Art Loans Of­fer the Best of Both Worlds

Canadian Art - - Auction Highlights -

It’s no sur­prise to any art lover that art can be a sig­nif­i­cant in­vest­ment. Ac­cord­ing to a 2016 re­port by con­sul­tancy firm Knight Frank, more in­vestors are al­lo­cat­ing re­sources to the “col­lectibles” cat­e­gory, which in­cludes art. How­ever, cre­at­ing liq­uid­ity can be a con­cern for many col­lec­tors. Art is a store of value— an as­set that can be en­joyed and mon­e­tized. The ques­tion now be­comes, how can you best ac­cess your art eq­uity? In other terms, how do you turn your art into read­ily avail­able dol­lars?

Un­til re­cently, if you re­quired a mea­sure of liq­uid­ity, you had to sell works of art. The art mar­ket is not liq­uid on a daily ba­sis and values may fluc­tu­ate widely de­pend­ing on sup­ply, de­mand and trends. Trans­ac­tion costs can be high and if the work has ap­pre­ci­ated, tax is also a con­sid­er­a­tion.

Now, for the first time in Canada, there is an al­ter­na­tive op­tion to sell­ing work should a col­lec­tor de­sire liq­uid­ity. LONO Fine As­set Lend­ing of­fers loans based on the value of works of art. If you have a piece that you don’t want to part with, LONO will of­fer you up to 50% of the ap­praised value of the work. Loans can be termed on 12, 18 or 24-month pe­ri­ods, and the in­ter­est rates are typ­i­cally 1.5–1.85% per month for smaller loans. Th­ese rates are less than the credit card rates, and the rates de­cline for larger loans.

Art loans are rel­a­tively new in Canada. In the US and Europe, sev­eral banks and smaller lenders of­fer a range of lend­ing op­tions to al­low clients to bor­row against their art col­lec­tions. What’s par­tic­u­larly no­table about LONO’S ap­proach, in con­trast to some of the larger in­ter­na­tional banks, is that LONO se­cures the loan against the art it­self. If you do wish to sell your work, LONO also pro­vides Pre-sale Loans so you can re­ceive funds up­front while you wait for the right price. LONO re­quires a min­i­mum art­work val­u­a­tion of $20,000 and loans at a max­i­mum of $1,000,000.

For those who meet the cri­te­ria, LONO of­fers a wel­come so­lu­tion to a long stand­ing prob­lem: re­tain­ing the work of art that you love and ac­cess­ing the cash value in the short term. Per­haps it’s even an an­swer to a much older adage: hav­ing your cake, and eat­ing it, too.

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