New York Private Finance is all but unique in our willingness to take illiquid assets as collateral for our loans. To facilitate these structures, we seek to craft a diversified pool of collateral assets. The primary reason is to minimize risk to our clients. Diversification is a classic mechanism to accomplish this goal, and we use it effectively on our clients’ behalf.
Of course, we too benefit from this structural consideration, as the risk of the loan is also reduced by the diversification of the collateral pool, but the primary beneficiary is our client. We seek to limit the chance that the collateral pool could decline in value to such an extent that the loan would require a prepayment or additional collateral. Accordingly, we seek a collateral to loan value of at least 4:1. At that level and with adequate diversification, the risk of extreme collateral pool diminution is de minimis.
Perhaps equally important, however, is the fact that our parent, Emigrant Bank, has a number of highly specialized lending groups with expertise in fairly abstruse areas – for example, fine art and collectibles. The benefit to our clients of these specialized groups is that NYPF can evaluate unusual forms of illiquid collateral that would not typically be appropriate for a bank loan of any sort. By extending the potential collateral reach into atypical arenas, we afford our clients the ability to borrow against assets that might otherwise lie fallow. The goal is to maximize flexibility with minimal risk, so that they can focus on creating wealth.
Please contact us to learn how we can help.
