Business Development Companies (BDCs)

Business development companies (BDCs) are closed-end, publicly traded investment vehicles that invest in small and developing U.S. businesses via secured debt, unsecured debt or equity. They may also provide management/consulting services to portfolio companies. BDCs often finance companies that are too small to access capital markets or qualify for traditional bank loans and often extend credit at higher interest rates. BDCs must invest at least 70% of their capital in private or public U.S. companies with a market cap of less than $250 million and must pay at least 90% of their income to shareholders.