Business Development Companies ( Bdcs )

867 WordsDec 21, 20154 Pages
What Are BDCs? Business Development Companies (BDCs) were created in 1980 to provide loans and aid to small and mid-sized businesses finance their prospective enterprises. According to the Small Business Administration, small business entities employ 50% of the private workforce space. financing, through loans for small and medium-sized companies raises business capital for retail investors who own shares. Prior to the existence of BDCs, the ability for smaller companies to raise capital were minimal. With the emergence of BDCs, small businesses, which are the backbone of the economy, are offered loans and incentives to promote growth, which in turn stimulates a strong market. Why Makes BDC Different From Traditional Closed-End Funds? BDCs provide funds to an underrepresented asset class: the small and mid-sized U.S. business. They provide these loans without high investment minimums and other more severe requirements that previously available private limited partnerships required. At their core, BDCs resemble traditional closed-end funds, administered by the Investment Company Act of 1940 -- which have the potential to offer higher yields than conventional income strategies. For instance, there are several differences that make BDCs an attractive complement to their higher yield bond and leveraged loan fund colleagues. Where BDCs depart from traditional closed-end funds, which leverage funds for larger companies (which generally disclose information to the SEC), BDCs
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