AIFMD 2.0 – A Focus on Loan Origination

Loan origination in the non-banking sector has become a focus of regulators as lending by that sector has grown since the global financial crisis. As part of the review of AIFMD¹, EU legislators have introduced specific rules to regulate alternative investment funds (AIFs) that originate loans by way of amendments to the alternative investment fund managers directive (the amended directive commonly referred to as AIFMD 2.0)². AIFMD 2.0 entered into force on 15 April 2024 and will come into effect on 16 April 2026. AIFMD 2.0 provides transitional provisions and exemptions from certain rules applicable to funds existing before 15 April 2024 and/or to the loans in their portfolios. See our OnPoint available here.

What is loan origination?

AIFMD 2.0 contains general rules applicable to EU AIFs that originate loans. While there is no definition of a “loan”, AIFMD 2.0 includes the following new definition in relation to loan origination:

“loan origination” or “originating a loan” means the granting of a loan: (i) directly by an AIF as the original lender; or (ii) indirectly through a third party or special purpose vehicle which originates a loan for or on behalf of the AIF, or for or on behalf of an AIFM in respect of the AIF, where the AIFM or AIF is involved in structuring the loan, or defining or pre-agreeing its characteristics, prior to gaining exposure to the loan.

The focus is, accordingly, on instances where the AIF is the originator (directly or indirectly) of the loan or involved in setting the terms of the loan in which the AIF subsequently invests.

What are the new rules that apply to the activity of “originating a loan”?

AIFMD 2.0 imposes new obligations on alternative investment fund managers (AIFMs) that manage AIFs that engage in any loan origination activity. These can be summarized as follows:

• No “originate to distribute”: AIFMD 2.0 expressly prohibits AIFMs from managing an AIF that originates loans with the sole purpose of selling them to third parties – so-called “originate to distribute” strategies. The focus of the AIF should, accordingly, be on the granting of loans for the sole purpose of investing the capital raised by the AIF in accordance with its investment strategy, subject to regulatory constraints. This is expected to apply to loans originated directly by the AIF, and also indirectly, for example, through a special purpose vehicle (SPV).
• Risk retention requirements: The recast directive also introduces a new risk retention requirement, which requires an AIF to retain at least 5% of the notional value of any loan that it originates and subsequently sells. Generally, AIFs must retain the 5% interest until the loan matures, or for at least eight years if the term of the loan exceeds eight years. AIFMD 2.0 does provide a list of derogations from the risk retention requirement, including: where the AIFM starts to sell assets of the AIF in order to redeem units or shares as part of the liquidation of the AIF; where the disposal is necessary for the purposes of compliance with sanctions or with product requirements; where the sale of the loan is necessary to enable the AIFM to implement the investment strategy of the AIF it manages, in the best interests of the AIF’s investors; and where the quality of the loan deteriorates, provided that the purchaser is informed of such deterioration.
• Diversification requirements and concentration limits: To address the risk of interconnectedness among AIFs that originate loans and other market participants, AIFMs of those AIFs are required to diversify their risk and comply with certain limits on exposure. An AIF should not originate loans (including through an SPV) to any single AIF, UCITS or financial undertaking (a broad term that covers a wide range of financial services firms) with a notional value exceeding 20% of the capital of the AIF (being its investible commitments after the deduction of all fees, charges and expenses borne directly or indirectly by investors).
  • Importantly, this limit does not apply to other loans, including those made to private companies.
  • A ramp-up period of up to 24 months is permitted (with a possible extension by an additional 12 months), and the 20% limit does not apply where it is exceeded because the AIF is selling assets to meet redemptions or as part of the liquidation of the AIF. The limit may also be temporarily suspended for up to 12 months where the capital of the AIF is increased or reduced.

