financing

FOR IMMEDIATE RELEASE 
April 7, 2025
 

CONTACT INFORMATION 

Tracey Cheek  
TLC@NAFA.aero  
405.285.7005 
 

Perry Bridges 
414.316.6000 
perry@cofinance.com 
 

NAFA Welcomes New Member: Co Finance Ventures, Inc. 

Edgewater, MD (April 7, 2025) – The National Aircraft Finance Association (“NAFA”) is excited to announce that Co Finance Ventures, Inc. (“Co Finance”) has joined its distinguished network of aviation professionals. 

NAFA’s network has grown consistently over the years—comprised of the finest aircraft lenders and product and service providers in the industry, allowing members to access and work with every aspect of the aircraft finance community. Collectively, NAFA’s members support the financing of general and business aviation worldwide.  

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

"Co Finance is a new entrant to the aviation finance space and unique at that,” comments Perry Bridges, Chief Operating Officer at Co Finance. “Co-ownership of aircraft has grown exponentially in the last several years. Our mission is to provide a finance solution for those co-owners who prefer to utilize their capital in other ways. While Co Finance is a new entity, I've financed airplanes for a good portion of my career. I have great respect for the NAFA membership group and hope to be able to continue great collaboration to grow our business in a segment—co-ownership aircraft finance—that is not well supported.” 
 

About Co Finance Ventures, Inc.: 
At Co Finance, our mission is to blaze a trail as the premier service provider of aviation financing for co-ownership transactions. We leverage relationships with industry contacts—from banks to lawyers, brokers, and more—to streamline the financing of your co-owned aircraft. The services we offer throughout this process are designed to make financing effortless. 

To learn more, contact Perry Bridges at perry@cofinance.com.  

About NAFA:  
The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for more than 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 with 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. 

Contact Information: 
 

Tracey Cheek  
TLC@NAFA.aero  
405.285.7005 
 

Victorine Fleishman 
marketing@avtaxadvisors.com 

Jeremiah T. Sailor 
Jeremiah@AvTaxAdvisors.com  
https://avtaxadvisors.com  
 

NAFA Welcomes New Member: AvTax Advisors, PLLC 

Edgewater, MD — March 31, 2025 - The National Aircraft Finance Association (NAFA) is excited to announce that AvTax Advisors, PLLC, has joined its distinguished network of aviation professionals. 

 “AvTax Advisors, PLLC, 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 AvTax Advisors, PLLC, to our growing organization and enhancing opportunities for all our members.”  

Based in Tampa, Florida, AvTax Advisors, PLLC is a leading aviation and tax law firm specializing in business aviation transactions and tax planning. With extensive experience structuring aircraft purchases, sales, and ownership models, they help clients navigate complex federal and state tax regulations while ensuring FAA compliance. Their services include tax exemption planning, entity formation, regulatory compliance, and audit representation. By providing tailored, strategic legal guidance, AvTax Advisors, PLLC helps aircraft owners and businesses minimize tax liability and optimize operational efficiency. NAFA is proud to welcome AvTax Advisors, PLLC to our network.  
 

About AvTax Advisors, PLLC: 
AvTax Advisors, PLLC  is an aviation and tax law firm in Tampa, Florida with a Clear, Accurate, and Vast Understanding of Business Aviation & Tax Law.  

Owning and operating a private aircraft offers unparalleled convenience and flexibility, but it also involves complex tax considerations. In planning and structuring thousands of aircraft transactions, AvTax Advisors, PLLC has marshaled extensive knowledge of federal aviation, tax and regulatory issues. We are acknowledged industry leaders with the ability to handle aviation matters from start to finish. Clients engage us at the beginning of their aircraft acquisition journey, and we work alongside brokers and technical experts to negotiate and structure deals with the clients' best interests in mind. Our exceptional aviation tax skills enable us to fill a dual role as we advise on aircraft ownership and operating structures that will minimize liability for state sales tax and property tax, and maximize income tax deductions while ensuring FAA compliance. 

At AvTax Advisors, we fly above tax and regulatory complexities to provide client-centered solutions. We offer flexible engagement terms to provide tailored, strategic legal guidance at an affordable cost. Whether you need tax planning, compliance support, or advice on transactions, you can depend on AvTax Advisors, PLLC—Your Trusted Co-Pilot in Aviation Tax Planning and Compliance.  

To learn more, visit http://www.avtaxadvisors.com.

About NAFA:  
The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for more than 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 with 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. 

NAFA member, David G. Mayer, Partner with Shackelford, McKinley & Norton, discusses how the ever-shifting U.S. strategy adds complexity and costs to business aircraft transactions.

The new or threatened tariffs announced by the Trump Administration and other countries may cost more than you realize when buying and financing private aircraft. The on-again, off-again U.S. tariff activity has roiled the U.S. financial markets, triggered retaliatory tariffs, alarmed aircraft stakeholders, and created wide uncertainty in global trade.

