This information is located in our software for artists. Some references within the text will be software related.
LOANS AND EMERGENCY LOANS FOR ARTISTS
Many nonprofit organizations offer loans to artists. The amounts and fees for these loans range widely. Some of these loans go towards completing a project that only pays out upon project completion. For instance, the New York Foundation for the Arts will give a loan that may not exceed 80% of the contracted amount for a project. There is a 3% fee of the loan amount. The loan is usually good for 120 days.
You should check your options carefully.
Artist Project Loans
Some organizations will loan you money for a contracted project. Since some grants and funding are not paid at the beginning of a project, you have to figure out how to raise start up funds. Some non-profit organizations have come up with a solution, and will loan you the money against the contract. The amounts they charge to do this are well worth it, and can help you actualize your project. After all, they need to pay their own accountant and legal folks to process your loan.
There are funders who will award you an emergency loan for various reasons such as health, a catastrophe or personal issues. You can find these on the web or in the library. (See Emergency Resources section.)
Pay Day Loans (not a good idea)
These companies will give you an advance on a certain amount of money until you get paid. They often have a fee associated with a particular amount. For example, a typical $250 loan can have a fee as high as $45. You secure this loan by writing a post dated check drawn off a checking account, which is deposited on the said date. Normally, the loan matures in two weeks, at which time you are expected to pay the loan and fee in full.
If you cannot pay the required amount then you can pay the fee ($45) and roll the original loan amount ($250) over for another two weeks, where again you will be faced with either paying the entire amount due or the fee and roll the loan for another two weeks. If you roll the loan over just once, you have paid $90 to borrow $250!
Borrow from friends and family or even a bank or credit union if you are strapped for cash. Or better yet, sell your art! But stay away from these types of organizations.
In addition to debt ratios, VA Loans use a residual income calculation to assess applications. For example, say a lender allows a debt to income ratio of 30% and requires a residual (leftover) income of $1000 per month. This means that although each month 30% of the borrower’s income goes towards debt, after debts are paid the borrower must have $1000 remaining to allocate towards property expenses.
So, if the borrower had an income of $1200 per month and debts of $360/month, s/he could not qualify for the loan. This is because although the borrower meets the debt ratio requirements ($360 is 30% of $1200), s/he does not meet the residual income requirement ($1200-$360 = $840).
In this example, the borrower would need to earn at least $1360 per month to meet both the debt ratio and residual income requirements ($1360 - $360 = $1000).
Private Mortgage Insurance is not required for VA loans. It is replaced by a VA funding fee instead. This fee varies from 1.25% to 3.3% of the value of the property and is used to help operate the program by paying claims to lenders who would otherwise lose money by making loans to sub-prime (under qualified) borrowers who default on their loans. This fee is also used to pay lenders that normally would not make these loans were if not for the VA funding fee.
In 2005, the residential loan limit for one-family loan was set at $359,650 in the continental US and $539,475 in Alaska, Hawaii, Guam and the U.S. Virgin Islands. Any single loan that exceeds Fannie Mae’s limits is considered a jumbo loan and will carry a higher interest rate than a conventional fixed-rate mortgage. This is a good loan to have if you need more money to secure the space you want and if can afford it.
Unlike many home buyer programs, government loans, such as a Federal Housing Administration or FHA backed mortgage, are not limited to first-time homeowners. Selected guidelines for standard government loans include:
• Terms have 15 or 30 years with either a fixed or ARM loan
• Gift funds from a non-profit organization, family members or friends can be used for the down payment
• No payment reserves are required for mortgage insurance
• Maximum total debt ratio is 41%
• Loans are assumable, meaning another party can take over the loan as long as they meet all of the loan requirements and qualifications per the FHA guidelines.
• Loan amounts are capped
Construction/ Permanent Loans
Loan programs are available to assist borrowers who would like to build a new property. Construction loans are available, as well as a combination construction/permanent option that features a single closing.
The loan would be secured by a mortgage on the land and the property, once it is built. The construction loan usually has a short term (12-24 months) to allow time to complete the building and may then convert to a permanent mortgage on the completed property. With such a loan product, one has to decide whether to incur the additional risk of building a space.
