NAV lending guide
NAV Loans: Borrowing Against a Private Portfolio
A practical guide to NAV lending for family offices, fund managers, limited partners and holding companies: how the loans work, what they cost and what happens when values fall.
By Alex Branton, Managing Partner and Chief Investment Officer, Nodem Capital. Published October 2026. Facilities from US$10m to US$100m+.
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For professional investors and their advisers. Not an offer or a solicitation. Figures marked illustrative are not Nodem terms.
Most material on NAV loans is aimed at large private equity sponsors, or at the institutions that invest in the loans. This guide is written for the borrower, and for the mid-market in particular. It covers what a NAV loan is, what it does to your cash flows when values fall, its total borrowing cost, what a lender needs to see, and who you are actually dealing with.
Contents
Executive summary
A NAV loan lets the owner of a mature private portfolio raise capital against the whole book rather than selling part of it. It is a useful tool, but the wrong one in some situations.
The loan is secured on the net asset value of a diversified set of private investments, not on a single company and not on undrawn investor commitments. The borrower keeps the holdings, and the loan is repaid from the distributions and sale proceeds those holdings produce. Advance rates are low, usually 10% to 30% of eligible value, which is what makes the structure workable for lender and borrower alike.
The product was built inside large buyout funds. Over the past three years it has spread to smaller funds, to family office holding companies and to investors in funds, a shift that advisers such as Rede Partners and Bernstein have both documented. Nodem’s own facilities run from US$10m to US$100m and above, the part of the market where the large NAV lenders and the banks tend not to operate.
Two things distinguish this guide from most of what is written on the subject. First, it shows what the loan does to you when valuations fall, rather than only what it does for you when they rise. Second, it gives the whole cost, including the cost of leaving early. The sources are listed at the end; where a figure comes from AllianceBernstein, Oaktree, ILPA or a law firm’s published work, it is marked as such, and where a number is Nodem’s own indication it says so.
US$44bn
NAV finance deal flow in 2023
17Capital data, cited by Oaktree. Separately, Bernstein puts the market at US$150bn in 2025 (FFP NAV Lending Index) and AB forecasts close to US$350bn by 2030 (May 2026).
5% to 30%
Loan-to-value at closing across the market
Oaktree, 2024; Bernstein, June 2026. Nodem typically lends at 10% to 30% of eligible value.
7 to 14 working days
Nodem’s target to indicative terms
From a complete information pack: seven for fund interest portfolios, about fourteen where direct stakes need look-through work.
Market volume figures differ with definition and are quoted with their dates; none is Nodem’s own estimate.
Who borrows, and when they should not
Family offices and holdcos
Capital for a new investment, a tax bill or a development commitment, raised against the book rather than by selling the best asset in it. Bernstein’s June 2026 article gives an illustrative family office with US$440m of NAV using a US$50m loan, at 11.4% LTV, for an operating company acquisition and five new fund commitments.
Fund managers
Follow-on capital, an add-on acquisition, or bridging between exits. ILPA’s July 2024 guidance recommends disclosure of the rationale and key terms to all LPs, LPAC consent where the LPA does not expressly permit the facility, and LPAC approval before a facility funds a distribution. What consent is legally required depends on the LPA.
Limited partners
Borrowing against a book of fund interests to meet calls or free up cash, keeping the upside that a secondary sale at a discount would give away, at the cost of interest and a sweep on distributions.
When not to borrow
A NAV loan suits a temporary gap with a credible repayment source. It is the wrong tool where the cash need is permanent, distributions are unreliable, existing leverage is already high, or repayment depends on refinancing. Borrowing to fund a family distribution creates a liability; it does not create a return.
Where Nodem lends
Nodem does not lend against a single asset or a single-asset holding company and does not provide subscription lines. We lend in the US and Canada from US$10m, and in the UK, Europe and other jurisdictions from US$25m.
What happens when values fall
This is the section most lender material leaves out. The question a family office CIO asks first is not whether the lender survives a markdown. It is whether the family will have to find cash, give up distributions or sell assets in a weak market, and at what point.
The table below answers that for an illustrative US$60m loan on US$300m of eligible value, using the covenant levels in the documents Nodem typically proposes. Levels, cure periods and remedies are negotiated case by case and the facility agreement governs; other defaults may carry different remedies.
Depending on the agreed documents, an LTV breach may raise the sweep, restrict releases or require repayment. In Nodem’s standard terms the order is a higher cash sweep and a block on releases first, then a cure right, with enforcement over the security last. Standstills and a borrower-run sale process ahead of any lender-directed sale are now commonly negotiated in both English-law and US facilities, as Ropes & Gray and Debevoise describe; they are negotiated protections, not rights that exist by default.
