Stellus Capital Investment Corp

Previous wording

On April 4, 2018, our board of directors (the “Board”), including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. At our 2018 annual meeting of stockholders our stockholders also approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, the asset coverage ratio applicable to us was decreased from 200% to 150%, effective June 29, 2018, which effectively increased the amount of leverage we may incur. As of June 30, 2025, our asset coverage ratio was 211%. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing.

Current wording

On April 4, 2018, our board of directors (the “Board”), including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. At our 2018 annual meeting of stockholders our stockholders also approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, the asset coverage ratio applicable to us was decreased from 200% to 150%, effective June 29, 2018, which effectively increased the amount of leverage we may incur. As of September 30, 2025, our asset coverage ratio was 210%. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing.

Previous wording

Economic activity has continued to accelerate across sectors and regions. Nonetheless, we have observed and continue to observe supply chain interruptions, labor resource shortages, commodity inflation, fluctuating interest rates, bank impairments and failures, economic sanctions in response to international conflicts and instances of geopolitical, economic and financial market instability in the United States and abroad, including as a result of the imposition of tariffs in the United States or its trading partners. One or more of these factors may contribute to increased market volatility and may have long- and short-term effects in the United States and worldwide financial markets.

Current wording

Economic activity has continued to accelerate across sectors and regions. Nonetheless, we have observed and continue to observe supply chain interruptions, labor resource shortages, commodity inflation, fluctuating interest rates, bank impairments and failures, economic sanctions in response to international conflicts and instances of geopolitical, economic and financial market instability in the United States and abroad, including as a result of the imposition of tariffs in the United States or its trading partners and the prolonged shutdown of the government. One or more of these factors may contribute to increased market volatility and may have long- and short-term effects in the United States and worldwide financial markets.

Previous wording

As of June 30, 2025, we had $985.9 million (at fair value) invested in 112 portfolio companies. As of June 30, 2025, our portfolio included approximately 89% of first lien debt, 1% of second lien debt, 1% of unsecured debt and 9% of equity investments at fair value. The composition of our investments at cost and fair value as of June 30, 2025 was as follows:

Current wording

As of September 30, 2025, we had $1,010.2 million (at fair value) invested in 115 portfolio companies. As of September 30, 2025, our portfolio included approximately 89% of first lien debt, 1% of second lien debt, 1% of unsecured debt and 9% of equity investments at fair value. The composition of our investments at cost and fair value as of September 30, 2025 was as follows:

Previous wording

Our investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require us to provide funding when requested by portfolio companies in accordance with the terms and conditions of the underlying loan agreements. As of June 30, 2025 and December 31, 2024, we had unfunded commitments of $58.7 million and $41.3 million, respectively, to provide financing to 71 and 71 portfolio companies, respectively. As of June 30, 2025, we had sufficient liquidity (through cash on hand and available borrowings under the Credit Facility (as defined below)) to fund such unfunded commitments should the need arise.

Current wording

Our investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require us to provide funding when requested by portfolio companies in accordance with the terms and conditions of the underlying loan agreements. As of September 30, 2025 and December 31, 2024, we had unfunded commitments of $54.1 million and $41.3 million, respectively, to provide financing to 73 and 71 portfolio companies, respectively. As of September 30, 2025, we had sufficient liquidity (through cash on hand and available borrowings under the Credit Facility (as defined below)) to fund such unfunded commitments should the need arise.

Previous wording

At June 30, 2025, our average portfolio company investment at amortized cost and fair value was approximately $8.8 million and $8.8 million, respectively, and our largest portfolio company investment at amortized cost and fair value was approximately $24.2 million and $21.2 million, respectively. At December 31, 2024, our average portfolio company investment at amortized cost and fair value was approximately $9.2 million and $9.2 million, respectively, and our largest portfolio company investment at amortized cost and fair value was approximately $23.2 million and $21.2 million, respectively.

Current wording

At September 30, 2025, our average portfolio company investment at amortized cost and fair value was approximately $8.9 million and $8.8 million, respectively, and our largest portfolio company investment at amortized cost and fair value was approximately $24.7 million and $22.0 million, respectively. At December 31, 2024, our average portfolio company investment at amortized cost and fair value was approximately $9.2 million and $9.2 million, respectively, and our largest portfolio company investment at amortized cost and fair value was approximately $23.2 million and $21.2 million, respectively.

