A NAV loan is a loan to an investment fund that is secured by the value of the fund’s existing investments, its net asset value (NAV). The fund borrows against what it already owns, and repays the loan from what those investments return.
NAV loans are also called NAV facilities, NAV financing or NAV lending. Private equity firms have used them for years. Some venture capital firms now use them too, for a reason that is specific to venture: a fund is fully deployed, but its best companies keep offering it the right to invest more.
NAV loan vs. subscription line
The Institutional Limited Partners Association (ILPA) describes the difference from the more familiar subscription line: subscription lines are backed by the LPs’ undrawn commitments, while NAV facilities are backed by the underlying portfolio.
That difference decides when each tool is available. A subscription line works early in a fund’s life, while there is capital left to call. A NAV loan works later, when most of the capital is invested and the portfolio has value.
| Compared on | Subscription line | NAV loan |
|---|---|---|
| Secured by | LPs’ unfunded commitments | The fund’s existing investments |
| When in the fund’s life | Investment period, while capital is uncalled | After most capital is called and deployed |
| Typical purpose | Bridge capital calls for weeks or months | Fund an investment, support the portfolio or bridge to exits |
| Repaid from | LP capital calls | Exit proceeds and other portfolio cash |
| Lender looks at | The creditworthiness of the LPs | The value, quality and concentration of the portfolio |
Some funds use a hybrid facility, which is secured by both the remaining commitments and the portfolio.
How a NAV loan works
A NAV loan is credit underwritten against a fund’s portfolio. The borrower is the fund, or a holding vehicle that owns the fund’s investments, and the collateral is the investments and the right to their proceeds. Most NAV loans follow the same three steps.
- The lender sets a borrowing base. It reviews the portfolio and decides how much of the reported NAV to recognize. It can exclude some holdings, adjust marks, and cap exposure to a single company. The loan is a percentage of this borrowing base, the loan-to-value (LTV).
- The fund uses the proceeds for an agreed purpose. For a venture fund, this is most often a follow-on investment in an existing portfolio company.
- Portfolio proceeds repay the loan. When a company exits or the fund sells a position, the cash goes to principal, interest and fees, often through a cash sweep set out in the agreement.
How much can a fund borrow?
A fund can usually borrow a modest share of its portfolio value. Rede Partners reports that private equity NAV facilities rarely exceed 20% loan-to-value and, unless there is a specific need, are rarely below 5%. Venture loans are usually a smaller share of the portfolio, because the lender recognizes only part of the reported value and limits exposure to any single company.
How much does a NAV loan cost?
A NAV loan is priced above a subscription line, because it is secured by portfolio value rather than LP commitments. The cost includes interest, an upfront fee and legal costs, and each loan is priced to the portfolio and its use of proceeds. Interest can be paid in cash or added to the loan balance (paid in kind, or PIK).
The value of a NAV loan comes from what it funds. If a $150M fund borrows $7.5M and invests it at cost, its gross assets rise to $157.5M and its NAV stays at $150M before fees and interest. If the new investment grows by more than the cost of the loan, the gain is shared by the LPs and, through carried interest, the GP. Because fund-level borrowing can increase carry, LPs look closely at why a fund borrows. If the investment loses value, all LPs share the loss, and the fund still repays the loan, with interest, from its other holdings.
How private equity funds use NAV loans
Private equity funds use NAV loans mostly to support companies they already own. Buyout portfolios usually hold mature companies with steady cash flow, which makes them good collateral.
ILPA cites a Fund Finance Association estimate that about 80% of NAV facilities support portfolio companies and about 20% fund distributions to LPs. The main PE uses are:
- Add-on acquisitions. A portfolio company buys a smaller business to fold into its platform.
- Portfolio support. The fund adds capital to a company when its reserves are spent.
- Refinancing. The fund replaces more expensive debt at the company level.
- Distributions. The fund returns cash to LPs before it sells assets. LPs give this use the closest review, because the fund keeps the asset and repays the loan from later exits.
How venture capital funds use NAV loans
Venture funds use NAV loans mainly to keep investing in their best companies after the fund is fully called. The private equity playbook does not transfer directly, because three features of a venture portfolio change how a lender looks at it.
Concentration. Venture returns follow a power law. A few companies can hold most of a fund’s value, and lenders limit how much of the borrowing base one company can support.
No cash flow before exit. Venture-backed companies rarely pay dividends. Repayment comes from exits or secondary sales, so the loan term allows for venture timelines. A 2025 PitchBook analysis found that the median time to IPO had risen to 9.4 years.
Valuation evidence. Venture marks often rely on the last priced round. Lenders look at how recent each round was and how well it supports the mark.
