Targeting lesser-known but nonetheless established artists who may need cash, J.G. Wentworth, a leading specialty finance outfit, has created the Artists Advance loan program.
The company has jumped into the loan-making fray sparked by the raft of high-profile securitization deals that offer money to artists but are often tied to huge bodies of works and the royalties they generate.
But this first-of-its-kind program hopes to attract artists on a slightly smaller scale.
Though the AA loan will allow artists to use their future earnings to secure financing, it is more of a traditional loan than the latest trend of securitizing royalties and creating bonds to then sell to institutional investors, as in the so-called (David) Bowie Bonds.
“The program is designed to meet the needs of creative entrepreneurs across a wide variety of fields,” Michael Goodman, exec veep of J.G. Wentworth, told Daily Variety.
“Many of the financial problems that successful artists face are the result of a lack of a steady flow of cash,” he observed.
Goodman said recording acts, songwriters, authors and inventors will be among those targeted for the program. Loans will range from $100,000 to $1 million.
Goodman noted that “billions of dollars in royalties are paid every year in the U.S. alone — particularly in the music and entertainment industries. Yet banks and brokerages have been slow to develop financial products that meet the needs of the people whose incomes and lifestyles are dependent on those royalties.”
Goodman added that the deals can be creatively structured without affecting the value of future royalty streams.
The Philadelphia-based J.G. Wentworth is the largest originator and servicer of securitized deferred obligations in the U.S., overseeing more than $1 billion in specialty asset receivables.