NAV loans for family offices: the DC Finance webinar, in writing

Last reviewed November 2026.

Recorded on 4 November 2026 for DC Finance’s Family Office and High Net Worth Community, hosted by Denny Chared. Chapter timestamps are in the video description on YouTube.

On 4 November 2026 I spoke for forty minutes to DC Finance’s family office community about NAV loans: what they are, why families use them, what they cost, how they are structured and what happens when they go wrong. The video is above. This is the written version, section by section, for anyone who would rather read than watch, and for anyone who wants to check a figure afterwards. Where I give numbers they are indicative and every facility is custom; our current ranges are on the NAV loan parameters page.

Why this matters now

Among the families I speak to, private markets are now somewhere between 40% and 60% of the portfolio, and in some cases above 90%. The holdings are private funds, direct company stakes, real estate and co-investments. Exits have slowed, so distributions arrive more slowly, while capital calls keep coming and new opportunities keep appearing. The usual first move is to borrow against the listed book through a Lombard line at the private bank. That works until it does not: most private banks will not lend against fund interests or private company stakes at all. A family can find itself needing cash quickly while sitting on assets that cannot be sold quickly at a sensible price. A NAV loan is the other option: borrowing against the portfolio of private assets itself. The market is roughly $100bn of NAV loans outstanding today and is expected to grow three or four times over the next few years, in direct response to the build-up of private assets.

The options for raising cash, and where each one falls short

When a family needs cash it can use cash on hand, draw a Lombard loan against listed equities, sell listed assets, sell private positions in the secondary market, or take an unsecured loan with personal guarantees. All of those are reasonable. Each has a point where it stops making sense. Cash may be needed on the balance sheet for other reasons. The Lombard line may already be at the limit the family is comfortable with. Selling listed assets gives up growth or unbalances the portfolio. Selling private positions is a long, high-friction process, usually at a discount, and surrenders the upside. Where those things are true, a NAV loan lets the family keep the portfolio and the upside in it and borrow to bridge the gap.

What a NAV loan is

A NAV loan is a loan against the value of a portfolio of private assets, typically made to the holding company that owns the portfolio. It is not a loan against income, and not a loan against a single company unless that company holds a portfolio. It is always against a diversified pool, at a conservative advance rate, and it is repaid from what the portfolio produces: company sales, dividends, distributions, refinancings. Three things follow. The lender wants a diversified pool. The lender advances against a fraction of it, not the headline NAV. And the lender expects to be repaid from the distributions of the pledged pool.

NAV loan versus Lombard loan, subscription line and secondary sale

A Lombard loan is secured on listed securities. It is cheap because the bank can sell the collateral in minutes. A subscription line is secured on the uncalled commitments of a fund’s investors. It is a product built for general partners, it is investment-grade risk secured on contractual LP cash flows, it is callable, and it prices at perhaps 180 to 200 basis points over a reference rate. Subscription lines are often confused with NAV loans, and the risk is completely different: a NAV loan is secured on the underlying portfolio, with uncertain repayment timing, relying on exits rather than on calling capital from LPs. A secondary sale is the sale of a private position or fund interest to a third party, usually at a discount, crystallising the gain and the tax and giving up the upside. It is the right tool when the price is good. Timing is usually the problem, and a NAV loan can buy the time to sell at a better price later. A NAV loan sits between these: you borrow against the private portfolio, you keep the upside, there are no daily marks or margin calls because valuations move quarterly, and the advance is conservative.

From reported NAV to borrowing capacity

A lender does not lend against the number on the capital account statement. The process runs as follows. Start with reported NAV. Apply concentration caps: a position that is 40% of the portfolio counts only up to a cap, often 20% to 25%, and only if the asset is strong. Apply exclusions and haircuts: early-stage venture is haircut hard or excluded; stale marks, particularly anything with a lagged valuation, are haircut; assets that cannot be pledged because of fund documents or transfer restrictions drop out; positions carrying their own leverage are discounted or excluded; carried interest and promote are heavily discounted unless a performance hurdle has already been cleared. What remains is eligible NAV. Eligible NAV multiplied by the advance rate is the borrowing capacity. A diversified buyout or credit book sits at the top of the advance range; a venture-heavy book sits at the bottom or is not fundable at all. When sizing a facility, leave significant room for a markdown, because nobody on either side wants to be caught out, and expect the lender to model the unfunded commitments still owed on the portfolio.

Five situations where family offices use NAV loans

These are based on real situations, with the details changed.

Bridging capital calls when distributions are late

A senior asset manager held many fund positions personally, with a large uncalled commitment book. A divorce left him funding the calls on both his and his former wife’s share. He could meet them from income but would have been cash poor for two years until things could be sold down. A facility against the existing NAV met the calls in the interim, effectively allowing the portfolio to fund itself for the two or three years it took to resolve.

Funding a time-sensitive acquisition or co-investment

An independent sponsor was buying a platform company ahead of raising co-investors who needed certainty of funds to sign. Against an existing portfolio of a couple of hundred million dollars, a $50m NAV loan funded the acquisition and gave time to repay as the co-investment was raised.

