First Word: July 2014

As with most things the government requires us to spend money on, many pilots that I talk with aren’t thrilled with the idea of force-fed ADS-B upgrades. Buying a non-compliant, $800 portable ADS-B receiver to get free weather is one thing. Investing thousands on a major installation is another. As we explain in the ADS-B equipment article on page 4, a full-up ADS-B-compliant upgrade, including a WAAS GPS navigator, could easily top 10 grand. If you’re lucky, you might get by with a $2000 investment, give or take, for a basic ADS-B output transponder. That’s a best-case scenario.

Many owners with lower-end aircraft and tight budgets wonder where they’ll come up with ADS-B upgrade money. Some contemplate selling the aircraft before the mandate hits. Can’t fault these folks for being realistic. If you can’t pay, you can’t play, at least in most controlled airspace come January 1, 2020.

But what many owners don’t realize is that there’s government-backed loans ($500 million to start) in the works. In 2012, Congress granted financial incentives for GA to begin equipping for ADS-B through the NextGen GA Fund. The Treasury is offering loan gurantees to the private sector to allow them to issue commercial paper at lower rates than banks would offer. It’s projected that the NexGen GA Fund will ultimately support over $1.3 billion of NextGen equipment installations for general aviation owners and operators over the next 10 years. But how easy will it be to get your paws on this upgrade money? That’s what I asked Michael Dyment with the NEXA General Partnership, the firm that’s managing the NextGen GA Fund and the lending process.

Dyment told me the borrowing process couldn’t be easier. First, get an installation quote from a qualified shop, which must include a separate breakdown of equipment, labor and certification costs. Then, visit the loan portal on the Aircraft Electronics Association (AEA) web page and fill out the application for funding. Dyment said if the project is under $30,000, NEXA will initiate a quick credit check to qualify the borrower. Decades of banking data proves that a majority of aircraft owners have excellent credit—the default rate for the GA demographic is less than 1 percent. If you look good, NEXA will approve the loan on the spot and generally pay the shop 50 percent of the project to get started (all borrowed money is paid directly to the shop). Sound too good to be true? It gets better.

Dyment said that financing can cover additional work, including rewiring existing systems and other non-ADS-B upgrades, including autopilots and PFD systems, for example (the project must include a certified ADS-B system.) Want a more modern instrument panel, free of round gauges? Go for it. As long as the installation includes electronics and promotes safety (upholstery and paint doesn’t qualify), NEXA said it will finance it. These loans are termed generally from five to six years and are based on current interest rates (between 6 to 9 percent, in general.) Unlike traditional lending, there’s no mortgage on the aircraft and qualification isn’t based on aircraft value.

Don’t think there isn’t a government agenda behind this incentive. The GA Fund could protect the FAA’s own $40 billion investment in the NextGen infrastructure. And as with other things involving FAA approval, the capital isn’t available yet. Since the FAA has never dealt with a federally guaranteed loan application, the program has been stalled for over a year. NEXA hopes to begin lending money by AirVenture later this summer. Meanwhile, the 2020 ADS-B mandate moves closer by the day, and while $500 million seems like a lot of dough, Dyment made it clear that it’s still not enough to upgrade nearly 160,000 aircraft that need to be equipped with ADS-B. —Larry Anglisano