SARATOGA INVESTMENT CORP.
For the period ended Feb 28, 2026. Filed May 5, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed May 5, 2026
SAR$12.96+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-02-28; filed 2025-05-07.
0001213900-25-040617
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2026-02-28; filed 2026-05-05.
0001213900-26-052176
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 274 previous paragraphs and 303 current paragraphs.
176 unchanged; 70 reworded; 39 added; 24 removed; 4 previous and 18 current paragraphs rearranged.
Tables are not compared: 117 previous and 138 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
On September 24, 2025, the Company completed the first refinancing of SLF 2022. This refinancing, among other things, extended SLF 2022’s investment period to October 2028. As part of this refinancing, the Company purchased $8.8 million of the SLF 2022-1 Class E-R Notes tranche at par. Concurrently, the existing $12.3 million of the SLF 2022-1 Class E Notes were repaid. The Company also paid $1.6 million of additional equity investment related to the refinancing of SLF JV. As of February 28, 2026, the fair value of the Class E-R Notes was $8.4 million.
Current report
The Company’s investments in CLO BB and CLO BBB debt have been valued using recent actual market trades or an independent pricing service. The valuation methodology of the independent pricing service includes incorporating data comprised of observable market transactions, executable bids, broker quotes from dealers with two sided markets, as well as transaction activity from comparable securities to those being valued. As the independent pricing service contemplates real-time market data and no unobservable inputs or significant judgment has been used by Saratoga Investment Advisors in the valuation of the Company’s investments in CLO BB and CLO BBB debt, such positions are considered level II assets.
Current report
For the fiscal year ended February 28, 2026, we had $184.6 million of sales, repayments, exits or restructurings resulting in $5.7 million of net realized gains. The most significant realized gains and losses during the year ended February 28, 2026 were as follows (dollars in thousands):
Current report
The $2.1 million of net realized gains was from the sale of the equity position in our Axiom Parent Holdings, LLC investment.
Current report
We received escrow payments from the prior sales of our investments in HemaTerra Holdings Company, LLC and Netreo Holdings, LLC.
Current report
The $3.2 million of net realized gains was from the sale of the equity position in our Identity Automation Systems investment.
Current report
The $0.5 million of net realized losses was from the sale of the equity position in our Roscoe Medical, Inc. investment.
Current report
The $3.6 million net change in unrealized depreciation in our investment in Saratoga Senior Loan Fund I JV, LLC was primarily driven by the impact of the performance of individual credits in the portfolio.
Current report
The $3.2 million net change in unrealized depreciation in our investment in Exigo, LLC was primarily driven by overall company performance.
Current report
The $1.9 million net change in unrealized depreciation in our investment in Madison Logic, Inc. was primarily driven by overall company performance.
Current report
The $8.0 million net change in unrealized appreciation in our investment in Zollege PBC was primarily driven by improved company performance.
Current report
The $1.1 million net change in unrealized appreciation in our investment in Modis Dental Partners OpCo was primarily driven by overall market conditions.
Current report
Fiscal year ended February 29, 2024
Current report
Commitment. The Encina Credit Agreement provided for borrowings up to $65.0 million (the “Encina Facility Amount”).
Current report
The Encina Credit Facility contained limitations on the type of loan assets that were “eligible” to be included in the borrowing base and as to the concentration level of certain categories of loan assets in the borrowing base such as restrictions on geographic and industry concentrations, asset size and quality, payment frequency, status and terms, average life, and collateral interests. In addition, if an asset was to remain an “eligible” loan asset, we could not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent of the administrative agent that would either result in subordination of the loan asset or be materially adverse to the lenders.
