Looks like California is now regulating flight schools

JOEFRIDAY2 said:
Where is the world did you come up with that myth?

Banks, the SBA and most companies that loan money or lease property to your corporation will require a PERSONAL GUARANTEE. That means you are PERSONALLY liable and responsible to pay if your corporation does not pay.

My friendly banker first told me years ago when he sat down, looked me straight in the eye and informed me that I would lose everything I have before the bank will lose the first dollar.

I went ahead and signed the personal guarantee. If I had not, the bank would not have loaned my company the money.

Banks don't like to lose. The SBA will tie up everything you own or think to own until their loan is paid off.

Joe

P.S. If you are married then the bank will often require your wife to sign the personal guarantee as well.
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Patrick said:
Try and setup an LLC or S-Corp, apply for a loan, and have any bank approve that loan without you PERSONALLY GUARANTEEING it. None will. So yes, while it was corporate debt, you personally backed it, so when your company defaults, yes, they'll come take your house.
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Short version. I am tired as hell from a snoring dog while sleeping on a couch last night in Livermore. Anyways, my brother had a buisness for a few years building race car chassis. A car left for powder coat that was 3 weeks late getting back. The guy lost his place, as my brother had a buisness to run, and due to many other factors, the guy also lost some sponsers. He then sued my brother who was on the hook for loans still. I don't remember the specifics, but he lost, and had to close his doors, and still lives in the same house that he was in before all this went down. IIRC, he had incorperated himself. I think he declared BK. When I see him next, if I remember I'll ask him.

Long story short, I'm am not 100% that they can take your house.....if you default on other loans. But I know they can put a lien on it. I remember hearing somethin about this, but don't remember what it was called.
 
mshunter said:
Short version. I am tired as hell from a snoring dog while sleeping on a couch last night in Livermore. Anyways, my brother had a buisness for a few years building race car chassis. A car left for powder coat that was 3 weeks late getting back. The guy lost his place, as my brother had a buisness to run, and due to many other factors, the guy also lost some sponsers. He then sued my brother who was on the hook for loans still. I don't remember the specifics, but he lost, and had to close his doors, and still lives in the same house that he was in before all this went down. IIRC, he had incorperated himself. I think he declared BK. When I see him next, if I remember I'll ask him.

Long story short, I'm am not 100% that they can take your house.....if you default on other loans. But I know they can put a lien on it. I remember hearing somethin about this, but don't remember what it was called.
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After May 17, 2010 your brother would not be qualified to start and run a flight school in the state of California.

However your brother is still fully qualified to start and run a flight school in Florida because Florida does not regulate flight schools.

Joe
 
mshunter said:
Short version. I am tired as hell from a snoring dog while sleeping on a couch last night in Livermore. Anyways, my brother had a buisness for a few years building race car chassis. A car left for powder coat that was 3 weeks late getting back. The guy lost his place, as my brother had a buisness to run, and due to many other factors, the guy also lost some sponsers. He then sued my brother who was on the hook for loans still. I don't remember the specifics, but he lost, and had to close his doors, and still lives in the same house that he was in before all this went down. IIRC, he had incorperated himself. I think he declared BK. When I see him next, if I remember I'll ask him.

Long story short, I'm am not 100% that they can take your house.....if you default on other loans. But I know they can put a lien on it. I remember hearing somethin about this, but don't remember what it was called.
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As someone who actually went to college, studied business, worked in the banking industry, and has started several private companies, I can assure that that is how it works. People who have said that corporate (by the way, it's "incorporate," not "incorperate") and personal assets are separate are entirely correct (provided the business is setup as either an S-Corp, C-Corp, LLC, or LLP). Yes, a business with established history may qualify for loans based on the credit of the business, not the individual. However, if you own a young or financially weak company, no financial institution (especially now, AFTER many banks lost a fortune due to bad loans) is going to loan money to your company without you (as the owner) proving that a) you are credit worthy for the amount to be borrowed and b) that you personally guarantee the loan.

Anytime that an individual has personally backed a corporate loan, that person is on the hook for whatever business losses cannot be paid by the business. By the way, this is entirely different from being sued. You may have personally backed business loans for your company, currently operate a solvent business, get sued and be legally forced to pay a judgment that exceeds the business assets (after insurance settlement, if any), and you will not be forced to use personal assets to pay the business caused legal settlement. This is where the limited liability clause of the corporate system comes in. However, if, due to the lawsuit, you were forced to close up shop and had outstanding debt to creditors (that remember, you personally guaranteed), then yes, they can come take whatever personal assets and property they so wish to cover your debt (the only real exception are protected retirement accounts- 401 (k), IRA, etc).

