Luxury assets such as art, jewelry, and collectible cars can provide liquidity for affluent individuals without disrupting financial plans. While traditionally viewed solely as possessions, luxury assets are increasingly seen as investments and part of overall portfolios. Leveraging these assets through loans or sales allows quick access to capital for opportunities or unexpected expenses. However, most advisors are reluctant to recommend tapping luxury assets. Doing so can offer clients faster funding than traditional bank loans, especially for time-sensitive needs. Advisors need more awareness of luxury asset lending to properly guide clients requiring short-term capital.

1. Solving the Liquidity Trap
M
any affluent individuals have worked hard to develop a fi-
nancial plan that helps ensure their quality of life for years
to come and maximizes their ability to reach personal and
professional goals. But life doesn’t always go as planned:
At times, these individuals may need to generate a considerable amount
of cash, whether to fund an attractive business or investment opportu-
nity, or simply to manage unexpected expenses such as a looming tax
bill. When that happens, it’s critical to have options to provide liquidity
without interrupting or compromising carefully laid financial plans.
Luxury assets present a valuable option for freeing up capital—one
that advisers and their clients often overlook. Selling assets outright or
borrowing against their value can provide an important source of li-
quidity, and for some individuals can provide attractive benefits over
traditional methods of raising funds.
THE CHANGING ROLE OF LUXURY ASSETS
For generations, luxury assets from fine art to automobile collections
played a singular role as objects of enjoyment for the owner. In recent
decades affluent individuals have begun considering these luxury assets
to be more than just possessions. In many cases, that has meant includ-
ing these items as part of their overall financial portfolio.
“Increasingly, we’re seeing people look at a purchase of, say, a piece
of artwork as an investment,” says Tom McDermott, Chief Commercial
Officer for Borro, a lending marketplace for clients with investments in
luxury assets. “It’s not just something to hang on their walls. They see
this investment as a way to bring more diversification to their broader
investment portfolio.”
Indeed,76%ofartcollectorsconsidertheirpurchasestobeinvestments
as well as additions to their collections.1
One reason for that shift is that
many luxury items have increased significantly in value in recent years. In
the 10 years through 2014, luxury assets including jewellery, stamps, coins,
fine wine, classic cars, and art and antiques have increased in value by more
than 200%2
—more than double the cumulative return of stocks during that
same time period, and nearly five times the return of government bonds.
Luxury assets aren’t just for personal enjoyment.
They also can help provide financial flexibility.
www.borro.comSponsored by 1
White Paper
A SHORT LIST OF
EXTRAORDINARY ASSETS
Samantha Lilley, MRICS, FGA, DGA, Director of
Valuations UK at Borro, says we have a very
diverse portfolio across a variety of different asset
classes including; works by important Old Masters,
Impressionist and Modern Artists, including Monet
and Degas, Urban Art such as Banksy. And it is
not just the more traditional art we can offer the
best deals on, categories such as Luxury Cars,
Important Jewellery and Memorabilia are also
represented within our portfolio and we are proud
to be able to offer the best rates, for the most
diverse works, including some historically unique
and important Star Wars Memorabilia.

2. Paul Aitken, CEO of Borro, believes many investors have turned
to luxury assets in recent years partly because of the financial crisis
that began in late 2007, which highlighted the financial system’s po-
tential for tremendous volatility. Items such as jewellery or automo-
biles are considered more tangible than assets such as stock shares
or bond certificates. “People have begun to think about the hard as-
sets they own when they think about their financial planning,” says
Aitken. “These items are unlikely to decline in value to zero. In the
stock market, a stock can lose its entire value in a day.”
A TOOL FOR WEALTH
Despite changing attitudes toward luxury assets, individuals and
their trusted advisers—including wealth advisers and trust and es-
tate planners—often are reluctant to leverage those assets to meet
capital needs.
In a recent Borro/WealthManagment.com survey of more than
300 financial advisers and lawyers, just 7.5% of respondents said
clients should consider selling personal assets to meet the need for
short-term capital.3
That may be due to a lack of awareness among
advisers and their clients that these assets can be leveraged through
lending or outright selling to generate money—perhaps because
there haven’t been many providers of these types of services to af-
fluent individuals and families. “Until recently, it really was just the
major global banks who let their very high net worth clients lend
against their luxury assets,” says McDermott. “They served a very
small and very wealthy audience.” These days, companies such as
Borro are making such services available to a greater number of
affluent individuals.
That said, most advisers focus on more traditional avenues to
raise money: More than half of the survey’s respondents said clients
should seek capital through home equity lines of credit (63%), tradi-
tional bank loans (62%) and securities-based lending (56%).4
Yet clients aren’t all alike: While one client may benefit from tap-
ping an equity release, another might have too little equity to cover
the required cash flow. What’s more, the need for capital might be
urgent—for example, to take advantage of an immediate business
opportunity, or to raise funds to take part in a pressing property
investment. In these situations, bank loans and other methods of
raising capital may need too much lead time to work through paper-
work and a potentially onerous approval process.
www.borro.comSponsored by 2
White Paper
THE VALUATION ADVANTAGE
Once a client decides to sell or borrow
against a valuable belonging, what’s the
timeline from decision to deal completion?
We asked Borro’s Samantha Lilley to walk us
through the process.
Current market value. Samantha remarks,
“Our in-house team of highly qualified
specialists, rely on the latest globally
recognized market data to provide informed
opinions on current market value, within the
different asset classes. Drawing up-to-date
data from different source points, enables
us to get a global view re market value and
therefore provide more accurate valuations
than our competitors. This is especially
important within the fine art sector, were
markets are often very volatile. By analyzing
and monitoring the current market trends
and consulting with our vast network of
industry renowned specialists across the
diverse range of disciplines our expert team
are able to offer the best deals for lending or
consigning purposes.”

