The coronavirus pandemic roiled the credit markets and placed unprecedented financial stresses on businesses, creating opportunities for fund managers to pursue private credit strategies and direct lending – something that many managers were already doing. In fact, direct lending strategies have been growing in popularity since the 2008 financial crisis. The 2008 crisis resulted in a tangle of regulations that forced banks to step back from providing credit to companies and individuals, among other historical business lines. Recognizing a market opportunity, other financial intermediaries – including hedge and private equity funds – stepped in to fill that void. As asset managers continuously search for yield, the investment strategy of direct lending has risen in popularity, with alternative lenders typically charging higher interest rates than traditional lenders. Engaging in those direct lending practices, however, can pose a number of challenges from a tax perspective, particularly for non‑U.S. investors, that affect hedge fund managers undertaking those efforts. Accordingly, a number of structures have been developed to permit non‑U.S. investors to participate in that investment strategy. The first article in our three-part series discusses the prevalence of hedge fund lending to U.S. companies and the primary tax considerations for hedge fund investors associated with direct lending. The second article explores structures available to hedge fund managers to mitigate the tax consequences of pursuing a direct lending strategy. The third article provides an overview of the regulatory environment surrounding direct lending and a discussion of the common terms applicable to direct lending funds. See “Key Compliance Issues Facing Credit Managers During the Pandemic” (Sep. 24, 2020); and our two-part series on direct lending funds: “Structural Approaches to Address Liquidity Considerations and Ensure Regulatory Compliance” (May 28, 2020); and “Five Structures to Mitigate Tax Burdens for Various Investor Types” (Jun. 4, 2020).