Illustrative stress case: US$60m loan, trigger above 30% LTV, hard limit above 40%
Standard sweep: 50% of net distributions repay principal, the rest is released to you
Nothing changes. Reporting continues; 5 percentage points of headroom to the trigger
Above the 30% trigger. Sweep steps up to 100% and releases stop. A cure period (30 to 90 days in Nodem’s standard documents) to bring LTV back to 30% or below: prepay US$1.5m, or add US$5m of eligible collateral. Not an event of default
Above the 40% hard limit. If not cured inside the period: event of default. Under Nodem’s standard documents the lender can then block releases and require a sale process that you run under agreed rules, and enforce the security only if that process fails. Other defaults carry their own remedies
Interest is paid from other cash or, where the documents allow it, capitalised. At 10.5% capitalised quarterly, US$60m becomes US$81.9m after three years. Repayment then needs a sale or a refinancing; an extension is only certain if an option is written into the facility
Who sets the valuation
For fund interests, the general partners’ quarterly statements. For direct stakes, your own valuation policy with the haircuts agreed at closing. In Nodem’s standard terms the lender may challenge a direct holding’s value on defined grounds (a material event, a stale valuation, a change of method) and a limited number of times a year, and a dispute goes to an independent valuer chosen from a panel agreed at closing. While it runs, releases may pause and the LTV test is not enforced; once it is determined, the cure period starts. A valuation dispute does not suspend other defaults. Grounds, frequency, cost and any suspension of remedies are all set in the facility documents; Debevoise notes that who pays for an appraisal often turns on whether a default is already live.
The distribution waterfall, in contractual order
A US$22m distribution arrives.
The sweep is rarely 100%
Distributions fund calls, tax and family spending, so a sweep that takes everything defeats the purpose of keeping the portfolio. A typical structure sweeps 50% to 75% of net distributions while LTV is inside the trigger, and 100% only once it is breached. Tax distributions and agreed reserves come out first. Order and percentages are typical of Nodem facilities and are set in the facility agreement; nothing here is a term until it is in that agreement.
Covenant and sweep mechanics consistent with Debevoise & Plimpton, NAV Loans for Buyout Funds (2023) and Ropes & Gray, NAV facilities in 2026 (April 2026). Oaktree reports private equity portfolio values fell about 25% from December 2007 through the financial crisis, against about 45% for public markets, which is why a 35% to 50% markdown is a severe but not impossible test.
What a lender needs to see, and what it costs
Two features make a NAV loan possible: an advance rate low enough that a markdown reaches the lender late, and collateral that can be realised one piece at a time. Covenants then act on cash before they act on assets. Understand those and the documentation holds few surprises.
What the covenants restrict is specific: new borrowing below the borrower vehicle, distributions out of the structure while a trigger is live, and sales of collateral without the proceeds passing through the controlled account. Following specified breaches they can require asset sales or repayment.
Repayment depends on the timing and the net cash proceeds of realisations, not on diversification by itself, which is why the stress case matters more than any statistic about how rarely fund portfolios lose money.
Illustrative interest and specified facility costs: US$50m, three years
SOFR assumed flat at 4.0%; floor of 2.0% in the documents
Margin of 650 bps, so 10.5% a year in cash, paid quarterly; the margin alone is 9.75 of the total
Nodem indication
1.5% of the facility at closing (range 1.0% to 2.0%)
Nodem indication
Borne by the borrower; third-party counsel, capped in the term sheet
Third party
Not included below; budget separately
Third party
0.5% to 1.0% on delayed-draw commitments only
Absent on a single draw
25 to 50 bps if a one-year option is written in and used
Negotiated
Simple annualised cost of about 11.2% on US$50m, before borrower counsel, tax advice and release costs; not an effective annual rate
Principal plus six months’ interest to complete an 18-month minimum-interest period, assuming interest to month 12 is paid and fees do not count toward the minimum
Negotiated
Principal, plus any accrued unpaid interest (1.3 for a final quarter), fees and security release costs
Typical
Principal and capitalised interest at maturity, compounding quarterly at the same 10.5% with no extra PIK margin: 50.0 to 55.5 to 61.5 to 68.2; on a flat US$250m eligible value, LTV rises from 20% to 27%
Negotiated
Illustrative schedule. SOFR is assumed, not forecast. Status tags: typical means commonly present; negotiated means it varies by deal; absent means not charged on the structure shown. Fee levels and minimum-interest periods are Nodem indications as at October 2026.
