Aircraft lending helps air enthusiasts to take flight

Those who want to take to the skies on their own will find securing financing a bit more accessible locally. First Nation-al Bank opened its doors in September 2001 and moved to its newly remodeled location at 1455 W. Battlefield in mid-January.

According to First National Bank President Eric Piel, aircraft financing one service provided by First National Bank isn't a service that you walk into any bank lobby and find.

First National Bank of Springfield operates un-der the charter of First National Bank of Clin-ton, which has been making aircraft loans for 30 years, Piel said.

When the Springfield bank was opened, it was only natural that the new bank would offer aircraft lending as well. In fact, aircraft loans account for a full one-third of the First National Bank of Clinton's portfolio, Piel said. "That's been a niche lending area for them," he said.

While some area banks might offer aircraft loans in theory, most banks do not actively pursue such customers, according to Piel.

"Most local banks don't know much about it and shy away from aircraft loans," he said. "That's because most lenders don't have the aviation expertise to perfect the lien, understand aircraft valuation, etc."

"It's very specialized lending, and not everyone is familiar with how to assess a plane, how to file the (Federal Aviation Administration) documents, and how to perfect the lien," said Aaron Buerge, senior vice president of First National Bank. "That helps the customer, because we can make sure there are no encumbrances on the plane." Buerge, a pi-lot himself, said First National Bank of Clinton has several staff members who also are pilots and can help guide people buying aircraft through the process.

"The typical aircraft borrower owns their own business or is in middle or upper management, has a good size net worth, and is able to put 20 to 25 percent down on an aircraft, sometimes more," Buerge said.

Traditionally, aircraft borrowers are considered very low risk borrowers, a fact borne out by hard statistics. "First National Bank of Clinton has been providing aircraft loans for decades, and they've only taken back three aircraft and lost money on one plane," Piel said.

"Most of our aircraft loans are made to private pilots, a lot of professional people, and loans are also made for corporate planes or planes intended for shared use," Piel said.

But aircraft borrowers aren't the only positive in the aircraft lending equation, according to Piel the collateral itself is a good risk, too. "When airplanes are regularly serviced and taken care of, they usually appreciate in value," he said.

First National Bank is primarily a commercial lending bank, according to Piel, but the bank will be working to make the fact that it offers aircraft loans more well-known. "We will be attending trade shows and air shows, and we have a rate and fact sheet on aviation lending, but it's mostly word of mouth," he said. "We need to make people aware that we do this type of lending and do it well."

Those who think the demand for aircraft loans in southwest Missouri is low might be surprised, according to Piel. "General aviation is strong in southwest Missouri," he said. "There are a lot of private pilots and corporate aircraft. There's a lot of activity and interest in general aviation in this area."

The economic slowdown of the past several months may have stalled aircraft purchases slightly, Piel said. "It's probably slowed down a little bit," he said. "There's definitely been an impact."

But the lingering effects of the greatest acts of terrorism the skies have ever seen could prove an unexpected boost for private aviation, according to Buerge. "We're hoping to see a rise in general aviation," he said.

"Charters could be used more, and private planes could become more popular for the sake of convenience and privacy," he added.

With the ability to make aircraft loans to borrowers anywhere in the United States, both Piel and Buerge see a future as wide open as the Missouri horizon for First National Bank's aircraft lending. "We would like to have a shot at everyone's aircraft loan in Springfield and southwest Missouri," Piel said.