How can you invest in a business development company (BDC)?

How Can You Invest in a BDC? A business development company (BDC) is a type of closed-end investment company that is designed to invest in small- and mid-sized businesses, as well as distressed companies. With smaller companies, BDCs give them access to the capital they need for growth that they may not be able to access elsewhere.

How does BDC calculate interest rate?

BDC calculates the interest rate on our small business loan as follows: Current floating base rate + variance based on your personal and business information = interest rate As a result, the interest rate varies by client. Loan structures can take many different forms. Other banks’ calculations may differ. Which bank is best for a business loan?

How many BDCs are there?

Today, there are 47 publicly traded BDCs with a combined market capitalization of more than $49 billion as of April 2021, according to Closed-End Fund Advisors, which tracks BDC data and research. How Does a BDC Work? A BDC is regulated under the Investment Act of 1940 and the Securities and Exchange Commission (SEC).

What is the present value of a BDC?

The present value of $1 of the BDC is the fair P/B multiple. Summing the infinite sum provides a formula for a fair P/B multiple, accounting for both the investor's discount rate and the annualized asset charge-off rate: According to the assumptions of an Ideal BDC, Shareholder ROE is equal to the dividend yield multiplied by the market P/B ratio: