Guest basscheffers Posted March 21, 2009 Share Posted March 21, 2009 Hi, I am trying to buy the aircraft I am training in. Good price, going to keep it on-line with existing customer base that breaks it even. Could do more with some promotion, for sure. I offer to pay a third out of my pocket and the rest mortgaged against the plane. You'd think this is a no brainer for any bank, but my broker (experienced in aircraft finance) can't get anyone to commit. I could do the whole thing out of my home equity, but because it is going to be in a p/l company and stay on-line, I'd like to keep personal and business finance separate. Anyone have any ideas? Tips of lenders that were helpful recently? Thanks for any advice! Link to comment Share on other sites More sharing options...
Guest drizzt1978 Posted March 21, 2009 Share Posted March 21, 2009 Can you some how use the house as a guarantee, if you can??Have you been to the bank about a personal/business loan? Just thinking out loud? Link to comment Share on other sites More sharing options...
Guest watto Posted March 21, 2009 Share Posted March 21, 2009 I used my home as equity and it has paid off with the interest rates as they are the drop has wiped out what would have been a large chunk of the AC payment. I am happy better than a fixed high interest personal loan at the moment. Watto Link to comment Share on other sites More sharing options...
Bidgee Posted March 22, 2009 Share Posted March 22, 2009 What type of finance have you been applying for? Have your talked about an unsecured goods and chattle mortgage with the financiers? Scott Link to comment Share on other sites More sharing options...
Guest basscheffers Posted March 22, 2009 Share Posted March 22, 2009 I have been looking at a chattel mortgage. The reasons I didn't want to do it from my home equity is because it will be run like a business, in a P/L company. Basically, if we were to lose it all, we'd lose someone else's money that way. Keep everything as separate as possible. But it looks like I may have to finance it myself. It would be easy as I can just take the money out from the redraw facility - the difference between current principal and maximum loan is plenty to cover it. (I'd loan that money to the company that will be set up to own the aircraft) I am going to crunch those numbers tonight... Link to comment Share on other sites More sharing options...
Guest drizzt1978 Posted March 22, 2009 Share Posted March 22, 2009 Perhaps if you do it this way, after a year of breaking even or making profit, you could finance it with somebody else? When I have done Commercial Hire Purchase, the directors of the company are the guarantors, and that includes there houses.... Link to comment Share on other sites More sharing options...
Guest basscheffers Posted March 23, 2009 Share Posted March 23, 2009 Yes, that's what I was thinking: tell my broker to keep an eye on the market and try again later. He's got all sorts of problems for different clients too; like a woodworker with a profitable business that can't get a loan to expand. But everyone is still financing trucks. How is that less risky? If you assume the woodworker is going to go out of business, the transport company would not need those trucks to transport his goods either! Banks are just idiots if you ask me. For my case, I think there really is a very low risk in financing myself; the only thing that could happen is a fatality or serious injury, with the company somehow being held responsible and claimants getting the assets. Quite unlikely if you are well insured, are responsible about maintenance and follow the rules... If the company just fails you'd get most of your money back by selling the asset. Link to comment Share on other sites More sharing options...
GraemeK Posted March 23, 2009 Share Posted March 23, 2009 .... in a P/L company. Basically, if we were to lose it all, we'd lose someone else's money that way. Keep everything as separate as possible. Most likely a financier would ask you for a directors' guarantee anyway, if the company has limited assets ..... Link to comment Share on other sites More sharing options...
Bidgee Posted March 23, 2009 Share Posted March 23, 2009 What reasons are they giving for knocking it back? Whatever the case the bank will want assurance that their investment is recoverble in case of default. Improving the LVR to 50% or better may help. You may also be better doing this off your own bat - ditch the broker. This is not run of the mill lending and there's every chance the lender doesnt have a clue about ac values and casflows from training. If you are serious about it do a business plan, including a cashflow budget and statement of position and go and see the lender face to face to explain it. Dont treat the bank as an enemy. They can be ignorant but a bit of education can see the difference between them financing something and not. Scott Link to comment Share on other sites More sharing options...
