Defaults on Non-Bank Art Loans Rise Dramatically Amid Market’s Struggles, Report Finds

Half of non-bank art lenders experienced loan defaults in 2024, up from 17 percent two years earlier, according to the Art and Finance Report 2025, published by Deloitte Private and ArtTactic.

That figure, however, is still better than 2020, the first year of Covid, when two-thirds of these lenders faced defaults as the art market all but came to a standstill.

Harry Smith, executive chair of art valuers Gurr Johns, put it bluntly to the Financial Times: “The market is split between the best and the rest. Lending on the best is fine—lending on the rest? Absolutely not.” His firm, which values up to $5 billion of art used as loan collateral each year, is also shutting down its small lending business.

Despite a strong showing during this past fall’s marquee sales in New York, the wider art market has been shrinking since 2022, hit by falling demand from high-spending Asian buyers and general economic uncertainty. Sales fell 12 percent to $57.5 billion in 2024, according to Art Basel and UBS. As a result, the value of artworks used as collateral has tanked, forcing lenders to either issue margin calls, or let loans default.

Regardless of this, the market for art-backed loans is reportedly growing. Deloitte and ArtTactic estimate it was worth between $33.9 billion and $40 billion in 2025, up nearly 12 percent from their last estimate in 2023. The firms predict it could hit up to $50.1 billion by 2027. Adam Chinn, who launched International Art Finance two years ago with funding and support from members of the Nahmad family, told ARTnews last year that his firm was on track to reach $500 million in loans before the end of 2025.

Not one of the 65 private banks surveyed, however, had a single default in 2024. That’s likely because they can reorganize a client’s finances to avoid a default.

Rebecca Fine, CEO of Athena Art Finance, explained that the rise of non-bank lenders has brought back “loan-to-own” businesses. These lenders aren’t as worried about keeping loans performing—they’re focused on eventually taking control of the borrower’s art at a discount. That means they often take on riskier clients. Fine said Athena hasn’t seen more defaults despite the trend.

Lenders usually look for artworks worth between $200,000 and $250,000 or more, and prefer to spread their bets across multiple artists, the report found. They also tend to favor big names in Impressionist and modern art over emerging artists without an auction track record.

The report’s sample size included 21 art-based lenders, 65 private banks, and 37 private offices, as well as 231 art professionals and 119 art collectors. It also found that some asset-based lenders were charging more than 15 percent interest, rates private banks don’t touch. Half of these loans sit at between 10 percent and 15 percent, and the rest under 6 percent.

As Smith, of Gurr Johns, put it: banks can offer competitive rates, while specialist lenders have to charge more. “The higher the rate, the lower the quality of the borrower,” he said.