Previous wording

At June 30, 2025 and December 31, 2024, 91.2% and 94.5% of our debt investments bore interest based on floating rates (subject to interest rate floors), respectively, and 8.8% and 5.5% bore interest at fixed rates, respectively.

Current wording

At September 30, 2025 and December 31, 2024, 90.4% and 94.5% of our debt investments bore interest based on floating rates (subject to interest rate floors), respectively, and 9.6% and 5.5% bore interest at fixed rates, respectively.

Previous wording

The weighted average yield on all of our debt investments as of June 30, 2025 and December 31, 2024 was approximately 10.2% and 10.3%, respectively. The weighted average yield on all of our investments, including non-income producing equity positions, as of June 30, 2025 and December 31, 2024 was approximately 9.6% and 9.7%, respectively. The weighted average yield was computed using the effective interest rates for all of our debt investments, including accretion of original issue discount. The weighted average yield of our debt investments is not the same as a return on investment for our stockholders, but rather relates to a portion of our investment portfolio and is calculated before the payment of all of our subsidiaries’ fees and expenses.

Current wording

The weighted average yield on all of our debt investments as of September 30, 2025 and December 31, 2024 was approximately 10.0% and 10.3%, respectively. The weighted average yield on all of our investments, including non-income producing equity positions, as of September 30, 2025 and December 31, 2024 was approximately 9.4% and 9.7%, respectively. The weighted average yield was computed using the effective interest rates for all of our debt investments, including accretion of original issue discount. The weighted average yield of our debt investments is not the same as a return on investment for our stockholders, but rather relates to a portion of our investment portfolio and is calculated before the payment of all of our subsidiaries’ fees and expenses.

Previous wording

As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $40.0 million and $20.1 million, respectively.

Current wording

As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $9.0 million and $20.1 million, respectively.

Previous wording

During the six months ended June 30, 2025, we made an aggregate of $78.2 million of investments in nine new portfolio companies and 13 existing portfolio companies. During the six months ended June 30, 2025, we received an aggregate of $46.6 million in proceeds from repayments of our investments.

Current wording

During the nine months ended September 30, 2025, we made an aggregate of $142.0 million of investments in 14 new portfolio companies and 18 existing portfolio companies. During the nine months ended September 30, 2025, we received an aggregate of $85.6 million in proceeds from repayments of our investments.

Previous wording

During the six months ended June 30, 2024, we made an aggregate of $94.9 million of investments in 11 new portfolio companies and 13 existing portfolio companies. During the six months ended June 30, 2024, we received an aggregate of $71.8 million in proceeds from repayments of our investments.

Current wording

During the nine months ended September 30, 2024, we made an aggregate of $112.6 million of investments in 12 new portfolio companies and 18 existing portfolio companies. During the nine months ended September 30, 2024, we received an aggregate of $87.3 million in proceeds from repayments of our investments.

Previous wording

We will not accrue interest on loans and debt securities if we have reason to doubt our ability to collect such interest. As of June 30, 2025, we had loans to five portfolio companies that were on non-accrual status, which represented approximately 6.8% of our loan portfolio at cost and 3.8% at fair value. As of December 31, 2024, we had loans to seven portfolio companies that were on non-accrual status, which represented approximately 8.3% of our loan portfolio at cost and 5.4% at fair value. As of June 30, 2025 and December 31, 2024, $8.7 million and $6.5 million of income from investments on non-accrual had not been accrued, respectively.

Current wording

We will not accrue interest on loans and debt securities if we have reason to doubt our ability to collect such interest. As of September 30, 2025, we had loans to five portfolio companies that were on non-accrual status, which represented approximately 6.7% of our loan portfolio at cost and 3.7% at fair value. As of December 31, 2024, we had loans to seven portfolio companies that were on non-accrual status, which represented approximately 8.3% of our loan portfolio at cost and 5.4% at fair value. As of September 30, 2025 and December 31, 2024, $9.7 million and $6.5 million of income from investments on non-accrual had not been accrued, respectively.