Guest basscheffers Posted March 23, 2009 Share Posted March 23, 2009 What reasons are they giving for knocking it back? "We don't do aircraft anymore". Initially, they said yes, with some conditions. (like a block of land I owned that was still on the market to be sold) When I came back a few weeks later with those conditions exceeded, they were no longer interested. You may also be better doing this off your own bat - ditch the broker. This is not run of the mill lending and there's every chance the lender doesnt have a clue about ac values and casflows from training. The broker has specialized in aircraft for years and comes highly recommended. And of course he forwarded my business plans and excel sheet to them. go and see the lender face to face to explain it. Could you give some names of aircraft-friendly lenders I could approach directly? Dont treat the bank as an enemy. They can be ignorant but a bit of education can see the difference between them financing something and not. For sure, but these should have been aviation lenders and should not need education; I am not the first doing this kind of setup! Maybe it might be time to approach non-aircraft lenders with the business plan. Thanks for your feedback. Link to comment Share on other sites More sharing options...
turboplanner Posted March 23, 2009 Share Posted March 23, 2009 Good luck Bass - we need more people buying AC and puting them on line to get back to the good old days where you could always find an aircraft at the weekend, and at an affordable price. The money stream for the truckies has dried up in recent weeks as an inevitable outcome of the earlier departure of the two big volume financiers so the truck industry has slowed down considerably according to the people I've spoken to, so if some are still getting money you could try talking to them to find out what was required, and that may lead you to suppliers prepared to look at the real picture rather than the aircraft industry trend which will be driven by big jet sales rather than the occasional Sports Star deal which is more reliant on the buyer's financial siutation than passenger or freight numbers. Link to comment Share on other sites More sharing options...
Guest Orion Posted March 23, 2009 Share Posted March 23, 2009 Basscheffers If you have access to the funds through the home loan thats the way i'd go. Its simple you borrow the money and lend it to the company that you are setting up to hold the aircraft. The company operates the aircraft insures it etc and makes the loan repayments to you. You make it seamless for yourself ie. Whatever your loan repayments personally are on the funds you have borrowed and on lent to the company is exactly what you charge the company that way you have no tax effect for you personally ie the interest you pay on the loan to the bank is exactly the same as the interest you receive from the company. the company naturally will claim a deduction for the interest it pays to you. As far as loss if it goes belly up. Thats a risk you take whenever you borrow. If you use a broker and borrow the funds either as a loan, Asset Purchase, Bill of Sale, Chattel Mortgage or Commmercial Hire Purchase or Lease or indeed anything else you want to call it, it would be a rare financier that didn't requre a Directors and possibly Shareholders gaurentee to support the borrowing so if the company goes pear shaped and unable to service the debt they would repossess the asset. Sell it, if that were not enough to satisfy the debt then they would enforce any gaurentee. So what you do to protect yourself is when you lend the funds to the company you do it under a written loan agreement, pay the duty on the loan agreement ( don't skimp here as it all helps in legitimizing the arrangement) and as part of the loan agreement take first mortgage over the asset. Then if the company goes belly up you as the lender have rights against the proceeds of that specific asset. In other words you are a secured creditor and you can repossess the asset and sell it to satisfy the loan to you. Anything excess to that required to satisfy the loan would go back to the liquidator to cover any unsecured debts of the company. If the asset is secured then you don't share the proceeds of the sale of the assets with other creditiors ie. its not proportionate issue, secured gets paid first and unsecured after that. In the end, if you have access to the funds without using or requiring a broker then why use one. Any of the finance options outlined earlier will cost more than current home loan rates. Just my two cents worth, running a sizeable public accounting practice means i know a thing or two about this sort of thing. Cheers Orion Link to comment Share on other sites More sharing options...