The Trump Administration has imposed, modified, and/or delayed the imposition of tariffs on specific countries to achieve certain foreign policy and economic goals. To stop massive shipments of fentanyl into the U.S., the Administration has imposed tariffs on Mexico and Canada and a 20 percent tariff on Chinese-origin goods to make U.S.-origin products more price competitive with cheaper non-U.S. origin metal sellers. This tariff may affect the metals used by aircraft manufacturers (OEMs), repair facilities, and their suppliers.

Transacting Steps and Process

Purchasing an aircraft without addressing tariffs is not an option. It is imperative to rely on customs brokers, lawyers and other import/export experts in deal teams to conduct a real-time analysis of potential tariffs, including direct and retaliatory tariffs from the U.S., Canada, or Mexico.

Their objectives should include determining the application, percentage, and effective dates of the tariffs on the aircraft being purchased. Second, they should calculate the tariff based on the purchase price if tariffs apply. The analysis should consider such tariff-based factors as the country of origin or transformation of an aircraft or specific product codes under the U.S. Harmonized Tariff Schedule (HTSUS). HTSUS is the primary resource for identifying tariff rates on aircraft imported into the United States. Third, they should try to structure the importation timing and terms to minimize the tariff cost.

As a byproduct of tariffs, the parties should brace for higher transaction costs and processing delays from the pre-tariff duty-free norm. The deal team will also negotiate purchase or financing documentation and interact with U.S. Customs and Border Protection officials.

Read full article here

This article was originally published by AIN on March 14, 2025.

Contact Information: 

Tracey Cheek  
TLC@NAFA.aero
405.285.7005 
 

Eric Helt 
EHelt@celticbank.com 
https://celticbank.com  

NAFA Welcomes New Member: Celtic Bank 
 

Edgewater, MD — March 27, 2025 - The National Aircraft Finance Association (NAFA) is excited to announce that Celtic Bank, has joined its distinguished network of aviation professionals. 

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

Specializing in aircraft financing, Celtic Bank provides flexible loan solutions for business-critical aircraft, including turboprops, small jets, and rotary aircraft. With competitive rates, quick approvals, and tailored loan structures, they help aircraft owners and operators secure financing that aligns with their operational and financial goals. Their expertise extends to borrowers who supplement financing with charter income, offering customized solutions to optimize investments. By delivering fast and efficient funding, Celtic Bank ensures that clients can acquire and maintain their aircraft with confidence. NAFA is proud to welcome Celtic Bank to our network.  
 

About Celtic Bank: 

At Celtic Bank, we understand the unique needs of aircraft owners and operators. Whether you’re looking to finance a turboprop, small jet, or rotary aircraft, our flexible loan terms and quick turnaround times ensure you get the financing you need when you need it most. With aggressive rates and personalized solutions, we specialize in financing aircraft that are business critical. For borrowers who can augment their monthly payments with charter income, we offer tailored financing that supports your goals and operations. 

Learn more about Celtic Bank. 
 

About NAFA:  

The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for more than 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 with 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. 

Contact Information: 

Tracey Cheek  
TLC@NAFA.aero  
405.285.7005 

Kenneth Parzygnat 
954.931.0596 
kenparz@v1capitaladvisors.com 
www.v1capitalaircraftfinance.com 
 

NAFA Welcomes New Member: V1 Capital Aircraft Financing 

Edgewater, MD — March 14, 2025 - The National Aircraft Finance Association (NAFA) is excited to announce that V1 Capital Aircraft Financing has joined its distinguished network of aviation professionals. V1 Capital Aircraft Financing is a leader in connecting clients with a wide array of specialized lenders through its extensive network of lending partners. Their mission is to provide tailored, flexible financing solutions to meet the specific needs of their clients. 

“NAFA members facilitate the financing of general and business aviation aircraft on a global scale,” said Ed Medici, NAFA President. “We welcome and support V1 Capital Financing’s services that play a role in advancing the interests of NAFA members within the aviation industry.”  

Their commitment to ensuring the best possible financing outcome for each client is evident in their personalized approach. V1 Capital Aircraft Financing’s range of services caters to various types of aircraft, from single-engine planes to multi-engine jets and helicopters. Whether it’s a personal, corporate, or utility aircraft purchase, they structure custom financing to meet each client’s unique needs and goals. V1 Capital Aircraft Financing’s depth of industry knowledge and strategic partnerships make them a valuable addition to NAFA’s growing network of aviation professionals. 