Current report
Collateral Tests. It was a condition precedent to any borrowing under the Encina Credit Facility that the principal amount outstanding under the Encina Credit Facility, after giving effect to the proposed borrowings, not exceed the borrowing base (the “Borrowing Base Test”). In addition to satisfying the Borrowing Base Test, the following tests must also be satisfied (together with Borrowing Base Test, the “Collateral Tests”):
Current report
Priority of Payments. The priority of payments provisions of the Encina Credit Facility required, after payment of specified fees and expenses, that collections of interest from the loan assets and, to the extent that these are insufficient, collections of principal from the loan assets, be applied on each payment date to payment of outstanding borrowings if the Borrowing Base Test, the Overcollateralization Ratio and the Interest Coverage Ratio would not otherwise be met.
Current report
Operating Expenses. The priority of payments provision of the Encina Credit Facility provided for the payment of certain of our operating expenses out of collections on interest and principal in accordance with the priority established in such provision. The operating expenses payable pursuant to the priority of payment provisions was limited to $200,000 per annum.
Current report
Covenants; Representations and Warranties; Events of Default. The Encina Credit Agreement contained customary representations and warranties, affirmative covenants, negative covenants and events of default. The Encina Credit Agreement did not contain grace periods for breach by us of any negative covenants or of certain of the affirmative covenants, including, without limitation, those related to preservation of the existence and separateness of the Company. Other events of default under the Encina Credit Agreement include, among other things, the following:
Current report
Live Oak Credit Facility
Current report
Below is a summary of the terms of the senior secured revolving credit facility we entered into with Live Oak Banking Company on March 27, 2024.
Current report
Collateral. The Live Oak Credit Facility is secured by assets of Saratoga Investment Funding III LLC (“SIF III”) and pledged to Live Oak under the Live Oak Credit Facility. SIF III is a wholly owned special purpose entity formed for the purpose of entering into the Live Oak Credit Facility.
Current report
The Live Oak Credit Facility also may require payment of outstanding borrowings or replacement of pledged loan assets upon our breach of our representation and warranty that pledged loan assets included in the borrowing base are “eligible” loan assets. Such ineligible collateral loans will be excluded from the calculation of the borrowing base and may lead to a Borrowing Base Deficiency, which may be cured by effecting one or more (or any combination thereof) of the following actions: (A) deposit into or credit to the Collection Account cash and Eligible Investments, (B) repay Advances (together with all accrued and unpaid costs and expenses of the Agents, Custodian, Collateral Administrator, Securities Intermediary and the Lenders), (C) sell or substitute Collateral Loans in accordance with Article X, or (D) pledge additional Collateral Loans as Collateral.
Current report
Fees and Expenses. We paid certain fees and reimbursed Live Oak Lender Finance, LLC for the aggregate amount of all documented, out-of-pocket costs and expenses, including the reasonable fees and expenses of lawyers, incurred by Live Oak Banking Company in connection with the Live Oak Credit Facility and the carrying out of any and all acts contemplated thereunder up to and as of the date of closing. These amounts totaled $0.8 million.
Current report
Valley Credit Facility
Current report
Below is a summary of the terms of the senior secured revolving credit facility we entered into with Valley on November 6, 2025.
Current report
Availability. SIF II can draw up to the lesser of (i) the Valley Facility Amount and (ii) the borrowing base. The borrowing base is an amount equal to (i) the difference of (x) the Aggregate Borrowing Base Value less (y) the Excess Concentration Amount,plus (ii) the amount on deposit in the Pre-Funding Accountplus, without duplication, the amount of Excess Cash on deposit in the Collection Account,minus (iii) the product of (A) with respect to each Delayed Drawdown Collateral Loan, the portion of the Unfunded Exposure Amount attributable to such Delayed Drawdown Collateral Loanmultiplied by (B) the Unfunded Exposure Haircut Percentage with respect to such Delayed Drawdown Collateral Loan,minus (iv) the Availability Block, in each case, as of such date. Each loan asset we held as of the date on which the Valley Credit Facility was closed was valued as of that date and each loan asset that we acquire after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase price paid for such loan asset. Adjustments to the value of a loan asset will be made to reflect, among other things and under certain circumstances, changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan asset, and certain modifications to the terms of the loan asset.