Previous wording

Comparison of the Three and Six Months Ended ended June 30, 2025 and 2024

Current wording

Comparison of the Three and Nine months Ended September 30, 2025 and 2024

Previous wording

The following shows the breakdown of investment income for the three and six months ended June 30, 2025 and 2024 (in millions).

Current wording

The following shows the breakdown of investment income for the three and nine months ended September 30, 2025 and 2024 (in millions).

Previous wording

The decrease in investment income for the three and six months ended June 30, 2025 was due primarily to a decrease in prevailing market rates on our loans, typically in reference to the Secured Overnight Financing Rate (“SOFR”), and a decrease in non-recurring income, partially offset by an increase in our principal debt outstanding.

Current wording

The decrease in investment income for the three and nine months ended September 30, 2025 was due primarily to a decrease in prevailing market rates on our loans, typically in reference to the Secured Overnight Financing Rate (“SOFR”), partially offset by an increase in our principal debt outstanding.

Previous wording

The following shows the breakdown of operating expenses for the three and six months ended June 30, 2025 and 2024 (in millions).

Current wording

The following shows the breakdown of operating expenses for the three and nine months ended September 30, 2025 and 2024 (in millions).

Previous wording

The increase in operating expenses for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024 was due to increased management fees and interest expense due to overall portfolio growth.

Current wording

The increase in operating expenses for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024 was due to increased management fees and interest expense due to overall portfolio growth.

Previous wording

The decrease in net investment income over the respective three and six month periods was due to decreased interest income as explained in the “Revenues” section above, offset by lower operating expenses as explained in the “Expenses” section above.

Current wording

The decrease in net investment income over the respective three and nine months periods was due to decreased interest income as explained in the “Revenues” section above, as well as higher operating expenses as explained in the “Expenses” section above.

Previous wording

Net change in unrealized appreciation primarily reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded appreciation or depreciation when gains or losses are realized.

Current wording

Net change in unrealized (depreciation) appreciation primarily reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded appreciation or depreciation when gains or losses are realized.

Previous wording

Net change in unrealized appreciation (depreciation) on investments and cash equivalents for the three months ended June 30, 2025 and 2024 totaled $1.4 million and ($5.6) million, respectively.

Current wording

Net change in unrealized (depreciation) appreciation on investments and cash equivalents for the three months ended September 30, 2025 and 2024 totaled ($5.1) million and $8.5 million, respectively.

Previous wording

Net change in unrealized appreciation on investments and cash equivalents for the six months ended June 30, 2025 and 2024 totaled $2.6 million and $17.9 million, respectively.

Current wording

Net change in unrealized (depreciation) appreciation on investments and cash equivalents for the nine months ended September 30, 2025 and 2024 totaled ($2.5) million and $26.4 million, respectively.

Previous wording

The change in unrealized appreciation over the respective periods was due to reversals of previous write-downs that were realized and company-specific investment write-downs, offset by company-specific write-ups.

Current wording

The change in unrealized (depreciation) appreciation over the respective periods was due to reversals of previous write-ups that were realized and company-specific investment write-downs, offset by company-specific write-ups.

Previous wording

We have direct wholly owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The Taxable Subsidiaries permit us to hold equity investments in portfolio companies, which are “pass through” entities for U.S. federal income tax purposes and continue to comply with the “source income” requirements contained in RIC tax provisions of the Code. The Taxable Subsidiaries are not consolidated with us for U.S. federal income tax purposes and may generate U.S. federal income tax expense, benefit, and the related tax assets and liabilities, as a result of their ownership of certain portfolio investments. The U.S. federal income tax expense, or benefit, if any, and related tax assets and liabilities are reflected in our consolidated financial statements. For both the three and six months ended June 30, 2025, we recognized a benefit for income tax on unrealized investments of $0.0 million for the Taxable Subsidiaries. For the three and six months ended June 30, 2024, we recognized a benefit for income tax on unrealized investments of $0.4 million and $0.2 million for the Taxable Subsidiaries, respectively. As of both June 30, 2025 and December 31, 2024, there was $0.0 million of deferred tax liabilities on the Consolidated Statements of Assets and Liabilities.

