The European Securities and Markets Authority (ESMA) has published its opinion on a common European framework for loan origination by investment funds. As part of its work on building a Capital Markets Union (CMU), the EU Commission asked ESMA to provide input on the key issues on which a consultation on the elements of a European framework on loan origination could focus. Loan origination refers to investment funds providing credit, acting as a sole or primary lender, to borrowers such as SMEs. This represents an alternative form of market-based financing. ESMA believes the elements presented in its opinion should ideally form part of a harmonised European framework, either through a legislative proposal or by way of an ESMA instrument supplementing the Alternative Investment Fund Managers Directive (AIFMD). The Commission plans to issue a public consultation on the matter in Q2 2016.