Where pricing sits, by date
Rede’s Q2 2025 lender survey: weighted-average target margins of 520 bps for secured NAV financing and 660 bps for recourse-light, over the base rate and before fees
350 to 650 bps over SOFR for investment-grade NAV loans (AllianceBernstein, 2026 edition; the August 2024 paper showed about 300 bps for banks and 400 to 650 bps for non-bank lenders)
450 to 550 bps for the largest and most diversified books; 550 to 900 bps for most facilities; PIK adds up to 100 bps. Nodem’s own indications, not market data
Why wider than the top of the market: tickets of US$10m to US$100m carry the same diligence cost as larger ones, collateral is more varied and usually unrated, and the borrower normally needs certainty inside a few weeks.
Two worked examples, downside included
A family office holding company draws US$45m
The holding company described above draws US$45m against US$241.5m of eligible value (18.6% LTV) to fund an equity commitment to a real estate development. The alternative was selling fund interests in the secondary market at a 10% to 15% discount and crystallising a gain.
Interest is 10.5% a year, with a 50% sweep on net distributions after interest. For simplicity each year’s distribution and sweep fall at year end, interest is charged on the year’s opening balance, and distributions are shown after portfolio-level deductions but before facility interest.
Security released
Refinance, use the extension option if one was agreed, or sell a holding. This is the risk being taken
The same US$45m need, four ways
10.5% a year cash interest, plus agreed fees and expenses (see costs)
Discount to NAV of 5% to 20% depending on the book, plus tax crystallised
Cheapest, often 150 to 300 bps over benchmark, if the public book is large enough
Asset-level rates, often cheaper; encumbers one holding, and equity-linked terms can also dilute ownership
The pledged holding company and its book
None after sale; upside given away
The public securities, with margin calls
That holding only
Distributions and realisations
Not applicable
Sale of securities or cash
That holding’s cash flow or sale
Sweep rises, releases stop, cure period, then enforcement
Already done; no further exposure
Forced sales within days
Default sits at the holding and can reach the parent through guarantees
GP or shareholder consent to pledge, per document
GP consent to transfer; buyer diligence
Usually none
Existing lenders and co-owners
Costs are indicative ranges as at October 2026 and depend on the book. A NAV loan exposes a wider set of assets than a secondary sale, in exchange for keeping them. Debt-funded distributions are a liability, not a realised return.
A buyout fund funds an add-on acquisition
The second example is AllianceBernstein’s: a six-year-old buyout fund (US$525m committed, US$500m called, NAV US$675m, eight companies) borrows US$50m for three years so that a portfolio company with US$75m of equity can buy a competitor for US$50m. We have made it auditable: SOFR held at 4%, margin 6%, so US$5m of cash interest a year, no amortisation, fees excluded. The US$25m of uncalled commitments would not have covered the purchase; whether the sponsor had other options is not known.
185.0
182.0
(5.0): proceeds repay the 50 principal and leave 10 against 15 of interest already paid, a cumulative deficit borne by the rest of the fund
Extend by agreement, refinance, or sell
Family office example is illustrative and not a Nodem transaction. Fund example adapted from AllianceBernstein, Funding Flexibility, Display 3, with the financing assumptions stated above; US$185m is cumulative proceeds after financing cost, not cash received at exit. The 18.6% LTV is on eligible value; on reported NAV of US$300m it is 15%.
Who lends, and who decides
NAV lenders sort themselves by appetite. Banks take the least risk at the lowest margin and keep capacity for their largest clients. Insurers and other rated lenders occupy the investment-grade middle. Specialist funds take more LTV, more concentration and more bespoke structures, and charge for it. Nodem works across the middle and specialist range, at the ticket sizes the larger lenders decline.
About 300 bps
5% to 10%
Largest sponsors only. Capacity kept for the closest relationships
350 to 650 bps
10% to 30%
Diversified, mature books. Rated or rateable. Negotiated covenant flexibility
400 to 700 bps (Rede 2025 lender target band) and above
30% and above
Fewer holdings, more concentration, bespoke underwriting and terms
450 to 900 bps
10% to 30%
Middle and specialist range, at ticket sizes of US$10m to US$100m+
Lender segments adapted from AllianceBernstein (2026 edition; segment data as at June 2024) and Rede Partners (June 2025; 50% of secured and 67% of recourse-light lender responses fell inside the 400 to 700 bps band). Nodem’s range is its own indication as at October 2026.
Who you contract with
Originator, structurer and servicer of every facility it offers. Nodem Limited, trading as Nodem Capital, is authorised and regulated by the FCA (FRN 1017481). Authorisation of the firm does not mean a facility or its terms are regulated or approved by the FCA.
