Common Questions

What is a BDC?

Congress created Business Development Companies (BDCs) in 1980 to provide public investors another means to invest in the long-term growth of smaller U.S. businesses. BDCs invest their capital primarily in small and middle market private companies in the U.S. Typically, BDCs are structured to originate and hold debt and equity investments and can invest across a portfolio company’s capital structure.

In order to qualify as a BDC, companies must be registered in compliance with Section 54 of the Investment Company Act of 1940. Among other restrictions, BDCs are required to maintain an asset coverage ratio of at least 150% in order to borrow or pay dividends and to meet specific asset diversification requirements. In addition, BDCs that are regulated investment companies for U.S. federal income tax purposes, such as Capital Southwest, are required to distribute at least 90% of investment company taxable income to shareholders in order to avoid corporate income tax on distributed taxable income.

What is Capital Southwest’s investment objective?

Capital Southwest Corporation specializes in providing customized financing to middle market companies located primarily in the United States in a broad range of industry segments. We focus on investing in companies with strong and sustainable business models with histories of generating revenues and positive cash flow, established market positions and proven management teams with strong operating discipline. Our core business is to target first lien senior secured debt investments and minority equity co-investments in lower middle market (“LMM”) companies. Our target LMM companies typically have annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) between $3.0 million and $25.0 million.

What does it mean that Capital Southwest is an internally managed BDC?

Being “internally managed” means that our shareholders own both our investable assets as well as our asset manager. Rather than having a management contract paying investment advisory fees and carried interest, our management team owns the same shares of stock that our shareholders own, aligning interests between management and the shareholders in all corporate decisions. Because Capital Southwest is internally managed, we directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms that are externally managed.

Where is Capital Southwest’s common stock listed?

Can I purchase shares directly from Capital Southwest?

Does Capital Southwest pay a Dividend?

Does Capital Southwest have a Dividend Reinvestment Plan (DRIP)?

We have adopted a dividend reinvestment plan, or DRIP, that provides for the reinvestment of dividends on behalf of our shareholders in shares of our common stock. Under the DRIP, if we declare a dividend, registered shareholders who have opted into the DRIP as of the dividend record date will have their dividend automatically reinvested into additional shares of our common stock. The share requirements of the DRIP are satisfied through open market purchases of common stock by the DRIP plan administrator. Shares purchased in the open market to satisfy the DRIP requirements will be valued based on the average price of the applicable shares purchased by the DRIP plan administrator before any associated brokerage or other costs.

What tax reporting will Capital Southwest’s stockholders receive?

Dividends are generally taxable in the year in which they are declared. Following the end of each year, we provide a Form 1099-DIV and a tax status letter to shareholders that describe the taxability of the dividends paid in the preceding year, including a breakdown between ordinary income and capital gains. For information on the tax status of the prior year’s dividends, please visit our Tax Information page. For information about taxes with respect to dividends you receive, you should consult your own tax advisor.

How do I place my vote for the CSWC Shareholder Annual Meeting?

Who is the transfer agent, dividend paying agent and registrar for Capital Southwest's common stock?

Whom can I contact for general information about Capital Southwest Corporation?

What is Capital Southwest's CUSIP number for its common stock and corporate bonds?