The bank will ALWAYS bleed you dry before they lose money.
 
Patrick said:
As someone who actually went to college,
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Well, I guess because I didn't go to college and study buisness I am stupid then. Please, don't throw punches like that. Act like a grown man. I figured college would have instilled that in people. I guess I was wrong.
 
JOEFRIDAY2 said:
After May 17, 2010 your brother would not be qualified to start and run a flight school in the state of California.

However your brother is still fully qualified to start and run a flight school in Florida because Florida does not regulate flight schools.

Joe
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If your calling my brother a fraud because of what I posted, you have no clue. He took no money before hand, no money was paid for work that was not completed, and infact, the work my brother performed was not charged for because unlike some of these fly by night flight schools, my brother only collects when the work was done, not before.

You and Patrick need to save the personal attacks for another forum.
 
mshunter said:
Well, I guess because I didn't go to college and study buisness I am stupid then. Please, don't throw punches like that. Act like a grown man. I figured college would have instilled that in people. I guess I was wrong.
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Wasn't meant to be a punch at all, just stating facts. I learned a long time ago not to spout my mouth in places where I don't have sufficient knowledge, but rather, to learn from those who have said knowledge (provided I want to learn it in the first place). You mentioned you like to fish. The only fishing I have ever done was with my ex girlfriend and her father, who ran a fishing charter company. I don't pretend to know a damn thing about fishing, which is why whenever I'm privy to a conversation that revolves around it, I either keep my mouth shut, or ask questions. If we were to ever go fishing, and I was enjoying myself, I would be asking you an endless storm of questions, as I'm the type of person who likes to learn new things.

There are plenty of topics that get started on this forum that I have no knowledge about, and thereof am not in a position to give any helpful advice or info, and thus, I either don't post anything or ask more questions. Thus, the only point that I wish to make here (and this applies to all of us, on any thread on this forum or others) is that none of us should give "advice" on topics that we don't have good, solid information or experience in.

It's been said that, and I'm a firm believer in this, "successful people never stop learning."
 
JOEFRIDAY2 said:
I don't see it that way. The application fee and .75% of all revenues have been required to be paid by other secondary and vocational schools. In the past, flight schools have been exempt from these reguations because the states believed the FAA was regulating flight schools.

With such high profile schools as Silver State Helicopters, Jet University, RAA and Tab Express closing after taking millions of dollars in student tuition and not providing the flight training, it became obvious that the FAA was not regulating flight schools.

The .75% goes into a fund that is used to pay students back if a school closes and does not provide the training and/or classes.

The fund protects the students and it also protects the legitimate flight school businesses because now a student will have the money (from the fund) if his flight school goes out of business. He can then use that money to continue his education at another legitimate flight school.

Frankly, I would not want to spend thousands of dollars doing business with a flight school that can not afford a $5000 application fee as well as proper insurance and proper funding.

The weak schools will close. The strong schools will get stronger. The bad guys will not set up flight schools in California.

Joe
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SOCIALISM!!!!!! AAAAAAAAAAAAAAAAAAAH!!!!!!








Or at least that's what some will think.

Wonderful movement by the State of California. Protecting students and their financial interests.
 
KSCessnaDriver said:
I'm still confused as to how this "legislation" defines flight school. Anyone with a CFI, or what are the parameters?
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It looks like any California flight school that offers a course exceeding $2500 would be subject to the regulation.

If you are an independent CFI and your "course" does not exceed $2500 then you would be exempt.

So in theory a student could rent a plane from an FBO or an owner of the plane (that is not the CFI). That student would pay for the plane separately.

The student would pay the independent CFI by the hour for the course. If the amount paid by the student, directly to the independent CFI, does not exceed $2500 then the independent CFI would be exempt from the regulation.

However if the CFI is an instructor for a flight school that charges more than $2500 then that CFI must be listed on the flight school application as an instructor and would come under the application of the flight school. That instuctor must comply with the regulations while an instructor at that flight school. This CFI would not be considered an independent CFI.

