BDC vs Interval Fund: Key Differences Explained

A BDC vs interval fund comparison starts with the wrapper. The table compares them on definition, holdings, who uses each, legal and tax treatment, borrowing limits, liquidity, risk and a typical example.

In one line: an interval fund promises a schedule, and a BDC’s exit depends on whether it is listed.

The Interval Fund Schedule

An interval fund runs a fixed cycle under SEC Rule 23c-3. The steps are the same every time:

1. 1.0
   NoticeThe fund tells holders about the offer 21 to 42 days before the deadline for requests.
2. 2.0
   RequestsYou ask to sell some or all of your shares by the deadline.
3. 3.0
   PricingThe fund sets its net asset value (NAV), the value of its holdings per share, within 14 days after the deadline.
4. 4.0
   PaymentYou are paid within seven days after pricing. The fund may keep a fee of up to 2%.

If holders ask to sell more than the offer, the fund may buy up to 2% more of its shares. After that, it buys from everyone pro rata, an equal share of each request. Cliffwater Corporate Lending Fund’s notice of May 8, 2026, shows the cycle: an offer for 5% of shares, a deadline and pricing date of May 29, payment within seven days and no fee.

The BDC Route

A BDC has no buyback schedule in its rules. A listed BDC trades on an exchange, so you sell to another investor at the market price. That price can sit above or below the NAV. A BDC that is not listed may offer to buy back shares through a tender offer, an offer to all holders for a set amount. The board decides whether and how much.

BDCs also face a borrowing rule. Their assets must be worth at least 200% of their debt (15 U.S.C. 80a-60). With approval, the floor drops to 150%. An interval fund, like other registered closed-end funds, needs 300% (15 U.S.C. 80a-18). More debt means larger gains in good years and larger losses in bad ones.

A non-traded BDC sells shares to the public but does not list them on an exchange. Like an interval fund, it usually sells shares at NAV and buys them back on its own terms. The difference is the promise behind the buyback.

• Interval fundThe buyback is a fundamental policy. Only a shareholder vote can change it, and the board can pause an offer only in cases the rule lists.
• Non-traded BDCThe buyback is a program the board runs at its discretion. It can shrink or stop it.

Demand can exceed both. In the third quarter of 2026, holders of Blackstone Private Credit Fund asked it to buy back about 10% of its shares, roughly $4.3B. The fund bought 5% and filled each request pro rata. A holder who asked to sell $100,000 would have received about $50,000 and kept the rest.

A non-traded BDC can also borrow more than an interval fund. If it opts into the 150% floor, the law makes it offer to buy back the shares of holders on the approval date. It can buy up to 25% of them a quarter over the next four quarters.

A private BDC sells its shares only in a private offering. StepStone Private Credit Fund is one example. It sells shares under Regulation D, the SEC’s rules for offerings that skip registration, to accredited investors only. Its shares are not listed, and it does not plan to list them. It intends to offer quarterly buybacks of up to 5% of its shares but is not obligated to.

An interval fund registers its offering with the SEC, so it can sell to a wider group of investors. Its buyback dates are written into its policy. A private BDC gives more room to its manager and less certainty to you. Some private BDCs plan a later listing or sale, which would be your main way out. See Reg D for how private offerings work.

Business Development Company

For

A listed BDC can be sold on any trading day. The 70% rule keeps it focused on US private companies. It can borrow more, which can raise income in good years.

Against

A listed BDC’s price can drop below its NAV. Non-traded and private BDCs buy back shares only when the board chooses. More debt means deeper losses when borrowers default.

Verdict: a listed BDC suits an investor who wants private lending exposure and the option to sell on an exchange. A non-traded or private BDC suits an investor who can leave money in for years and accept that buybacks may be capped or paused.

Interval Fund

For

Buybacks happen on a schedule set by policy. You know the dates in advance. Lower borrowing limits keep debt smaller.

Against

You can sell only at set dates, and only part of your stake if many holders sell at once. There is no exchange to fall back on. A fee of up to 2% may apply.

Verdict: an interval fund suits an investor who wants private assets with a known exit calendar and less debt. It does not suit money you may need on short notice.

If you are choosing between the two, start with when you may need the money. Then ask how much the fund borrows and what it holds. Both kinds of fund often lend to the mid-sized companies described in private credit and direct lending. A third wrapper, the tender offer fund, buys back shares only when its board decides.

If you work at or hold shares in a venture-backed company, a BDC may already be its lender. Some BDCs make venture debt loans and take warrants, rights to buy shares later. Their loans are repaid before any shareholder in a sale or a failure.

Common Mistakes

• Treating a buyback as a promiseAn interval fund offers 5% to 25%. If many holders sell, you get a pro rata share. A non-traded BDC can cut its program.
• Ignoring the price on an exchangeA listed BDC trades at what buyers will pay. That can sit well below the NAV in a downturn.
• Skipping the debt levelA BDC can borrow up to $2 per $1 of equity. An interval fund can borrow up to $0.50. Check the fund’s filings.
• Reading the payout as profitA RIC must pay out at least 90% of its income. A high payout can include gains that may not repeat.

Business development company (BDC)

A closed-end fund that elects BDC status and must keep at least 70% of its assets in qualifying investments, mainly US private companies.

Interval fund

A registered closed-end fund that must offer to buy back 5% to 25% of its shares every three, six or twelve months.

Closed-end fund

A fund that does not have to buy back shares on demand. Holders exit by selling on an exchange or through buyback offers.

Non-traded BDC

A BDC that sells shares publicly but does not list them on an exchange.

Private BDC

A BDC that sells shares only in a private offering, usually to accredited investors.

Net asset value (NAV)

The value of a fund’s holdings minus its debts, per share.

Asset coverage

A fund’s assets divided by its debt. A 200% floor means assets must be at least twice the debt.

Regulated investment company (RIC)

A tax status that lets a fund avoid corporate tax on income it pays out, if it distributes at least 90% of that income.

Pro rata

In proportion: each seller gets the same share of what they asked for.

Tender offer

An offer to all holders to buy a set amount of shares at a stated price.

Rules and filings were last checked on November 6, 2026. The rules are US federal law and change over time. Fund examples come from the funds’ own SEC filings and show how one fund worked on one date.