Refinancing cash-pay bank debt

A family was paying cash interest every quarter to a bank against a book that distributed once every year or two. Moving to a NAV loan where the interest accrues and is paid from later distributions removed the liquidity mismatch.

A generational transfer or buyout

An estate splits. One party keeps the assets and the other needs to be paid out. A NAV loan against that portion of the portfolio funds the payment without a sale.

Tax planning

Borrowing rather than selling avoids crystallising gains. I am not a tax adviser, but families and their advisers find that borrowing can be the better route for several tax reasons beyond that one.

What a NAV loan costs and why it costs more than a bank line

These facilities are meaningfully more expensive than Lombard loans, and it helps to understand the lender’s side of the table. A Lombard loan might price at around 100 basis points over a reference rate. In NAV lending, the bottom of the market is around 400 basis points over the reference rate and the typical band is 500 to 700; our published indicative range is 450 to 750. Facilities are usually taken for six months to three or four years. There is often an original issue discount of 1% to 3%, where the lender advances less cash than the face value of the loan. Legal fees depend on the complexity of the structure and are often in the hundreds of thousands, which is why minimum sizes exist: we go as low as $10m, while most non-bank lenders operate at $50m to $100m and above. Lenders also put in make-wholes or minimum return multiples to justify the work of understanding a private portfolio.

Why the difference? A Lombard loan sits on listed shares with a live price; if the value drops, the bank sells that afternoon. A private fund stake or a holding company cannot be sold for months, the price is highly variable, and there are years of valuation and liquidity risk embedded in it. The bank regulator sees it the same way: listed collateral needs almost no capital behind it, so the bank funds it from deposits at close to the reference rate, while private assets carry a heavy capital charge, which is why most banks will not touch them, or will only do so as part of a much broader relationship. A Lombard loan is a product of a system that prices and monitors automatically. A NAV loan is a transaction, with fund documents, a holdco pledge, GP consents, quarterly monitoring and legal work that starts at perhaps $150,000 to $200,000. One more point: if a non-bank lender commits $30m and the borrower draws $10m, the other $20m has to be held available, and that capital has a cost, so there are fees on undrawn commitments. In practice most facilities are drawn in full up front, and I have seen few with more than two or three draws.

Terms and structure

Every facility is different, and the fastest way to understand what yours would look like is to send a real scenario, even a sketch. The important points are these. The advance rate is set on eligible NAV, not reported NAV: lower for venture, higher for diversified buyout and credit. The advance on an unrealised promote might be 5%; on high-quality assets it might be 50% or more. In general NAV loans sit at 15% to 30% loan-to-value on the headline NAV, sometimes higher for highly diversified portfolios of institutional fund stakes, where close to 50% is possible, and up to 70% for real estate, where the NAV lender will nearly always be junior at the holdco level behind the senior lenders at the asset level. Twenty-five per cent may sound conservative, but the companies under the book often carry their own leverage and their final valuations are uncertain, and the aim is a structure where a covenant breach feels almost impossible, because enforcement is in nobody’s interest.

Pricing is a margin over a base rate, usually on a grid tied to loan-to-value, so if the book is marked down and LTV rises, the margin steps up. Interest can be paid in cash or capitalised (PIK). PIK means the interest accrues and compounds, so the balance grows; in my experience it is the most used structure, because the typical need is a two to three year bridge repaid by an exit that is waiting in the background. A pure PIK facility usually adds 50 to 100 basis points to the margin. A PIK toggle gives the borrower the choice each interest period of paying cash or rolling up. Tenor is typically 18 months to five years, with 18 months to three years the most common. Prepayment is usually allowed, with some minimum return to the lender in the form of a minimum period or a make-whole. Legal costs are largely fixed, so they are similar whether the deal is $5m or $100m; get a quote up front, assume $150,000 to $200,000 to get the facility papered, and note that once the structure exists much of the work can be reused for a later facility.

Cash sweeps and the distribution waterfall

The cash sweep is the rule that decides what happens to money that comes back from the pledged portfolio, and to a large degree it is the whole negotiation. Every distribution from the pool is paid into the holding company’s bank account, over which the lender has some control, rather than straight to the family. The loan agreement sets out a waterfall. If the loan is cash-pay, accrued interest comes out first. Then permitted uses, which usually include capital calls on the pledged funds and tax. Then, above the sweep trigger, which is usually an LTV level, a stated share of what is left goes to pay down the loan, and the balance is released to the family. Below the trigger the lender takes nothing and the cash is released. The trigger level and the proportion swept are negotiated, partial sweeps are common, and cash sweep holidays exist: a period, say the first 12 to 24 months, where no sweep applies regardless of LTV. That is useful where a distribution is expected that would otherwise repay the facility too early, and it can be carved out.

