Direct Lending Fund ModelFree Financial Model Download
Model a direct lending fund with loan-by-loan origination, yield, defaults, and fund performance without missing accrued interest or covenant breaches. Calculate fund-level cash flows, investor distributions, and tranche-specific returns across the portfolio life.
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About this model
A direct lending fund originates individual loans to middle-market companies, managing yield, defaults, and fund-level cash flows to investors. The model tracks each loan's interest income, origination fees, and principal repayment, rolls these up to fund-level cash flows, and computes IRR and MOIC (money multiple on invested capital) across junior and senior tranches. Key variables include the blended yield (interest rate plus upfront fees), the loan term, loss assumptions, and default probability.
The workbook separates accrued interest income (which swells the portfolio value) from cash interest (which funds investor distributions), capturing the timing misalignment that causes naive cash flow models to understate returns in the early hold period. Loss provisioning is modeled as a percentage of outstanding principal, with recovery assumed at a later date. The fund-level cash flow includes both original capital deployed (negative) and distributions back to investors as loans are repaid and interest is collected (positive).
Direct lending funds are appropriate for credit investors with a tolerance for illiquidity (5–7 year hold periods) and the operational complexity of loan-level tracking. This template is calibrated for institutional fund structures with 10–50 loans in the portfolio at any given time.
Recolor to your brand.
Formatted to IB standards.
Named theme colors repaint the whole workbook in one click, on top of an investment-banking structure with blue inputs, black formulas, and green cross-sheet links.
- Brand-ready
- Institutional grade
- Fully auditable
What's included
- Individual loan origination with price, rate, and term assumptions
- Yield calculation: interest income, OID accretion, and upfront fees
- Loss provisions and default scenario analysis
- Principal repayment and refinancing schedule
- Fund-level cash flows, investor distributions, and fund IRR and MOIC
Loan-level yield and covenant tracking
Model each loan interest, fees, and PIK toggle separately, then track covenants and refinancing scenarios at the individual loan level.
Loss provisioning and recovery modeling
Apply recovery rate assumptions and timing to quantify net loss impact on fund returns and test portfolio resilience under default scenarios.
Waterfall distribution to capital tranches
Distribute fund cash flows by seniority across senior, mezzanine, and junior tranches to show tranche-specific IRR and MOIC for LP reporting.
Frequently asked
What is a direct lending fund model?+
It is a model that forecasts loan origination, yield realization, default losses, and fund-level cash flows to calculate IRR and MOIC for a direct lending fund.
How is direct lending yield calculated?+
Yield includes stated interest, upfront fees amortized over the loan life, OID accretion, and PIK interest where applicable, all measured as effective yield to maturity.
What are loan covenants?+
Covenants are borrower obligations such as maintaining a leverage ratio or interest coverage floor, whose breach triggers acceleration rights or lender protective action.
How do I model a fund MOIC?+
MOIC is cumulative cash distributions plus ending residual value divided by cumulative invested capital, and is the primary return metric used in LP reporting.
Who uses direct lending fund models?+
Credit investors, direct lenders, fund managers, and credit analysts use them for fund underwriting, LP materials, individual loan approval analysis, and exit planning.
Alex Tapio
Founder of Finamodel • Professional Financial Modeller • Ex-Deloitte
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