The New York Times leads with a profile of the art loan business:

Art Capital’s headquarters in the former Sotheby’s building on Madison Avenue looks at first glance like an art gallery. Two Warhols, a pair of Rubens portraits of Roman emperors and a pink nude by the contemporary Mexican painter Victor Rodriguez hang on the cool white walls. A sculpture of a faun by Rembrandt Bugatti sits on a windowsill in a conference room where transactions are discussed.

But it would be more accurate to describe the airy space as something far less genteel: a pawnshop.

Art Capital issues loans of $500,000 or more at interest rates from 6 percent to 16 percent. Fail to pay and you lose your Rubens; several of the works on display in Art Capital’s office on Madison became subject to sale after their owners defaulted.

The company expects to make about $120 million in art-related loans in 2009, up from $80 million in 2008. At a Manhattan-based competitor, Art Finance Partners, “we are up 40 percent in originations in the last six months,” said Meghan Carleton, a partner.

ArtLoan, a similar company in San Francisco, is actually regulated by California’s pawn laws. It opened in 2004 and has seen “exponential” growth in the last year even though it charges interest rates of 18 percent to 24 percent, said Ray Parker Gaylord, an owner.

“It’s a very rough-and-tumble corner of the business,” said Mark Porter, who heads the American operations of Christie’s auction house. Christie’s and Sotheby’s also offer loans against fine art but focus on bridge loans to customers who have pledged their art for planned auctions.

That Old Master? It’s at the Pawn Shop (The New York Times)