Business Development Companies
A business development company (BDC) is a type of closed-end investment company that invests in the securities of small, developing companies. The purpose of BDCs is to provide capital to small, struggling companies that cannot easily find capital elsewhere. Business development companies also may offer these companies their managerial assistance.
BDCs operate like venture capital firms, except that they are public companies registered under the Investment Company Act that trade openly on the secondary market. As such, they allow small, non-accredited investors to participate. Registered business development companies must distribute at least 90% of their taxable income to shareholders every year.
BDCs are subject to the same diversification rules as other investme