Standard custodians (Schwab, Fidelity, IBKR) only lend against publicly traded securities they can liquidate in a margin call. The assets that often dominate larger portfolios — fine art, classic cars, single-family rental holdings, private equity stakes, pre-IPO shares, intellectual property royalties — are off-limits to those lenders. Private credit funds and family-office lenders fill the gap.
Athena Art Finance, Sotheby’s Financial Services, and Bank of America Private Bank lend 30%–50% of appraised value at SOFR + 3%–5%, typically on 1–3 year terms with annual renewal.
Specialty desks at EquityZen, Forge, and the major prime brokers lend against vested but illiquid equity in private companies, often structured non-recourse so the borrower can walk if the underlying equity collapses. Rates run wide — 8%–15% — because the collateral is volatile and difficult to value.
Standard commercial-style underwriting via private banks, but against assets the borrower wants to keep using rather than liquidate to free capital.
The trade in private credit is consistent: broader collateral and faster access in exchange for a wider rate, less covenant flexibility, and a lender with recourse to a specific asset rather than a diversified portfolio. Read the appraisal-frequency clauses — a lender that can re-appraise quarterly is a lender that can re-set your loan-to-value at the worst possible moment, especially in thin secondary markets like contemporary art and pre-IPO shares.