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Blended finance structure

Business development companies

Specialty finance, Business development company (BDC), specialty lending
BDCs were created in 1980 and are regulated investment companies. They are basically closed-end investment funds that are structured similarly to a REIT, meaning they avoid paying corporate taxes if they distribute at least 90% of their taxable income in the form of dividends.
There are many different types of BDCs, but they ultimately exist to raise funds from investors and provide loans to middle market companies, which are smaller businesses with generally non-investment grade credit. Roughly 200,000 of these businesses exist, and large banks are less likely to lend them growth capital, which is why BDCs are needed.
BDC's often take equity stakes in the lower middle market companies it works with, helping provide management guidance
Ares Capital Management, one of the world’s largest specialty finance companies
Specialty finance can be broadly defined as any financing activity that takes place outside the traditional banking system. Following the recession, banks and larger financial institutions were forced by a combination of market conditions and increased regulations to significantly tighten their lending standards. This financial conservatism has essentially closed off the traditional credit market to many consumers and small businesses. This has opened the door to specialty finance firms to play a larger role in providing structured finance options to these borrowers.
specialty lending ties to the performance of specific assets (credit card receivables, equipment leases, consumer installment loans, merchant cash advance, etc.) and investment managers often are providing financing, primarily through highly structured asset-backed facilities, to specialty finance companies who originate the loans
small ticket equipment lending and leasing, accounts receivable factoring, trade finance,
supply chain finance
⁠
,
merchant cash advances
⁠
, and
peer-to-peer lending
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all fall into this category.
Sources:
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https://www.simplysafedividends.com/intelligent-income/posts/10-a-guide-to-investing-in-business-development-companies-bdcs
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