but we caution against paying off the loan. With lending rates as low as they are right now, and with aircraft market values looking as though they’re going to continue to be as good, if not better, in the near term, now is the time to take a serious look at refinancing your aircraft loan. 

    At the very least, assess what you currently have. Could you do better? It’s a good time to compare and contrast.

    We’re in a period where more than likely prices are going to be flat to increasing. If that stays true, then you’re far better off—if you can afford the cash flow—keeping a loan on the airplane and investing the money in the market.

    Conversely, if you are concerned that your situation is too fluid and you foresee that things may go sideways, and you might not be able to afford the loan payments on your current aircraft, this is a great time to sell. Supply is low, demand is elevated, and airplane prices reflect those realities.

    That also applies to financing a new aircraft. For the most part, we’re seeing airplane values continuing to remain strong and trend upward. Low rates and appreciating values make a purchase now a smart move. So assuming you’re comfortable—you’re not going to lose your job—and you’re confident that you’ll have the cash flow to support your loan payments, then we would finance all day long.

    This article was originally published by AOPA Aviation Finance Company on February 3, 2021.


  • NAFA Administrator posted an article
    Webinar: How Are You Managing First and Second Wave of Deferrals? see more

    NAFA members Robert Lebano with Wells Fargo Equipment Finance, Michael Smith with Scope Aircraft Finance, and Gary Crichlow with Arc & Co discuss managing first and second wave of deferrals.

  • NAFA Administrator posted an article
    Webinar: Are Lenders Trying to Increase Yield in this Market? see more

    NAFA member Gary Crichlow with Arc & Co discusses lenders increasing yield in this market.

  • NAFA Administrator posted an article
    Webinar: How Have Lending Strategies Changed Due to the Pandemic see more

    NAFA members Robert Lebano with Wells Fargo Equipment Finance, Michael Smith with Scope Aircraft Finance, and Gary Crichlow with Arc & Co discuss changes in lending strategies due to the pandemic.