Business Development Company (BDC)

A Business Development Company (BDC) is a type of publicly traded investment company in the United States that focuses on providing Capital to small and mid-sized businesses. BDCs are designed to help these businesses grow by offering financing Options, including debt and Equity investments. They are required to distribute at least 90% of their Taxable Income as dividends to Shareholders, which allows them to avoid federal corporate taxes.

Examples of well-known BDCs include:

• BlackRock TCP Capital Corp. – Invests in private middle-market companies.
• Ares Capital Corporation – Provides debt and Equity financing to U.S. middle-market companies.
• FS KKR Capital Corp. – Focuses on Equity/">Private Equity investments in various sectors.

Case: A BDC might invest in a technology startup seeking growth Capital. By providing funding, the BDC helps the startup expand its operations, while the BDC aims to earn Returns through interest payments and potential Equity appreciation.