While lending institutions are restoring practices popular prior to the financial meltdown, even with multi-million dollar transactions cash still remains king. Here is a primer on financing basics.
Let us take a quick look at the state of financing for business aircraft as 2015 dawned. The post-recession return to equity-based lending and the concurrent need for borrowers to provide more detailed financial disclosure, kept financing at about 25% of US retail business jet transactions through the end of the year.
Remember when you were a kid and when your parent said no when you asked to do something? You told her that all the other kids were doing it. Her reply? “Well, if all your friends were jumping off a bridge, would you do that?” A bit melodramatic, but she was reminding the young-you that you need to decide for your own what will work.
(This was first published in World Aircraft Sales magazine, and Avbuyer.com)
Fractional ownership lowers the barriers to purchasing and using a business aircraft. The capital needed to gain access to one or more aircraft is reduced by acquiring a shared interest in the asset. The idea is much like that of time-share vacation properties. When you don’t need full time access, why pay for the entire property?