High Yield Business Development Companies (BDCs)

Business Development Companies (BDCs) were created under the Investment Company Act of 1940 and categorized as Regulated Investment Companies (RIC). BDCs invest in small, privately held companies that offer outstanding growth and profit potential. As RICs, BDCs must conform to certain restrictions such as distribution of at least 90% of taxable income to shareholders annually and no more than 5% of assets invested in any one security.

The income received by BDCs is never taxed as long as 90% of that income is distributed to investors each quarter. Because BDCs do not use a great deal of leverage (debt), they offer less risk than more highly leveraged investments

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