A NAV loan can carry a loan-to-value as conservative as 10% or as aggressive as 70%, and that gap has almost nothing to do with which lender you use. It has almost everything to do with what the fund actually holds.
What a NAV loan actually is
A NAV (net asset value) loan is a facility secured by the current value of a fund's underlying investment portfolio, as opposed to a capital-call line, which is secured by limited partners' (LPs') unfunded commitments instead. A fund borrows against what it already owns, typically to fund a distribution to LPs, make a follow-on investment in an existing portfolio company, or address general liquidity needs, without having to sell any underlying assets to raise the cash.
The market, at a scale worth noting
17Capital, a specialist lender in this space, estimates NAV finance deployment reached roughly $70 billion in 2025, and projects growth toward $145 billion by 2030 within a total addressable market it puts at $700 billion. Treat those figures as one lender's own projection of a market it operates in and has an obvious interest in describing as large and growing, not as an independently audited statistic. They're useful for understanding scale and direction, not for precision.
Why the LTV range is so wide
"NAV lending" is not one product priced one way. A typical NAV loan against a buyout-style private equity portfolio, hard to value precisely between formal marks, concentrated in a relatively small number of portfolio companies, and illiquid by design, commonly sits in a conservative 10% to 30% loan-to-value range. A NAV loan against a diversified, high-quality credit fund portfolio, more liquid, more frequently and more reliably valued, can support a materially higher advance rate, sometimes in the 50% to 60-70% range for the strongest, most diversified books.
The driver is not lender competition; it's the actual character of the collateral. A lender pricing a NAV loan is really pricing the specific portfolio behind it: how liquid is it, how frequently and reliably is it valued, how concentrated is the risk, and how quickly could it actually be realized if the loan needed to be repaid from the assets themselves.
The controversy, stated plainly
The most contested use of NAV lending is funding a distribution to LPs. Critics argue this can let a fund manufacture the appearance of an interim return, cash actually landing in an LP's account, without a genuine realization event (a sale, an exit) behind it. The fund still owns the underlying, unrealized asset; it has simply borrowed against that asset's estimated value to send cash out early, adding real leverage and real interest cost at the fund level in the process, a cost that ultimately reduces the fund's eventual net proceeds.
This is not a claim that NAV lending is improper. It is a real, live debate in the fund-finance industry about whether a specific use case, distribution funding, blurs the line between genuine performance and financed performance in a way LPs may not fully appreciate when they see the distribution land.
Why a NAV-loan "margin call" doesn't look like a stock margin call
The same underlying mechanism, a forced response if the loan-to-collateral ratio moves against the lender, applies to NAV loans. But private-fund net asset value is valued on a formal schedule, often quarterly, not continuously the way a public stock trades. That means a NAV loan's collateral value doesn't reveal deterioration the way a falling stock price does; it can lag reality for months at a time, then move all at once at the next formal valuation. The risk is real, but it is slower to reveal itself and, in some ways, harder to manage proactively than the kind of margin risk covered on this site's margin-call mechanics guide for publicly traded collateral.
What to ask before your fund draws a NAV facility
- What specific loan-to-value did the lender price against this fund's actual portfolio, and how does that compare to the general ranges cited above for similar strategies?
- If this facility is funding a distribution, how is that being communicated to LPs, and does it distinguish clearly between a financed distribution and a realized one?
- How frequently is the fund's NAV formally revalued, and what happens contractually between valuation dates if the lender believes value has deteriorated?
- What specific covenants does the facility carry beyond the headline LTV, and what triggers a default independent of a simple valuation-based breach?