It was just one year ago, this past March, that Collectors Universe, the world's leading provider of value-added grading, authenticators of high-end collectibles, and the parent company of Sports Market Report magazine, launched Collectors Finance Corporation. Designed specifically to be a lending source for dealers and high-end collectors of vintage and modern coins, currency, stamps, autographed material, sportscards, and high-end sports memorabilia, Collectors Finance Corporation offers loans that are secured by everything from one item to entire collections.
Mike Lewis, Collectors Universe's Senior Vice President of Finance also serves as the president of this new lending branch of Collectors Universe. The concept is really a rather simple one - to create a lending institution that could assist dealers and high-end collectors in paying off auction bills, securing a significant item or collection, or increasing their working capital by using their current collections to secure a loan.
"We established Collectors Finance Corporation because we felt it was consistent with our strategy to facilitate commerce in the high-end collectibles market," said Lewis. "Working in conjunction with all of our other services, we see this as another component to make it easier for dealers and high-end collectors to buy and sell."
Lewis went on to explain that the necessity of a business like Collectors Finance Corporation stems from the fact that many conventional lending institutions are not comfortable with lending on collectibles and most will not do it. "They simply don't have a mechanism in place to determine the value of items," said Lewis. "Most people who have attempted to secure a loan by using their collections as collateral have found that banks and other lending institutions are not comfortable with most appraisals. There are some institutions that will lend on certain things, but, overall, that is based more on their comfort level with the individual rather than on the collateral. Trying to find someone who will lend on collectibles the way we do is few and far between."
The minimum loan that Collectors Finance Corporation will make is for $5,000, and while the terms vary, they basically lend at the floating prime rate plus 4% for 90 days with no pre-payment penalty. The borrower's inventory, which must be graded by CU prior to the granting of a loan, is then held as collateral at Collectors Universe until the loan payment has been satisfied. "People should also know that while our terms are based on 90 days, that time frame can be extended by simply rolling over the loan," said Lewis.
Working in association with Collectors Universe subsidiaries, Professional Sports Authenticators (PSA), PSA/DNA Authentication Services, Professional Coin Grading Service (PCGS), and Professional Stamp Experts (PSE), Collectors Finance Corporation's terms also vary on what collectible items are being used for collateral.
Borrowing on Bullion, Coins and Currency
By using vintage coins, a borrower can receive 65% of the value deemed by the Certified Coin Exchange. If a collector chooses to use bullion, which may be in the form of coins, ingots, or private issues of precious metals, including gold, silver, platinum, palladium and copper, the company will loan 80% on London's PM fix of the intrinsic metal melt value of a particular numismatic item. On modern coins, loans are made on 50% of the item's value listed by the Certified Coin Dealer Newsletter better known as the "Bluesheet", and on currency a borrower can take a loan of 50 % of current value offered by the Currency Dealer Newsletter, known as the "Greensheet".
Loans on Sports Cards, Autographs, Signed Documents and Memorabilia
If a collector wishes to use PSA authenticated and graded cards as collateral, the company will loan 50% of the card's value based on the latest issue of Sports Market Report (SMR). As for sports related autographs and other memorabilia, loans are made on 35% of an item's value as listed in the most recent SMR.
Using Stamps as Security
Collectors Finance Corporation will loan 50 percent of a stamp, or a stamp collection's value based on the most recently published issue of Stamp Market Quarterly.
The Collector's Loan Collector
To begin the loan process, a collector's first step would be to contact, the loan man himself - Mike Lewis. A highly respected financial executive with an extensive background in developing management systems for organizations experiencing rapid growth or financial turnaround.
From 2001 through 2005, Lewis served as the chief financial officer for Collectors Universe. In September of last year, Lewis was named Senior Vice President of Finance and Chief Compliance Officer for Collectors Universe and President of Collectors Finance Corporation.
"I am very excited about the opportunities we are making available to dealers and high- end collectors through Collectors Finance Corporation," said Lewis. "We are offering a tremendous service to those who have a significant amount of cash tied up in their inventory - to use that inventory to get liquid cash that they can use to purchase another collection, to satisfy auction loans, or to provide them with working capital."
Since its inception in the Spring of 2005, Collectors Finance Corporation has loaned over $3.5 million. "We are currently holding a collection that is valued at over $8 million," Lewis said. "We have unmatched security when it comes to holding these items, which is another thing for dealers and collectors to consider. By working with us, they are not only able to use their collections to secure a loan, they are also housing their existing inventory, at no charge, in the most controlled and secured environment available. To the best of my knowledge, no one else is doing anything like this."
From the Client's Perspective
When it comes to better understanding a business or service, perhaps the best place to turn for answers is to someone who has actually been a client and used the service. John Rothans, a well-respected Southern California coin dealer who has taken advantage of the services of Collectors Finance Corporation, says he is not only extremely satisfied with the ease of doing business with the company but has also found it to be one of the most beneficial ways for him to continually grow his business and increase his revenues.
"Using the services of Collectors Finance Corporation has given me the opportunity to purchase more coins than I otherwise would," said Rothans. "By using my inventory as collateral, I have been able to greatly increase my company's revenues by using someone else's money."
Stating that he has been able to double, and more recently, triple the on-hand inventory he is certifying and selling, Rothans said he is also thoroughly comfortable with the integrity and security that Collectors Finance Corporation affords him. "There is absolutely no question in my mind that my coins are 100% accounted for and are being held as securely as they would be at Fort Knox," he said. "And, along with the benefits and security Collectors Finance Corporation offers me, I can say that dealing with them has been one of the most professional and easy business transactions I've ever done. I think it's easier for me to borrow money from them than it would be to ask my own mother."
If you would like further information on borrowing on your coins, currency, stamps, autographs, sports cards, or sports memorabilia collections, you can contact Mike Lewis at (888) 469-2646 Ext. 375 or via e-mail at [email protected]