The companies essentially help fund small $5 million to $100 million businesses. Ever since the financial crisis, regulators have clamped down on traditional lenders and made it harder for businesses to access public capital, which has forced smaller business to take loans from BDCs.
Since the debt is typically senior secured and set to float with interest rate benchmarks, there is diminished rate risk. When the Fed raises rates, BDC loan interest rates pegged to the London Interbank Offered Rate, or LIBOR, will also rise. [BDC ETFs for a Growing Economy, Attractive Yields]
Home to 30 BDCs, BIZD currently carries a 30-day SEC yield of 9%.
Market Vectors BDC Income ETF
