Stellus Capital Investment Corp

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 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.

Current wording

Economic activity has continued to accelerate across sectors and regions. Nonetheless, we have observed and continue to observe macroeconomic uncertainty as a result of various events and trends, including labor resource shortages, commodity inflation, fluctuating interest rates, 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 on the United States or against its trading partners, and the global conflict in the Middle East, including Iran. 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

We originate and invest primarily in privately held lower middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA) with a focus on investing through first lien (including unitranche) loans, often with a corresponding equity investmen.

Current wording

We originate and invest primarily in privately held lower middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA) through first lien (including unitranche), second lien, and unsecured debt financing, often with a corresponding equity investment.

Previous wording

As of December 31, 2024, we had $953.5 million (at fair value) invested in 105 portfolio companies. As of December 31, 2024, our portfolio included approximately 90% of first lien debt, 1% of second lien debt, 1% of unsecured debt and 8% of equity investments at fair value. The composition of our investments at cost and fair value as of December 31, 2024 was as follows:

Current wording

As of March 31, 2026, we had $990.0 million (at fair value) invested in 116 portfolio companies. As of March 31, 2026, our portfolio included approximately 90% of first lien debt (including unitranche investments), 1% of second lien debt, 0% of unsecured debt and 9% of equity investments at fair value. The composition of our investments at cost and fair value as of March 31, 2026 was as follows:

Previous 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:

Current wording

As of December 31, 2025, we had $1,007.6 million (at fair value) invested in 115 portfolio companies. As of December 31, 2025, our portfolio included approximately 90% of first lien debt (including unitranche investments), 1% of second lien debt, 0% of unsecured debt and 9% of equity investments at fair value. The composition of our investments at cost and fair value as of December 31, 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 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.

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 March 31, 2026 and December 31, 2025, we had unfunded commitments of $48.2 million and $53.4 million, respectively, to provide financing to 76 and 77 portfolio companies, respectively. As of March 31, 2026, 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

The following is a summary of geographical concentration of our investment portfolio as of September 30, 2025:

Current wording

The following is a summary of geographical concentration in our investment portfolio as of March 31, 2026:

Previous wording

The following is a summary of geographical concentration of our investment portfolio as of December 31, 2024:

Current wording

The following is a summary of geographical concentration of in investment portfolio as of December 31, 2025:

Previous wording

The following is a summary of industry concentration of our investment portfolio as of September 30, 2025:

Current wording

The following is a summary of industry concentration in our investment portfolio as of March 31, 2026:

Previous wording

The following is a summary of industry concentration of our investment portfolio as of December 31, 2024:

Current wording

The following is a summary of industry concentration in our investment portfolio as of December 31, 2025:

Previous 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.

Current wording

At March 31, 2026, our average portfolio company investment at amortized cost and fair value was approximately $8.8 million and $8.5 million, respectively, and our largest portfolio company investment at amortized cost and fair value was approximately $28.0 million and $18.5 million, respectively. At December 31, 2025, our average portfolio company investment at amortized cost and fair value was approximately $8.9 million and $8.7 million, respectively, and our largest portfolio company investment at amortized cost and fair value was approximately $26.1 million and $19.2 million, respectively.

Previous 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.

Current wording

At March 31, 2026 and December 31, 2025, 91.5% and 91.6% of our debt investments bore interest based on floating rates (subject to interest rate floors), such as the Secured Overnight Financing Rate (“SOFR”), respectively, and 8.5% and 8.4% bore interest at fixed rates, respectively.

Previous 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.

Current wording

The weighted average yield on all of our debt investments as of March 31, 2026 and December 31, 2025 was approximately 9.0% and 9.3%, respectively. The weighted average yield on all of our investments, including non-income producing equity positions, as of March 31, 2026 and December 31, 2025 was approximately 8.5% and 8.7%, 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 September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $9.0 million and $20.1 million, respectively.

Current wording

As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $3.4 million and $25.1 million, respectively.

Previous 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.

