Updated . Educational only — not tax, legal, or lending advice. Confirm figures with your CPA, the state revenue department, and a lender before you close.
The Management Agreement Is Part of the Collateral File
A management company can make an operation insurable and maintainable. It does not, by itself, make the borrower more creditworthy. Lenders read the contract to see who controls the aircraft while their lien is on it.
Clauses that decide whether the file moves
- Term and termination. A manager who can quit on 30 days’ notice, or who can hold the aircraft for unpaid fees, is a problem. The lender wants the right to step in.
- Assignment. The borrower should be able to assign the agreement to the lender upon default. Many manager-friendly forms forbid assignment. That form will be rewritten or the loan will wait.
- Maintenance authority. Who can approve an overhaul, and who pays if the reserve is short. A manager who can incur liens for unpaid shop bills puts a repairman’s lien in front of the lender.
- Insurance. Whose policy, whose named insured, and whether the lender is loss payee. Dual policies are a claims dispute waiting to happen.
- Fee priority. Management fees paid ahead of debt service mean the lender is funding the manager. Lenders notice.
None of this produces a lower APR as a reward for “having a manager.” At best it removes a reason to decline or to cut the advance. Bring the draft agreement to the lender before you sign it. Renegotiating it after both the manager and the seller are impatient is how closings slip a month.
Questions buyers actually ask
Should the manager be on the loan?
Only if the manager is part of the credit, which is a different negotiation. Being on the insurance policy is not the same as being on the note.
Can the manager’s broker place the financing?
They can introduce a lender. The borrower still has to qualify. A referral is not a term sheet.