When establishing a revolving line of credit the client puts up enough art collateral to establish a 'drawdown facility' that can be used at their discretion and for any purpose. Apollo Collector Services can help with arranging a credit line. A set of rules are established at the start that dictate the ways and amounts that can be withdrawn at any one time:
- minimum value of the collateral portfolio
- minimum value per object
- low risk portfolio
- maximum amount to be drawn out at a single transaction
- set up fee for the credit line (regardless of whether it is drawdown) and yearly interest
Case StudyA dealer seeking to acquire 20 pieces over a two-year period established a £5m credit line with an art financier that enabled them to move quickly to acquire pieces once the opportunity arose, even though they didn’t have precise details of all the target works.
Having paid a management fee for having the line in place, they were able to withdraw £1m in the first year and £3m in year two. The line was subsequently extended for another two year period.