Current wording

During the three months ended March 31, 2026, we made an aggregate of $27.7 million of investments in three new portfolio companies and nine existing portfolio companies. During the three months ended March 31, 2026, we received an aggregate of $41.7 million in proceeds from repayments of our investments.

Previous 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.

Current wording

During the three months ended March 31, 2025, we made an aggregate of $55.4 million of investments in seven new portfolio companies and five existing portfolio companies. During the three months ended March 31, 2025, we received an aggregate of $15.0 million in proceeds from repayments of our investments.

Previous wording

Our level of investment activity can vary substantially from period to period depending on many factors, including the amount of debt and equity capital to lower middle-market companies, the level of merger and acquisition activity, the general economic environment and the competitive environment for the types of investments we make.

Current wording

Our level of investment activity can vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to lower middle-market companies, the level of merger and acquisition activity in that sector, the general economic environment and the competitive environment for the types of investments we make.

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 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.

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 March 31, 2026, we had loans to six portfolio companies that were on non-accrual status, which represented approximately 9.2% of our total investments at cost and 5.2% at fair value. As of December 31, 2025, we had loans to five portfolio companies that were on non-accrual status, which represented approximately 7.5% of our total investments at cost and 4.1% at fair value. As of March 31, 2026 and December 31, 2025, $13.2 million and $11.2 million of income from investments on non-accrual had not been accrued, respectively.

Previous wording

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

Current wording

Comparison of the Three Months Ended March 31, 2026 and 2025

Previous wording

We generate revenue in the form of interest income on debt investments and capital gains and distributions, if any, on investment securities that we may acquire in portfolio companies. Our debt investments typically have a term of five to seven years and bear interest primarily at floating rates. Interest on our debt securities is generally payable quarterly. Payments of principal on our debt investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some cases, our debt investments may pay interest in-kind, or PIK interest. Any outstanding principal amount of our debt securities and any accrued but unpaid interest will generally become due at the maturity date. The level of interest income we receive is directly related to the balance of interest-bearing investments multiplied by the weighted average yield of our investments. We expect that the total dollar amount of interest and any dividend income that we earn will increase as the size of our investment portfolio increases. In addition, we may generate revenue in the form of prepayment fees, commitment, loan origination, structuring or due diligence fees, fees for providing significant managerial assistance and consulting fees.

Current wording

We generate revenue in the form of interest income on debt investments and capital gains and distributions, if any, on equity securities that we may acquire in portfolio companies. Our debt investments typically have a term of five to seven years and bear interest primarily at floating rates. Interest on our debt investments is generally payable quarterly. Payments of principal on our debt investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some cases, our debt investments may pay interest in-kind, or PIK interest. Any outstanding principal amount of our debt securities and any accrued but unpaid interest will generally become due at the maturity date. The level of interest income we receive is directly related to the balance of interest-bearing investments multiplied by the weighted average yield of our investments. We expect that the total dollar amount of interest and any dividend income that we earn will increase as the size of our investment portfolio increases. In addition, we may generate revenue in the form of prepayment fees, commitment, loan origination, structuring or due diligence fees, fees for providing significant managerial assistance and consulting fees.

Previous wording

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

Current wording

The following shows the breakdown of investment income for the three months ended March 31, 2026 and 2025 (in millions).

Previous 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.

Current wording

The decrease in investment income for the three months ended March 31, 2026 was due primarily to a decrease in prevailing market rates on our loans, typically in reference to the SOFR.

Previous wording

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

Current wording

The following shows the breakdown of operating expenses for the three months ended March 31, 2026 and 2025 (in millions).

Previous 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.

Current wording

The decrease in gross operating expenses for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was due to the decrease in income incentive fees, offset by higher management fees and interest expense due to overall portfolio growth, and increased professional fees. The increase in net operating expenses for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was due to the decrease in income incentive fees waived.

Previous 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.

Current wording

Net investment income for the three months ended March 31, 2026 decreased compared to the three months ended March 31, 2025 as a result of decreased interest income as explained in the “Revenues” section above and higher operating expenses as explained in the “Expenses” section above.