• Restrictions on lending: To limit conflicts of interest, AIFMs and their staff should not receive loans from any AIFs that they manage. Similarly, the AIF’s depositary and the depositary’s delegates, the AIFM’s delegates and their staff, and entities within the same group as the AIFM, are prohibited from receiving loans from the AIF concerned.
• Risk management, policies, procedures and processes for AIFMs managing AIFs that grant loans: In addition to the current requirement for AIFMs to review their risk management systems with appropriate frequency at least once a year and adapt them whenever necessary, AIFMs managing AIFs that engage in loan origination are required to implement effective policies, procedures and processes (i) for the granting of loans as well as (ii) for assessing credit risk and for administering and monitoring their credit portfolios. Such policies, procedures and processes should be proportionate to the extent of the loan origination, kept up to date and effective, and reviewed regularly and at least once a year. In some jurisdictions, for example Luxembourg or France, AIFMs that wish to include the management of AIFs originating loans in their program of activities must currently provide the Commission de Surveillance du Secteur Financier (CSSF), the Luxembourg supervisory authority for the financial sector, or the Autorité des marchés financiers (AMF), the French regulator, with a related set of dedicated policies and procedures.
• Fees and expenses disclosures: Where an AIF originates loans, the proceeds of such loans, minus any allowable fees for their administration, must be attributed to that AIF in full. Furthermore, all costs and expenses linked to the administration of such loans must be disclosed to investors as part of the Article 23 pre-contractual disclosures. AIFMs must also periodically disclose to investors details of the composition of the loan origination portfolio.
• Access to loans originated by AIFs across the EU – exception for loans to consumers: AIFMD 2.0 creates a harmonized market for loans originated by AIFs by prohibiting Member States from imposing national rules in respect of loans originated by an AIF managed by an AIFM authorized in another EU jurisdiction. However, Member States will still have the option to restrict the origination of loans to consumers (i.e., natural persons acting outside their trade, business or profession) or to require AIFs granting such loans to meet additional national requirements for locally originated loans. This Member State discretion recognizes a Member State’s interest in consumer protection, while providing the possibility for this part of the market to benefit from this source of capital. Germany and Luxembourg have implemented such a restriction on consumer lending. In France, the current regime authorizes certain French funds to lend but does not permit such loans to be granted to natural persons. The expectation is that when implementing AIFMD 2.0, the French legislature will implement a restriction on the origination of loans to consumers.
• Shareholder loans: The requirements introduced by AIFMD 2.0 apply to AIFMs managing AIFs that are directly generating loans and AIFs that are indirectly generating loans through the use of an SPV. However, the obligations are lighter in relation to AIFs which originate ‘shareholder loans’. Per AIFMD 2.0,

“shareholder loan” means a loan which is granted by an AIF to an undertaking in which it holds directly or indirectly at least 5% of the capital or voting rights, and which cannot be sold to third parties independently of the capital instruments held by the AIF in the same undertaking.

Where an AIF’s only loans are ‘shareholder loans’, the aggregate value of which does not exceed 150% of the capital of the relevant AIF, there is no requirement for the AIFM to maintain policies, procedures and processes for AIFs granting such loans and the leverage limits do not apply.

What are the additional new rules that apply to loan originating AIFs (“LOFs”)?

All the above apply to AIFMs that manage AIFs engaging directly or indirectly in loan origination, but there are two additional requirements that apply to LOFs. Per AIFMD 2.0,

a “loan-originating AIF” means an AIF: (i) whose investment strategy is mainly to originate loans; or (ii) whose originated loans have a notional value that represents at least 50% of its net asset value;

• Leverage caps Calculated in accordance with the commitment method, the following caps are introduced:
  • open-ended LOFs may be leveraged up to 175% of the NAV; and
  • closed-ended LOFs may be leveraged up to 300% of the NAV.
• LOFs must be closed-ended unless the AIFM that manages the LOF is able to demonstrate to the competent authorities of the home Member State of such AIFM that the fund’s liquidity risk management system is compatible with the investment strategy and redemption policy, in which case the LOF can remain open-ended. How open-ended LOFs are to evidence this is a matter for the competent authority of the AIFM managing the LOF to determine.

The European Securities and Markets Authority (ESMA), the EU’s financial market regulator and supervisor, was mandated under AIFMD 2.0 to prepare detailed regulatory technical standards (RTS) for LOFs that wish to maintain an open-ended structure (the OE LOF RTS). On 21 October 2025, ESMA published the OE LOF RTS³.

There is some degree of uncertainty following the letter⁴ from the European Commission (the Commission) of 1 October 2025 to the European supervisory bodies announcing that it will not adopt non-essential Level 2 acts⁵ (i.e., certain RTS ) before 1 October 2027 at the earliest, due to the high volume of Level 2 empowerments and also in light of the Commission’s simplification agenda. The press release⁶ accompanying ESMA’s publication of the OE LOF RTS expressly states that the OE LOF RTS have been submitted to the Commission for adoption but that ESMA draws stakeholders’ attention to the fact that the Commission includes these OE LOF RTS on the list of the non-essential Level 2 acts that the Commission will not adopt before 1 October 2027 at the earliest.

AIFMD 2.0 also requires AIFMs of all open-ended funds generally (whether they originate loans or not) to select certain liquidity management tools (LMTs) from a specific list included within AIFMD 2.0 as part of its liquidity risk management. The LMT RTS⁷ were adopted by the Commission on 17 November 2025. The RTS are now subject to a three-month scrutiny period by the Council and European Parliament before they are formally published in the Official Journal.

