The Baby, The Bathwater And Bdcs

We have written a fair bit about business development companies and the important role that they serve as alternative capital providers.  During the financial crisis and in the immediate aftermath of the financial crisis, BDCs have proven that they can meet the more customized financial needs of small and middle-market companies.  It was, therefore, important that the SEC Staff agreed that BDCs qualify as emerging growth companies under the JOBS Act and can avail themselves of the accommodations made available under the Title I IPO on-ramp provisions.  As we've noted in prior posts regarding additional legislation that addresses capital formation issues, there are a couple of proposed bills that would modernize the regulatory framework applicable to these entities.  Although certain of the provisions of these proposed bills relating to permissible asset coverage and leverage have provoked some debate (see, for example, SEC Chair White's letter addressing some of these