Key Takeaways
- • On 7 July 2026, the Austrian National Council passed the bill implementing AIFMD II (Directive (EU) 2024/927), giving loan-originating AIFs an EU-wide aligned regulatory framework in Austria.
- • EU AIFMs no longer need a banking licence to market, source, negotiate, agree and extend loans to Austrian borrowers, with loan origination in an AIF's name now an explicitly permitted AIFM activity.
- • Key guardrails include a 20% per-borrower concentration limit where the borrower is a financial undertaking, AIF or UCITS, a 5% risk retention requirement on transferred loans, and a ban on consumer lending, which remains reserved for licensed banks.
- • Loan-originating AIFs face a closed-ended default structure and leverage caps of 175% (open-ended) and 300% (closed-ended).
- • The bill now goes to the Austrian Federal Council, which has an eight-week window to object before promulgation and entry into force.
Summary
Per a Freshfields client publication dated 9 July 2026, private credit funds have long viewed Austrian borrowers as a potential market, but fund-originated lending into Austria previously required navigating significant regulatory complexity, a specific fact pattern and specialised legal advice.
That is set to change following the passage of the bill implementing AIFMD II by the Austrian National Council on 7 July 2026. The legislation gives loan-originating alternative investment funds (AIFs) a clear framework aligned with EU-wide rules. According to Freshfields, the bill expressly entitles AIFs to originate loans directly to Austrian borrowers, reducing the regulatory, cost and risk burdens that previously affected AIF managers lending into Austria.
Freshfields expects private capital to reassess the Austrian market. The firm points to potential demand arising from more restricted bank lending, and to opportunities where speed, flexibility and bespoke structuring matter. Examples cited include acquisition financings backing sponsor-led buyouts, growth and venture debt, subordinated or unitranche tranches alongside senior bank debt, and financing for special situations or restructurings. The firm draws a parallel with the private credit build-out already seen in Germany.
The bill also carries substantive guardrails. Loans to financial undertakings, AIFs or UCITS are subject to a 20% concentration limit per borrower, and loans transferred to third parties through syndication or sell-downs require 5% risk retention. Consumer lending remains reserved for licensed banks. Where loan origination is a fund's main strategy, or originated loans represent at least 50% of net asset value, the fund is treated as a loan-originating AIF, which by default must be closed-ended, with open-ended structures requiring regulator sign-off on liquidity management. Leverage caps are 175% for open-ended and 300% for closed-ended funds. Freshfields notes these requirements mirror AIFMD-based rules elsewhere in Europe.
The bill moves next to the Austrian Federal Council, which has eight weeks to object. Promulgation and entry into force are expected shortly after clearance. Freshfields advises managers planning Austrian origination to review whether their existing fund and AIFM arrangements comply.
That is set to change following the passage of the bill implementing AIFMD II by the Austrian National Council on 7 July 2026. The legislation gives loan-originating alternative investment funds (AIFs) a clear framework aligned with EU-wide rules. According to Freshfields, the bill expressly entitles AIFs to originate loans directly to Austrian borrowers, reducing the regulatory, cost and risk burdens that previously affected AIF managers lending into Austria.
Freshfields expects private capital to reassess the Austrian market. The firm points to potential demand arising from more restricted bank lending, and to opportunities where speed, flexibility and bespoke structuring matter. Examples cited include acquisition financings backing sponsor-led buyouts, growth and venture debt, subordinated or unitranche tranches alongside senior bank debt, and financing for special situations or restructurings. The firm draws a parallel with the private credit build-out already seen in Germany.
The bill also carries substantive guardrails. Loans to financial undertakings, AIFs or UCITS are subject to a 20% concentration limit per borrower, and loans transferred to third parties through syndication or sell-downs require 5% risk retention. Consumer lending remains reserved for licensed banks. Where loan origination is a fund's main strategy, or originated loans represent at least 50% of net asset value, the fund is treated as a loan-originating AIF, which by default must be closed-ended, with open-ended structures requiring regulator sign-off on liquidity management. Leverage caps are 175% for open-ended and 300% for closed-ended funds. Freshfields notes these requirements mirror AIFMD-based rules elsewhere in Europe.
The bill moves next to the Austrian Federal Council, which has eight weeks to object. Promulgation and entry into force are expected shortly after clearance. Freshfields advises managers planning Austrian origination to review whether their existing fund and AIFM arrangements comply.
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