Main country comparison

• France: The AMF has orally confirmed that France will not gold-plate implementation of the AIFMD 2.0 loan‑origination regime, although the implementing legislation has not yet been published. Implementation will require amendments to the current domestic framework – on which AIFMD 2.0 was partly modelled – including: (i) repealing provisions applicable to French‑originated loans that conflict with AIFMD 2.0; (ii) relaxing currently stricter rules (e.g., widening the pool of eligible borrowers, recalibrating leverage limits and revisiting hold‑to‑maturity requirements); and (iii) adapting the banking‑monopoly rules to permit EU AIFs compliant with AIFMD 2.0 to lend to French borrowers. These changes would represent a significant shift by opening the primary private credit market to foreign AIFs, which is currently closed under the banking‑monopoly regime to non‑French AIFs that are not ELTIFs. The legislature may nevertheless limit access thereby excluding non‑EU AIFs. As noted above, France is also expected to exercise its option to prohibit AIFs, whether domiciled in France or elsewhere, from granting loans to French consumers. However, we understand that this would not prohibit foreign AIFs originating loans to consumers in other countries from marketing to French investors under the AIFMD passport regime.
• Germany: The cross-border origination of loans by EEA AIFs and EEA AIFMs into Germany is permitted without obtaining a banking licence under the German Banking Act (Kreditwesengesetz – KWG) insofar as such lending activity is part of the investment management activities of such EEA AIF/AIFM. As the wording of German law only refers to the lending activity of an EEA AIF/AIFM, taking a conservative interpretation, the origination of loans should only be made by the EEA AIF/AIFM, although a post-closing assignment of the loan receivables to an SPV subject to certain requirements should be permissible. Germany has recently published the draft bill for the Fund Risk Limitation Act (Fondsrisikobegrenzungsgesetz) in order to implement AIFMD 2.0, which appears to transpose AIFMD 2.0 without any gold-plating. Until the implementation of AIFMD 2.0 takes effect, the applicable exemption from the banking licence remains restricted solely to EEA-AIFs (and, under certain circumstances, non-EEA AIFs) directly. However, the draft significantly relaxes the previously strict regulatory approach by explicitly extending the ‘lending privilege’ – the exemption from banking licence requirements – to SPVs controlled by the AIF. This change accommodates the market reality that the majority of loan origination is executed via SPVs rather than directly by the fund, thereby enabling a significantly more practicable and market-standard structuring of German loans.
• Ireland: Ireland is not expected to gold-plate implementation of the AIFMD 2.0 loan origination rules. Conversely, the Central Bank of Ireland (the Central Bank) issued its consultation paper (CP162) on 9 September 2025 that proposed deleting the existing Irish loan originating rules (which previously gold-plated AIFMD I) from the Central Bank’s AIF Rulebook in their entirety⁸. CP162 currently proposes that Irish loan-originating AIFs managed by non-EU AIFMs must be closed-ended and comply with relevant AIFMD 2.0 requirements. Ireland has also exercised its discretion to prohibit funds that originate loans – whether domiciled in Ireland or elsewhere – from granting loans to Irish consumers.
• Luxembourg: Bill of law n°8628, which was tabled on 3 October 2025 to the Luxembourg Parliament, aims to transpose AIFMD 2.0 into the act of 12 July 2013 on alternative investment fund managers, as amended. The bill of law does not include any gold-plating. However, as mentioned above, Luxembourg will elect that loans originated by AIFs cannot be granted to consumers in Luxembourg. The CSSF may need to reconsider its existing position, which is that where an AIF grants a loan with a value lower than EUR 3 million, this is not considered as lending to the public within the meaning of the act of 15 April 1993 on the financial sector, as amended.
• United Kingdom: The UK is not proposing to make the AIFMD 2.0 changes, meaning UK AIFMs will remain subject to the UK version of AIFMD. The FCA is undertaking a review of the asset management regulation and UK AIFMD will be looked at as part of this. The FCA’s stated priorities are to make the regime for AIFMs and investment firms more proportionate to promote the competitiveness of the UK as a jurisdiction for asset managers. See our OnPoint on the UK’s proposals to revise the regulatory framework for UK AIFMs, available here.

Actions to be taking now

As a first step, AIFMs should be looking at their AIFs to determine whether they manage any AIFs that originate loans, and whether any of such AIFs constitute LOFs.

AIFMs across the EU that are managing AIFs originating loans will need to review their policies and procedures to ensure they are compliant with the new AIFMD 2.0 by 16 April 2026. For AIFMs located in a Member State that already has specific rules in place for such AIFMs (for example, France, Ireland and Luxembourg), the development and the submission of revised policies and procedures should be more straightforward than for AIFMs located in a Member State that does not currently impose rules specific to the managing AIFs that grant loans.

Furthermore, AIFMs would be advised to undertake a gap analysis of those AIFs they are managing that are originating loans to determine the impact of AIFMD 2.0’s new rules, including the offering and constitutional documentation of those AIFs. If amendments are needed, it is possible that investor consent may be required and adequate time to obtain such consent should be built into any project plan timelines.