P2P lenders tap $400bn art lending market
Peer-to-peer lending platforms are seeing growing demand for high-value art finance, a lending market which is believed to be worth more than $400bn (£289bn) globally.
According to art advisory and finance firm The Fine Art Group, requests for art loans surged by 30 per cent in 2020 compared with 2019.
This trend has been mirrored in the UK’s P2P lending community.
“We are lending more and more against contemporary art, the market for which is now as liquid as prestige watches,” said Rito Haldar, co-founder of Unbolted.
Unbolted’s head of lending Chris Brown added that the market for lending against art is growing, with particular interest in contemporary art by artists such as Banksy.
In response to this demand, Unbolted has developed a specific Art Finance product, which offers loans of between £50,000 and £1.5m at up to 50 per cent of the low auction estimate. Its set up fees begin at 1.5 per cent, while interest rates start at 1.1 per cent per month.
“A particularly strong area is loans around auction activity,” added Brown.
“Often a collector will see their next target piece coming up at auction and know eventually they will need to sell lesser pieces to fund it, but do not want to sell in advance in case they are not the winning bidder. Our bid-now pay-later and auction consignment loans help bridge this gap.”
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Daniel Grimes, co-founder of P2P pawnbroking platform Connective Lending, said that art-backed lending is not limited to paintings.
“Pre-P2P my pawnbroking company has lent against several pieces of art, mainly in the pre-auction area where we offer an advance on the auction result,” said Grimes.
“This has included painted pictures and watercolours with probably the best known being a L S Lowry Piece. A point of note is it is not just art in the sense of paintings etc. We have provided auction advances on decorative silver ornaments and antique furniture as well.”
Connective Lending offers rates on a case by case basis, however larger loans can be offered from 1.5 per cent per month.
Earlier this year Alex Klabin – chairman of Sotheby’s Financial Service – said that the value of privately held art is more than $2trn, while the potential market for art loans could be worth more than $400bn.
“We think there is a tremendous growth opportunity ahead of us,” Klabin told CNBC.
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