Guest drizzt1978 Posted March 23, 2009 Share Posted March 23, 2009 ORION: You guna send him a bill for that!!!!:black_eye: Thats some sound advice right there!!;) Link to comment Share on other sites More sharing options...
Guest Orion Posted March 23, 2009 Share Posted March 23, 2009 its free today Link to comment Share on other sites More sharing options...
Guest basscheffers Posted March 23, 2009 Share Posted March 23, 2009 Orion, much appreciated! Mortgaging the plane to the company is a great idea for added protection. So is paying the duty to legitimize - I had not thought of that myself yet. That is a state tax, isn't it? Looks like only $10+ 0.15% for anything over $6K in SA. (or nothing from July 2009) I'll get my accountant to take care of that. Cost a few pennies, but you guys are usually a good investment. ;-) Link to comment Share on other sites More sharing options...
Guest Orion Posted March 23, 2009 Share Posted March 23, 2009 mortgage duty is a state tax, as such each state is differnt, some may even have abolished it. Not sure on the state of play in sunny SA. However your accountant will be able to assist. In NSW its $4.00 per $1000 so the numbers sound about right. Cheers Link to comment Share on other sites More sharing options...
Guest basscheffers Posted March 23, 2009 Share Posted March 23, 2009 Turbo: having it online is really the only way I could justify it. My main goal is for it to subsidise as much of my own flying as possible. It is currently the only ultralight at YPPF, but hopefully when we get CTA endorsements there will be more. I would welcome the competition as I would really like to see YPPF have an RAA community, which can only be good for business. (not to mention a lot of fun!) Link to comment Share on other sites More sharing options...
turboplanner Posted March 23, 2009 Share Posted March 23, 2009 Yes I agree - line aircraft get the critical mass up to the point where aircraft are available, the office is painted, instructors earn good money and the world is a rosy place...and the owner should be able to squeeze out 50 to 100 hours a year of free flying. Link to comment Share on other sites More sharing options...
GraemeK Posted March 23, 2009 Share Posted March 23, 2009 Just to reinforce Orion's comments regarding documenting the loan - it's also important from a tax perspective. Link to comment Share on other sites More sharing options...
Bidgee Posted March 27, 2009 Share Posted March 27, 2009 Bas Talked to lender from Westpac the other day and he was very happy to lend on an aircraft. Caveat was good business plan and they must have confidence in the borrower. Scott Link to comment Share on other sites More sharing options...
Thruster87 Posted March 28, 2009 Share Posted March 28, 2009 Know a person who recently bought a plane via NAT Bank finance but is having no-end of problems due to the fact that the A/C is VH registered presently and he wants to go the RAA way,but the bank having ownership, thus its name is on the rego papers needs to join the RAA to keep its name[Nat Bank] on the new rego from RAA,but the Nat Bank won't join the RAA [its' their policy of not joining associations]to get the new rego papers. Link to comment Share on other sites More sharing options...
T500 Posted March 28, 2009 Share Posted March 28, 2009 Hi, Does anyone know of an accountant in the Townsville area QLD that knows about A/Craft and how to run a Flight School company ie tax what can I claim on, what I can and cant do, whether better to lease or buy, I have two a/c raft that I bought for the school and have spent buckets on the school etc , plus I cover most of Outback Qld and not much income coming in with all the running around (in one hand out the other) I was recieving bills from the accountant for general meetings that were held for the company $160 every 3 mths (wasnt sure if this was normal) , I seem to be out laying money to an accountant and getting nothing in return ie havent recieved any refunds back so far after two years, so I have closed the Company side of it down and just keep my abn, This Company thing is to confusing for my already over maxed brain :) Ive asked other schools with no joy (they keep their tricks to their tade to themselves, which is fare enough) any thoughts? cheers Link to comment Share on other sites More sharing options...
Guest Orion Posted March 28, 2009 Share Posted March 28, 2009 T500 i've sent you a private message on your request. Cheers orion Link to comment Share on other sites More sharing options...
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