Previous 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.

Current wording

Net change in unrealized (depreciation) appreciation on investments and cash equivalents for the three months ended March 31, 2026 and 2025 totaled ($6.5) million and $1.2 million, respectively.

Previous 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.

Current wording

The change in unrealized (depreciation) appreciation over the respective periods was primarily due to company-specific write-downs, partially offset by realizations on investments previously written up.

Previous wording

Benefit for Taxes on Unrealized Investments

Current wording

Provision for Taxes on Unrealized Investments

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 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.

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 months ended March 31, 2026 and 2025, we recognized a provision for income tax on unrealized investments of $0.0 million for the Taxable Subsidiaries. As of both March 31, 2026 and December 31, 2025, there was $0.0 million of deferred tax liabilities on the Consolidated Statements of Assets and Liabilities.

Previous 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.

Current wording

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

Previous 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.

Current wording

Our operating activities provided net cash of $22.8 million for the three months ended March 31, 2026, primarily in connection with sales and repayments of portfolio investments, partially offset by the purchase of portfolio investments. Our financing activities for the three months ended March 31, 2026 used cash of $44.5 million, primarily from repayments of SBA-guaranteed debentures.

Previous 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.

Current wording

Our operating activities used net cash of $36.9 million for the three months ended March 31, 2025, primarily in connection with the purchase of portfolio investments, partially offset by and sales and repayments of portfolio investments. Our financing activities for the three months ended March 31, 2025 provided cash of $27.8 million, primarily from proceeds from our ATM Program and net borrowings on our Credit Facility, partially offset by repayments of SBA-guaranteed debentures.

Previous wording

Although we expect to fund the growth of our investment portfolio through the net proceeds from future public and private equity offerings and issuances of senior securities or future borrowings to the extent permitted by the 1940 Act, our plans to raise capital may not be successful. In this regard, if our common stock trades at a price below our then-current net asset value per share, we may be limited in our ability to raise equity capital given that we cannot sell our common stock at a price below net asset value per share unless our stockholders approve such a sale and our Board makes certain determinations in connection therewith. A proposal approved by our stockholders at our 2025 annual stockholders meeting authorizes us to sell up to 25% of our outstanding common shares at a price equal to or below the then-current net asset value per share in one or more offerings. This authorization will expire on the earlier of (i) June 17, 2026, the one-year anniversary of our 2025 annual stockholders meeting, and (ii) the date of our 2026 annual stockholder meeting. We would need similar future approval from our stockholders to issue shares below the then-current net asset value per share any time after the expiration of the current approval. In addition, we intend to distribute between 90% and 100% of our taxable income to our stockholders in order to satisfy the requirements applicable to RICs under Subchapter M of the Code. Consequently, we may not have the funds or the ability to fund new investments, to make additional investments in our portfolio companies, to fund our unfunded commitments to portfolio companies or to repay borrowings. In addition, the illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value.

Current wording

our ability to raise equity capital given that we cannot sell our common stock at a price below net asset value per share unless our stockholders approve such a sale and our Board makes certain determinations in connection therewith. A proposal, approved by our stockholders at our 2025 annual stockholders meeting, authorizes us to sell up to 25% of our outstanding common shares at a price equal to or below the then-current net asset value per share in one or more offerings. This authorization will expire on the earlier of (i) June 17, 2026, the one-year anniversary of our 2025 annual stockholders meeting, and (ii) the date of our 2026 annual stockholder meeting. We would need similar future approval from our stockholders to issue shares below the then-current net asset value per share any time after the expiration of the current approval. In addition, we intend to distribute between 90% and 100% of our taxable income to our stockholders in order to satisfy the requirements applicable to RICs under subchapter M of the Code. Consequently, we may not have the funds available to allow us to fund new investments, to make additional investments in our portfolio companies, to fund our unfunded commitments to portfolio companies or to repay borrowings. In addition, the illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value.

