NAV Lending

NAV Lending (Net Asset Value Lending) is a credit facility secured by the value of a fund's existing portfolio investments rather than unfunded LP commitments. Unlike subscription lines of credit which are secured by LP commitments and typically used early in a fund's life, NAV loans are secured by the portfolio itself and are more commonly used later in a fund's lifecycle when most capital has been called. NAV facilities can be used for follow-on investments when reserves are depleted, funding distributions to LPs when exits are delayed, capitalizing continuation vehicles, and bridging liquidity gaps. NAV lending has grown significantly as funds seek financial flexibility beyond their committed capital. Loan amounts are typically 10-25% of the portfolio's NAV, with borrowing bases determined by the lender's assessment of portfolio quality and liquidity. Interest rates are higher than subscription lines (reflecting greater risk) and the loans may include covenants tied to portfolio concentration, NAV maintenance, and coverage ratios.