IADA logo

The Tightening of Lending Rules for Business Aircraft Purchases

Contributed by Marc McKenzie with Duncan Aviation Aircraft Sales & Acquisitions

Financing the purchase of an older aircraft has become a frustrating and tedious task. Many large companies avoid this hassle by purchasing older aircraft with cash. However, many smaller businesses, who can only afford an older aircraft and must go through a lending institution, are finding fewer banks willing to talk to them.

Recently, Duncan Aviation had a buyer interested in purchasing an aircraft nearly 29 years old but still in great shape both inside and out. The prospect owned a small, successful business in the Midwest and was looking at purchasing a small business aircraft to expand into more regions of the United States. The aircraft fit his business needs perfectly.

The aircraft was manufactured in 1989 and had a Duncan Aviation maintenance track record. Aircraft specifications and photos were sent and it appeared we were on our way to price negotiations, intent letters and contracts. However, after calling the bank to see if they would finance, I got an entirely different answer. The financial officer told me it wasn’t likely they would even consider our buyer for financing.

He stated the age of the aircraft was a major factor. But even if the aircraft were 10 years newer and the buyer had already established a good financial relationship with them, the odds of financing would have only increased slightly. As it turned out, our buyer had never turned to this specific lending institution for any past financial needs. Therefore, the bank wasn't interested.

The financial officer was still very helpful in referring us to other lending institutions that might have been willing to finance an older aircraft. Unfortunately, the processes to get the needed approval proved to be both tedious and very time-consuming. In the end, the prospective buyer was unable to purchase the aircraft and it was sold to an operator who could pay outright in cash.

It is no surprise that lending rules have changed and the process is becoming longer with greater scrutiny on the buyer and aging aircraft. Even prior to the economic downturn, many banks discussed the lending rules with business aviation groups and stated there would be changes coming. Today, lenders are more willing to finance an aircraft five to 10 years old. Yet if an aircraft is more than 20 years, lending becomes more challenging.

All small business owners who have a vested interest in opening a flight department need to keep two key elements in mind.


  • Have an established financial relationship with a credible lending institution.

  • Be aware the age of the aircraft in consideration will be a factor.


Duncan Aviation provides aircraft acquisition sales and consignment support for business aircraft. Our in-house aircraft sales team reduces the confusion and stress of used aircraft transactions by managing the process for you. From advertising in prominent outlets, to negotiating purchase agreements, to coordinating prebuy services: we do it all.

Marc McKenzie is Duncan Aviation's Lead Market Analyst for Aircraft Sales, specializing in the after-market aircraft industry. His knowledge as an airframe maintenance tech gives him the practical and hands-on experience to accurately assess current market trends and aircraft resale. His aviation career began in 1989.
Duncan Aviation is a founding member of NARA. To read more articles by Duncan Aviation aircraft experts, visit Duncan Aviation’s blog, Duncan Download

Posted on: March 22, 2012