Will the artist be given a loan to expand his business? Automatic translate

Financing creative entrepreneurship in Russia presents a unique set of opportunities and constraints that require a detailed understanding of modern banking approaches to lending to creative professionals. Artists, like other creative people, face unique challenges when trying to obtain credit to develop their businesses, due to the specifics of their professional activities and banks’ perception of the risks associated with creative activities.

Current state of lending to creative professions

Banks’ perception of artists as borrowers

Bank lending to creative professionals is characterized by increased caution on the part of financial institutions. Research shows that among creative professionals (actors, musicians, journalists, writers) 11% of cases of loan defaults have been recorded. This forces banks to consider artists as a potentially risky category of borrowers.

The main problem is the instability of income, which is typical for creative professions. Banks cannot verify the origin of money from creative activities, since it often comes in the form of fees, transfers from individuals or foreign payments. Formally, this is income, but in fact it remains an unaccounted turnover in terms of bank algorithms for assessing creditworthiness.

Criteria for banking risk assessment

The banking system in Russia is built around risk assessment, where each client is considered in terms of the probability of repayment. Credit scoring is used for analysis - an algorithm that automatically evaluates the borrower based on many parameters. The first and most important parameter is official income.

A traditional borrower has a 2-NDFL certificate, an employment contract, and a stable schedule of receipts. An artist has fees, transfers from individuals, foreign payments, and cash payments. The bank cannot verify the origin of these funds, which leads to an underestimated assessment of solvency.

Additional risk factors that banks consider include lack of work experience, non-transparent tax status, and income instability. Even with a higher actual income than an office worker, the bank focuses on documentary evidence rather than reputation in the professional environment.

Specific difficulties for artists when obtaining credit

Problems with income verification

Artists often face difficulties in providing official documents of income. Creative work can bring significant profits, but these incomes are not always formalized through employment relationships or permanent contracts.

Many artists work as individual entrepreneurs or self-employed, which creates additional requirements for document flow. When applying for a business loan, an artist-individual entrepreneur must provide an extended package of documents: TIN, certificate of registration of individual entrepreneur, certificate from the Federal Tax Service on the absence of debt, financial statements, and a bank account statement.

Seasonality and irregularity of income

Creative activity is characterized by irregular income. An artist may receive a large order or sell several works at once, and then not have significant income for a long time. Such cyclicality makes it difficult to plan monthly loan payments and makes banks wary.

Banking algorithms are designed for stable monthly income that can be predicted for the loan term. Irregularity of creative income does not fit into these models, which leads to a decrease in the credit rating of the potential borrower.

Lack of traditional collateral

Artists often do not have traditional forms of collateral, such as real estate or expensive equipment. Artworks as a form of collateral require special valuation and present challenges for banks due to the subjectivity of pricing and limited liquidity in the market.

Credit Options for Artists

Consumer loans

Despite the difficulties, artists can count on receiving consumer loans if they meet certain conditions. Banks offer loans “for any purpose” that can be used to develop a creative business. The minimum rate in the largest banks is 3% per annum, subject to preferential conditions.

To increase the chances of approval, artists are advised to:

• Open a current account with the lending bank and conduct basic financial transactions through it
• Provide the most complete documentation of income, including contracts with customers
• Consider the possibility of involving guarantors
• Prepare a business plan for the development of creative activities

Loans for individual entrepreneurs

Artists registered as sole proprietors have access to specialized credit products for small businesses. These loans are often offered under more favorable terms compared to consumer loans.

Basic requirements for individual entrepreneurs:

• The term of business activity is from 1 year
• Availability of turnover on the current account for the last 3-6 months
• Break-even activity according to reporting data
• Tax Compliance

Government support programs

The Russian government is developing programs to support small and medium-sized businesses, including creative industries. The national project includes preferential credit programs with state guarantees.

Moscow support programs offer:

• Preferential loans at 3-5% per annum to replenish working capital
• Patent and Copyright Loans for Creative Companies
• Sureties of the Moscow Guarantee Fund up to 70% of the loan amount
• Online loans without collateral up to 5 million rubles for up to 3 years

Specialized programs for creative industries

The infrastructure for supporting creative projects is being developed through specialized funds. The Fund for Supporting Investment Projects of Creative Industries offers microloans of up to 5 million rubles at rates from 1% to 12% per annum for up to 3 years.

