DEFINITION of 'Permanent Loan'

A form of loan agreement in which an individual, trust, or company loans artwork or other objects to a museum for an extended period of time. The loan agreement may stipulate that the museum must display the loaned artwork in a specific area of the museum, that the artwork is to be displayed as part of an exhibition, or that the artwork is not to be shown in a touring exhibition.

BREAKING DOWN 'Permanent Loan'

Providing artwork to a museum under a permanent loan carries a certain level of prestige, especially if the artwork is well known. The museum may prominently display the name of the benefactor in its literature, and may even name an exhibition hall after the individual or trust.

Accepting artwork under a permanent loan does put a museum at a risk, however. While the word “permanent” is used to describe the time period of the loan, objects loaned under this sort of agreement can still be withdrawn at any time. For example, the heirs of a wealthy collector may request a painting be returned. Additionally, museums that rely on permanent loans may fail to acquire their own pieces. If loaned artwork is recalled the museum will see an immediate drop in the objects available for display.

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