Structuring Direct Lending Funds: Open-Ended vs. Private Equity/Closed-Ended Style Structures; Valuation; Tax and ERISA; Regulatory Considerations

Recording of a 90-minute CLE webinar with Q&A

Conducted on Wednesday, September 27, 2017

Recorded event now available

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Program Materials

This CLE webinar will examine issues associated with the formation and operation of direct lending funds, with a focus on those organized to lend to small and medium-sized businesses, and to real estate developers and other RE market participants.


Small and medium-size businesses are increasingly looking to direct lending funds, as opposed to banks and other traditional lenders, as a source of financing. This disintermediation between banks and borrowers has been driven to a great extent by the imposition of additional regulatory requirements on banks the calculation of their capital, and conducting various banking activities.

Conversely, over the past decade, there have been numerous private investment funds organized to offer this same financing abdicated by many banks. To a meaningful extent, this has been driven by both the dynamics effecting banks, plus the gyrating and unpredictable capital markets in the period between 2008 and today.

Listen as our authoritative panel examines the structuring options available to direct lending funds and the tax ramifications of each. The discussion will include “season and sell,” corporation blockers and RICs, and their advantages and disadvantages for different investor groups.



  1. Current lending climate—demand for nontraditional lenders
  2. Structuring options for direct lending funds
    1. Standard LLC or partnership—when all investors are U.S. taxable investors
    2. “Season and sell”
    3. U.S. corporation blocker, owned by off-shore private equity fund, invests in U.S. loan origination fund
    4. Closed-end registered investment company


The panel will review these and other key issues:

  • Is there a standard structure for direct lending funds?
  • Comparing open to closed end structures, including the following key considerations: valuation and marketing
  • Further structuring considerations: how to structure to accept investors that are U.S. non-taxable and offshore
  • Most common tax structuring tactics for these investors: “season and sell” vs. corporate blocker structures
  • Further structuring considerations: how to structure to accept investors that are primarily ERISA/IRA entities? Focus: conflicts of interest with affiliated service providers
  • Key regulatory issues: valuation (from SEC perspective), conflicts of interest with affiliated service providers, principal transactions, calculation of AUM (i.e., "Regulatory Assets under Management")


Gelinas, Alex
Alex Gelinas

Sadis & Goldberg

Mr. Gelinas focuses his practice on providing tax advice to investment managers of hedge funds, private equity funds...  |  Read More

Huttler, Steven
Steven Huttler

Sadis & Goldberg

Mr. Huttler has extensive experience in corporate, finance, investment fund and securities matters, including the...  |  Read More

Viola, Daniel
Daniel G. Viola

Sadis & Goldberg

Mr. Viola is the Head of the Firm’s Regulatory and Compliance Group. He structures and organizes...  |  Read More

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