Current report
The Valley Credit Facility requires a minimum drawn amount at all times equal to the greater of $25.0 million or 38% of the facility amount in effect at such time.
Current report
Interest Rate and Fees. Under the Valley Credit Facility, funds may be borrowed from or through certain lenders at a floating rate per annum equal to Term SOFR plus an applicable margin of 2.85%, with a SOFR Floor of 1.00%. In addition, SIF II is required to pay an unused fee on the amount by which the commitment amount exceeds outstanding principal amounts on each day at a rate per annum equal to 0.75% if the unused amount is greater than 62% of the commitment amount, or otherwise 0.50%. We were also obligated to pay certain other fees to the lenders in connection with the closing of the Valley Credit Facility.
Current report
Fees and Expenses. We paid certain fees and reimbursed Valley for the aggregate amount of all documented, out-of-pocket costs and expenses, including the reasonable fees and expenses of lawyers, incurred by Valley in connection with the Valley Credit Facility and the carrying out of any and all acts contemplated thereunder up to and as of the date of closing. These amounts totaled $1.4 million.
Current report
As of February 28, 2026, we had $32.5 million outstanding borrowings under the Valley Credit Facility. Our borrowing base under the Valley Credit Facility at February 28, 2026 was $77.1 million.
Current report
SBA Debentures
Current report
SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to eligible small businesses and invest in the equity securities of small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $24.0 million and have average annual fully taxed net income not exceeding $8.0 million for the two most recent fiscal years. In addition, an SBIC must devote 25.0% of its investment activity to “smaller enterprises” as defined by the SBA. A smaller enterprise is one that has a net worth not exceeding $6.0 million and has an average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services.
Current report
The SBIC Subsidiaries are able to borrow funds from the SBA against each SBIC’s regulatory capital (which generally approximates equity capital in the respective SBIC). The SBIC Subsidiaries are subject to customary regulatory requirements including but not limited to, a periodic examination by the SBA and requirements to maintain certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure that the SBIC Subsidiaries will receive SBA-guaranteed debenture funding, which is dependent upon the SBIC Subsidiaries complying with SBA regulations and policies. The SBA, as a creditor, will have a superior claim to each SBIC Subsidiary’s assets over the Company’s stockholders and debtholders in the event that the Company liquidates such SBIC Subsidiary or the SBA exercises its remedies under the SBA-guaranteed debentures issued by the SBIC Subsidiary upon an event of default.
Current report
7.50% 2031 Notes
Current report
On February 6, 2026, we issued $100.0 million in aggregate principal amount of 7.50% fixed-rate notes due 2031 (the “7.50% 2031 Notes”) for net proceeds were approximately $96.7 million, after deducting the underwriting commission of approximately $3.1 million and estimated offering costs of approximately $0.2 million. Interest on the 7.50% 2031 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.50% per year, commencing May 31, 2026. The 7.50% 2031 Notes mature on February 6, 2031 and, commencing February 6, 2028, may be redeemed in whole or in part at any time or from time to time at our option. Net proceeds from this offering, together with available cash, were used to pay off the outstanding 4.375% 2026 Notes at maturity on February 28, 2026. Financing costs of $0.04 million related to the 7.50% 2031 Notes have been capitalized and are being amortized over the term of the 7.50% 2031 Notes. The 7.50% 2031 Notes are listed on the NYSE under the trading symbol “SAV” with a par value of $25.00 per note.
Current report
As of February 28, 2026, the total amount of 7.50% 2031 Notes outstanding was $100.0 million.
