Your Art Collection as Loan Collateral
Art and Liquidity
As a fine art collector, you no doubt have a very clear sense of what drew you to each piece in your collection. You may even be able to talk in depth on the personal history and creative influences of the artists whose works you own. Yet if you are like many collectors, you may only vaguely be aware that you can use art as collateral for a loan. By borrowing against your artwork, you may create liquidity to take advantage of a broad range of financial opportunities. You might think about:
- Acquiring more artwork
- Financing a business investment
- Renovating and investing in real estate
- Investing in hedge funds and private equity partnerships
- Replacing a volatile securities based margin loan
- Taking advantage of other opportunities
As a client of U.S. Trust, you have access to a qualified team of credit specialists who can help you borrow against your art collection while you maintain possession of every piece.
Deep aesthetic interest and passion may be your main motivations for buying fine art. Yet your collection may be valuable in financial as well as emotional terms. You are no doubt aware of how the individual pieces have changed in value over time. Indeed, if recent auctions of major artworks is anything to go by, we are in a period of increasing activity in art markets.*
Recent appreciation in the art market may favorably affect the potential collateral value of your collection.
While there are collectors who have ready access to liquidity, we have found that others tend to be fully invested most, if not all, of the time. They often have little money available to focus on other investment opportunities and must consider liquidity when the opportunity arises. A fine art loan may be an effective way to generate the cash which can be invested elsewhere in your portfolio.
- If the value of your securities declines, you may be required to deposit additional securities and/or cash into your account.
- Your securities may be sold to meet a "maintenance" call and we may do so without contacting you.
- You can lose more funds than you deposit in your margin account.
- We can increase our "maintenance" margin requirements at any time, and we are not required to provide you with advance written notice.
- You are not entitled to an extension of time on a margin call.