3. www.borro.comSponsored by 3
White Paper
THE VALUATION ADVANTAGE
CONTINUED
The process. The Borro team of valuers will
request information for all assets. They require
images, and information such as medium,
dimensions, condition, provenance etc.
Samantha explains, “From this information
we can give informed opinions of current
market values, based on comparable auction
data.” Borro offers a bespoke and confidential
valuation service which can be carried out
either in the comfort of the clients’ own
home/office, or by appointment at their
London, premises. Appraisers will physically
examine the property, discuss provenance
and any condition issues, (which can often
effect overall value). Samantha expounds,
“Once appraised, we are able to provide
comprehensive written and online valuations,
listing each asset under its own unique
reference number, along with an image for
every asset. All valuations are confidential
and can only be accessed by the client with
a unique password and login, which are
accessible 24 hours a day through Borro’s
online platform.”
Due diligence. As part of our due diligence
process we will also consult with more than
one specialist, to arrive at the final figure, and
consult with a number of online platforms
to ensure the highest standard of service
is provided to all our customers. All data
is passed by to our experienced sales team
who will offer competitive rates based on the
information provided.
And while traditional approaches may suit some clients, oth-
ers may not be good candidates for bank loans or lines of credit.
For example, they may have considerable assets tied up in entre-
preneurial ventures, leaving them less attractive in the eyes of
lenders than borrowers with lower debt levels. Clients and their
advisers also may be reluctant to tinker with a carefully built in-
vestment portfolio in order to meet a short-term capital need by
selling stocks or borrowing against those investments.
A FUNDING ALTERNATIVE
While many advisers and their clients seek out traditional channels
to raise capital, they also may benefit from exploring opportuni-
ties to tap their luxury assets. In the UK and US markets, affluent
individuals hold some £380 billion worth of luxury assets that are
effectively lying idle.5
Meanwhile, luxury asset lenders make just £10 billion in
loans annually. That market is expected to double to £20 billion
in the next five years as advisers and their clients gain a better
understanding of the benefits of leveraging valuable assets such
as jewellery, art and antiques.
Consider a restaurant owner who wants to expand into a new
market. He applies for a small-business loan from his financial in-
stitution, but learns that it may take eight weeks or longer to process
the loan paperwork, receive approval and release the funds. Mean-
while, he’s negotiating with the property owner for what he believes
will be the perfect location for his new restaurant, and wants to
move quickly to secure the lease. One solution to cover the security
deposit, rent and upgrades to the space is to borrow against his fam-
ily’s collection of heirloom jewellery.
In this scenario, the jewellery is collateral for a short-term loan
that lets the restaurateur cover the startup costs for the new location
while still pursuing the small-business loan. Once the funds are re-
leased by his bank, the man can repay the balance on the short-term
loan and take back his family’s jewellery. “Most people simply aren’t
aware that this is an option,” says Borro’s Aitken. “They don’t have a
clue they can do this with their luxury assets. But this can really help
people when it comes to managing their finances.”

4. www.borro.comSponsored by 4
White Paper
of art collectors
consider their purchases
to be investments
Percent luxury assets have
increased in value from
2004-2014
current U.K. and U.S.
luxury assets
76%
£380
200%
BILLION
MoreThan
It’s not just entrepreneurs or investors who can take advantage
of the benefits of tapping the capital in luxury assets. Leveraging
valuable assets can serve to bridge short-term financial gaps caused
by tax bills, unexpected medical expenses or other costs.
Consider an example of a woman whose remaining parent
dies, leaving an estate that needs to be divided among the fam-
ily members—as well as a large tax bill that needs to be covered
before the assets are spread among the heirs. “In this case, bor-
rowing against assets may make sense. There’s no capital gains tax,
because nothing is sold,” says Aitken. “Why solve one tax problem
and cause another?”
DISPELLING MISCONCEPTIONS
Affluent individuals have many options for managing their luxury
assets. They can go directly through an appraisal network or auction
house to sell items, and engage advisers and attorneys to assist them
through the appraisal process.
However, more than four in 10 advisers and lawyers say they
don’t regularly use appraisal firms for their clients,6
suggesting that
these clients’ luxury items may not be considered part of their over-
all financial picture. That’s a mistake, says Aitken. “The bottom line
is that these advisers’ clients have put more and more of their net
worth into these asset classes in recent years, and they need their
advisers to help them manage these assets,” he says.
Advisers need to better understand the process of leveraging
luxury assets so they can offer a broader and more comprehensive
range of solutions to their clients. These may include discussing
questions such as:
• What options are available? Borro offers several options, from
assistance selling an item or collection (and receiving immediate
payment in advance of the sale) to short-term bridge loans or
term loans of several months or even years.
• How long does the process take? With firms such as Borro, as-
sets can be appraised and terms agreed on in as little as one hour
to a week or so for more complex loans and sales.
• Is it complicated? Thanks to a proprietary technology platform,
clients can quickly upload information about their items and
often can receive feedback from valuation experts without having