Current wording

We have direct wholly owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The Taxable Subsidiaries permit us to hold equity investments in portfolio companies, which are “pass through” entities for U.S. federal income tax purposes and continue to comply with the “source income” requirements contained in RIC tax provisions of the Code. The Taxable Subsidiaries are not consolidated with us for U.S. federal income tax purposes and may generate U.S. federal income tax expense, benefit, and the related tax assets and liabilities, as a result of their ownership of certain portfolio investments. The U.S. federal income tax expense, or benefit, if any, and related tax assets and liabilities are reflected in our consolidated financial statements. For both the three and nine months ended September 30, 2025, we recognized a benefit for income tax on unrealized investments of $0.0 million for the Taxable Subsidiaries. For the three and nine months ended September 30, 2024, we recognized a benefit for income tax on unrealized investments of $0.0 million and $0.2 million for the Taxable Subsidiaries, respectively. As of both September 30, 2025 and December 31, 2024, there was $0.0 million of deferred tax liabilities on the Consolidated Statements of Assets and Liabilities.

Previous wording

The net increase in net assets between the respective periods was due to higher unrealized appreciation, offset by lower realized gains in the current year.

Current wording

The net decrease in net assets between the respective periods was due to higher unrealized depreciation, offset by higher realized gains in the current year.

Previous wording

The net decrease in net assets between the respective periods was due to lower unrealized appreciation and lower net investment income, offset by decreased net realized losses in the current year.

Current wording

The net decrease in net assets between the respective periods was due to higher unrealized depreciation and lower net investment income, offset by decreased net realized losses in the current year.

Previous wording

Our operating activities used net cash of $13.3 million for the six months ended June 30, 2025, primarily in connection with the purchase of portfolio investments, offset by the net increase in net assets resulting from operations and sales and repayments of portfolio investments. Our financing activities for the six months ended June 30, 2025 provided cash of $33.2 million, primarily from proceeds from the issuance of common stock, offset by net paydowns on our Credit Facility and shareholder distributions.

Current wording

Our operating activities used net cash of $33.5 million for the nine months ended September 30, 2025, primarily in connection with the purchase of portfolio investments, offset by the net increase in net assets resulting from operations and sales and repayments of portfolio investments. Our financing activities for the nine months ended September 30, 2025 provided cash of $22.4 million, primarily from proceeds from the issuance of common stock, proceeds from the issuance of 2030 Notes Payable (as defined below), offset by net paydowns on our Credit Facility, repayment of 2026 Notes Payable (as defined below), repayment of SBA-guaranteed debentures and shareholder distributions.

Previous wording

Our operating activities used net cash of $8.6 million for the six months ended June 30, 2024, primarily in connection with the purchase of portfolio investments, offset by sales and repayments of portfolio investments. Our financing activities for the six months ended June 30, 2024 provided cash of $18.4 million, primarily from proceeds from the issuance of common stock and net borrowings under our Credit Facility, offset by shareholder distibutions.

Current wording

Our operating activities provided net cash of $3.1 million for the nine months ended September 30, 2024, primarily in connection with the purchase of portfolio investments, offset by sales and repayments of portfolio investments. Our financing activities for the nine months ended September 30, 2024 provided cash of $9.4 million, primarily from proceeds from the issuance of common stock, offset by net paydowns on our Credit Facility and shareholder distibutions.

Previous wording

Also, as a BDC, we generally are required to meet an asset coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, over the aggregate amount of the senior securities, which include all of our borrowings and any outstanding preferred stock, of at least 150% effective June 29, 2018 (at least 200% prior to June 29, 2018). This requirement limits the amount that we may borrow. We have received exemptive relief from the SEC to permit us to exclude the debt of the Stellus Capital SBIC, LP (the “SBIC subsidiary”) and Stellus Capital SBIC II, LP (the “SBIC II subsidiary”) (collectively, the “SBIC subsidiaries”) guaranteed by the U.S. Small Business Administration (“SBA”) from the definition of senior securities in the asset coverage test under the 1940 Act. We were in compliance with the asset coverage ratios at all times. As of June 30, 2025 and December 31, 2024, our asset coverage ratio was 211% and 234%, respectively. The amount of leverage that we employ will depend on our assessment of market conditions and other factors at the time of any proposed borrowing, such as the maturity, covenant package and rate structure of the proposed borrowings, our ability to raise funds through the issuance of shares of our common stock and the risks of such borrowings within the context of our investment outlook. Ultimately, we only intend to use leverage if the expected returns from borrowing to make investments will exceed the cost of such borrowing. As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $40.0 million and $20.1 million, respectively.