FHA loans will also accept funds from gifts, other loans or grants from certain sources to be used for down payments and closing costs. Unlike conventional loans, the maximum property debt ratio is increased to 29% compared to the 28% allowed for conventional loans and the total debt ratio can be as high as 41% versus 36%.
In addition, while a conventional loan may require you to have at least a two-month payment reserve (money in the bank to cover the mortgage and/or insurance) this is not a requirement for FHA loans.
EMERGENCY RELIEF FOR ARTISTS
There are generally two kinds of emergencies that qualify for an emergency loan: large scale disasters and personal emergencies.
Large scale disasters inflict wide range damage, such as a hurricane, earthquake, or terrorist attack. These kinds of crises destroy livelihoods and communities in an instant, and it often takes many years for these neighborhoods to recover. Personal injuries include an accident or sudden illness, physical injuries, house or studio fires, and floods.
Encountering both types of emergencies at the same time can be overwhelming.
Fortunately, there are a number of emergency support programs. It is a good idea to know the basis of what is available before you are in a crisis.
About Emergency Support Organizations
In the US, there are a number of organizations that provide emergency support to individual artists. Some of these organizations work with specific disciplines such as musicians, while others concentrate on a particular ethnic group or geographic region. Not every region is covered, so planning ahead can make a difference. Most of the emergency loan organizations are non-profits started by artists, who raise funds from foundations, charities, guilds and unions; very few of them receive government funding. Most of these organizations work in crisis mode themselves because crises are unending.
There are many simple things you can do to survive an unforeseeable crisis. (See the Health and Safety section and scroll to the Earthquake Preparedness section.)
Learning from Others
It is crazy to think that all emergency situations can be avoided. However, their devastating impact can be tempered or reduced. Consider, for instance, the aftermath of the Nisqually earthquake in Washington State in February 2001, from which Washington artists (mostly visual artists) reported $1.3 million in losses, including $890,000 in inventory. Luckily, the Seattle-based arts service organization Artist Trust, in collaboration with the King County Arts Commission, Seattle Art Commission, Washington State Arts Commission, and the National Endowment for the Arts, quickly set up an emergency support program called Artists’ Quake Aid (AQUA). Through AQUA, Artist Trust was able to distribute $40,000 in aid within weeks to artists suffering the greatest losses (grant amounts ranged from $250 to $1,500). Reported losses included damage to artwork and equipment, workspace, work time, emotional trauma, and the breakup of artistic communities. In the AQUA Final Report, Artist Trust points out several important findings about the ways in which many artists organize their lives and maintain their artistic production, all of which are applicable to most emergency situations, regardless of the type or scale of the emergency:
• Many artists live so close to the edge financially that they cannot sustain a disaster of any kind.
• Many artists live and work in unsafe conditions.
• Most artists do not carry insurance for their artwork as this insurance is difficult to find, very expensive, and has high deductibles. Furthermore, the value of artwork is hard to determine.
• Many galleries do not carry insurance for artwork on exhibition or in storage, for the same reasons that artists do not carry it.
• Government resources are often unattainable by artists who are not viewed as having a "business."
Additionally, artists do not feel that they are part of the general public (they tend to marginalize themselves). They therefore do not tend to utilize the existing emergency support infrastructure offered to them by social service organizations such as the Federal Emergency Management Agency (FEMA), American Red Cross, and the Salvation Army. However, the reverse is also true. Many social service organizations do not quite know how to handle artists and their specific needs. What is important here is to think outside the box. In emergency situations, in particular, artists should also pursue programs for the general public. This includes community programs, support groups, programs serving students, faith-based programs, etc.
What Situations Are Eligible for Emergency Support?
