Investing in America s Growth

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1 Performance data quoted herein represents past performance, and past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Prospective investors should consider the investment objectives, risks, and charges and expenses of Business Development Corporation of America carefully before investing. The Fund s prospectus contains information about these important issued as well as other information about the Fund. A prospectus for the Fund may be obtained by calling or writing us in care of: Realty Capital Securities, LLC, Three Copley Place, Suite 3300, Boston, MA You may also download a copy of the Fund s prospectus by going to Please read the prospectus carefully before investing.

2 Business Development Corporation of America ( BDCA ) is an SEC-registered non-traded fund that invests in both the debt and equity of private middle market companies throughout the America. 2

3 What is a Business Development Company ( BDC ) Mutual REITs 1980 Funds BDCs Created by Congress in 1980 to facilitate increased capital flows to small and mid-sized U.S. businesses A pass-through entity no taxation at BDC level on distributed income BDCs must distribute at least 90% of income and capital gains Restricted primarily to investments in privately held or small publicly traded U.S. companies 3

4 Our ultimate desire is to provide capital to secure the financial foundations that will position middle market companies for greater success. Peter M. Budko, CEO, BDCA Adviser, LLC 4

5 Investment Objectives 1 Generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments in middle market companies. Middle market companies have a market capitalization ranging between $10 million and $1 billion Make investments ranging in size from $1 million to $25 million, and may vary proportionately with the size of BDCA s capital base Leverage the experience and expertise of its Adviser in sourcing, evaluating and structuring investments Invest principally in first and second lien senior secured loans and mezzanine debt issued by middle market companies. First and second lien secured loans are senior debt instruments that generally rank ahead of subordinated debt and equity and are secured by liens on the operating assets of the borrower, including inventory, receivables, plant, property and equipment 1 There can be no assurance that we will achieve any of our stated objectives 5

6 Market Opportunity

7 Business in America # of U.S. Businesses Annual Revenue Designation 5,700,000 Under $5mn Small business 369,000 $5mn $1bn Middle market There are over 6 million businesses in the United States, 1 for every 50 Americans 2,600 Over $1bn Large corporate Sources: U.S. Census Bureau, 2007 Economic Census (next report in 2012); Richard M. Trottier, middle market strategies: How private companies use the middle markets to create value (Hoboken, NJ: John Wiley & Sons, 2009). 7

8 Characteristics of Middle Market Firms Broad universe of over 370,000 companies Generally privately owned Account for one-third of U.S. private sector GDP Employ approximately 41 million people Annual sales of $5 million to $1 billion Sources: U.S. Census Bureau, 2007 Economic Census (next report in 2012). 8

9 Market Opportunity + Reduced Bank Lending + Historically Low Corporate Defaults = Attractive Yields on Senior Secured Middle Market Loans + Stabilized U.S. Business Environment 9

10 Record Low Average Defaults Leveraged Loan Defaults LTM default rate based on par amount Investing in America s Growth Note: Excludes distressed exchanges. Sources: J.P. Morgan; S&P LCD. 10

11 Business Development Corporation of America

12 Why BDCA? Principal Preservation* Regular Distributions (1) Floating Rate Loans Low Default Rates * The Company attempts to preserve investor capital, but there can be no assurance that it can or will be able to do so. 1 Distributions are not guaranteed. We may not be able to pay or maintain distributions and they are subject to change at any time. Payment of fees to our Adviser as well as the payment of operating expenses will reduce cash available for distributions. The amount of any distributions we pay is uncertain. Our distributions to our stockholders may exceed our earnings, particularly during the period before we have substantially invested the net proceeds from this offering. Therefore, portions of the distributions that we pay may represent a return of capital to you. 12

