At SkyWatch, we're in daily communication with thousands of light aircraft owners, and one concern comes up repeatedly: financing. Whether you're buying your first Cessna or upgrading to a Cirrus, navigating aircraft financing can feel overwhelming. That's why we set out to learn from the best in the business, and we're sharing everything we discovered.
The Journey Begins
Over the past few months, our team connected with leading aviation finance experts to understand what really matters when financing a light aircraft. What we learned surprised us: aircraft financing is fundamentally different from any other type of loan you've encountered.
Starting With the Pilot's Perspective: Michael Smith at Scope
We began by speaking with Michael Smith, President of Scope Aircraft Finance. Michael provided us with a practical, pilot-focused view of what you need to succeed.
Michael's pro tip: Don't submit incomplete applications hoping to "figure it out later." Lenders will request more documentation based on your specific situation, but starting with a complete package shows you're serious and speeds up the process considerably.
Your Documentation Checklist
Michael walked us through what you'll need to prepare before applying. Start gathering these now to speed up your approval:
For Your Business/Entity:
- Three years of corporate tax returns, balance sheets, and P&L statements
- Articles of organization, operating agreements, and certificates of good standing
- EIN letter
For Guarantors:
- Personal tax returns (last 3 years) and K1s
- Personal financial statement showing assets and liabilities
- Recent bank and brokerage statements proving liquidity
- Complete debt schedule (all existing loans)
For the Aircraft:
- Spec sheet or sales listing
- Purchase agreement
- Estimated annual flight hours
- Hangar location and rental agreement
Michael emphasized the importance of guarantor information, especially detailed financial statements for any business where the guarantor owns 50% or more. Organization and thoroughness matter more than you might think.
The Lender's Perspective: Bryan Byers at Prism Bank
Next, we spoke with Bryan Byers, SVP, Director of Aviation Lending at Prism Bank and President of the National Aircraft Finance Association (NAFA). Bryan opened our eyes to just how specialized this field is from the lender's side.
"Aircraft finance is a niche within a niche. There are no standardized rules. Every lender uses their own approach."
At Prism, they evaluate approximately 20 different factors, ranking each on a 1-10 scale to determine loan terms. Cash flow, liquidity, credit rating, aircraft type, and how you'll use the aircraft all matter equally.
What shocked us most? Even if you're putting down 50-60%, lenders still require full financial disclosure. Why? As Bryan put it:
"Aircraft are movable assets with the fantastic ability to disappear."
The process is still largely manual. What Bryan calls:
"The pencil deal approach."
Automation remains challenging due to the complex, multifactorial nature of aviation underwriting. This means human relationships and thorough documentation matter even more.
The Critical Insurance-Financing Connection
Here's where things got particularly interesting for us at SkyWatch. Bryan emphasized that insurance isn't just a checkbox. It's central to the financing equation.
What Every Financed Aircraft Owner Must Know:
Your lender will require specific insurance provisions before they'll approve your loan. Missing even one can delay or kill your deal:
- Lienholder Notification: The bank must be listed on your policy
- Breach of Warranty Coverage: Protects the bank even if you violate policy terms (like unauthorized charter operations)
- 30-Day Cancellation Notice: Your insurer must notify the bank 30 days before cancelling. Ask your insurance provider to send notices via email AND mail for faster processing
Insurance lapses are rare, but when they happen, lenders can invoke personal guarantees and purchase expensive force-placed coverage on your behalf. Bottom line: maintain continuous coverage from day one.
What Current Market Rates Look Like
Our research revealed helpful benchmarks for planning your budget:
- Conventional Aircraft: Expect rates around 7-8% for most Cessnas, Pipers, and Cirrus aircraft
- Experimental Aircraft: Limited lender competition means rates typically range from 4.75-6.85%, but finding financing can be more challenging
- Loan Minimums: Most specialized aviation lenders start at $250,000 minimum loan amounts (aircraft valued $300,000+)
Many pilots work with finance brokers who act as intermediaries, gathering your documentation once, then shopping it to multiple banks simultaneously. This approach can save weeks of back-and-forth and help you secure better terms through competition.
Your Next Steps
Based on everything we learned from Michael, Bryan, and analyzing the broader market, here's your action plan:
- Start Early: Begin gathering financial documents 60-90 days before you plan to purchase. Tax returns, financial statements, and entity documents take time to compile.
- Get Your Insurance Quote First: Know what coverage will cost before finalizing your budget. Lenders need proof of insurability, and you'll want to factor premiums into your monthly costs.
- Understand the True Cost: Beyond principal and interest, budget for insurance, hangar, maintenance reserves, and annual inspections.
- Consider a Broker: If you're financing $250K+, a specialized aviation finance broker can save time and potentially secure better rates through lender competition.
- Maintain Clean Financials: Lenders evaluate your business differently than consumer loans. Strong cash flow and liquidity matter more than credit scores alone.
How SkyWatch Can Help
The interplay between financing and insurance is non-negotiable. That's why we're committed to making the insurance piece as seamless as possible.
When you're ready to finance your aircraft:
- Get a quick insurance quote to include in your loan application
- Ensure your policy meets all lender requirements (lienholder notification, BOC, etc.)
- Set up automated reminders so coverage never lapses
The SkyWatch team works with financed aircraft owners every day. We understand exactly what lenders need and can structure your policy correctly from the start.
Ready to move forward? Whether you're just starting to explore financing or have a purchase agreement in hand, getting your insurance quote early removes one major variable from the equation.