When struck by an emergency, what should you do? Before applying to an emergency organization, it is important to understand the distinction between what they term valid emergencies and avoidable ones. The majority of emergency support organizations draw a clear line between the two. Valid emergencies can be characterized as absolutely unavoidable. They are life-and-death situations such as medical emergencies, fires, floods, natural disasters, etc. Emergency situations of one’s own making, although difficult, are not eligible for emergency support. This category includes circumstances such as bad financial planning, credit card debt, child support, defaults on student or other loans, eviction because of refusing to pay rent, etc. Emergency organizations are also not set up to assist with special opportunities such as sudden and unexpected performance/exhibitions overseas, residencies, and professional conferences (although there are many programs nationwide, similar to NYFA’s Special Opportunity Stipends, that support special opportunities). None of these situations constitute unavoidable, life-and-death emergencies.
Types of Emergency Support
Emergency organizations generally provide one or more of the following areas of support: emergency grants, emergency low-interest loans (these have to be repaid), and emergency assistance. Emergency grants can range from a couple hundred to several thousand dollars. Emergency loans come in the same amounts, and are usually accompanied by a grace period of about a year to give artists time to get back on their feet before the repayments start. Lastly, many emergency organizations (and non-emergency organizations, too) give artists technical assistance concerning how to pick up the pieces and proceed with their lives, and some will work with other social service organizations on an artist’s behalf. Whatever the form of support, responsiveness (i.e., a quick turnaround time) and access to information and resources are rules by which these organizations live and breathe.
It is also good to know that most organizations do not prioritize artistic merit. Generally, an organization will review an artist’s résumé simply to verify that she or he is a "professional" working artist. The organization will also weigh the need and the degree of crisis. Lastly, artists stricken with multiple emergencies over the course of several years may reapply to many emergency organizations for help.
Emergency Support Organizations
In addition to hosting further roundtables, creating partnerships among emergency organizations, and advocating for greater emergency relief, NYFA launched a brand new database on its web site in the fall of 2002. The database, developed in partnership with the Urban Institute in Washington, DC, builds upon NYFA’s Visual Artist Information Hotline, a clearinghouse of information on more than 2,000 support programs for visual artists. It makes comprehensive, up-to-the-minute information available on nearly 5,000 support programs for artists working in all disciplines: visual arts, media arts, design arts, dance, music, theater, performance art, and literature. The database is searchable, and is available free 24/7 on NYFA’s new web site.
List of Emergency Organizations
The following is an extensive, though by no means definitive, list of emergency organizations. Please call or check the organizations’ web sites to get the latest programmatic information and eligibility requirements.
Academy of American Poets
American Society of Journalists and Authors Charitable Trust
Authors League of America
Carnegie Fund for Authors
Human Rights Watch
Pen American Center
Motion Picture and Television Fund
Commonwealth Council for Arts and Culture (Northern Mariana Islands)
Herbert and Irene Wheeler Foundation
J. Happy-Delpech Foundation
Louisiana Division of the Arts
Montana Arts Council
Actors’ Fund of America
Conrad Cantzen Shoe Fund (funds up to $80 per year to purchase one new pair of shoes)
Entertainment Industry Assistance Program (EIAP) (for counseling, advocacy and aid)
Senior and Disabled Program (for the disabled or age 62 or older)
AIDS Initiative (for AIDS counseling, support groups, emergency aid, and housing)
Mental Health Services (for treatment, housing, rehabilitation, and funding)
American Guild of Musical Artists (AGMA)
AGMA Emergency Relief Fund (for AGMA members)
American Guild of Variety Artists (AGVA)
Associated Musicians of Greater New York Local 802
Dancer’s Group Studio Theater
Episcopal Actors Guild of America
International Association of Blacks in Dance
Jazz Foundation of America
Music Maker Relief Foundation
Musicians’ Assistance Program
Rhythm and Blues Foundation
Santa Fe Jazz Foundation
Screen Actors Guild Foundation
Society of Singers
Sweet Relief Musicians Fund
Theatre Bay Area
Will Rogers Memorial Fund
Adolph and Esther Gottlieb Foundation
Berkshire Taconic Community Foundation
Chicago Artist’s Coalition
Craft Emergency Relief Fund
Photographers + Friends United Against AIDS
Other Emergency Services
American Red Cross
Federal Emergency Management Agency (FEMA)
Small Business Administration (SBA)
Volunteer Lawyers for the Arts (VLA)
Legal Aid Society