Such organizations have a better understanding of the specifics of the creative business and are willing to consider non-standard forms of ensuring the return of funds, including intellectual property rights and future income from creative projects.

Lending against intellectual property

International experience

Lending secured by intellectual property rights is actively developing in global practice. In the US, the volume of loans secured by works of art in 2019 amounted to 21-24 billion dollars. Large banks such as Bank of America and Citigroup offer art loans for collections worth from 10 million dollars.

Singapore had an Intellectual Property Financing Scheme (IPFS) program that allowed companies to obtain loans secured by patent rights. The bank approved seven-figure loans based on the valuation of intellectual assets.

Russian initiatives

In Russia, since 2019, small and medium-sized businesses have been able to receive subsidies to reimburse expenses on loans secured by intellectual property. The program provided support for lending secured by registered inventions, utility models, and other industrial property.

SME Corporation provides direct guarantees for loans secured by a pledge of intellectual property rights. The guarantee limit can reach 500 million rubles, and the term is up to 184 months for investment purposes.

Problems of valuation of creative assets

The main difficulty in lending against art is assessing its value. Artistic value is subjective and depends on many factors: the artist’s reputation, the historical significance of the work, the state of the art market.

Factors affecting the value of works of art:

• Authenticity and provenance of the work
• The artist’s reputation and historical significance
• Size and execution technique
• State of preservation
• Market trends and demand

Alternative sources of financing

Microfinance organizations

Microfinance organizations can be more flexible in lending to creative professions. They offer loans with simplified paperwork requirements and faster application review processes.

Advantages of MFO for artists:

• Speed ​​of processing (37% of borrowers note this factor as the main one)
• Fewer requirements for the package of documents (32% of borrowers)
• Possibility of online registration without visiting the office
• A more tolerant attitude towards non-standard sources of income

Flaws:

• Significantly higher interest rates (up to 1% per day)
• Short repayment periods
• Limited loan amounts

Crowdfunding and crowdlending

Alternative funding platforms allow artists to raise funds directly from interested investors or fans of their work. Crowdfunding platforms provide an opportunity to raise funds for specific projects without the need for repayment in the traditional sense.

Grant programs

State and private funds offer grant support for creative projects. The Ministry of Culture of the Russian Federation implements programs of state support for creative projects by non-profit organizations. The Russian Culture Foundation supports the implementation of creative initiatives through various forms of financing.

Practical advice for artists

Preparing to apply for a loan

Artists planning to apply for a loan are advised to:

1. Formalization of activities : Registration as an individual entrepreneur or creation of an LLC for conducting a creative business
2. Financial reporting : Documenting all income and expenses, tax accounting
3. Building a Credit History : Gradually Building a Positive Credit History Through Small Loans
4. Preparing a Business Plan : A detailed description of the creative activity as a business with income and expense projections

Choosing a bank and a credit product

When choosing a bank, artists should consider:

• Availability of specialized programs for creative industries
• Experience working with representatives of non-standard professions
• Flexibility in assessing non-traditional sources of income
• Possibility of providing preferential conditions when working with small businesses

Increasing your chances of approval

To increase the likelihood of receiving a loan, artists are advised to:

• Provide guarantors from among financially stable individuals
• Consider joint lending with your spouse
• Prepare a portfolio of work and documents confirming professional reputation
• Show the presence of regular customers or contracts for future work

Regional features and development prospects

Moscow support programs

Moscow is a leader in developing support for creative industries. Over the first five months of 2025, the volume of loans issued in the capital exceeded 1.7 trillion rubles, which is 31% of the all-Russian figure. City preferential lending programs specifically highlight creative industries as a priority area.

The Moscow Guarantee Fund provides guarantees of up to 70% of the loan amount with a liability limit of up to 100 million rubles for each project. This significantly reduces the collateral requirements for creative entrepreneurs.

