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Will a Bank Loan to an LLC?

Adam answers in February's edition. 
Cirrus SR20

My friend and I (both AOPA members) now each own 50% of an LLC that owns a Piper Cherokee with no debt.  We plan to sell the Piper and purchase a used Cirrus SR20 after Covid, hopefully later this year.  We will finance.

However, we will have asymmetric ownership – I may own $270K and my friend may own $70K of the LLC, including its asset of the Cirrus (assuming we purchase one for $340K, for example).  I can pay the down payment portion (10% or 20%?) and finance my remaining portion.  So we will restructure our LLC arrangement. We both have excellent credit ratings and credit history and will be approved for our amounts.

Question: Can the LLC have a 20 year loan with us a co-signers?  Will a bank loan to an LLC?  Or will we each need direct personal loans outside the LLC, but with the LLC (or the airplane itself) listed as a secured asset for collateral? 

Answer: Thanks for reaching out to AOPA Finance. 

We work as a broker and have multiple lenders to consider.  All lenders will treat the LLC as the borrower and use the aircraft as collateral.  Additionally, lenders will require that all members of the LLC personally guarantee the loan.  Depending on the lender, you may be shown on the loan documents as either guarantors or co-borrowers with the LLC. 

Regardless of your respective ownership percentages, most lenders require that each partner qualify for the full loan amount.  Once we receive your application packages we will review the financial information to make sure you meet the minimum requirements of our lenders and then identify the best lending option for you.

Let me know when you are ready to move forward with a purchase and I’ll be happy to help. Give us a call at 800.627.5263.

Have questions for Adam? He is happy to answer them. Submit your questions here. Great rates. Great terms. Helpful and responsive reps. Three good reasons to turn to AOPA Aviation Finance when you are buying an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (75263) or click here to request a quote.

Adam Meredith

Adam Meredith

President of AOPA Aviation Finance Company
Adam Meredith, President of AOPA Aviation Finance Company, is an aircraft finance professional with more than 15 years lending, small business management and customer service experience. Adam is a commercial pilot with multi-engine and instrument ratings.
Topics: AOPA Aviation Finance Company, AOPA Products and Services, Financing

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