I talked to Bob this morning and with his approval I am posting the terms here, they are subject to change with time and by person. I hope this could be helpful for others as well.
Regarding the builder assist fee, it's not considered at all and should be calculated out of the loan.
We will loan on many different types (but not all) of aircraft kits (homebuilt and experimental). Please check with us to determine if the kit you are considering is one we will finance. All our loans are fixed rate and have no prepayment penalties. Things we need to look at a proposal are: completed credit application (attached and also available at our aviation web site:
www.1st-of-pryor.com ), copies of the first two pages (first page and signature page) of your last two years federal 1040 tax form together with any business schedules (C,E,F, K-1, etc.); an estimate of the total cost of the aircraft together with the amount you wish to borrow, and a copy of your driver?s license and pilot?s license. If you will be sending sensitive personal information via e-mail, we request that you contact us prior to sending for a secure mail link. Although we prefer to get involved in the financing from the start, it is possible to start financing ?mid-stream?. If we are not involved at the start, we will require copies of invoices which you have already paid, photos of the aircraft in its current state of construction and you may incur additional approval time and loan costs. Normal closing costs average $750-$760 on a build. Interest rate during the construction phase is at 8.25%. The kit construction loan is set up for an 18 month term to allow completion of the project. A one year extension is possible if the construction is not finished but significant progress has been made. Quarterly photos of the project are required. We will loan 80% of the cost of parts (including freight). We will not loan for tools, labor or builder?s assist. If the kit has already been started, we can utilize the money that you have already spent (verified by invoices) toward your 20% equity in the project. We do a controlled disbursement where the funds we disburse are sent directly to the supplier, with a copy of the check sent to you. You will be required to carry ground only coverage on the aircraft kit during the construction phase. Some insurance companies allow you to bump up the coverage during the construction process, and that is acceptable to us. Loan advances, however, may not exceed the amount of insurance in force. During the construction phase, you will be required to pay interest on a monthly basis on the amount of funds advanced. We encourage you to include extra funds in the construction loan to take care of price increases, unanticipated costs or additional items purchased. There is no additional cost to you if these funds are not used, since you are only paying interest on the funds advanced. If there are not enough funds in the loan to complete the aircraft and the loan needs to be rewritten to allow additional funds to be advanced, then you would incur an additional $750.00 in closing cost. When the kit is complete and the aircraft has been certified as airworthy, the loan is converted (modified) into an amortizing loan. Generally speaking, there is no charge involved for this modification. The interest rate at conversion will depend upon our current rates at the time of completion. Currently there are five different interest rate options that are available upon completion. Those options currently are:
7.25% on a 15 year straight amortization
7.00% on a 10 year straight amortization
6.25% on a 5 year straight amortization
6.75% for the first 5 years on a balloon on a 15 year amortization
6.50% for the first 5 years on a balloon on a 10 year amortization