Development of the creative class

According to research, the creative class in Russia is 3.4 million people and has increased by a third in five years. The growth is due to modern specialties: the number of graphic designers, software developers, advertising and marketing specialists is increasing.

Traditional creative professions, such as visual artists, make up a smaller share of the creative class, but remain an important segment of the economy. The development of digital technologies opens up new opportunities for monetizing creative activities and creating stable sources of income.

Risks and measures to minimize them

Main risks for creditors

Banks highlight the following risks when lending to creative professions:

• Instability of income from creative activities
• Dependence on subjective factors (fashion, public tastes)
• Limited liquidity of works of art as collateral
• Difficulty in predicting future income
• High mobility of representatives of creative professions

Ways to reduce risks

To minimize risks, banks and artists can use:

From the banks :

• A thorough analysis of the borrower’s creative history and reputation
• Request for additional security or surety
• Setting higher interest rates
• Reduction of loan terms
• Regular monitoring of the borrower’s financial status

From the artists’ side :

• Diversification of income sources
• Creating a reserve fund to cover periods of low activity
• Developing long-term relationships with regular customers
• Creative Risk Insurance
• Gradual increase in credit limits

International trends and best practices

European experience

Specialised funding programmes for creative industries are being developed in the European Union. Germany offers preferential funding for the establishment and development of creative enterprises, including loans at preferential interest rates, guarantees and equity participation.

The German Federal Government and the federal states provide founders of creative enterprises with financial support in various forms, recognising the importance of the creative sector for economic development.

Asian models

Singapore’s IPFS experience demonstrated the potential for successful lending against intellectual property, although the program was discontinued in 2018 due to high intangible asset valuation costs.

Korean and Japanese models of support for creative industries include government loan guarantees and specialized funds for the development of creative entrepreneurship.

Technological solutions and digitalization

Blockchain and NFT

The development of blockchain and NFT (non-fungible token) technologies creates new opportunities for artists to verify authorship and generate additional sources of income. Digital certificates of authenticity can simplify the process of assessing works of art for banks.

Online platforms

Digital platforms allow artists to create verifiable portfolios of work, track sales, and build a documentary base to prove income. This can significantly improve their position when applying for loans.

Artificial Intelligence in Assessment

Advances in machine learning algorithms open up opportunities to more accurately value artworks and predict their market value. This could reduce the subjectivity of valuation and make artworks more attractive as collateral.

Legal aspects and regulation

Pledge of intellectual property

Russian legislation allows the transfer of exclusive rights to intellectual property objects as collateral. The agreement on the collateral of exclusive rights must be concluded in writing and may require state registration depending on the object.

The pledger retains the right to use the pledged intellectual property, unless otherwise provided by the agreement. In case of violation of obligations, the creditor may foreclose on the pledged rights through legal proceedings.

Tax aspects

Receiving credit funds does not constitute taxable income for the artist. However, interest on the loan can be included in expenses related to business activities, which reduces the tax burden.

When using works of art as collateral, it is necessary to take into account the taxation peculiarities of transactions with intellectual property and copyrights.

Socio-economic significance

Impact on the development of the creative economy

The availability of credit resources for artists directly affects the development of the creative economy in Russia. Financial support for creative entrepreneurship contributes to the creation of new jobs, the development of cultural industries and the increase in the international competitiveness of Russian art.

Multiplier effect

Every ruble invested in supporting creative projects generates a multiplier effect in related industries: tourism, publishing, education, technology. Artists create a cultural environment that attracts investment and talented specialists.

Image component

The development of creative industries creates a positive image of the region and the country as a whole. Financial support for artists contributes to the creation of cultural clusters and creative spaces that become points of attraction for international cooperation.

Prospects and Recommendations

For the banking sector

Banks are advised to:

• Develop competencies in the field of creative asset assessment
• Create specialized products for creative industries
• Establish partnerships with expert organizations in the arts
• Study international experience of lending secured by intellectual property

For government agencies

It is advisable for authorities to:

• Expand preferential lending programs for creative projects
• Improve legislation on the pledge of intellectual property
• Develop infrastructure to support creative entrepreneurship
• Create specialized guarantee funds for creative industries

For artists

Representatives of creative professions are recommended to: