Alternatives to an Aircraft Loan: HELOC, Securities-Based Lines, Personal Loans, Seller Financing and SBA

This page is for buyers who can get a standard aircraft loan but want to know what else is on the table, and for buyers whose airplane, income or timing doesn't fit a conventional aviation lender. It compares each alternative on the same $150,000 example, with the risk that comes with it.

What a standard aircraft loan gives you (the benchmark)

Before choosing an alternative, know what you're giving up. As of September 2026, piston aircraft loan rates quoted by major aviation lenders generally start around 7% for well-qualified borrowers and run to roughly 10%, depending on credit, aircraft age, loan size and down payment. AOPA Aviation Finance lists 6.99%–9.99%, a minimum 15% down payment for post-1960 singles, and terms up to 20 years on single-engine loans of $75,000 or more.

The loan is secured only by the airplane. The lender records its security agreement with the FAA Registry, and your house and brokerage account stay out of it. On $150,000 at an assumed 7.75%, the payment is $1,231 a month over 20 years or $1,412 over 15 years. A long fixed term at a known payment is hard to beat, so each alternative below has to win on something else: speed, privacy, eligibility, a lower rate or an airplane a conventional lender won't take.

How do the alternatives compare on the same $150,000?

Every rate in this table is a labelled assumption for illustration, not a quote. HELOC and SBA figures are tied to the 7.00% Prime rate in effect after the Federal Reserve's September 16, 2026 increase. Payments are computed, principal and interest only.

HELOC and home equity loans

A home equity line of credit lets you pay the seller in cash. There's no aircraft appraisal, no aviation underwriting and no lien on the airplane, which helps with an older airframe, an unusual type, a fast closing, or an experimental aircraft a lender won't touch. HELOCs are usually priced as Prime plus a margin, so the September 2026 hike flowed straight into their rates.

The math. Drawing $150,000 at an assumed 7.50% costs $938 a month during an interest-only draw period, lower than the $1,231 aircraft-loan payment. But interest-only means no principal is being repaid. Amortized over 15 years at the same rate, the payment is $1,391. Each 1% increase in Prime adds about $125 a month to the interest-only payment.

The risks. The collateral is your house, not the airplane. If you can't pay, you can't simply hand back the aircraft. Banks can freeze or reduce HELOC lines when home values or your credit weaken. And under current federal law, interest on home-equity debt is deductible as mortgage interest only when the money buys, builds or substantially improves the home. HELOC interest on an airplane generally isn't deductible as mortgage interest. If the airplane is used in a business, interest-tracing rules may allow a business deduction; confirm with a CPA.

A fixed-rate home equity loan removes the rate risk. At an assumed 8.25% over 15 years it costs $1,455 a month, with the same collateral trade-off. For kit and experimental builds, where home equity is often the main source, see financing a kit plane build.

Securities-based lines of credit

Brokerages and private banks lend against a diversified portfolio, typically priced as a spread over SOFR, a benchmark that moves with the fed funds range (3.75%–4.00% as of September 2026). Draws can fund in days, payments are often interest-only, and you avoid selling appreciated holdings and triggering capital gains.

The margin-call test. Suppose you hold $400,000 and draw $150,000, and the lender's maximum advance rate is an assumed 50%. After a 30% market decline the portfolio is worth $280,000 and the maximum line is $140,000. You'd owe about $10,000 in cash or collateral immediately, or the lender sells holdings at the bottom. Market drops tend to arrive with recessions, which is also when airplanes are hardest to sell. Keep the draw well under the advance limit, or plan to refinance into an aircraft-secured loan once the purchase closes.

Unsecured personal loans

Personal loans need no collateral and close quickly, but the rates are usually higher than secured aircraft loans, terms are short, and many lenders cap them well below typical aircraft prices. They fit narrow cases: a low-cost two-seater, a small gap between your down payment and the loan, or a buyer whose airplane is below an aviation lender's minimum loan size. At an assumed 12.00% over seven years, $40,000 costs $706 a month and $19,313 in total interest. Some personal lenders restrict how proceeds are used, so disclose the purpose.