About V1 Capital Aircraft Financing: 

At V1 Capital Aircraft Financing, we take pride in offering a streamlined and efficient financing process that saves you time, hassle, and money. With over 30 years of industry experience, we leverage our deep knowledge to connect you directly with the lender offering the right product for your specific needs. This approach eliminates the need for you to repeatedly submit financial information to multiple lenders, saving you the effort and time of searching for the perfect match for your profile, usage, and equipment requirements. Our strong relationships with lenders allow us to secure more favorable terms on your behalf. By prequalifying borrowers, we reduce the lenders' workload of vetting unqualified applicants, which often results in better terms and cost savings that we pass directly to you. Learn more at https://www.v1capitalaircraftfinance.com.

About NAFA:  

The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for more than 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 with 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. 

Contact Information: 

Tracey Cheek  
TLC@NAFA.aero  
405.285.7005 

Jaime Steel
Jaime@steelaviation.com 
www.steelaviation.com 
 

NAFA Welcomes New Member: Steel Aviation 
 

Edgewater, MD — March 13, 2025 - The National Aircraft Finance Association (NAFA) is excited to announce that Steel Aviation has joined its distinguished network of aviation professionals, a company with nearly 25 years of industry experience in aviation financing.  

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

Steel Aviation provides a comprehensive range of services, including aircraft sales, acquisitions, financing, insurance, maintenance, and interior and paint services. The company helps clients secure financing for any aircraft purchase, not limited to their own inventory, giving customers the flexibility to purchase from any seller. Steel Aviation’s expertise and dedication to simplifying aviation financing are key reasons why they are a valuable addition to NAFA's network of industry professionals. 

About Steel Aviation: 

With nearly 25 years of industry experience, Steel Aviation makes aviation financing seamless. We know your time is valuable, so we focus on making the financing process as easy and efficient as possible. From start to finish, we work directly with our trusted lenders to ensure a quick, hassle-free experience — so you can focus on what you do best. 

Think of us as your personal assistant in aviation financing. Thanks to our strong relationships with exclusive lenders, we can offer you the best rates and terms in the industry, ensuring you get the most favorable financing options available. 

Get pre-approved today and boost your negotiating power. Purchase your new aircraft from any seller, not just Steel’s inventory. Whether you’re looking for something big or small, Steel Aviation is here to finance them all. Learn more at http://www.steelaviation.com.

About NAFA:  

The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for more than 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 with 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 purchasers and financiers fail to appreciate the implication of how an aircraft will be operated post closing, whether under FAR Part 135 or Part 91, during the sales process. Parts 135 & 91 apply to operations of aircraft and the particulars of these parts will govern not only how, when, and where the aircraft can be operated post-closing, but also what equipment, certification and licensing the aircraft and crew will need as well as the availability of aircraft and engine support programs. In addition to the FARs, depending on the proposed operation, the economic aviation regulations of DOT may also need to be considered.

From on-demand air taxi operators to private non-commercial operators, operational issues can be complex and can create challenges for structural arrangements that purchasers as well as financiers may not anticipate. This may be particularly true if the intent is for operation of the aircraft not only domestically, but also internationally. While international operations may present unique challenges, such challenges can be overcome without jeopardizing the value or security of the aircraft.

In this webinar, we discussed:

• What lessors/financiers need to know about commercial/non-commercial and domestic/international operations and the implications of these operations on leases and security interests.
• What questions transaction attorneys should consider during the sale/purchase process in counseling purchasers and financiers regarding the intended post-closing operation of an aircraft.
• What insurance brokers need to know for proper underwriting and to ensure proper coverage based upon the post-closing operations of the aircraft and equipment, certification and licensing required for aircraft, operators, and crew.

View the Recording
 

This NAFA webinar originally aired on March 12, 2025.

Are you considering refinancing your business aircraft in the near future? What advice can the experts give, and what questions should you be asking to determine if it’s the right move? Gerrard Cowan explores.

Business aircraft owners have a range of refinancing options related to their aircraft, enabling them to secure better terms or access capital for other uses. But what are the key questions they need to ask themselves and their lenders before pursuing the refinancing option, and what tips do the experts offer?

Refinancing a business or personal aircraft can be a good option in a range of scenarios. For example, a National Aircraft Finance Association (NAFA) spokesperson told AvBuyer it is opportune when interest rates change – for example, when the financial status of the borrower changes or improves, or when a borrower needs to free up cashflows.

Additionally, refinancing could be an option “if the value of the aircraft increases, if the current structure of the loan becomes unfavorable for any reason, or if there are changes in tax laws or the position of the owner that may make refinancing desirable”, the spokesperson adds.

Business aircraft owners should first consider their current terms compared to the new terms, interest rates, the cost of refinancing, aircraft values and market conditions, any tax implications and their personal debt profile and creditworthiness, the spokesperson highlights.

Chris Lee, President of the Aircraft Finance Division in 1st Source Bank, believes refinancing could be a good way to free up capital for other areas, because equity in an aircraft typically isn’t as productive as equity invested in the owner’s business.

