NAV loans for family offices explained: structure, LTV and cost

A NAV loan is a term facility secured on the net asset value of a portfolio of private market holdings rather than on a single asset or on investor commitments. For a family office it provides cash against fund interests and direct holdings without selling them, at an advance rate that is typically no higher than 30% of eligible value for a diversified portfolio. The loan is repaid from distributions, which are swept to the lender under agreed terms. It is a liquidity tool with a defined cost and defined failure modes, and it suits some situations and not others.

Fund-level versus portfolio-level

The original NAV loan was a fund-level product: a private equity fund in its harvest period borrowed against its remaining portfolio companies to fund follow-ons or distributions. ILPA issued guidance on NAV-based facilities in 2024 recommending that GPs seek LPAC consent before putting one in place unless the fund documents expressly permit it, and that they disclose the rationale, use of proceeds, size, structure and key economic terms.

A portfolio-level NAV loan is made to the investor instead. A family office holding company, trust or special purpose vehicle that owns a book of LP interests and direct positions borrows against the whole book. The lender takes a pledge over the borrowing vehicle's equity and control of the account that receives distributions. Because fund documents usually restrict transfers, the lender often cannot take security over each LP interest directly, which is why these facilities are described as recourse-light and why diversification carries so much weight in sizing.

Typical loan-to-value

Advance rates are low by the standards of listed collateral. Nodem Capital's NAV loans guide sets out typical closing LTVs of 10% to 30% of eligible value and summarises market-wide ranges by lender type, and its shorter primer describes 15% to 30% as the normal band.

Eligible value is a defined term, not the GP's reported NAV. It excludes concentrated or unapproved positions, applies haircuts for valuation age and currency, and caps exposure to any single fund or manager. A facility that reads as 25% of reported NAV may be 35% of eligible value, and it is the second figure that the covenants test. The companion article on what to establish before borrowing covers the definition.

What NAV loans cost

Rede Partners' NAV Financing Report 2025 surveyed lenders and found weighted average margins of 5.2% for secured facilities and 6.6% for recourse-light structures, with spreads down roughly 40 basis points over the previous year and most deals in a 4% to 7% margin range. The 2026 edition reported that target margins fell again for both structures and that the gap between them narrowed, while lender sentiment suggested pricing might have reached an inflection point.

Those are fund-level market averages. Family office portfolios are smaller and more mixed, and pricing is correspondingly higher: Nodem's published indication is 450 to 550 basis points over the reference rate for the largest and most diversified portfolios and 550 to 900 basis points for most facilities, with payment-in-kind interest adding up to 100 basis points. Fees, legal costs and minimum interest on early repayment should be added before comparing a facility with a secondary sale. Jefferies' July 2026 Global Secondary Market Review recorded LP portfolio pricing at around 87% of NAV, which sets the benchmark that a loan has to beat on a like-for-like cash basis.

Market size and direction

The product has grown quickly from a small base. 17Capital's David Wilson, quoted in August 2025, put NAV facility deployment at about $20bn in 2020 and projected roughly $145bn by 2030. Haynes Boone's 2026 Fund Finance Annual Report found that more than half of market participants estimated the whole fund finance market at $1.25tn to $1.75tn, with subscription lines making up more than two-thirds of it, and that 72% expected moderate to significant growth in institutional NAV activity in 2026.

Uses and risks

Family offices use NAV loans to meet capital calls when distributions have slowed, to fund a new investment without selling at a discount, to pay a tax or succession liability, and to support existing holdings through follow-on rounds. The common feature is a temporary and defined need against a portfolio the family intends to keep.

The risks are structural. Interest accrues whether or not distributions arrive, so a loan drawn against a portfolio that then stops distributing compounds against a falling collateral value. A markdown lifts the LTV even if the loan is unchanged, and the facility's cash sweep can tighten to 100% of distributions once a trigger is hit, leaving the office to fund capital calls from elsewhere. Valuation disputes can pause releases. Where repayment depends on a refinancing or a recovery in marks, the loan has become a bet on timing. The comparison with Lombard lending is instructive: the bank product is cheaper and faster but needs listed collateral, while the NAV loan accepts private assets and charges for the difference.

A NAV loan is best treated as one of several liquidity options, costed against the same cash need on the same dates, and documented so that the office knows in advance what happens in a downside case.

The author is Chief Investment Officer of Nodem Capital, an FCA-authorised lender. Family Office Primer is published by Nodem Capital; see our editorial standards.