Current wording

Also, as a BDC, we generally are required to meet an asset coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, over the aggregate amount of the senior securities, which include all of our borrowings and any outstanding preferred stock, of at least 150% effective June 29, 2018 (at least 200% prior to June 29, 2018). This requirement limits the amount that we may borrow. We have received exemptive relief from the SEC to permit us to exclude the debt of the Stellus Capital SBIC, LP (the “SBIC I subsidiary”) and Stellus Capital SBIC II, LP (the “SBIC II subsidiary”) (collectively, the “SBIC subsidiaries”) guaranteed by the U.S. Small Business Administration (“SBA”) from the definition of senior securities in the asset coverage test under the 1940 Act. We were in compliance with the asset coverage ratios at all times. As of September 30, 2025 and December 31, 2024, our asset coverage ratio was 210% and 234%, respectively. The amount of leverage that we employ will depend on our assessment of market conditions and other factors at the time of any proposed borrowing, such as the maturity, covenant package and rate structure of the proposed borrowings, our ability to raise funds through the issuance of shares of our common stock and the risks of such borrowings within the context of our investment outlook. Ultimately, we only intend to use leverage if the expected returns from borrowing to make investments will exceed the cost of such borrowing. As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $9.0 million and $20.1 million, respectively.

Previous wording

The Credit Facility provides for borrowings up to a maximum of $315.0 million on a committed basis with an accordion feature that allows us to increase the aggregate commitments up to $350.0 million, subject to new or existing lenders agreeing to participate in the increase and other customary conditions.

Current wording

The Credit Facility provides for borrowings up to a maximum of $335.0 million on a committed basis with an accordion feature that allows us to increase the aggregate commitments up to $365.0 million, subject to new or existing lenders agreeing to participate in the increase and other customary conditions.

Previous wording

Pursuant to the Fourth Amendment to the Amended and Restated Senior Secured Revolving Credit Agreement, the Credit Facility will bear interest, subject to our election, on a per annum basis equal to (i) term SOFR plus 2.50% (or 2.75% during certain periods in which our asset coverage ratio is equal to or below 1.90 to 1.00) plus a SOFR credit spread adjustment (0.10% for one-month term SOFR and 0.15% for three-month term SOFR), with a 0.25% SOFR floor, or (ii) 1.50% (or 1.75% during certain periods in which the our asset coverage ratio is equal to or below 1.90 to 1.00) plus an alternate base rate based on the highest of the prime rate (subject to a 3% floor), Federal Funds Rate plus 0.50% and one-month term SOFR plus 1.00%. We pay unused commitment fees of 0.50% per annum on the unused lender commitments under the Credit Facility. The commitment to fund the revolver expires on November 21, 2027, after which we may no longer borrow under the Credit Facility and must begin repaying principal equal to 1/12 of the aggregate amount outstanding under the Credit Facility each month. Any amounts borrowed under the Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on November 21, 2028.

Current wording

Pursuant to the Sixth Amendment to Amended and Restated Senior Secured Revolving Credit Agreement, the Credit Facility will bear interest, subject to the Company’s election, on a per annum basis equal to (i) term SOFR plus 2.25% (or 2.50% during certain periods in which the Company’s asset coverage ratio is equal to or below 1.90 to 1.00) with a 0.25% SOFR floor, or (ii) 1.25% (or 1.50% during certain periods in which the Company’s asset coverage ratio is equal to or below 1.90 to 1.00) plus an alternate base rate based on the highest of the prime rate (subject to a 3% floor), Federal Funds Rate plus 0.50% and one-month term SOFR plus 1.00%. The Company pays unused commitment fees of 0.50% per annum on the unused lender commitments under the Credit Facility. The commitment to fund the revolver expires on September 11, 2029, after which the Company may no longer borrow under the Credit Facility and must begin repaying principal equal to 1/12 of the aggregate amount outstanding under the Credit Facility each month. Any amounts borrowed under the Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on September 11, 2030.