“We saw a run-up in aircraft values over the past four years, but values in business aircraft have begun to normalize now,” he says. “Even so, aircraft values remain strong and refinancing while aircraft values are high can help you maximize the efforts of refinancing.”

Read full article here.

This article was originally published by AvBuyer on November 11, 2024.

NAFA member Juan Carlos Ferrer, Partner with Holland & Knight, discusses the important differences between domestic and cross-border aviation finance transactions.

Though there are some similarities between financing an aircraft registered in the U.S. versus financing an aircraft registered abroad, in truth those similarities are vastly outweighed by the differences and complexities associated with a cross-border aircraft financing. The following is an overview of some important differences between domestic and cross-border aircraft finance transactions, as well as some practice pointers to assist in navigating the potential pitfalls of financing a non-U.S.-registered aircraft.

Cape Town Convention

Financing an aircraft registered in a country that has ratified the Cape Town Convention (CTC) can provide comfort to aircraft financiers that they will ultimately be able to timely foreclose on the aircraft should a default occur. Many countries have ratified the CTC, but a surprising number of countries have not. And even among those countries that have ratified the CTC, it is important to fully understand what elections the ratifying country has made to govern creditors' rights in relation to aircraft. Countries that have opted for Alternative A of the CTC afford far greater protections to creditors than those that opt for Alternative B or for reliance on that country's existing insolvency laws.

Owner Registry vs. Operator Registry

The U.S. Federal Aviation Administration (FAA) registry is an "owner-based" registry where the eligibility requirements for obtaining U.S. registration for an aircraft are determined based on the citizenship of the owner of the aircraft. The citizenship of the operator is irrelevant for purposes of registering an aircraft in the U.S. However, most foreign aircraft registries are "operator-based" registries that look to the citizenship of the operator – and not the owner – of an aircraft in order to determine eligibility to register an aircraft in that jurisdiction. Understanding these types of nuances and how to deal with the challenges, as well as the opportunities that they present, is key to properly structuring cross-border aircraft finance transactions.

Read full article here

This article was originally published by Holland & Knight on September 23, 2024. 

Can you afford a private jet? Beyond the purchase price, it’s crucial to evaluate the full scope of ownership costs. From hourly Direct Operating Costs (DOCs) to maintenance, fuel, and crew expenses, understanding these variables will determine your actual budget. Analyzing these factors in relation to your planned usage will help you gauge the true cost of ownership. Additionally, considering unexpected costs and fluctuations in expenses will give you a more accurate financial picture. Continue reading to learn more about what it truly means to afford a private jet, including how to assess the comprehensive costs beyond just the purchase price.

Let’s assume you’ve found what looks like the ideal aircraft to buy for your mission requirement. The purchase price falls within range, but does that necessarily mean you can afford it?

Analyzing the hourly Direct Operating Costs (DOCs) of the aircraft is vital. It is particularly important to look at the DOC from the perspective of the average stage length you anticipate flying, as well as how these might change on shorter or longer flights.

The DOC (which we’ll refer to as the Variable Costs) should include fuel, maintenance, landing, parking and ground handling fees, spare parts, crew expenses (including layovers), and catering costs, among others.

You’ll need to establish several assumptions when preparing a variable cost analysis which will form the baseline of your assessment.

Read full article here

This article was originally published by NAFA member CFS Jets on August 14, 2024.

FOR IMMEDIATE RELEASE: August 2, 2024

Contact: Tracey Cheek  
tlc@nafa.aero   
405-285-7005 

Alex Martin
alex@aircraftcash.com
859-694-8589  

NAFA Welcomes New Member: Aircraft Guarantee & Lending  

Edgewater, MD – August 2, 2024—The National Aircraft Finance Association (NAFA) is pleased to announce that Aircraft Guarantee & Lending has recently joined its network of aviation professionals. Aircraft Guarantee & Lending (AGL) is an aircraft loan and insurance brokerage. 

“Aircraft Guarantee & Lending 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 AGL to our growing organization and enhancing opportunities for all our members.”  

About Aircraft Guarantee & Lending: 
Aircraft Guarantee and Lending is a family-oriented company dedicated to providing comprehensive financial solutions for the aviation industry. With a focus on aircraft financing and insurance, they offer competitive rates and personalized service to clients nationwide. Their partnership with AirMart Aircraft Sales & Brokerage allows them to streamline the aircraft purchasing process and provide clients with a one-stop shop for all their aviation needs. 

Additionally, Aircraft Guarantee and Lending is committed to supporting the aviation community through various initiatives and partnerships. They are known for their exceptional customer service and dedication to building long-term relationships with their clients. “AGL partners with multiple banks that are NAFA members,” says spokesperson Alex Martin, “We are excited to grow our banking relationship with new banks and provide banks with indirect aircraft loan volume.”  

To learn more, visit aircraftcash.com.  

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. 

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  
405-285-7005

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.