Today art financiers are a very large and growing market. The move to art lending really began after the 2008 market crash, today it is not easy to get a loan from a bank, it is quite complex and very difficult for the average person to qualify for it, especially for those people who hold their wealth not in money but in assets. Art lending provides them another solution. People are now able to secure loans via a piece of art or a portfolio of artwork. If the person who takes out the loan cannot repay it, the lender is able to take the art and sell it, to get their money back and then some. In order to be sure that art financiers are not taking unnecessary risks it is essential that they: will need to know the title or ownership of the secured asset from birth and its authenticity, basically the borrower would have to provide documentation to show that the artwork truly is what they say it is. Secondly they will have to understand the present and future value of the asset, in order to determine if they will at least get back the amount of money they are loaning to the borrower. Finally they will need to know about the identity and physical security of the asset.
The ways in which the intended borrower can prove the title and ownership of the art is through a few different ways. It can be done through collection of retained auction catalogue entries, sales receipts, and by searing the art loss register. There is not a 100% guarantee that the asset is authentic, which provides a bit of risk for the lender, but generally the reward is well worth the risk.
The last key thing when being an art financier is knowing that his collateral, the borrower’s asset for which they are getting the loan from, is both secure and identifiable. Sometimes this means that the lender will store the asset for safe keeping until the loan is repaid in full, it truly just depends on how the art financier does business.
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