Seller financing

In a seller-financed sale, the seller accepts part of the price as a promissory note. It's most common on older, unusual or slow-selling aircraft, and in higher-rate periods when fewer buyers qualify. Terms are negotiable, which is both the advantage and the trap.

Typical structure. A seller may want to be paid off within a few years, so notes often amortize over a longer schedule with a balloon. At an assumed 8.00% on $150,000 amortized over 15 years, the payment is $1,433. After 60 payments about $118,149 is still owed and comes due as a balloon, which you'll likely refinance with a conventional lender. Plan for that refinance on day one; a balloon payoff plan covers the options.

Protect both sides with the same paperwork a lender would use:

• A title and lien search before closing. If the seller still has a loan, that lien has to be released or paid off at closing. A "wrap" over an existing loan can breach the seller's due-on-sale clause. See how to run and read a lien search.
• An FAA Bill of Sale to you and a registration application, with the seller's security agreement recorded with the FAA Registry ($5 per item of collateral). See how lien recording works.
• A promissory note that states the rate, schedule, balloon, late charges and prepayment terms, plus insurance naming the seller as loss payee.
• An escrow or title agent to hold funds and documents.

SBA loans: only for aircraft used in a business

SBA 7(a) loans can finance equipment for an eligible, for-profit operating business, and that can include an aircraft the business uses to earn revenue, such as a flight school trainer, an aerial application or survey airplane, or a charter aircraft. Eligibility is the hurdle. Personal-use aircraft don't qualify, passive and investment businesses are generally ineligible, and an aircraft owned by one entity and leased to your operating company raises extra questions. Confirm the structure with an SBA lender before you sign a purchase agreement.

SBA publishes maximum variable rates tied to a base rate such as Prime (SBA terms and conditions): base + 6.5% for loans of $50,000 or less, + 6.0% for $50,001–$250,000, + 4.5% for $250,001–$350,000, and + 3.0% above $350,000. Most 7(a) loans max out at $5 million. With Prime at 7.00%, the cap is 10.00% on a large loan and 13.00% on a $150,000 loan. Those are ceilings, and actual quotes may be lower. At the large-loan cap, $400,000 over 10 years costs $5,286 a month. Expect guarantee fees, a full business-credit review, and personal guarantees from significant owners. Flight schools weighing SBA against aviation lenders should read flight school aircraft financing.

Shared ownership and leaseback: covered on other pages

Buying a share lowers the amount you need to finance. Fractional programs are rare in pistons, but partnerships and LLC co-ownership are common. See how to finance a partnership share. Placing an aircraft on a flight school leaseback, or leasing instead of buying, changes who pays for the airplane rather than how you borrow. Those trade-offs are covered in leasing vs buying and lease-to-own deals.

Which alternative fits which buyer?

• You qualify for an aircraft loan and the airplane is mainstream: start with the aircraft loan. It isolates the risk to the airplane and fixes the payment for up to 20 years.
• The airplane is old, unusual, experimental or cheap: a fixed home equity loan or a seller note is often the practical route. Compare against specialty lenders first; see financing an older airplane.
• You need to close in days: a HELOC or securities line can fund a cash offer, followed by an aircraft-secured refinance once the airplane is yours.
• The aircraft earns revenue in an operating business: compare SBA 7(a) with aviation equipment lenders on rate, term, fees and guarantees.
• You need a small amount: a personal loan can work, but compare total interest against a secured loan over a longer term.

Tax notes that apply to every structure

How you fund the purchase doesn't change whether the airplane qualifies for depreciation. That depends on ownership, acquisition and placed-in-service dates, and business use. 100% bonus depreciation is permanent for eligible property acquired after January 19, 2025 (IRS). Aircraft are listed property, so qualified business use has to exceed 50% or bonus depreciation is lost. Interest is a separate question: whether it's deductible depends on how the borrowed money is traced to its use, not on the collateral. See aircraft depreciation after the 2025 tax law, and confirm with a CPA for your situation.

How this guide differs from related guides

This page compares ways to borrow other than an aircraft loan. For deciding whether to borrow at all, see finance or pay cash. For how standard aircraft loans work, see aircraft financing 101, and for what lenders require, see aircraft loan requirements. To pull equity out of an airplane you already own, see aircraft cash-out refinance.

Frequently asked questions