Lenders Scrutinize Usage, Cash Flow and Management When Financing Part 135 Charter Aircraft

Financing an aircraft used on Part 135 charter missions involves a more complex underwriting process than pure Part 91 flying, because of higher utilization and the commercial nature of the operations, according to Christopher Lee, President of the Aircraft and Specialty Finance Deposit Divisions at 1st Source Bank. Lenders focus on projected annual usage, revenue stability and the aircraft's operational profile. Higher flight hours accelerate depreciation and affect residual value assumptions, which in turn shape loan structuring.

Brian Macbean, Director – Credit and Sales at AOPA Finance, said lenders consider estimated charter hours, how charter operations will be managed and who will maintain the aircraft. In most cases, lenders will not rely on pro-forma charter income estimates and are more comfortable when the buyer can cover ownership expenses and loan payments without charter revenue. A management plan, estimated annual charter hours and a complete financial package, including interim statements and prior-year taxes, must still be provided.

Tripp Thurston, Group President of FLYING Finance, described two recent jet refinancings of aircraft acquired at the top of the rate market after the 2023 rate rise. For an aircraft used by a tech entrepreneur for business and personal trips, the rate was lowered by 1.24%, saving about $10,000 per month for the remainder of the term. For a jointly owned aircraft that received its Part 135 certificate in mid-2025 and has since been used for leasing and charter, the rate was lowered by 0.5% with no change to other terms.

Red flags for lenders include old, high-time and out-of-production aircraft, weak or inconsistent financials, limited Part 135 experience, overly aggressive revenue or utilization assumptions, declining collateral quality, poor credit history, and buyers who rely on charter income to afford an aircraft they otherwise could not. Skipping engine programs or buying aircraft near Time Between Overhauls (TBO) or Total Time Airframe (TTAF) limits typically leads lenders to reject the aircraft or require overhauls and programs. Lenders want to see the Part 135 certificate where one exists.

The lenders advise engaging experienced lenders, brokers and advisors early, using conservative, well-supported projections, and favoring models with strong liquidity, fleet depth and OEM support. For pre-approval, Thurston recommends having personal financials and three years of historical financials and organizational documents for operating companies and the single-asset holding company, and identifying the pilot, management company, engine programs, third-party charter contracts and intended use of the aircraft.

The lender position described here sets a ceiling on how charter revenue can be used in aircraft acquisition. Because lenders generally decline to credit projected charter income, a Part 135 certificate adds credit value for the operation's track record but not for the cash flow of a purchase. Ownership of charter-deployed aircraft therefore tends to sit with buyers whose other income already carries the debt, and charter offsets cost rather than funds the purchase.

The refinancing examples show the second effect: the 1.24% cut went to an aircraft used for business and personal trips, while the 0.5% cut went to the jointly owned aircraft that began charter flying in mid-2025. Thurston's own attribution points to the Part 135 operation as the factor behind that difference, not owners' credit, so charter use is priced as an operating-risk category on top of the borrower.

The lenders' red-flag list, and in particular its engine-program and TBO/TTAF points, also shapes which airframes can be financed at all. Age, hours and lapsed maintenance programs translate directly into rejection or forced overhauls before a loan is placed, which narrows the pool of charter-capable used aircraft that qualify for conventional financing.