Previous wording

As of June 30, 2025 and December 31, 2024, $163.1 million and $175.4 million, respectively, was outstanding under the Credit Facility. The carrying amount of the amount outstanding under the Credit Facility approximates its fair value. The fair value of the Credit Facility is determined in accordance with Accounting Standards Codification (“ASC”) Topic 820,Fair Value Measurements and Disclosures(“ASC 820”), which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Credit Facility is estimated based upon market interest rates for our own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. We incurred costs of $7.3 million in connection with the current Credit Facility, which are being amortized over the life of the facility. Additionally, $0.3 million of costs from a prior credit facility will continue to be amortized over the remaining life of the Credit Facility. As of June 30, 2025 and December 31, 2024, $2.4 million and $3.1 million of such prepaid loan structure fees and administration fees had yet to be amortized, respectively. These prepaid loan fees are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

Current wording

As of September 30, 2025 and December 31, 2024, $167.6 million and $175.4 million, respectively, was outstanding under the Credit Facility. The carrying amount of the amount outstanding under the Credit Facility approximates its fair value. The fair value of the Credit Facility is determined in accordance with Accounting Standards Codification (“ASC”) Topic 820,Fair Value Measurements and Disclosures(“ASC 820”), which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Credit Facility is estimated based upon market interest rates for our own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. We incurred costs of $8.8 million in connection with the current Credit Facility, which are being amortized over the life of the facility. Additionally, $0.3 million of costs from a prior credit facility will continue to be amortized over the remaining life of the Credit Facility. As of September 30, 2025 and December 31, 2024, $3.6 million and $3.1 million of such prepaid loan structure fees and administration fees had yet to be amortized, respectively. These prepaid loan fees are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

Previous wording

Interest is paid monthly or quarterly in arrears. The following table summarizes the interest expense and amortized loan fees on the Credit Facility for the three and six months ended June 30, 2025 and 2024 (dollars in millions):

Current wording

Interest is paid monthly or quarterly in arrears. The following table summarizes the interest expense and amortized loan fees on the Credit Facility for the three and nine months ended September 30, 2025 and 2024 (dollars in millions):

Previous wording

Due to the SBIC subsidiaries’ status as Small Business Investment Companies (“SBICs”), we have the ability to issue debentures guaranteed by the SBA at favorable interest rates (“SBA-guaranteed debentures”). Under the regulations applicable to SBICs, a single licensee can have outstanding SBA-guaranteed debentures, subject to a regulatory leverage limit, up to two times the amount of regulatory capital. As of both June 30, 2025 and December 31, 2024, the SBIC subsidiary had $75.0 million in “regulatory capital,” as such term is defined by the SBA, and $133.8 million and $150.0 million of SBA-guaranteed debentures outstanding, respectively.

Current wording

Due to the SBIC subsidiaries’ status as small business investment companies (“SBICs”), we have the ability to issue debentures guaranteed by the SBA at favorable interest rates (“SBA-guaranteed debentures”). Under the regulations applicable to SBICs, a single licensee can have outstanding SBA-guaranteed debentures, subject to a regulatory leverage limit, up to two times the amount of regulatory capital. As of both September 30, 2025 and December 31, 2024, the SBIC I subsidiary had $75.0 million in “regulatory capital,” as such term is defined by the SBA, and $124.0 million and $150.0 million of SBA-guaranteed debentures outstanding, respectively.

Previous wording

On a stand-alone basis, the SBIC subsidiaries held $497.7 million and $510.1 million in assets at June 30, 2025 and December 31, 2024, respectively, which accounted for approximately 48.1% and 52.0% of our total consolidated assets, respectively.

Current wording

On a stand-alone basis, the SBIC subsidiaries held $483.8 million and $510.1 million in assets at September 30, 2025 and December 31, 2024, respectively, which accounted for approximately 47.0% and 52.0% of our total consolidated assets, respectively.

