Proposed Legislation for Business Development Companies H.R. 5929: A Capital Increase for Business Development Companies

June 20, 2012
The bi-partisan Next Steps for Credit Availability Act (H.R. 5929) (the Bill) that was recently introduced would promote capital raising by small and mid-sized U.S. companies by increasing the capital available to business development companies (BDCs) to invest in such companies. If enacted, the Bill would allow BDCs to take on more leverage, have subsidiaries that are registered investment advisers, and take advantage of certain rules and privileges that facilitate registrations and offerings of securities. These changes would significantly decrease the regulatory burdens faced by BDCs, however it is not clear whether passage is likely during the current legislative session. This update summarizes the provisions of the Bill and its potential impact on BDCs.