13 Senior Secured Focus 9/30/2013* Focus on Attractive 1 st Lien Loans *Per BDCA 9/30/ Q 13

14 Equity Creates a Buffer Against Losses Senior Secured Debt Mezzanine Equity 14

15 Floating Rate Focus Minimize Interest Rate Risk 15

16 Steady Distribution (1) Growth BDCA s annualized distribution rate has steadily increased $0.88 $0.87 $0.86 Investing in America s Growth Annualized Dividend $0.85 $0.84 $0.83 $0.82 $0.81 $0.80 $0.79 $0.78 $0.77 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 1 Distributions are not guaranteed. We may not be able to pay or maintain distributions and they are subject to change at any time. Payment of fees to our Adviser as well as the payment of operating expenses will reduce cash available for distributions. The amount of any distributions we pay is uncertain. Our distributions to our stockholders may exceed our earnings, particularly during the period before we have substantially invested the net proceeds from this offering. Therefore, portions of the distributions that we pay may represent a return of capital to you. 16

17 Potential Exit Strategies 1 1 Listing on Public Exchange Potential Exit Strategy 2 Sale of Portfolio to Institutional Buyers 3 Sale of Individual Assets If our Board does not decide to pursue a liquidity event, or if we fail to receive stockholder approval for a liquidity event, the Company could operate indefinitely. 17

18 Summary of Investment Considerations 1 Current Income Backed by Secured Middle Market Loans Potential Equity Appreciation Through Warrants or Direct Equity Ownership Experienced Management Team Providing Access to Direct Investment Opportunities Reduced Bank Lending to Middle Market Companies Provides Increased Opportunities Favorable Default Characteristics for Middle Market Loans Generally non-correlated to the Stock Market Focused Exit Strategy 1 There is no guarantee that these considerations will continue or be profitable. 18

19 Seasoned Leadership For Broker Dealer Use Only Not For Public Distribution

20 Executive Leadership Peter M. Budko Chief Executive Officer, BDCA Adviser, LLC Mr. Budko currently serves as CEO of BDCA Adviser. Mr. Budko founded and formerly served as Managing Director and Group Head of the Structured Asset Finance Group, a division of Wachovia Capital Markets from 1997 to As head of this group, Mr. Budko had responsibility for a diverse platform of structured financial and credit products, including commercial asset securitization; net lease credit finance and acquisitions; structured tax free asset exchange solutions and qualified intermediary services for real estate exchange investors. While at Wachovia, Mr. Budko transacted over $5 billion of structured financings From 1987 to 1997, Mr. Budko worked in the Private Debt Placements Group at NationsBank Capital Markets (predecessor to Bank of America Securities). Within the Private Placement group, Mr. Budko was responsible for the origination, underwriting, structuring and placement of highly structured debt offerings by corporate issuers within NationsBank. Throughout his 25 year financial career, Mr. Budko has developed significant knowledge and experience with the underwriting, financing and placement of a wide variety of complex and structured corporate debt, equity and real estate structures. Mr. Budko received a B.A. in Physics from the University of North Carolina at Chapel Hill 20

21 Executive Leadership (cont.) With over 25 years of experience in middle market finance, business development companies and asset management, Mr. Grunewald brings an unusually broad and diverse skill set to BDCA. Within the finance industry, he has participated as a lender, investment banker, M&A advisor, portfolio manager and hedge fund operator Robert K. Grunewald Chief Investment Officer, BDCA Advisor, LLC As head of Financial Services M&A at NationsBank/Montgomery Securities from 1992 through 1997, Mr. Grunewald and his team completed numerous assignments for clients throughout the specialty finance industry. In 1997, Mr. Grunewald was recruited to head up the Specialty Finance Investment Banking Practice at what became Wachovia Securities. At Wachovia, Bob managed a number of high profile transactions, including initial public offerings and secondary offerings for some of the largest publicly-traded BDCs and finance companies including Capital Source, American Capital Strategies, Allied Capital, Ares Capital and Gladstone Capital In 2006, Mr. Grunewald joined American Capital Strategies (ACAS), a publicly-traded BDC and global asset manager with current assets under management in excess of $52bn. As head of the Financial Services Investment Practice from 2006 through 2009, Mr. Grunewald and his team focused on investment activity in the specialty finance, insurance, depository and asset management sectors. In his three years at ACAS, Mr. Grunewald committed over $1bn to debt and equity investments and also founded two highly successful financial services companies at ACAS: Core Financial Holdings, a diversified commercial finance company and asset based lender, and American Capital Agency Corporation (NASDAQ:AGNC), a publicly traded mortgage REIT, currently with over $43bn in assets Mr. Grunewald s unparalleled relationships and contacts within the middle market finance arena will allow BDCA to source attractive debt and equity investments from a large universe of middle market originators and sponsors 21

