In addition, a bank performance bond2can be used as an alternative to paying a deposit in advance of the build. It can also be combined with a mortgage, loan or lease to finance the aircraft without paying the entire cost on completion.
This will be a mortgage secured on the aircraft and so only applies to the balance of payment, not on the deposit (a mortgage can only be secured on an existing asset and so is not possible until the aircraft is complete). Close Finance will, however, provide the client with the security of certifying the the creditworthiness of the manufacturer.
A 'performance bond' or 'bank bond' is a guarantee by a bank to a contractor to pay the full amount owed for a contract. In essence, the bank guarantees to pay Robin Aircraft the full amount of the contract up to two months past the contractual delivery date. If the aircraft has not been delivered within that time the contract is void and no money is paid. The advantage for the client is that their money is held in a holding account, the security of which is guaranteed by the bank. The disadvantage is that Robin Aircraft will charge an additional 2% on the entire cost (because they have to take a risk on the value of the dollar and some risk on the contract as a whole) and the bank is likely to charge around 1% on the value of the contract.