15 U.S.C. § 80a–61 — Loans

Business development companies (BDCs) don't have to follow most investment company rules, thanks to the exemption in section 80a-6(f). But this section still makes section 80a-21 apply to them, just as if they were registered closed-end investment companies. Section 80a-21 restricts loans between an investment company and people connected to it. Two kinds of loans are allowed despite that restriction. First, a BDC may lend money to one of its directors, officers, employees, or general partners so that person can buy the BDC's securities, as long as the loan is part of an executive compensation plan and meets the requirements of section 80a-56(j). Second, a BDC may lend money to a company it controls. This stays allowed even if the BDC and the borrowing company would otherwise be treated as "under common control" only because the same third person controls the BDC.