Question 1

What is the difference between debt financing (loan), a finance lease and an operating lease for a corporate jet?

Accepted Answer

Debt financing (senior secured loan): the borrower retains legal ownership and tax benefits (e.g. depreciation), while the lender holds a mortgage on the aircraft. Finance lease: the financier or lessor retains title to the aircraft until the finance obligations have been met, then title passes to the borrower/lessee. Operating lease: the lessor retains ownership and takes the residual value risk, while the lessee pays for usage over a fixed term, at which point the aircraft is returned to the lessor.

Question 2

What Loan-to-Value (LTV) ratios and age limits apply to business jet loans?

Accepted Answer

For factory-new or late-model turbine aircraft (0–5 years old), senior debt facilities can reach 75% to 100% LTV. As aircraft age (10–15+ years), lenders reduce maximum LTVs to 60%–70% or compress loan amortisation terms to offset accelerated residual value depreciation. Most tier-one lenders cap maximum aircraft age at 15 to 20 years at loan maturity.

Question 3

Can financing be arranged for both new and pre-owned aircraft?

Accepted Answer

Yes. Finance facilities can be arranged for aircraft going through construction, factory-new acquisitions, pre-owned purchases, and refinancings designed to release equity or optimise capital costs for existing owners.

Question 4

How do traditional private banks compare to non-bank private credit funds for jet loans?

Accepted Answer

Private banks offer competitive interest rate margins, but typically enforce strict credit criteria, net-worth ratios, or collateralised assets under management (AUM) pledges. Specialist private debt funds and aviation lessors provide asset-backed debt without requiring wider banking relationships; while interest margins are higher, they execute faster, offer higher LTV ratios, and accept older airframes or complex international flight profiles.

Question 5

Does an aircraft's operational usage (private vs. charter) impact financing terms?

Accepted Answer

Yes. Charter revenue can support debt coverage, but higher annual flight hours accelerate engine and airframe depreciation, which may restrict available terms or alter lender appetite. With this in mind, some lenders will restrict charter hours flown to a set number per year.

Question 6

How do flight hours affect the finance covenants?

Accepted Answer

The anticipated annual flight hours correlate to the forecast depreciation of the aircraft, which is used by the lender to calculate the amortisation of the loan. The higher the flight hours, the higher the aircraft depreciation and finance amortisation — and vice versa.

Question 7

How do engine power-by-the-hour (PBTH) programs affect the finance covenants?

Accepted Answer

An aircraft's engines can represent up to 50% of the total asset value; as a result, lenders enforce strict usage and maintenance covenants, such as enrolling the engines, APU and airframe on fully transferable OEM maintenance reserve programs.

Question 8

What documentation is required to underwrite a business jet loan?

Accepted Answer

Underwriting requirements depend on the credit support on offer. For a personal guarantee, documents include proof of ultimate beneficial ownership (UBO), source of wealth and financial statements. For a corporate guarantee, documents include at least three years of company accounts (preferably audited), financial projections, company ownership structure and a detailed understanding of the company's activities. For both credit profiles, lenders will require source of wealth information along with the complete aircraft technical specifications, engine maintenance logs, and details of the intended operational profile.

Question 9

Can an aircraft registered offshore or held within a Special Purpose Vehicle (SPV) be financed?

Accepted Answer

Yes. Most business jets are held in SPVs for liability isolation, privacy and tax optimisation. Lenders routinely finance aircraft registered under major international registries provided the UBO or corporate entity supplies an acceptable guarantee.

Question 10

How does financing a new construction differ from purchasing a pre-owned business aircraft?

Accepted Answer

Pre-owned acquisitions are secured via a traditional aircraft mortgage upon title transfer, along with assignments of contractual rights and guarantees. When financing pre-delivery payments (PDP), lenders take an assignment of the buyer's rights under the OEM purchase agreement (including any manufacturer refund guarantee), a collateral assignment of pre-delivery payments made to date, and assignment of warranty rights. Once the aircraft is built and registered, the lender takes a first-priority mortgage over the airframe, filed with the relevant aircraft registry.

Question 11

How is business jet financing structured differently from yacht finance?

Accepted Answer

While both rely on secured asset finance, aircraft transactions require specialised attention to aviation registration jurisdictions, airworthiness certificates, continuous maintenance compliance, and operational profiles (wholly private versus commercial charter). These variables determine lender selection, loan covenants, and overall facility terms.

Question 12

Why choose JB Capital to arrange your business jet finance?

Accepted Answer

JB Capital Group gives clients whole-of-market access to global capital solutions through a single relationship, backed by decades of experience on both the lending and advisory sides of structured finance. Our team draws on long-standing relationships with capital providers and a track record that anticipates roadblocks before they arise, with each transaction handled by the relevant subject matter specialist. As a fully independent and confidential advisor, we have no conflicting loyalties — only aligned interests with the client, and we persevere until the project is complete.

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