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Financing a private aircraft 101

Private aviation has the potential to unlock a world that propels your business forward unlike anything you've experienced before. Flexibility and versatility that come with owning an aircraft allow you to reimagine the value of your time. With Textron Aviation's extensive lineup of aircraft solutions fit to everything from business to leisure to cargo to humanitarian efforts, the opportunities truly are endless.

If you're newer to aviation, the concept of owning an aircraft likely comes with a lot of questions. How do I finance an aircraft? What are my options? Is the financing process similar to other loans I've experienced? Do I need a financial adviser to assist?

The short answer is likely what you imagined; it depends. We recommend you tie in whomever you trust with your financial decisions and start here. While we cannot and do not offer financial or tax advice, we have put together some general information for your consideration as you work through aircraft financing with your trusted advisors.


Financing an aircraft is a choice you can make based on your personal or company's financial situation and preferences. Aircraft buyers can buy an aircraft with cash and the percentage of cash buyers has increased in recent years. But there are still a great number of aircraft owners who finance their aircraft purchase. Consult your financial advisor to determine what's best for you or your company.


  • Previous Aircraft Ownership

    Lenders take into consideration any previous aircraft ownership you may have had. This includes…

    • Previous turbine experience

    • Previous aircraft financing

    • Corporate vs. Commercial use

      Some lenders are more focused on one or the other.

    • Engine Programs

      Engine programs are often required for lenders on turbine aircraft. They can come from the engine manufacturer or the aircraft manufacturer depending on the situation and travel with the aircraft if you were to ever sell. They operate like an insurance policy where you pay a cost per flight hour to then have any future engine issues covered. Consider engine programs to be insurance against the residual. Engine Programs increase the value of the aircraft as well as positively differentiate the aircraft for future marketability.

    • Ownership Structure

      This helps lenders understand who all is responsible for financing of the aircraft.

  • Your Mission

    Lenders consider how you intend to utilize your aircraft. If you are operating under Part 91, you'll follow regulations for generally non-commercial aircraft. If you are operating under Part 135, you'll follow regulations for commercial operations, which are more restrictive and require more training. Some lenders only focus on Part 91 operators, so you'll want to keep that in mind. Lenders are also interested in whether you'll be using the aircraft more per year than the average owner, which in turn, may have an affect on the amortization of the aircraft.

  • Trade In Opportunities

    Just like if you're trading in your vehicle and looking at taking out a new car loan, lenders in aviation take into consideration any equity in a current aircraft.


Operating Lease

Again, similar to a vehicle, you can enter an operating lease on the aircraft for a number of years. In this situation, your name is not directly on or tied to the title and you have no equity in the aircraft. Rather, your lessor's name is on the title, and you handle payments through them. It is a common misconception that these leases allow for lower down payments. They are often similar to traditional loans in respect to out of pocket down payment requirements and dependent on buyer’s financial strength and credit history.



A loan or debt is the most widely understood way of economically financing an aircraft, as you likely have encountered a loan before on a vehicle, home, etc. The biggest difference is the term of the loan is amortized over the same period of time. If you have a 20-year mortgage, for instance, it is likely amortized over 20 years. However, in aviation, it is more common to have a shorter term (typically five years) amortized over a longer period of time. Once that term is up, you can decide if you'd prefer to sell and invest in a new aircraft, pay off the lump sum or refinance.


Commercial Banks

Who They Are

Banks that take deposits, manage relationships/wealth and typically have a presence regionally, nationally or potentially worldwide.


Due to many factors, commercial banks offer traditionally lower rates. They leverage relationships and can be easy to work with if you have a pre-existing relationship.

Leasing Companies

Who They Are

These are companies who have a greater stake in the aircraft. They'll want to lease the aircraft to you and then own the aircraft at the end of the term.


Your payments are typically similar or lower compared to commercial banks and there is no residual risk to you.


Who They Are

ECAs stands for Export Credit Agencies. Some examples include the United States Export Import Bank (Exlm) or Export Development Canada (EDC) and focus on exporting goods from their respective countries. For Textron Aviation, this would include exports from the United States to other countries.


You're likely to find lower interest rates internationally with ECAs. They also are available in many different countries around the world where commercial banks or local options may not be available or are more expensive.


  • 3 Years of Financials or Tax Returns on the Business

  • Ownership Structure of Company

  • Nature and History of Business

  • Formation Documents

  • Personal Financial Statements and 3 Years Tax Returns for Shareholders

    • a. If Personal Guarantors are required


  • Loan Amount/Advance Rate/Loan to Value

    These terms are all interchangeable. It is the amount you are financing with a lender, expressed as an amount or percent of purchase price.

  • Term vs. Amortization

    The term is the amount of time you have to pay on your loan. Amortization determines the rate at which the principal balance is reduced. In aviation, it is most common to have a shorter term than amortization period.

  • Floating vs. Fixed Rates

    The decision between these two options rests with you. Fixed rates, as indicated by the name, stay fixed throughout your loan while floating rates change periodically based on the market.

  • Index

    Your rate is tied to an index. It serves as the baseline of your rate with other contributing factors determining the rate you receive.

  • Spread

    Refers to the difference between the index and the ultimate rate you receive. It is based on your financial strength and condition.

  • Basis Point (bps)

    The name Basis Point comes from the base move between two percentages, indicating the spread. Basis Points are used to show the spread between interest rates. For example, 100 Basis Points equals 1%.

  • Approval vs Proposal

    A lender may send you a letter of interest or proposal indicating payment terms for a potential loan. It could indicate the lender is in the process of approving your loan. However, a proposal is not an approval. It is important to ensure you have your financing approved by the lender when you take delivery of your aircraft.

  • Closing Fees vs. Broker Fees

    Every bank charges closing fees but they vary across the different lenders in different parts of the world. Broker fees come into play if you bring in a broker to assist in the purchase/financing. Working with OEMs like Textron Aviation means you do not need a broker, but you may elect to utilize one.

  • Cape Town International Registry

    Serves as the international registry and protection of aircraft interests and assets. Your home country often requires additional registration processes.

  • Debt Covenants

    Refers to specific financial limitations as a condition with a loan. These can include restrictions on outside spending, minimum cash balances, or other restrictions that if violated, put you in default of your loan. They do not apply to all loans.


In summary, there are several different options when you’re looking at investing in your new aircraft. It serves to have some knowledge of these options and include your financial advisers in helping you make the best decision. When purchasing from Textron Aviation, representatives from our sister company, Textron Financial Corporation, become valuable advisers and help you navigate the aviation finance world.

Interested in finding the best aircraft for your mission? Contact a sales representative to start the process now.

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