Previous wording

As of June 30, 2025, we have incurred $11.1 million in financing costs related to the SBA-guaranteed debentures since the SBIC subsidiaries received their licenses, which were recorded as prepaid loan fees. As of June 30, 2025 and December 31, 2024, $3.4 million and $3.7 million of prepaid financing costs had yet to be amortized, respectively. These prepaid loan fees are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

Current wording

As of September 30, 2025, we have incurred $11.1 million in financing costs related to the SBA-guaranteed debentures since the SBIC subsidiaries received their licenses, which were recorded as prepaid loan fees. As of September 30, 2025 and December 31, 2024, $3.2 million and $3.7 million of prepaid financing costs had yet to be amortized, respectively. These prepaid loan fees are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

Previous wording

The following table summarizes the interest expense and amortized fees on the SBA-guaranteed debentures for the three and six months ended June 30, 2025 and 2024 (dollars in millions):

Current wording

The following table summarizes the interest expense and amortized fees on the SBA-guaranteed debentures for the three and nine months ended September 30, 2025 and 2024 (dollars in millions):

Previous wording

As of both June 30, 2025 and December 31, 2024, the aggregate carrying amount of the 2026 Notes Payable was approximately $100.0 million. The 2026 Notes Payable are institutional, non-traded notes.

Current wording

On September 30, 2025, the Company prepaid $50.0 million in aggregate principal of the 2026 Notes. For the three and nine months ended September 30, 2025, the Company recorded a make-whole payment of $0.1 million and accelerated $0.1 million of unamortized upfront fees which are recognized as a loss on debt extinguishment in the Consolidated Statements of Operations. As of September 30, 2025 and December 31, 2024, the aggregate carrying amount of the 2026 Notes Payable was approximately $49.9 million and $99.4 million, respectively. The 2026 Notes Payable are institutional, non-traded notes.

Previous wording

In connection with the issuance of the 2026 Notes Payable, we have incurred $2.3 million of fees, which are being amortized over the term of the 2026 Notes Payable, of which $0.3 million and $0.6 million remains to be amortized as of June 30, 2025 and December 31, 2024, respectively. These financing costs are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

Current wording

In connection with the issuance of the 2026 Notes Payable, we have incurred $2.3 million of fees, which are being amortized over the term of the 2026 Notes Payable, of which $0.1 million and $0.6 million remains to be amortized as of September 30, 2025 and December 31, 2024, respectively. These financing costs are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

Previous wording

The following table summarizes the interest expense and deferred financing costs on the 2026 Notes Payable for the three and six months ended June 30, 2025 and 2024 (dollars in millions):

Current wording

The following table summarizes the interest expense and deferred financing costs on the 2026 Notes Payable for the three and nine months ended September 30, 2025 and 2024 (dollars in millions):

Previous wording

On April 1, 2025, we issued $75.0 million in aggregate principal amount of 7.250% fixed-rate notes due 2030 (the “2030 Notes Payable” and together with the 2026 Notes Payable, the “Notes Payable”). The 2030 Notes Payable will mature on April 1, 2030 and may be redeemed in whole or in part at any time or from time to time at our option on or after October 1, 2029, at a redemption price equal to 100% of the outstanding principal, plus accrued and unpaid interest. Interest on the 2030 Notes Payable is payable semi-annually beginning October 1, 2025. As of June 30, 2025, the aggregate carrying amount of the 2030 Notes Payable was approximately $75.0 million. The Notes Payable are institutional, non-traded notes.

Current wording

On April 1, 2025 and September 25, 2025, we issued $75.0 million and $50.0 million, respectively, in aggregate principal amount of 7.250% fixed-rate notes due 2030 (the “2030 Notes Payable” and together with the 2026 Notes Payable, the “Notes Payable”). The 2030 Notes Payable will mature on April 1, 2030 and may be redeemed in whole or in part at any time or from time to time at our option on or after October 1, 2029, at a redemption price equal to 100% of the outstanding principal, plus accrued and unpaid interest. Interest on the 2030 Notes Payable is payable semi-annually beginning October 1, 2025. As of September 30, 2025, the aggregate carrying amount of the 2030 Notes Payable was approximately $122.6 million. The Notes Payable are institutional, non-traded notes.

Previous wording

In connection with the issuance and maintenance of the 2030 Notes Payable, we have incurred $2.5 million of fees, which are being amortized over the term of the 2030 Notes Payable. As of June 30, 2025, $2.4 million of prepaid financing costs had yet to be amortized. These financing costs are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

Current wording

In connection with the issuance and maintenance of the 2030 Notes Payable, we have incurred $2.6 million of fees, which are being amortized over the term of the 2030 Notes Payable. As of September 30, 2025, $2.4 million of prepaid financing costs had yet to be amortized. These financing costs are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.