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 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.

Current wording

Under the provisions of the 1940 Act, we are permitted, as a BDC that has satisfied certain requirements, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of our gross assets, less all liabilities and indebtedness not represented by senior securities after each issuance of senior securities. As of March 31, 2026 and December 31, 2025, our asset coverage ratio was 199% and 203%, 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 March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $3.4 million and $25.1 million, respectively.

Previous wording

On October 11, 2017, we entered into a senior secured revolving credit agreement, as amended, dated as of October 10, 2017, that was amended and restated on December 21, 2021, February 28, 2022, May 13, 2022, November 21, 2023, October 30, 2024 and September 11, 2025 with Zions Bancorporation, N.A., dba Amegy Bank and various other lenders (the “Credit Facility”).

Current wording

We have entered into a senior secured revolving credit agreement, dated as of October 10, 2017, with Zions Bancorporation, N.A., dba Amegy Bank and various other lenders thereto (as amended and restated on September 18, 2020 and amended on December 21, 2021, February 28, 2022, May 13, 2022, November 21, 2023, October 30, 2024 and September 11, 2025.

Previous 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.

Current 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.

Previous 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.

Current wording

Pursuant to its terms, the Credit Facility will bear interest, subject to our election, on a per annum basis equal to (i) term SOFR plus 2.25% (or 2.50% during certain periods in which our 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 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 September 11, 2029, 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 September 11, 2030. Our obligations to the lenders are secured by a first priority security interest in our portfolio of securities and cash not held at the SBIC subsidiaries, but excluding short-term investments. The Credit Facility contains certain covenants, including but not limited to: (i) maintaining a minimum liquidity test of at least $10.0 million, including cash, liquid investments and undrawn availability, (ii) maintaining an asset coverage ratio of at least 1.67 to 1.00, (iii) maintaining a minimum stockholder’s equity, and (iv) maintaining a minimum interest coverage ratio of at least 1.75 to 1.00. As of March 31, 2026 and December 31, 2025, we were in compliance with these covenants.

Previous 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.

Current wording

As of March 31, 2026 and December 31, 2025, $241.5 million and $236.6 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 $8.9 million in connection with the current Credit Facility, which are being amortized over the life of the facility.

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 nine months ended September 30, 2025 and 2024 (dollars in millions):

Current wording

Interest is paid quarterly in arrears. The following table summarizes the interest expense and amortized loan fees on the Credit Facility for the three months ended March 31, 2026 and 2025 (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 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.

Current wording

Due to the SBIC subsidiaries’ status as licensed SBICs, we can issue debentures guaranteed by the SBA at favorable interest rates. 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 March 31, 2026 and December 31, 2025, the SBIC I subsidiary had 73.6 million and $75.0 million in “regulatory capital,” respectively, as such term is defined by the SBA, and $85.0 million and $124.0 million of SBA-guaranteed debentures outstanding, respectively. During the three months ended March 31, 2026, the SBIC I subsidiary repaid $39.0 million of SBA-guaranteed debentures that matured during the period. As of both March 31, 2026 and December 31, 2025, the SBIC II subsidiary had $87.5 million in regulatory capital and $175.0 million of SBA-guaranteed debentures outstanding.

Previous wording

On August 12, 2014, we obtained exemptive relief from the SEC to permit us to exclude the debt of the SBIC subsidiaries guaranteed by the SBA from our 150% asset coverage test under the 1940 Act. The exemptive relief provides us with increased flexibility under the 150% asset coverage test by permitting us to borrow up to $325.0 million more than we would otherwise be able to absent the receipt of this exemptive relief.

Current wording

On August 12, 2014, we obtained exemptive relief from the SEC to permit us to exclude debt of the SBIC subsidiaries guaranteed by the SBA for purposes of complying with 150% asset coverage test under the 1940 Act. The exemptive relief provides us with increased flexibility under the 150% asset coverage test by permitting us to borrow up to $325.0 million more than we would otherwise be able to absent the receipt of this exemptive relief.