Fine Art Loans

I recently received a solicitation email from a company called ArtLoan Financial Services. I found the concept very interesting, where ArtLoan values a work or works of art in a collection, uses it as collateral and issues a short term loan or a line of credit. OK, not that unusual, as a matter of fact back on August 14 I wrote on the AW blog about a NY Sun article and art as collateral. I mention how a few major banks and their private banking divisions are catering to high net worth individual more as of a courtesy and issuing financial loan packages based upon the value of fine art collections. Click HERE to read that post.

ArtLoan at first seemed to fit into that category as a boutique financial services firm offering loans collateralized by art and antiques. ArtLoan states there are no credit checks, credit scores, tax return reviews or financial statement requirements and offers a very quick turnaround once your account has been established. The loans appear to be based solely on the value of the art being used to collateralize the loan.

The difference between a regular bank loan and an ArtLoan Financial Services loan, and the aspect the bothers me a little is that ArtLoan takes possession of the collateral. With a typical bank loan, the collector still gets to keep and enjoy his collection, although there is a lien/UCC statement recorded and placed upon the property. I do understand that should ArtLoan lend without a proper financial review of the collectors net worth, cash flow and credit, the risks are greater, and to protect their interests they not only collateralize the loan with a lien on the property, but take actual possession of the property. As the old idiom states, possession is nine tenths of the law.

The ArtLoan service appears to lean toward fine art pawn brokerage rather than traditional fine art loans. It is another service that appraisers should be aware of, and perhaps might be called upon to value an object of an art loan. In any event, as personal property appraisers we need to know about all of the new and different types of services that are being offered to collectors in the marketplace, and how they might impact value. For more information on the types of loan and application process you can visit ArtLoan Financial Services on the web by clicking HERE.