With estimates that dry powder in private equity now exceeds $1 trillion, there can be no doubt that managers are fiercely competing for the best investment opportunities and that a manager’s inability to close quickly on investment deals may put it at a competitive disadvantage. Although many private funds have sizeable amounts of uncalled capital from their limited partners, that capital may only be accessible following a notice period of 10 business days or more. Subscription credit facility products were created as a form of bridge financing for private funds that employ a capital call structure. Credit lines of this nature have, however, come under intense scrutiny over the past 24 months, with one economist even calling these facilities a “con” used to artificially boost funds’ internal rates of return (IRRs). In this three-part series, the Hedge Fund Law Report examines these lending facilities and the controversies surrounding their use. This first article provides background on the types of funds that frequently use these facilities, recent trends that have emerged regarding this form of financing, basic mechanics of how these facilities are structured and the types of lenders that routinely offer these products. The second article will discuss the primary advantages to funds and their sponsors, as well as investors, of using these facilities and explore the legal documents that govern these facilities. The third article will evaluate some of the concerns raised by members of the private equity industry regarding these facilities, including the debate as to whether these facilities should be used for longer-term financing and how they impact a fund’s IRR. For more on subscription credit facilities, see “Subscription Facilities Provide Funds With Needed Liquidity but Require Advance Planning by Managers (Part One of Three)” (Jun. 2, 2016).