Prior to the existence of BDCs, the ability for smaller companies to raise capital were minimal, often being rejected by banks. With the emergence of BDCs, small businesses, which are the backbone of the economy, are offered loans and incentives to promote the growth of their businesses — in turn stimulating a stronger market.

1. HOW DO BDCS
FARE AGAINST
TRADITIONAL
INVESTMENTS?
CHRISOBERBECK. COM
Chris Oberbeck

2. Prior to the existence of BDCs,
the ability for smaller companies
to raise capital were minimal,
often being rejected by banks.
WHAT ARE
BUSINESS
DEVELOPMENT
COMPANIES?

3. WHAT DO
BDCS DO?
BDCs are able to invest in numerous, types
of securities that include debt and equity
— known as a business’ capital structure.

4. In the capital structure system, loans reap
returns on investors’ principal and interest
without the participation of the investor in
the growth of the company.

5. When investing in equity, the common
stock of the small to mid-sized
company may increase substantially in
value depending on its growth.

6. TRADITIONAL
CLOSE- END FUNDS
At their core, BDCs resemble
traditional closed-end funds,
administered by the Investment
Company Act of 1940.

7. In terms of net of returns, the dividend
yields for BDCs are most often greater
than traditional closed-end funds.

8. BDCs create personalized sourcing and
underwriting directly to borrowers — a
shift from the traditional bank transaction.

9. As banks become less willing to lend to alternative
small and mid-sized asset class, BDCs are filling
the gap to offer capital to this marginalized class.
BANKS

10. Key to the investment decision
is identifying the right BDC
management organization.

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