For these reasons, a venture NAV loan is usually a smaller share of the portfolio than a buyout loan, and it is structured around a specific use. The uses also differ from PE. Venture funds rarely borrow to make acquisitions or refinance company debt. They borrow to keep investing in their strongest companies.
| Private equity use | Venture capital equivalent |
|---|---|
| Add-on acquisition for a platform company | Follow-on investment or pro rata in a portfolio company’s new round |
| Support a company when reserves are spent | Bridge or insider round for a company close to its next milestone |
| Refinance company-level debt | Join a recapitalization on terms offered to existing holders |
| Distribution ahead of exits | Possible, with LPAC approval under ILPA guidance |
Why are venture funds using NAV loans now?
Venture funds are holding companies longer and returning less cash. Through the third quarter of 2025, only 25% of 2021-vintage funds on Carta had made any distribution. The Q3 2026 PitchBook-NVCA Venture Monitor reports that net cash flow to LPs has been negative by $202 billion since 2022.
At the same time, many of these funds are fully called. When a strong company raises a new round, the fund has a pro rata right but no capital to use it. Its options are to let the right lapse, raise an SPV, give the allocation to one LP, or borrow against the portfolio.
Example: how Fin Capital used a NAV loan
NAV loan vs. SPV, secondary sale and continuation fund
A NAV loan is one of several ways for a venture fund to get capital or liquidity from an existing portfolio. Each one changes who keeps the upside and who pays.
| Compared on | NAV loan | SPV | Secondary sale | Continuation fund |
|---|---|---|---|---|
| Capital comes from | A lender, against the portfolio | New investors in one deal | A buyer of fund or company stakes | New investors in a new vehicle |
| Who keeps the upside | All LPs, after financing costs | SPV investors | The buyer | Investors who roll or buy in |
| Main cost | Interest and fees | Formation, admin, SPV fees and carry | The discount to NAV | The price set by the lead buyer, plus conflicts |
| Speed | Weeks | Weeks to months, depending on the raise | Weeks to months | Months |
| Main consideration | Leverage on the whole portfolio | Depends on investor demand | Upside passes to the buyer | Needs a fair pricing process |
| Best when | The fund wants to keep the upside and has a clear repayment path | Investors want direct exposure to one deal | LPs need liquidity now | The GP wants to hold strong assets past the fund’s term |
Secondary sales of venture interests are costly in the current market. Jefferies reports that venture LP portfolios sold at an average of 79% of NAV in the first half of 2026, against 91% for buyout. A NAV loan keeps the asset and its upside in the fund, but interest builds the longer the loan is outstanding. A secondary sale costs more upfront but ends the exposure. Which costs less depends on how long the loan is outstanding and how the kept asset performs.
Are NAV loans risky?
Yes, as with any borrowing. A NAV loan adds leverage to the fund, and the whole portfolio usually secures it. Review these points before the fund commits.
- Larger losses. If the portfolio loses value, all LPs share the loss, and the fund must still repay the loan with interest.
- Lower and later distributions. Interest accrues until exits, and exit proceeds repay the loan before LPs receive cash. This reduces DPI.
- Portfolio value. Lower portfolio values raise the loan-to-value ratio. The agreement sets protections for this, such as a partial repayment or a cash sweep.
- Shared collateral. The whole portfolio usually secures the loan, so proceeds from any holding can go toward repayment.
- Sizing. Size the loan against the whole portfolio, so repayment does not depend on one investment.
Facility agreements set out what happens if the loan-to-value ratio passes an agreed level or a payment is missed. Steps can include a cash sweep or a required repayment, and in a default the lender can enforce its rights over the pledged portfolio.
Do LPs need to approve a NAV loan?
Often, yes. It depends on the fund’s limited partnership agreement (LPA). Many LPAs allow short-term borrowing to bridge capital calls but say nothing about borrowing against the portfolio. ILPA’s 2024 guidance recommends that GPs:
- Get LPAC consent for a NAV facility unless the LPA expressly permits one.
- Always get LPAC approval when proceeds fund distributions.
- Count debt held in an SPV or holding vehicle toward the fund’s leverage limit.
- Tell LPs the facility’s size, LTV, interest rate, tenor, structure and covenants.
Clear communication makes approval easier. LPs want to know why the fund borrows, how much and on what terms, and how the loan will be repaid.
When does a NAV loan make sense for a venture fund?
A NAV loan tends to fit when most of these are true:
- There is a specific use. The fund wants to take up its pro rata in a strong company, join a recapitalization, or support a company close to its next milestone.
- The fund is fully called. There is no uncalled capital left for the investment, and raising an SPV would be slow or uncertain.
- The portfolio can support it. The fund holds several companies with recent, well-supported marks, so the loan does not depend on one holding.
- There is a repayment path. Expected exits or secondary sales can repay the loan within its term.
- The documents allow it. The LPA permits fund-level borrowing, or the LPAC is likely to consent.
If several of these are missing, an SPV, an LP co-investment or passing on the round may be the better choice.
Learn more about NAV loans for venture funds, or talk to the Turbine team.
