The acquisition and financing of a business aircraft may appear to be no different than the purchase of any other capital asset. But it is – dramatically so. Thus, the most prudent step is to seek high-quality assistance. Nearly 90 percent of all business aircraft transactions, new and pre-owned, involve a professional brokerage and acquisition firm. These experts are in the market all day, every day, and have experienced nearly every variation of aircraft financing along with a full range of providers – the good, the bad, and the ugly. Solicit their input at the outset. There is no cost for their knowledge, and they can help you avoid a costly mistake.
Lender Options. Two basic sources of business aircraft loans exist: Bank lenders and Non-Bank lenders. Within the former category there are local, regional and large national institutions. The Non-Bank lender segment has two variations. First is OEM captive finance organizations, whose primary goal is to support sales of their OEMs’ aircraft. Second is commercial finance companies / independent financiers. These organizations are typically backed by private equity or insurance company capital. Both compete with banks, and each other, to provide aircraft acquisition financing.
Beware the Unaware. Working with your existing local bank to finance a business aircraft initially would seem logical. But you then need to ascertain that the loan officer truly understands the intricacies of aircraft financing, along with the myriad of state, federal and international regulations that govern acquisition, ownership and operation, and who has relationships with tax, accounting, legal and other professionals knowledgeable about business aviation.
Bank lenders and Non-Bank lenders with business aircraft portfolios can be expected to possess the requisite industry, marketplace and product knowledge to also assist you in areas outside of just the financing. This is especially true when there are marketplace tenures and high numbers of annual transactions. But, not all lenders are created equal in terms of expertise, longevity, and levels of service. Your challenge is to select those that have the capability to assist you, provide quality service, and who want a long-term relationship.
At the end of the day, regardless of which lender type you choose, your goal is to determine the right combination that unlocks the right vault.