Increased demand for loans secured by works of art as access to finance for art dealers and antique dealers remains limited

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The TEFAF Art Dealer Finance 2018 report was launched to coincide with the TEFAF New York Spring Fair (pictured). TEFAF image by Kirsten Chilstrom.

The current value of loans to galleries and dealers is estimated to be between $ 1.4 billion and $ 2.1 billion, or about 10% of the global art-backed loan market, according to the TEFAF Art Dealer Finance 2018 report. estimates the global market between 17 and 20 billion dollars.

The report found that less than 10% of the value of dealer inventories is financed by debt and nearly 90% would like better access to acquisition finance. Most brokers currently rely on retained earnings or co-investment from private investors to fund their businesses.

Compiled by art market research firm ArtTactic, the report interviewed 142 dealers and galleries participating in TEFAF art fairs.

“Full potential”

Anders Petterson, Founder and CEO of ArtTactic, said: “We hope this report becomes a resource for galleries and dealers to educate them about the funding options available. For funders, this will provide insight into how art dealers currently finance their activities and… the challenges that currently prevent the market from reaching its full potential.

Dealers have turned away from finance because of perceived risks and 36%
of art dealers surveyed said the risks of using loans on their inventory are “high to very high” due to unpredictability of sales.

The report, launched to coincide with the TEFAF New York Spring fair, also highlighted the significant difference in size between the art lending markets in the United States and the United Kingdom. He estimated that over 90% of the world’s secured loans of works of art to art dealers are made in the United States.

Part of the reason is that the US art lending market benefits from a more advantageous legal framework. The Uniform Commercial Code allows borrowers to retain possession of works of art until the loan is repaid.

ATG n ° 2293 reported on the evolution of the art lending market.

Learn more about the TEFAF Art Dealer Finance 2018 here.


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