You’ve made the decision to purchase your first airplane, now what? One of the most important first steps is to start the aircraft financing process being as prepared as possible. You’re most likely familiar with the loan process for other larger purchases, like an automobile or a boat. Aviation financing, however, can be quite different. When financing an aircraft, lenders will not only look into your credit history, they will also want to assess the plane and the reason for the purchase.

We’ve listed below a few examples of standard questions you may be asked during the aircraft financing process. Not all of these factors can determine the final amount you are able to borrow.

1. What are your plans for use of the aircraft?

Buying a large plane with the intent of offering long-distance charter trips is a lot different than wanting to purchase a small aircraft for shorter flights. You need to be prepared to answer questions regarding your intended use for the plane and the types of trips you may be taking, what the purpose of those trips are, and who you may be transporting. As you consider the right type of aircraft for your intended purposes, be sure you have done your due diligence and research to ensure you choose the right aircraft that best suits your needs. We recommend reaching out to an aircraft broker to help find the right plane for you.

2. What are the airplane’s specifications?

Once the Aviation financing loan process has started, the lender will look closely at the specifications of the aircraft you are wishing to purchase and compare it to the value given in an aircraft pricing guide. Think of this as an equivalent for aircraft to Kelley Blue Book for cars. Typically, the lender will have an independent appraisal performed and offer a loan in the amount of the appraisal or the purchase price, depending on which is lower.

It’s a good idea to check the aircraft pricing guide’s listed price for the aircraft you are considering prior to working with a lender. If the aircraft is listed at a higher selling price than the list price in the aircraft pricing guide, you may end up paying out of pocket to cover the difference.

3. What is the history of the aircraft?

You will need to provide the lender with a complete and well-documented aircraft maintenance history for the plane you wish to purchase. The seller should readily provide this information prior to purchase. (If the seller does not have this info on hand or seems hesitant to provide it to you, this could be a big red flag.) Incomplete logs or certain types of damage history may prevent the lender from offering you financing.

A lender will ask you these questions because, in essence, they will be the co-owner of the aircraft until your loan is paid in full. Think of it this way – you would never cosign on a loan for someone without first knowing all the details. The more information you can provide to the lender, the better your chances of being approved for the loan will be.

What types of aircraft can we finance?

Our priority is to get you in the air, no matter the type of aircraft you are looking to finance – be it a jet, turboprop or special mission aircraft. We strive to give you the right loan to help open up the endless possibilities in the world of aviation.

Shearwater Global Capital provides customized, responsive, asset-based financing solutions for aircraft worldwide, including:

  • Business Jets of All Ages
  • Large Turboprop Aircraft
  • Special Mission aircraft
  • Aviation Equipment

Airplane financing terms

Without the restrictions of banks and large institutions, we are able to provide the aircraft finance that suits your needs best – without the need for a middle man or broker fee. When you are ready to get started with aircraft financing, our loan application process is convenient and quick, allowing us to provide you with a term sheet in as little as one hour with minimal to no credit checks.

Our typical loan structures are limited recourse or asset-based and tailored to meet the particular needs of the individual client. Utilizing the financed aircraft as collateral, we can close in as little as four weeks. We can also consider convertible debt or Hybrid – Debt /Equity investments.

Steps to a successful aircraft financing

At Shearwater Global, our flexibility allows us to structure deals to meet our client’s needs as much as possible. Our experienced and trusted specialists are well versed in the intricacies of aircraft finance and have a deep understanding of the issues that may arise.

Here are some important steps to get you in the air faster.

Gather supporting documentation

Let us know where you intend to register and base the aircraft and what aircraft management company you will be using. We are happy to provide recommendations.

Complete the application

Make sure you have filled out the application as completely as possible to avoid any delays in processing.

  • Get approved or pre-approved

We will work with you to provide a structure that works best for your aircraft purchase.

  • Negotiate a Balanced Purchase and Sales Agreement

It’s easy to get excited, but don’t just sign whatever the seller gives you. You need to have someone well versed about the process review any agreement to ensure it’s balanced. The purchase and sales agreement is a binding legal contract that sets the sales price and all conditions to close, including time to complete pre-buy, time to complete a transaction, where and how escrow and deposit are held, who is responsible for moving the aircraft, etc.

  • Schedule a Pre-Purchase Inspection

It is strongly recommended that you schedule an independent 3rd party pre-purchase inspection to avoid any surprises or conflict of interest once you take ownership of the aircraft.

  • Secure Insurance

You will be required to obtain hull and liability insurance coverage for your aircraft. We will gladly refer you to an aircraft insurance agent for a quote.

  • Prepare for the loan closing

Once the closing date has been set, be prepared to find a notary to notarize any documents that require notarization, and allow time for any overnight packages that will need to be sent back and forth for physical signatures.

At Shearwater, we understand that every aviation financing loan contract is unique to the individual situation, which is why our professional team works through every project to provide our clients with the maximum benefits and advantages to suit their needs. Whether you’ve been rejected by the bank in the past for aircraft financing or you simply want to go a different route with a non-institutional alternative, we offer financing that gives you wings. Contact us today to learn more.

If you would like to discuss your needs, contact us today.