Subscription Credit Facility - Repayment via LP Capital Call
Recording the repayment of the subscription line of credit using proceeds from the LP capital call that was issued to fund the facility repayment.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Subscription Credit Facility Payable | Liability (-) | 6,000,000.00 | - |
| Interest Expense - Subscription Credit Facility | Expense (+) | 18,000.00 | - |
| Cash & Cash Equivalents | Asset (-) | - | 6,018,000.00 |
💡 Accountant's Note
When the capital call proceeds are received from LPs, the subscription line is repaid in full including accrued interest. The interest cost is typically allocated to LP capital accounts as a fund expense. The net effect is that LPs fund the investment at a slight delay with a small interest cost, but the GP benefits from faster deal execution.
Practitioner & Systems Framework
💻 ERP Architecture
Track the interest accrual on the facility daily based on the outstanding balance and the credit agreement rate (typically SOFR + spread). Ensure the interest expense is included in the fund's expense ratio disclosure to LPs.
⚠️ Audit Flags
Auditors confirm the facility balance per the bank statement, recompute interest expense, and verify the facility is within the borrowing base limits (typically 25%–50% of unfunded LP commitments as collateral).
📄 Required Documentation
Bank credit agreement, borrowing base certificate, wire transfer for repayment, interest accrual calculation, LP capital call notice (matching repayment amount).
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