What is a business development company (BDC)?

A business development company is a publicly traded firm with stocks trading on public exchanges, so you can purchase stocks through your broker. Some BDC stocks are included in exchange-traded funds and mutual funds. For example, the VanEck BDC Income ETF is offered through many brokers and is available to retail investors.

What is a BDC & how does it work?

A BDC helps these firms grow in the initial stages of their development. With distressed businesses, the BDC helps the companies regain sound financial footing. Similar to closed-end investment funds, many BDCs are public companies whose shares trade on major stock exchanges, such as the American Stock Exchange (AMEX), Nasdaq, and others.

How does a BDC fund a struggling company?

The raised capital is then used to provide funding for the struggling companies. BDCs can use different financial instruments to provide capital, but in general, most issue loans or purchase stocks or convertible securities from the companies.

Who can invest in BDCs?

Unlike venture capital funds, just about anyone can invest in BDCs. BDCs are publicly traded companies, meaning you can use your brokerage account or retirement account to invest in these companies just as you would any other publicly traded company.