Most aircraft acquisitions involve some form of financing. Even buyers who could pay cash often choose to finance for tax planning, cash flow management, or to preserve liquidity for other investments. The aircraft financing market is specialized, and understanding your options helps you secure the best terms for your situation.

Financing Options Overview

1. Conventional Bank Loans

Traditional secured loans from banks specializing in aviation finance remain the most common financing method for business aircraft.

Qualification Criteria

• Strong personal or corporate credit
• Demonstrated ability to service the debt (income or cash flow)
• Net worth typically 3-5x the loan amount
• Business purpose documentation (for business aircraft)
• Personal guarantee required in most cases

2. Operating Leases

An operating lease allows you to use the aircraft without owning it. The leasing company retains ownership and takes the depreciation benefit.

3. Finance Leases (Capital Leases)

A finance lease is structured so that the lessee is treated as the economic owner for tax purposes, receiving the depreciation benefit. At the end of the lease, the lessee typically has a purchase option at a predetermined residual value.

• Down payment: Typically 10-20%
• Term: 5-10 years
• Tax treatment: Lessee claims depreciation and interest deductions
• End of term: Purchase option at fair market value or predetermined residual
• Best for: Buyers who want depreciation benefits with lower upfront capital than a conventional purchase

4. SBA Loans

The US Small Business Administration (SBA) guarantees loans for qualifying businesses acquiring aircraft for business use. SBA 7(a) and 504 loan programs can be used for aircraft:

• Down payment: As low as 10%
• Terms: Up to 10 years
• Rates: Typically prime + 1-3%
• Maximum amount: SBA 7(a) loans up to $5 million
• Qualification: Must be a qualifying small business with demonstrated business use for the aircraft
• Processing time: Longer than conventional aviation loans — typically 60-90 days

5. Private Lenders and Asset-Based Lending

For borrowers who may not qualify for conventional bank financing — due to non-traditional income, international residence, or complex business structures — private lenders offer alternative financing:

• Higher rates: Typically 2-4% above conventional bank rates
• More flexible qualification: Asset-based rather than income-based underwriting
• Faster closings: Some private lenders can close in 2-3 weeks
• Cross-collateralization: May use other assets as additional security
• International borrowers: Some private lenders serve non-US borrowers who cannot access domestic bank financing

Choosing the Right Structure

The Financing Process

1. Pre-qualification: Contact 2-3 aviation lenders to understand terms you can expect
2. Application: Submit financial documentation (tax returns, financial statements, aircraft details)
3. Underwriting: Lender evaluates creditworthiness, aircraft value, and transaction structure
4. Commitment letter: Lender issues a commitment with terms and conditions
5. Documentation: Legal documents prepared (loan agreement, security agreement, UCC filings)
6. Closing: Funds disbursed, aircraft title transferred, security interest filed

Timeline: 3-6 weeks for conventional bank loans; 2-3 weeks for private lenders; 60-90 days for SBA loans.

Tips for Getting the Best Terms

• Shop multiple lenders: Rates and terms vary significantly between aviation lenders
• Consider a broker: Aviation finance brokers can access multiple lending sources and negotiate on your behalf
• Strong down payment: A larger down payment (25%+) typically improves your rate
• Clean financials: Well-organized, current financial documentation speeds underwriting
• Aircraft selection: Lenders prefer popular, liquid aircraft types that are easy to remarket if needed
• Timing: Start the financing process in parallel with the acquisition process — do not wait until you have a signed LOI

Discuss Financing Options