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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 can write up a personal loan agreement by hand, with pen and paper, or draft it on your computer. Once the document looks good, it can be printed out and signed by both parties.
The IRS doesnt allow taxpayers to claim an income tax deduction for merely loaning works of art to tax-exempt organizations, even for long-term loans. A charitable income tax deduction is available only for irrevocable lifetime donations that have been delivered to the museum in perpetuity.
An agreement for the loan of a piece of art for display at the borrowers premises for an agreed period of time, possibly in return for a loan fee, including a copyright licence to reproduce images of the artwork for limited purposes connected with the display.
Banks typically charge 2% to 5% on art loans, depending on the clients other assets and businesses, while art lending firms and auction houses often charge 6% to 9%. The term of an art-backed loan is typically a year, and owners can usually borrow as much as half of the appraised value of an artwork.
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Art loans may be made for many reasons, some of which may include advances against art not yet produced (usually made to artists of some repute), advances against items to be auctioned or otherwise sold (known as a bridge loan to sale, a type of bridge loan), to finance new purchases (known as acquisition financing and
There are two main groups of players: specialist lenders, who loan against art and other assets, and banks, who as part of their service will give loans to their clients, their art and other assets being the collateral. Sothebys Financial Services is in the first category.
Art finance is used to unlock capital tied up in private art collections. Lenders offer you a loan, using your art as collateral. You can use the liquidity raised from an art-backed loan for practically any reason.

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