The holdco pledge, GP consents and recourse-light

The easy version of the structure is a pledge over the holding company with no GP consents needed. The borrower is the holding company that owns the portfolio; the family trusts and individuals sit above it. The security is a pledge over the holdco’s equity plus control of the bank account that receives distributions. Taking the pledge one level up, at the holdco, avoids most of the GP consents and transfer restrictions that would otherwise require a great deal of work. It is lighter, but it does not remove the need for the lender to read the fund agreements and understand what is in the portfolio. Contributing assets into the holdco is a transfer and can have tax consequences, so check that before starting; we guide families through it. For the largest positions there is a document-by-document check. Even so, a lender can give a good view of structure, facility size, timeline and process from an initial call and a sketch of the portfolio. Recourse-light means the lender looks to the holdco and what is in it, not to the rest of the family’s balance sheet. Personal guarantees are the exception and appear only where a portfolio is very thin or concentrated.

What happens when things go wrong

This is rare, and nearly everything is worked out through extensions, but it is worth running through. Take a PIK NAV loan whose balance grows each quarter. The portfolio is marked down and LTV climbs. The first effect is a step up on the pricing grid. The second is that the sweep trigger is crossed and a higher share of distributions goes to the lender. The third is the LTV ceiling. At the ceiling there is a cure period, which can run from weeks to, in some funds I have seen, years. It is not an immediate default. The borrower has time to add collateral to the pool, prepay part of the loan or sell some assets, and the documents say how long. If that fails and the facility cannot be extended or refinanced, enforcement would be the sale of some of the pledged holdco interests, which is slow and a last resort. These are conservative facilities and a borrower should never reach that point, but the thought exercise is worth doing. What the lender can take is the pledged holdco or its assets, not the family’s other assets, unless there is a guarantee.

The process and timing

The borrower sends a line-by-line schedule of positions, usually a structure chart and the latest capital account statements. If that is clean, indicative terms can follow by email or on a call within a day or two, and a term sheet or letter of intent about a week later. When the term sheet is signed, a legal deposit is paid to start legal and structuring work; it covers the work done and is not refundable, and the terms become binding only when the documents are signed. On the family’s side there is usually some administration: forming a holdco, trustee approvals, transferring assets, GP notices in some cases. We recommend lawyers who can do this cost-effectively, or families use their own. Start to finish can be done in four weeks; most facilities take six to eight weeks from the first conversation.

Questions to ask a NAV lender

Beyond the headline rate, ask these on the first call. What counts as eligible NAV, and what are the caps and exclusions? Is the margin on an LTV grid, and what are the steps? What are the fees, including undrawn fees and anything not in the headline? When does the cash sweep start and what proportion is swept, and can a sweep holiday be negotiated over a one or two year crunch? What happens at the LTV ceiling? What is the prepayment cost? Is there a cap on legal fees? A good lender can give a clear view of cost and process from very little information, and a term sheet within a week from decent data.

A worked example

A family office holds most of its balance sheet in institutional buyout, growth and real estate funds across trusts and individuals. It needs cash for uncalled commitments over the next two years plus an acquisition, beyond what was planned. The liquid book is earmarked elsewhere or already carries a Lombard loan. The lender runs an eligibility review and drops the small lines and anything unclear from the pool, excludes the promote, and sets capacity below the ask to leave headroom. A holdco is formed and the personally held interests are contributed into it, with trustee sign-offs and one or two GP consents. The facility is made to the holdco, delayed draw, PIK, with a partial sweep above a trigger and a sweep holiday long enough to avoid any other liquidity pressure. The family meets its capital calls, completes the acquisition, and uses capital priced at around 500 basis points over the reference rate to fund an opportunity it expects to return 25% to 30%.

About Nodem Capital

Nodem Capital is an asset manager focused on family offices, with most of its business in the US and Europe a major focus. We have reviewed several billion dollars of transactions this year. Most NAV lenders work with very large buyout funds or their general partners. We provide facilities from $10m to $100m and above, and our place in the market is the $10m to $50m range, where non-bank lenders and banks both struggle. We take a bottom-up approach to the portfolio, give a term sheet within about a week, and build a bespoke structure with the borrower. Our indicative terms are on the NAV loan parameters page and the full picture for families is on NAV financing for family offices and individuals.

Questions from the webinar

Do you work with clients in Europe as well as the US?

Yes, both, and elsewhere in principle, though the bar for emerging market assets is extremely high. US and European portfolios are typical.

How long has Nodem been doing this, and what is the minimum size?

Nodem has been operating for a couple of years. The industry itself barely existed ten years ago and very few lenders serve family offices directly; our enquiries have doubled this year. The minimum is $10m, dictated by the fixed legal costs, since the work is the same at $10m as at $100m. We are most finely tuned to facilities below $50m, with loan-to-value up to 30% for a typical portfolio, up to 50% for a very diversified one and up to 70% for real estate.

Can a global client choose where the holding company sits?

Yes, within reason. It depends on what security a lender can take in that jurisdiction and how familiar the local lawyers are with these structures. Some jurisdictions are more difficult than others, and the aim is a structure that works for the borrower.

General information, not advice. Nodem Capital is an FCA-authorised AIFM (fund manager). Nodem Ltd is authorised and regulated by the Financial Conduct Authority, FRN 1017481.