Created in 1980 with overwhelming bipartisan Congressional support, Business Development Companies (BDCs) are job-creating engines that provide access to capital for American small- and medium-sized businesses. BDCs invest at least 70% of their total assets in “eligible portfolio companies,” which are generally defined as public and private U.S. operating companies valued at under $250 million, providing capital as well as management expertise to these companies to help them grow. Nascent companies rely on BDCs to purchase land, equipment, and factories. The more capital there is available to BDCs means more American small businesses have the opportunity for growth.

The BDC structure also offers retail or Main Street investors the opportunity to invest in smaller U.S. companies that otherwise only high net worth investors would be able to access. This helps to close both the investment opportunity gap and the capital gap. BDCs have provided good returns to investors compared to traditional fixed income investments.

The Small Business Investor Alliance is recognized as the “go-to” resource for Congress and regulators on issues pertaining to BDCs and their investors. In March 2017, after SBIA’s multi-year education campaign “BDCs Work for America,” legislation modernizing BDC regulation was signed into law. The legislation allows the BDC industry to provide billions of dollars in additional growth capital to American small businesses through streamlined regulations and an optional increase in the leverage ratio.