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Fund Operations

Can We Use a Loan Equivalent to Management Fees to Invest 100% of Committed Capital in Our LPA?

Asked by:
Community Member
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May 03, 2023
Our LPA allows the partnership to borrow money — if our bank were to give us a loan equivalent to the management fees would we be able to use it to invest 100% of the committed capital?
1 answer
Mike Suprovici
Accepted Answer
May 03, 2023
Usually the reason that language is there to allow for capital call lines. You would probably need to specify this or work with your IC if you have one to get this done. That being said, you can also just do recycling to achieve the same effect, with less risk. One final thing on this, I’m not sure that a bank would loan you the money for something like this. Banks are super conservative and the amount of paperwork that you would need to make this happen is probably prohibitive.

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