{"id":12398,"date":"2023-01-20T18:03:00","date_gmt":"2023-01-20T18:03:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=12398"},"modified":"2023-01-24T08:53:05","modified_gmt":"2023-01-24T08:53:05","slug":"business-development-company","status":"publish","type":"post","link":"https:\/\/businessyield.com\/bs-business\/business-development-company\/","title":{"rendered":"BUSINESS DEVELOPMENT COMPANY(BDC): How Does It Work?","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n

What is a Business Development Company?<\/span><\/h2>\n\n\n\n

A business development company (BDC) is an organization that invests in small and medium-sized businesses, as well as companies in difficulty. A BDC helps small and medium-sized businesses grow in the early stages of their development. In distressed businesses, BDC helps businesses find a solid financial foundation again.<\/p>\n\n\n\n

How Business Development Companies Work<\/span><\/h2>\n\n\n\n

CDBs use their capital to make loans or to buy ownership of small and medium-sized businesses in the US, most of which are privately owned. For tax purposes, most BDCs are treated as regulated investment companies (RICs) rather than taxable companies. In return for favorable tax treatment, the BDC must distribute at least 90% of its income to shareholders every year, similar to real estate investment trusts (REITs). Due to their high dividend and interest payments, investors often use CDBs as income instruments.<\/p>\n\n\n\n

BDCs are similar to venture capital funds in that they both invest in companies, but the main difference between them is access. Venture capital funds are generally only available to accredited investors, large institutions and high net worth individuals. You have to limit the number of your investors and enforce certain criteria in order not to be marked as a RIC. However, BDCs are open to anyone with access to an exchange.<\/p>\n\n\n\n

WHat are the Types of BDC?<\/h2>\n\n\n\n

There are two types of BDC , they are:<\/p>\n\n\n\n