Main Street Capital Fixed Income Presentation Deck
Business Development Company (BDC) Background
Created by Congress in
1980 through the Small
Business Investment
Incentive Act of 1980 to
facilitate the flow of
capital to small and mid-
sized U.S. businesses
Highly regulated by the
Securities and
Exchange Commission
under the Investment
Company Act of 1940
(1940 Act)
Provide a way for
individual investors to
participate in debt and
equity investments in
private companies
Main Street Capital Corporation
Leverage
Regulatory restrictions on debt leverage levels require BDCs to maintain
conservative leverage
Must maintain an asset to debt coverage ratio of at least 1.5x
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Full Transparency
Detailed schedule of all investments (and related key terms) in quarterly and
annual reporting
Quarterly fair value mark to market accounting
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Income Tax Treatment
As a Regulated Investment Company (RIC), BDCs generally do not pay corporate
income taxes
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MAIN ST
CAPITAL CORPORATION
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To maintain RIC status and avoid paying corporate income taxes, BDCs must
distribute at least 90% of taxable income (other than net capital gain) to investors
To avoid a 4% federal excise tax on undistributed income, BDCs must distribute in
each calendar year the sum of (1) 98% of their net ordinary income for the
calendar year and (2) 98.2% of their realized capital gains (both long-term and
short-term)
Tax treatment is similar to Real Estate Investment Trusts (REITS)
NYSE: MAIN
mainstcapital.com
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