Either a vehicle managed by Nodem or a vehicle of one of Nodem’s funding partners. Which one is stated in the term sheet, by name. Where a partner is lender of record, Nodem participates alongside it.
Indicative terms are subject to credit approval by Nodem’s investment committee and, where a partner is lender of record, by the partner’s, and to documentation. The lending commitment arises under the signed facility agreement; drawdown remains subject to its conditions precedent. Some term sheet provisions, such as confidentiality, exclusivity and costs, may bind earlier.
The lender of record. Nodem is your single point of contact and runs the process; response times are written into the facility agreement so that a waiver request has a date on it.
A security agent for the lender of record. Account control sits with the agent and is exercised only as the facility agreement provides.
To affiliates and to a list agreed at closing, with disclosure to those prospective transferees under agreed confidentiality terms. Transfers to anyone else need your consent, other than after an event of default. The permitted categories and exceptions are set out in the facility documents.
The Lepercq Group is a shareholder in Nodem. It does not guarantee any facility and is not a party to your loan.
Five questions to put to any lender, including us
Is there a team and a pool of capital set aside for NAV loans, or is this an opportunistic trade inside a wider mandate?
Who is the lender of record, and who votes on a waiver if my portfolio marks down?
Have you closed facilities of this size and against this kind of collateral? How many, and how long did they take?
What is the time from a complete information pack to terms, and from terms to funding? Is that a record or a target?
Walk me through an LTV breach: what is swept, what is blocked, how long I have to cure, and what happens if I cannot.
Questions 2 and 5 are answered for Nodem in the table above and in What happens when values fall, on the basis of Nodem’s standard proposed terms.
Frequently asked questions
What is a NAV loan?
A term loan to a fund, a holding company or an investor in funds, secured on the value of the private investments that vehicle owns. The lender looks through to the holdings, applies its own haircuts, and lends a fraction of what remains, usually 10% to 30% of eligible value. The borrower keeps the holdings, and the loan is repaid from the distributions and sale proceeds those holdings produce.
What happens to a NAV loan when portfolio values fall?
In Nodem’s standard terms the order is a higher cash sweep and a block on releases first, then a cure right, with enforcement over the security last. For an illustrative US$60m loan on US$300m of eligible value, a 20% fall in values changes nothing; a 35% fall breaches the 30% trigger, so the sweep steps up to 100%, releases stop and a 30 to 90 day cure period begins; a 51% fall breaches the 40% hard limit and, if not cured, is an event of default. Levels, cure periods and remedies are negotiated case by case and the facility agreement governs.
How much does a NAV loan cost?
On an illustrative US$50m facility over three years, with SOFR at 4% and a margin of 650 bps, cash interest is 10.5% a year, the arrangement fee is 1.5% and lender’s legal costs are around US$0.25m, giving a simple annualised cost of about 11.2% before the borrower’s own counsel and tax advice. Nodem’s October 2026 indications are 450 to 550 bps for the largest and most diversified books and 550 to 900 bps for most facilities, with PIK adding up to 100 bps.
Who borrows with a NAV loan?
Family offices and holding companies raising capital for a new investment, a tax bill or a development commitment against the book rather than by selling the best asset in it; fund managers funding follow-on capital, an add-on acquisition or bridging between exits; and limited partners borrowing against a book of fund interests to meet calls or free up cash while keeping the upside a discounted secondary sale would give away.
When is a NAV loan the wrong tool?
A NAV loan suits a temporary gap with a credible repayment source. It is the wrong tool where the cash need is permanent, distributions are unreliable, existing leverage is already high, or repayment depends on refinancing. Borrowing to fund a family distribution creates a liability; it does not create a return.
Who is the lender of record on a Nodem facility?
Either a vehicle managed by Nodem or a vehicle of one of Nodem’s funding partners. Which one is stated in the term sheet, by name. Where a partner is lender of record, Nodem participates alongside it. Nodem is the originator, structurer and servicer of every facility it offers.
How long does it take to get terms and close a NAV loan with Nodem?
Nodem’s target to indicative terms from a complete information pack is seven working days for fund interest portfolios and about fourteen working days where direct stakes need look-through work. From terms to close, four to eight weeks is the target; consents and counsel decide the actual date.
What is the minimum size of a Nodem NAV loan?
Nodem lends in the US and Canada from US$10m, and in the UK, Europe and other jurisdictions from US$25m, with facilities running to US$100m and above. Nodem does not lend against a single asset or a single-asset holding company and does not provide subscription lines.
