Non-Traded Business Development Companies (BDCs):
A business development company, or BDC, is a company that invests primarily in the debt or equity of private American companies and has elected to be regulated by certain provisions under the Investment Company Act of 1940. A BDC combines the capital of many investors to own or finance a portfolio of operating businesses. The BDC structure was created in 1980 by Congress to encourage capital investment into privately owned American Businesses. At that time, there was a perceived constraint on the supply of credit to small and mid-sized companies.
A BDC primarily holds debt and equity positions in these companies, and aims to pass through at least 90% of interest payments and dividends (after expenses) to investors. While all BDCs are public investment vehicles registered with the SEC, individual BDCs can choose to be either traded or non-traded Additionally, a BDC may provide capital appreciation, lower volatility and lower correlation to stocks.