What Type of Financing Options are Available to the GA Pilot?

Financing the purchase of aircraft is, unsurprisingly, not something your typical high street bank will consider, which has led to the establishment of specialist funders. We interviewed Andy Blundell, Director of Aviation and Marine Finance at UK merchant bank Close Brothers to find out more about this niche part of our industry.

AvBuyer  |  08th September 2017
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Tell us more about Close Brothers Aviation and Marine

Close Brothers Aviation and Marine has been financing the general and business aviation industry in Britain and Ireland for over four decades after first opening our doors in 1976 as Air and General Finance Limited.

A little known fact is that we are one of the founder members of the British Business General Aviation Association, with representation on the board of the main council for the last 17 years. In addition, we are also an active member of both the British Marine Federation and British Helicopter Association.

We typically employ people who have worked directly in the aviation sector or have a specialist aviation finance background, which helps us better understand the needs and requirements of our customers.


Who would you typically work with?

It’s fair to say that we don’t have a ‘typical’ customer because we work with all types of people, from private owners who have a passion for aviation all the way up to corporate operators with multi-aircraft fleets.

What type of aircraft do you finance?

We can finance a wide range of aircraft, including light piston aircraft, turboprops, helicopters, executive corporate jets and air ambulances. We also finance vintage aircraft and are a strong supporter of historic aviation in the UK and Ireland.

Aircraft are usually registered in the UK, USA, Ireland, Isle of Man or Guernsey.

We can finance brand new aircraft direct from the manufacturer, or pre-owned aircraft that are being sold from dealers, brokers or via private sale.

We can also consider refinancing aircraft that are already owned, to release capital for overhauls, upgrades, rebuilds or other purposes.

We can’t; however, finance aircraft operated by major airlines and the Armed Services.


How does aircraft finance work at Close Brothers Aviation and Marine?

The finance facilities are structured by way of a loan with security by way of a mortgage over the aircraft; facility fees normally apply. The mortgage will be registered at the CAA or another national aviation authority. When lending to companies and limited liability partnerships (LLPs) we also register a mortgage with Companies House. Personal guarantees may be required.

Financing the purchase of aircraft is, unsurprisingly, not something your typical high street bank will consider, which has led to the establishment of specialist funders. We interviewed Andy Blundell, Director of Aviation and Marine Finance at UK merchant bank Close Brothers to find out more about this niche part of our industry.

Andrew Blundell

Arranging the financing for the purchase of private aircraft is usually a straightforward process. A basic transaction for a small personal or corporate aircraft may proceed as follows:

1. The borrower provides information about themselves and their prospective aircraft to the lender.

2. The lender performs an appraisal of the aircraft's value and undertakes its own internal credit analysis.

The lender would normally expect the borrower to undertake their own pre-purchase survey of the aircraft.

3. The lender and borrower agree terms on the structure of the transaction.

4. The lender performs a title search based on the aircraft's registration number, in order to confirm that no liens or title defects are present. The lender then prepares documentation for the transaction, which includes dealing with the vendor, insurers, maintenance organisations and (where applicable) lawyers.

5. At closing, the loan documentation is executed and then funds are transferred.White Helicopter front view


How are the finance packages structured?

Deciding how to finance an aircraft is a key component in the ownership process. Any good finance house will work with their clients to understand the key drivers of each transaction, taking into account the proposed usage and maintenance cycle of the aircraft, together with the cash flow requirements of the borrower, to offer a tailored and bespoke solution for each transaction.

This is not just marketing speak – because of the nature of general and business aviation, you cannot apply a ‘one size fits all’ approach to transactions –each deal is unique in its own right.

The sheer variety of aircraft available is another factor to consider and a reason why it’s important each opportunity is assessed individually - we have helped customers purchase thousands of aircraft, ranging from small flying club aircraft to mid-sized corporate jets, historic warbird aircraft, two seat private helicopters to large corporate and air ambulance helicopters.

Facilities are usually structured over five to seven years, with final ‘balloon’ payments usually an option, depending on the customer requirements and the specific aircraft being financed. Facilities in sterling, Euro and US Dollars are available.


Is insurance required for aircraft or helicopters?

Yes – all aircraft must be comprehensively insured, with the Lender’s interest in the aircraft noted on the policy.


What are your views on the sector?

The general and business aviation sector is a vital part of the aviation industry and the wider UK economy. I feel strongly that its importance should not be overlooked. GA can sometimes suffer from the image of being a luxury industry. Behind the scenes, it is really no different from other more traditional industries.

It requires a significant support structure and provides employment for pilots, engineers, flying schools, engineering apprentices, insurers, airport workers, air traffic controllers, parts suppliers, administrators, regulators, caterers, tourist workers and managers. This in itself is a contributor to the national economy, but it can be multiplied several times by what the aircraft can do as a tool for business.

Many entrepreneurs are able to optimise their time and maximise the productivity of their business by using private aircraft; however, the use of aircraft as business tools is rarely advertised and happens quite discretely. As such the multiplier effects and subsequent benefits to the economy can also remain hidden.

Given the vital role that general and business aviation plays in the UK, Close Brothers is committed to remain an active supporter by continuing to finance aircraft for our customers.


Andrew Blundell

Director of Aviation and Marine Finance

Wimbledon Bridge House, 1 Hartfield Road

London, SW19 3RU

T: + 44 (0) 20 8390 9444 or F: + 44 (0) 20 8390 8211



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