About Nodem
Nodem Capital provides NAV loans to family offices, fund managers, limited partners and investment holding companies, from US$10m to US$100m and above. Nodem Limited, which trades as Nodem Capital, is a London-based asset manager authorised and regulated by the Financial Conduct Authority. It is backed by the Lepercq Group as shareholder, and lends through its own vehicles and alongside institutional funding partners who are named at term sheet.
How a transaction comes together
1. Conversation
Under NDA, to understand the need, the timing and the book.
2. Portfolio view
With your permission we review holdings, pipeline and cash flows and size the facility.
3. Term sheet
Within seven working days of a complete pack for fund interest books; about fourteen working days where direct stakes need look-through work.
4. Close
Diligence and documents in parallel. Four to eight weeks is our target; consents and counsel decide the actual date.
Before closing, we will ask for
An ownership and entity chart, and the governing documents of the borrower vehicle and of each holding.
Current statements for fund interests; your valuation policy and latest accounts for direct stakes.
Existing debt anywhere in the structure, uncalled commitments, and a three-year cash flow forecast.
Any transfer or pledge restrictions in the fund or shareholder documents, so consents can be sought early.
After closing
Quarterly: the fund statements you already receive, a compliance certificate and an LTV calculation.
Annually: accounts for the borrower vehicle and a financial summary for each direct stake. We do not require monthly line-by-line financials from operating companies.
On an event: notice of a write-down, a disposal, a change of valuation method or new borrowing below the vehicle.
Structuring and tax: clear these before terms are final
A holding vehicle borrows; its owners grant security over their ownership interests in it, and the holder of the distribution rights grants security over the account
GP consent to encumbrance under the LPA
Same vehicle; security over the shares where permitted, otherwise account security only
Shareholder agreement: pre-emption and transfer clauses
Security over the ownership interests in the holdco above any mortgaged property, granted by its owners
Existing mortgage lender; intercreditor terms
Confirm existing lender restrictions, governing law, how security is perfected and where it would be enforced, and whether recourse extends beyond the agreed collateral. Nodem facilities are recourse to the borrower vehicle, with the pledged interests and accounts as the security; family guarantees are the exception and are stated if sought.
We take security over holding companies in the usual jurisdictions, including the Channel Islands, Cayman and Luxembourg. Interest deductibility, withholding and gross-up, and any duty on restructuring or enforcement are for your counsel and tax advisers to clear. We do not promise a tax result.
Who sees your information
Nodem’s team, the funding partner’s credit team under NDA, counsel, and a valuer if one is appointed. General partners are approached only for consents, at your direction. Disclosure to a permitted prospective transferee is subject to agreed confidentiality obligations; any other onward disclosure needs your consent, except where law or regulation requires it.
Contact
Alexander Branton, Managing Partner and Chief Investment Officer. abranton@nodem.com
Download the PDF guide
Sources
AllianceBernstein, AB Dimensions: Funding Flexibility. Exploring the Private Equity NAV Lending Opportunity for Asset Owners (August 2024; the 2026 edition held by Nodem, with data to 31 March 2026, is the one cited; it draws on PitchBook and Preqin). AllianceBernstein, NAV Loans: Flexibility for Private Equity When Holding Periods Extend (20 May 2026). ILPA, NAV-Based Facilities: Guidance for Limited Partners and General Partners (25 July 2024). Debevoise & Plimpton, NAV Loans for Buyout Funds, Private Equity Report (November 2023). Ana Biloglav and Paola Bahari, NAV facilities in 2026: structuring, governance and market practice considerations for sponsors, Journal of International Banking and Financial Law (April 2026), republished by Ropes & Gray. Mayer Brown, Benefits and Considerations of Family Office NAV Credit Facilities (June 2023). Rede Partners, NAV Financing Market Report 2025 (June 2025). Bernstein, How Family Offices Can Access Liquidity Without Selling Private Assets (June 2026), citing the FFP NAV Lending Index. Oaktree Capital and 17Capital, NAV Finance 101 (2024). Private Equity Law Report, Negotiating Loan-to-Value Ratios in NAV Facilities (2022). Nodem transaction experience, 2024 to 2026.
Nodem Limited, trading as Nodem Capital, is authorised and regulated by the Financial Conduct Authority (FRN 1017481). This page is issued by Nodem Limited for information only. Authorisation of the firm does not mean any facility or its terms is regulated or approved by the FCA. It is not an offer to sell, or a solicitation of an offer to invest in, any product or service, and it is not advice. Figures described as illustrative are not terms. Third-party material is reproduced with attribution and has not been independently verified. Past performance is not indicative of future results. The value of investments can go down as well as up.