Using an artwork to get a loan is an increasingly popular way to raise funds, in South Africa and around the world. It makes it possible to unlock the value of the artwork, without selling it.
In this article, we look at recent growth in the worldwide art loans industry, with some interesting statistics.
We also offer details about how this type of loan works and its potential advantages for those who own artworks of value.
Worldwide growth in loans against artworks
According to The Fine Art Group, an art advisory and finance firm, loan requests against fine art in the US went up by 30% in 2020 compared to the previous year.
This increase was primarily driven by collectors and entrepreneurs who wanted to access the capital tied up in their art collections for other investments and business opportunities.
Bank of America is also a leading art lender and it saw a similar surge in art loans of 30% in 2020.
According to one expert, the value of privately owned art is estimated at more than US$2 trillion (R35 trillion), which makes the potential value of loans against artworks around US$400 billion (R6.9 trillion) worldwide.
How much you can borrow against an artwork in South Africa
The amount you can borrow against an artwork in South Africa depends on the market resale of the piece. The loan amount is calculated as a percentage of this resale value.
The resale value of the artwork itself will depend on a few factors, including the artist, the demand for the artist’s work, how rare the piece is, how old the artwork is and what condition it’s in.
In the past, Lamna has offered loans up to R10 million against artworks and other valuable assets.
Advantages of using an artwork to get a loan
Using a valuable artwork to secure a loan has many advantages compared to a traditional bank loan.
- Quick access to money. Typically you’ll have the funds within 24 hours.
- You get to keep your asset.Once the loan is paid off, the artwork is returned to you. You don’t have to part with a piece that you love, or that could one day be worth far more than it would fetch if you sold it now.
- Discreet application. Because an asset secures the loan, we don’t require information about your credit score, employment status or current income.
- Your asset is safely stored. Your asset is securely stored by the lender for the duration of the loan and doesn’t get used for any other purpose.
Using artwork to get a loan with Lamna
Lamna offers asset-based loans against a range of assets of value, including works of art by recognised South African and international artists. We’re an established financial services provider (FSP) with physical branches across South Africa.
For more information about using an artwork to get a loan in South Africa, WhatsApp us on 068 725 9701, call 086Â 111 2866 or simply complete and submit our online application form.
ILLUSTRATIVE EXAMPLE
Client borrows R10,000 for 90 days.
Loan Amount | Repayment Period | Monthly Interest | Total Cost of Loan | Initiation Fee | Monthly Fee | APR |
---|---|---|---|---|---|---|
R10 000 | 3 months | R500.00 | R2 914.50 | R1 207.50 | R569.00 | 60% |
Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.