Hi everyone,

I've been trying to work out financing to purchase an Mu2 and it is proving exceedingly difficult. I thought I had found a good source with good terms through JJ Best, but after applying and waiting a few days, I received an email today that their underwriters won't finance any turboprop over 20 years old. I was told by the representative that that based on my credit/income, they would loan me a million dollars or more to purchase a Meridian under 20 years old but wouldn't finance an Mu2 period. He put it succinctly that the problem isn't me or my finances, but the machine itself, which is why he mentioned the Meridian.

The Mu2 just checks every single box for me as far as space/payload/speed/reliability/opex/capex, it fits in my hangar, etc, etc so I'd really like to find a way to make it work, but with what I have to put down and my credit history, I have been surprised at the reluctance of lenders to finance what to me are very solid, clean, serviceable airplanes.

AOPA aircraft finance had offered me preliminary terms of 9.25% on a 10 year loan with a 20 year amortization. This is getting to the edge of what I consider reasonable even with the recent massive jumps in the fed funds rate and I was wondering if anyone had any ideas of who to reach out to for financing on late 70's Mu2's. I have top tier credit and plenty to put down but can't fully write a check for a nice one.

Issues that lenders have raised are
1. They won't finance Mu2's
2. No aircraft over 20 years old
3. No aircraft over 10,000 airframe hours

The example I am looking at is a 6500 hour specimen with 1300 since overhaul on the engines (5400 TBO) so it's probably one of the more eligible candidates for financing as Mu2's go since it's under 10,000 airframe hours and has relatively low time engines and some modern panel upgrades and new interior.

Does anyone know of any companies offering aircraft financing that won't reject these airplanes out of hand and that offer reasonable rates (under10%) for highly qualified borrowers? The asset based lenders all seem to be in the mid teens for interest rate and I'm just not paying that.

It would be nice if there was an airplane LendingClub or crowd lending type of operation for aircraft. With 50K folks on BT at $20 each, or $200 each if only 10% of us invested, we’d have you covered and then some. Granted, I would only profit $14 off that investment for my $200.

Have you considered using something other than the MU2 as collateral for a loan and using the loan proceeds to purchase the airplane? I assume that you can get hull insurance at a rate you can live with?

I have some real estate holdings with some equity, but the LTV's don't really support pulling any more equity out, so that's not really an option.

It's kind of a bummer that there's these great old airplanes that are being kneecapped by the finance industry. It also seems to me to be self feeding problem because they're worried about being made whole if the borrower defaults because they're hard to sell, but they're hard to sell because the financing is hard to get. It's a frustrating situation.

Bank wants to be able to sell that plane if you default

They’ve had experience with this, and the math tells them the meridian will sell quickly and they know their risk exposure

The mu2 they can’t, it’s that simple

I have some real estate holdings with some equity, but the LTV's don't really support pulling any more equity out, so that's not really an option.

It's kind of a bummer that there's these great old airplanes that are being kneecapped by the finance industry. It also seems to me to be self feeding problem because they're worried about being made whole if the borrower defaults because they're hard to sell, but they're hard to sell because the financing is hard to get. It's a frustrating situation.

I financed my MU2 through Bob Howe and Dorr Aviation.

Robert H. Howe
President
Dorr Aviation Credit Corp
579 Pleasant Street, Suite 3
Paxton, MA 01612
Phone: 800-214-0066
Cell: 508-989-2226
Fax: 508-363-1700
howe@dorraviation.com
www.dorraviation.com

Thank you! I will reach out to them on Monday.

Contact Morgan Littell at Equity Bank in Wichita...........316-641-5080

Look for the smallest bank you can find. Is there some rural county 80 miles north of you that has a single branch bank of East Nowhere? And Arnold Nowhere III is the president of the Bank, and Arnold "Quatro" Nowhere IV is the loan officer and they would be happy to make a loan. Find that bank.

Yep, exactly like Charles said. Almost all aviation lenders are in fact just brokers (Dorr is no different) - they don't hold the loan on their books, so that's why it needs to conform and have all these things in place as it's actually carried by faceless lenders in packages/tranches. Find the local little bank, ideally where you already have a relationship, and ask them.

If the bank doesn't hold the note themselves, it's the wrong lender.

I used First Interstate Bank in my hometown. They were also used for my house mortgage and are the primary lender for my business. They didn’t care what age the plane was at the time (2016).

Talk to a local 135 operator, or FBO with rental/training planes. They more than likely have older planes (TP over 20) and have them financed with a local bank. Find those banks...

I did the typing, so you don’t have to …

Thank you guys for the thoughtful replies. Dorr replied already and sent me an app. I will be calling around tomorrow to the others mentioned and there are also some small family banks that my family has relationships with that I will approach about financing.