AIFMD Loan Origination: Central Bank note on authorisation process

In a welcome move, the Central Bank of Ireland (the Central Bank) has published a note (the Note) setting out a streamlined authorisation process for AIFMs which engage in loan origination.

As the Note explains, this will affect those currently managing loan originating Qualifying Investor Funds and will help enable them to achieve authorisation by 16 April 2026, when changes to the AIFMD framework (AIFMD 2) comes into effect.

The Note sets out the procedure to be followed by an AIFM which needs to be authorised to perform the activity of loan origination on behalf of an AIF.

Such an AIFM should submit its application to MancoFSPauthorisations@centralbank.ie as soon as possible, clearly stating “Loan origination application – [name of AIFM]”.

What is the authorisation process?

The procedure to be followed requires the AIFMs to submit two letters.

The first letter should be sent to the FSP Authorisations Team, seeking authorisation to provide the Annex I function of origination loans on behalf of an AIF.

The second letter should

• list the AIFs for which the AIFM acts that originate loans, stating when these were established
• outline the list of the policies and procedures in place to manage loan origination activity in relation to those funds
• outline how, in the view of the AIFM, such policies and procedures align with the requirements for an AIFM performing the function of origination loans on behalf of an AIF under AIFMD 2
• inform the Central Bank if the AIFM has experienced any issues in relation to management of the AIFs since its authorisation.

The Central Bank will work with the AIFM regarding any queries arising from the application with a view to the AIFM receiving authorisation for this additional function by 16 April 2026.

Queries should be directed to MancoFSPauthorisations@centralbank.ie.

What’s the background?

Currently, the Central Bank’s framework for authorising loan originating investment funds allows loan origination only by a Qualifying Investor Fund managed by an authorised AIFM and requires the AIFM to implement a range of governance and oversight standards in relation to loan origination activities.

AIFMD 2 comes into effect on 16 April 2026 and introduces a harmonised loan origination framework for AIFs and AIFMs across the EU.

These new rules apply to all AIFs that originate loans and there are additional requirements for a "Loan Originating AIF" (LO AIF), where the AIF’s main strategy is lending or whose originated loans represent at least 50% of their NAV.

An AIFM which manages an LO AIFs (as well as those managing an AIF which intends to originate loans but does not fall within the definition of a LO AIF) is required to implement effective policies, procedures and processes for

• the granting of loans
• assessing credit and
• monitoring credit portfolios.

Origination of loans on behalf of an AIF is an additional AIFM function, which requires Central Bank authorisation.

Grandfathering provisions

Under AIFMD 2

• a LO AIF which was constituted before 15 April 2024 can take advantage of a five-year transitional period to comply with product rules. (The Note clarifies that all loan originating QIAIFs which had been authorised by the Central Bank before that date will be able to make use of this transition period.)
• there are, though, no grandfathering provisions for AIFMs. These must have the requisite Central Bank authorisation by 16 April 2026 in order to continue to manage AIFs which originate loans.

See our note on the Loan Origination framework under AIFMD 2 here.