22 Offering Details Offering Size $1.5bn Initial Price Per Share $10.00 per share 1 Minimum Initial Investment $1,000 Distribution Schedule Monthly 2 Suitability Standards Gross annual income of $70,000 and net worth of $70,000 or a net worth of at least $250,000. (Suitability requirements may differ in certain states, including: AL, AZ, CA, ID, IA, KS, KY, ME, MI, NC, NE, NJ, ND, OH, OK, OR, TN and TX For additional information, please consult the current prospectus.) Distribution Reinvestment Plan Share Repurchase Plan 90% of public offering price On a quarterly basis, we will repurchase shares at 92.5% of the public offering price at the time of such repurchase. On an annual basis, we will not repurchase more than 10% of the weighted average of shares outstanding in the prior year. Shares repurchased: (1) will be limited to the number of shares we can repurchase with proceeds from the distribution reinvestment plan in that quarter, and (2) will not exceed 10% of the weighted average shares outstanding in the prior year. Please read the prospectus for a more complete detail of the terms, conditions and limitations of the share repurchase plan 1 As NAV increases we will increase public offering price. 2 Distributions are not guaranteed. We may not be able to pay or maintain distributions and they are subject to change at any time. Payment of fees to our Adviser as well as the payment of operating expenses will reduce cash available for distributions. The amount of any distributions we pay is uncertain. Our distributions to our stockholders may exceed our earnings, particularly during the period before we have substantially invested the net proceeds from this offering. Therefore, portions of the distributions that we pay may represent a return of capital to you. 22

23 Risk Factors A more detailed description of these risks is found in the fund s prospectus. We intend to invest primarily in senior secured term loans, second lien loans and mezzanine debt and selected equity investments issued by private companies. For senior secured and second lien loans, the collateral securing these investments may decrease in value or lose its entire value over time or may fluctuate based on the performance of the portfolio company which may lead to a loss of principal. Mezzanine debt investments are typically unsecured, and investing in mezzanine debt may involve a heightened level of risk, including a loss of principal or the loss of the entire investment. Because there is no public trading market for shares of our common stock and we are not obligated to effectuate a liquidity event by a specified date, it may be difficult for you to sell your shares. We may borrow funds to make investments. As a result, we may be exposed to the risks of borrowing, also known as leverage, which may be considered a speculative investment technique. Leverage increases the volatility of investments by magnifying the potential for gain and loss on amounts invested, therefore increasing the risks associated with investing in our securities. Moreover, any assets we acquire with leverage will be subject to management fees payable to our Adviser. The amount of any distributions we pay is uncertain. Our distributions to our stockholders may exceed our earnings, particularly during the period before we have substantially invested the net proceeds from this offering. Therefore, portions of the distributions that we pay may represent a return of capital to you. The purchase price for our shares will be determined at each closing date. As a result, your purchase price may be higher than the prior closing price per share, and therefore you may receive a smaller number of shares than if you had subscribed at the prior closing price. A significant portion of our portfolio will be recorded at fair value as determined in good faith by our board of directors and, as a result, there may be uncertainty as to the value of our portfolio investments. 23

24 Risk Factors (cont.) Our investment adviser, BDCA Adviser, LLC (the Adviser ), faces conflicts of interest as a result of compensation arrangements, time constraints and competition for investments, which it will attempt to resolve in a fair and equitable manner but which may result in actions that are not in your best interests. The potential for the Adviser to earn incentive fees under the investment advisory and management services agreement may create an incentive for the Adviser to acquire investments that are riskier or more speculative than would otherwise be the case, and the Adviser may have an incentive to increase portfolio leverage in order to earn higher management fees. We intend to qualify as a RIC but may fail to do so. Such failure would subject us to U.S. federal income tax on our income, which would have a material adverse effect on our financial performance. 24