Joe
 
So you could do:

Presolo Ground Course: $2499
Written Prep Ground Course: $2499
XC Ground Course: $2499

Takeoff and Landing Flight Course: $2499
Ground Reference Maneuvers Flight Course: $2499

Etc, etc.

........and not pay a penny.

-mini
 
JOEFRIDAY2 said:
However if the CFI is an instructor for a flight school that charges more than $2500 then that CFI must be listed on the flight school application as an instructor and would come under the application of the flight school. That instuctor must comply with the regulations while an instructor at that flight school. This CFI would not be considered an independent CFI.
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Sweet, I've already got this figured out. Break a commercial rating into about a dozen different courses, each covering a different part of the commercial PTS and requirements. Each of those courses would come in below $2500, and thus, I wouldn't have to deal with the situation. Brilliant.

Edit: I see I'm not the first one onto this game.
 
KSCessnaDriver said:
Sweet, I've already got this figured out. Break a commercial rating into about a dozen different courses, each covering a different part of the commercial PTS and requirements. Each of those courses would come in below $2500, and thus, I wouldn't have to deal with the situation. Brilliant.

Edit: I see I'm not the first one onto this game.
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As long as you don't collect more than $2500 from the student then you are golden. Once you collect over $2500 from the student then you are subject to the regulation.

Joe
 
JOEFRIDAY2 said:
As long as you don't collect more than $2500 from the student then you are golden. Once you collect over $2500 from the student then you are subject to the regulation.

Joe
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You're saying two things in the last few posts. In one you say "per course" and now you're saying "from the student". Since I don't care enough to read the rule.......which is it? There's a very important distinction.

-mini
 
minitour said:
You're saying two things in the last few posts. In one you say "per course" and now you're saying "from the student". Since I don't care enough to read the rule.......which is it? There's a very important distinction.

-mini
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The way I read the law is $2500 TOTAL charge for the "course."

Here is the way the exemption is worded:


(f) An institution that does not award degrees and that solely provides educational programs for total charges of two thousand
five hundred dollars
($2,500) or less when no part of the total charges is paid from state or federal student ​
​

financial aid programs.

This is listed under Article 4. Exemptions of Chapter 310. It is (5) (f).​


​
 
JOEFRIDAY2 said:
The way I read the law is $2500 TOTAL charge for the "course."
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That's still two different things.

Here is the way the exemption is worded:


(f) An institution that does not award degrees and that solely provides educational programs for total charges of two thousand
five hundred dollars
($2,500) or less when no part of the total charges is paid from state or federal student ​
​

financial aid programs.

This is listed under Article 4. Exemptions of Chapter 310. It is (5) (f).​


​
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Seems like that's saying the charge for the program. So just divide your commercial/private pilot course up into 9 or 10 "courses" and sell it that way on paper. Hell, you can even make up a fancy certificate and get it laminated when they pass that "course" to make it look real.

Problem solved. How many students helped? Only the ones at the flight schools not smart enough to see how to get around it..........or the ones that don't leave CA.....or the ones that don't hike the rates up a bunch to compensate.

So yeah, the consumer still pays for these additional fees and the world just keeps on-a-turnin.

-mini
 
minitour said:
That's still two different things.

Seems like that's saying the charge for the program. So just divide your commercial/private pilot course up into 9 or 10 "courses" and sell it that way on paper. Hell, you can even make up a fancy certificate and get it laminated when they pass that "course" to make it look real.

Problem solved. How many students helped? Only the ones at the flight schools not smart enough to see how to get around it..........or the ones that don't leave CA.....or the ones that don't hike the rates up a bunch to compensate.

So yeah, the consumer still pays for these additional fees and the world just keeps on-a-turnin.

-mini
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The way I read it is that you can't collect more than $2500 from a student. If a flight training facility does collect more that $2500 from a student and is not licensed then that facility would be subject to a $50,000 fine.

Although I personally like the idea of breaking the program into $2500 modules in an attempt to exempt from the regulations, I personally don't believe that will fly with the regulators.

The best way to get an answer on this is to call the Bureau of Private Post Secondary Education in Sacramento and ask if this method would qualify for the exemption.

Joe
 
Even though there are not currently any state or federal loans available for flight training other than the VA benefits, I do believe these loans will become available again.

If you go for the exemption and you are not licensed in California then you would not be permitted to accept any state of federally guaranteed loans for tuition from your students.


Joe
 
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