When Silicon Valley Bank and First Republic faced collapse in March 2023, the fund finance world was sent into a state of turmoil. However, as teams from these failed institutions found new homes, the landscape began to normalize. But how has this affected various aspects of fund finance? Let's delve deeper.

Unraveling the Effects of Banking Turmoil on Fund Finance

Subscription Lines and Their Changing Dynamics

After the regional banking crisis, the subscription finance market compressed. One CFO shared, "There were fewer options initially, but it's starting to improve now. The facilities are more expensive and terms are shorter. We need to have a broader relationship with the providing bank." Kristen Laguerre from MPM BioImpact noted that increased fees and expenses, along with higher interest rates, made sub lines temporarily unattractive in the early-stage venture space. She decided not to enter into any credit facilities for now.However, another CFO, Chris Iorillo from Freeman Spogli, recently went through the process of setting up a subscription line for a new fund. He said, "Although there were challenges initially, the market is gradually coming back. Banks are renewing lines and even looking for new funds."

NAV Loans and Their Rising Prominence

In a lackluster M&A market, NAV loans have gained significant attention. Credit funds dominate this space. One anonymous CFO said, "NAV loans are a great product when needed, but the cost has gone up with interest rates. We tend to use them only when necessary." But NAV loans have also attracted some negative attention as facilities are sometimes used for distributions instead of full exits. Jason Snider from Gauge Capital believes, "Just like any debt, NAV loans can be beneficial if used correctly."

The Impact on CFO's Thinking

A third of respondents in the Private Funds CFO Insights Survey 2025 said rising interest rates would reduce their use of subscription lines. CFOs are clearly considering price when it comes to fund finance utilization. Béla Schwartz from The Riverside Company emphasized the importance of sub lines for various expenses and how they help limit capital calls. He said, "Although they are a bit more expensive now, it's still cheaper than alternative methods."In conclusion, the fund finance industry has undergone significant changes due to banking crises. Subscription lines and NAV loans have both faced challenges and opportunities. CFOs are carefully weighing the costs and benefits in their decision-making processes.