The European Commission intends to consult on establishing a common EU approach to loan origination by funds in the second quarter of 2016 and has requested ESMA input. Loan origination is the process by which an investment fund provides credit to borrowers such as SMEs and a common framework is expected to reduce the potential for regulatory arbitrage and, in turn, facilitate an alternative form of market-based financing in line with the objectives of the CMU. ESMA has now published its opinion on EU framework for loan origination by investment funds, setting out its views on elements such as the authorisation of loan-originating funds and their managers, eligible investors, organisational requirements and leverage. The opinion takes into account the different bespoke frameworks currently in place in several member states, which mean that funds operating cross-border must comply with different requirements.