Net Asset Value (NAV) Loan
Private Credit glossary · Fund Structures, Returns & Economics
Definition
Credit facility extended to a fund or holding entity, secured by the fair value (NAV) of underlying portfolio investments rather than uncalled LP commitments. Typical advance rate: 10%–25% of NAV; coupon SOFR + 300–500 bps. Used by GPs late in a fund's life (when uncalled commitments are exhausted) to fund follow-ons, distributions, or working capital. Distinguished from a Subscription Line, which is secured by uncalled commitments and is drawn early in the fund's life.
Net Asset Value (NAV) Loan in plain English
Imagine a fund that owns stakes in a bunch of private companies. A NAV loan is money the fund borrows using the value of those companies it already owns as the collateral — 'NAV' just means 'Net Asset Value,' the total fair worth of everything the fund holds. Funds usually reach for this late in life, once they've already called in all the cash their investors originally promised but still need money to support a struggling company, pay investors a distribution, or cover bills. Lenders are cautious, so they only lend a slice — roughly $10 to $25 for every $100 of portfolio value — and charge a floating rate (a base benchmark called SOFR plus about 3–5 extra percentage points). It's different from a Subscription Line, which borrows early against money investors have pledged but not yet paid in.
Also called: Net Asset Value (NAV)
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