A capital call facility is a fund-level credit line — often called a subscription line — backed by limited partners’ uncalled capital commitments.

How it works

When a GP signs a deal, wiring full equity immediately may require calling all LPs first — slow in auctions. Instead, the fund borrows against uncalled commitments, closes the investment, then issues capital calls to repay the lender plus interest.

Facilities typically last a few years with renewal options. Banks charge interest and fees; LPs indirectly bear cost through fund expenses. The facility size relates to total commitments and lender comfort with LP credit quality.

Regulators and some LPs scrutinize heavy subscription line use because it flatters interim IRR without changing ultimate cash timing to LPs. Transparency in quarterly letters about line balances is increasingly expected from institutional GPs.

Facility size is usually capped as a percentage of uncalled commitments — exceeding that cap requires LPAC or lender approval in many fund documents.

Why it matters

• Founders: Faster certainty of close when a fund uses a line — less risk of a stalled process waiting for LP wires.
• Investors (LPs): Facilities improve GP competitiveness but can boost net IRR optics by deferring LP cash outflows. Ask for metrics with and without subscription line effects; understand default risk if an LP fails to fund a repayment call.

Common mistake

Assuming the facility creates extra investable capital. It is timing leverage on the same LP commitments — and it adds interest expense that LPs ultimately bear through fund costs.

Related ideas

See also capital call, subscription line, called capital, and dry powder.