5. www.borro.comSponsored by 5
White Paper
to ship items back and forth.
• Is it reputable? Borro employs a 10-person team of in-house
valuation experts as well as a network of more than 300 inde-
pendent advisers with specific expertise in a range of fine art,
automobiles and other assets. Borro has valued more than 45,000
items and loaned more than £140 million to clients.
• Is it cost effective? Fees for advanced sales, short-term and
longer-term loans are competitive with more traditional methods
of funding.
• How large are the loans? Borro provides loans of as little as
£3,000 to as much as £5 million.
Whether a client wants to sell or lend against a valuable personal
item or collection, leveraging luxury assets may offer significant
benefits against traditional lending strategies such as equity release
or bank loans. For instance, individuals engaged in relatively high-
risk businesses may want to avoid borrowing against their primary
residence or key business equipment. In these types of loans—called
“recourse” loans—failure to repay may mean not only forfeiting the
asset as collateral, but also receiving a black mark on a credit report
for the default. However, the type of luxury lending Borro is involved
in is non-recourse, which means that there’s no additional credit im-
pact if the borrower can’t repay the loan.
Ultimately, the ability to leverage luxury assets is another tool
financial advisers and trust and estate planners can use to properly
guide clients in need of capital. It is critical for advisers and plan-
ners to fully understand not only the process of selling and lending
these valuable items, but also the role these assets play in their
clients’ overall financial picture. “As people are investing more and
more into these asset classes, it poses a real challenge—and a real
opportunity—for those involved in wealth and trust-and-estate
planning,” says Aitken. n
1
Deloitte Art & Finance Report, 2014.
2
2015 Knight Frank Wealth Report; Invesco & Lipper Inc., 2014.
3
“2014 Trusts & Estates Asset Liquidity Survey,” Borro/WealthManagement.com, 2014.
4
“2014 Trusts & Estates Asset Liquidity Survey,” Borro/WealthManagement.com, 2014.
5
Christie’s and Sotheby’s filings; IBIS World reports, other industry sources.
6
“2014 Trusts & Estates Asset Liquidity Survey,” Borro/WealthManagement.com, 2014.
Why Would I Use
Luxury Asset Lending?
Three Examples.
Small Business Owner — wants to
expand into a new market. The small
business loan may take eight weeks or
longer to process paperwork, receive
approval and release the funds. He’s
negotiating the perfect location for his
new restaurant now, and wants to move
quickly to secure the lease.
Estate Heir — needs to determine how
to divide an estate among the family
members—as well as pay a large tax bill
that needs to be covered before the assets
are spread among the heirs. By borrowing
against the assets, there’s no capital gains
tax, because nothing is sold.* Why solve
one tax problem and cause another?
Other Investors — may have
considerable assets already tied up in
entrepreneurial ventures but don’t want
to miss an opportunity. Also may be
reluctant to tinker with a carefully built
investment portfolio in order to meet a
short-term capital need by selling stocks
or borrowing against those investments.
*This material is provided solely for educational purposes.
Individuals should seek advice from a qualified tax expert to
ensure tax rules are being observed.

6. www.borro.comSponsored by 6
White Paper
Borro is the leading marketplace for luxury asset lending. The company launched in 2009 in the uk and
proceeded to open offices in new york and los angeles. Borro offers loans to high net worth individuals,
entrepreneurs and business owners, with clients using luxury assets such as fine art, antiques, prestige and classic
cars, jewellery and luxury watches as collateral. Borro has extended over £140 million in luxury asset-backed loans
since its inception.
Borro’s platform is built with flexibility and scalability in mind. It integrates seamlessly with partners, servicing
loans from £3,000 to £5,000,000 across multiple asset classes. This facilitates growth, allowing Borro’s business
to expand with its partners and their clients.
Borro’s investors include: canaan partners (lending club), eden ventures, augmentum capital, rocket internet,
ourcrowd and victory park capital. The company’s board of directors includes: nigel morris (co-founder capital
one) as chairman, and paul gratton (ex-ceo egg, first direct).