Venture Debt Pricing in 2026: SOFR Spreads, Fees, and the Real Cost

Venture debt volume hit a record $68.8 billion in the United States in 2025, spread across roughly 1,000 transactions with a median deal size of $5.5 million, according to Runway Growth Capital and PitchBook's 2025-2026 Venture Debt Review. That is a lot of founders trading a fixed obligation for a smaller equity check than they would otherwise need to sell, and a lot of term sheets where the actual all-in cost is harder to read than the headline number suggests.

Venture debt is not priced like a mortgage or an SBA loan, where the rate alone tells most of the story. A venture debt facility bundles a floating interest rate, an equity kicker in the form of warrant coverage, and a handful of fees that rarely show up in the first paragraph of a term sheet summary. Understanding how each piece works, and how they interact, is the difference between comparing two offers correctly and comparing two headline rates that don't actually measure the same thing.

How Facility Sizing Works

Lenders generally size a venture debt facility to 20% to 35% of a company's most recent priced equity round, though the exact number depends on the lender's read of the company's burn rate, revenue trajectory, and existing cash position. A company that just closed a $20 million Series B might expect to raise somewhere between $4 million and $7 million in venture debt on top of it, not as a replacement for equity but as an extension of the runway that round already bought.

This sizing convention exists because venture debt is fundamentally a runway-extension tool, not a primary financing source. Lenders are underwriting against the company's ability to reach its next milestone or its next equity round, not against hard collateral in the traditional sense, so they anchor the facility size to a multiple of what the company's own investors were willing to fund.

The Interest Rate: SOFR Plus a Spread

Most venture debt today is priced as a floating rate: the Secured Overnight Financing Rate (SOFR), which sat around 3.6% as of mid-2026, plus a spread that typically runs 6 to 9 percentage points depending on the lender and the borrower's risk profile. That puts the total annualized cost in a roughly 8% to 15% range for most deals, with stronger companies and larger facilities generally landing toward the lower end and earlier-stage or higher-risk borrowers landing toward the upper end.

That 8% to 15% range is meaningfully higher than a comparable secured commercial loan would cost a profitable business, which is the point: venture debt lenders are pricing in the real possibility that a pre-profitability company doesn't reach its next milestone, and the rate reflects that risk alongside the warrant coverage described below.

Warrant Coverage: The Part That Doesn't Have a Clean Formula

Venture debt term sheets typically include warrant coverage, giving the lender the right to purchase a small slice of company equity at a fixed strike price, usually the price of the company's most recent round. This is where a lot of comparison content gets sloppy, because there is no single published formula for how much coverage a given lender takes.

Specialty, non-bank venture debt funds generally negotiate for meaningfully more warrant coverage than bank-affiliated lenders, who tend to rely more on the underlying deposit or banking relationship for their return. But neither category of lender discloses a standard percentage in public filings, and secondary sources online cite ranges anywhere from roughly 2% to 30% of the loan amount depending on which blog you land on, none of them tied to an actual disclosed term sheet. Treat any specific warrant-coverage percentage you're quoted as a negotiated term specific to your deal, your lender, and your leverage in the negotiation, not as evidence of a market rate you can benchmark against.

What you can reasonably do is model the dilution impact directly: a warrant to purchase equity worth even 1% of the loan amount at today's valuation is a real, if usually small, dilution cost on top of the cash interest, and it should be weighed alongside the interest rate rather than treated as a footnote.

The Fees That Don't Show Up in the Headline Rate

Beyond interest and warrants, most venture debt facilities carry additional fees worth pricing out before signing:

• A draw fee or facility fee, charged when the loan closes or when capital is actually drawn, typically a percentage of the facility size.
• An unused-line fee, charged on any portion of the committed facility that goes undrawn, which matters if you negotiate a larger facility than you end up needing.
• A prepayment penalty, which can apply if the company pays the loan off early, for instance after raising a large subsequent equity round. This one catches founders off guard most often, since the instinct after a big raise is to clear debt immediately.

None of these are unusual or predatory on their own, they are standard in commercial lending, but a term sheet that leads with a modest interest rate and buries a meaningful draw fee and prepayment penalty further down is not actually the cheaper option once the full structure is priced out.

Putting It Together: What a Typical Deal Looks Like

A representative 2026 venture debt deal for a company that raised a $20 million Series B might look like: a $5 million facility (25% of the round), priced at SOFR plus 7 points, drawn over 12 months with a 36-month maturity, carrying a modest draw fee and negotiated warrant coverage sized to the lender's risk assessment. The all-in annualized cost, including interest alone, would land in the low-to-mid teens at current SOFR levels, before adding the fees and warrant dilution on top.

Compare that structure, in full, against any alternative facility, not just the headline interest rate. A lender advertising a slightly lower rate but a larger draw fee and stricter warrant coverage can easily end up more expensive than a lender with a nominally higher rate and a cleaner fee structure. For a broader look at how venture debt fits into a company's overall treasury strategy, alongside the sweep networks and cash-tiering framework most growth-stage companies also need, see our guide to multi-bank sweep networks for larger treasury balances and our comparison of bank-affiliated venture lenders versus specialty debt funds.

This is educational information, not personalized financial or legal advice. Venture debt terms are individually negotiated; confirm current rates, fees, and warrant coverage directly with any lender before signing a term sheet.