Current report
On April 10, 2026, the Company issued $25.0 million in aggregate principal amount of 7.25% fixed-rate notes due 2029 (the “7.25% 2029 Notes”) for net proceeds of approximately $24.5 million, based on an offering price of 98.00% per Note. Estimated offering costs incurred were approximately $0.2 million. Interest on the 7.25% 2029 Notes is paid quarterly on February 28, May 31, August 31 and November 30 of each year, beginning on May 31, 2026. The Notes will mature on April 10, 2029, and may be extended to October 10, 2029, at the sole discretion of the Company. The Notes may be redeemed at the Company’s option, in whole or in part at any time, or from time to time on or after April 10, 2027, at the redemption price of par, plus accrued and unpaid interest. The Company intends to use the net proceeds from the offering for general corporate purposes in accordance with the Company’s investment objective and strategies. Pursuant to the terms of the Notes Purchase Agreement, upon the mutual agreement of the Company and the Purchaser, the Company may issue additional Notes for sale in one or more subsequent private offerings by July 10, 2026, in an aggregate amount of up to $25.0 million, resulting in a total maximum issuance of $50.0 million.
Current report
In addition, holders of the 7.25% 2029 Notes will have the option to have the 7.25% 2029 Notes repaid prior to the stated maturity date if (i) the Company is no longer directly managed by Saratoga Investment Advisors or any of its affiliates, or if two or more of Christian L. Oberbeck, Michael J. Grisius, Thomas V. Inglesby, Charles G. Phillips or Henri J. Steenkamp cease to work or be employed on a full-time basis with respect to the business of Saratoga Investment Advisors at least the duties and responsibilities delegated to him as of the date of the Seventeenth Supplemental Indenture and has not been promptly replaced by another person reasonably acceptable by the holders of the Notes; or (ii) the Company violates Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act as in effect as of the date of the Seventeenth Supplemental Indenture, but giving effect to any exemptive relief granted to the Company by the SEC.
Removed paragraphs (24)
Previous report
On October 28, 2022, SLF 2022 issued $402.1 million of debt through the JV CLO trust. The 2022 JV CLO Notes were issued pursuant to the JV Indenture, with the Trustee. As part of the transaction, we purchased 87.50% of the Class E Notes from SLF 2022 with a par value of $12.25 million. As of February 28, 2025 and February 29, 2024, the fair value of these Class E Notes were $12.3 million and $12.3 million, respectively.
Previous report
For the fiscal year ended February 28, 2023, we had $222.2 million of sales, repayments, exits or restructurings resulting in $7.4 million of net realized loss. The most significant realized gains and losses during the year ended February 28, 2023 were as follows (dollars in thousands):
Previous report
For the year ended February 28, 2023, our investments had a net change in unrealized depreciation of $15.2 million compared to a net change in unrealized appreciation of $17.0 million for the year ended February 28, 2022. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended February 28, 2023, were the following (dollars in thousands):
Previous report
The $9.3 million net change in unrealized depreciation in our investment in Pepper Palace, Inc. was driven by overall company performance.
Previous report
The $2.1 million net change in unrealized appreciation in our investment in Artemis Wax Corp. was driven by improved financial performance.
Previous report
The $2.0 million net change in unrealized appreciation in our investment in Axero Holdings, LLC was driven by growth and overall strong financial performance.
Previous report
The $1.3 million net change in unrealized appreciation in our investment in Destiny Solutions Inc. was driven by growth and overall strong financial performance.
Previous report
The $1.2 million net change in unrealized depreciation in our investment in Zollege PBC was driven by weakened financial performance.
Previous report
The $2.4 million net change in unrealized depreciation in our investment in Netreo Holdings, LLC was driven by increased leverage and slowing top line growth.
Previous report
The $5.1 million net change in unrealized depreciation in our investment in PDDS Buyer, LLC was driven by the sale of that investment, resulting in a reversal of previously recognized unrealized appreciation reclassified to realized gains.
Previous report
The $4.1 million net change in unrealized depreciation in our investment in Saratoga Investment Corp. CLO 2013-1 Ltd. was driven by the increase in discount rates and overall market conditions.
Previous report
The $3.4 million net change in unrealized depreciation in our investment in Saratoga Senior Loan Fund I JV, LLC was driven by the increase in discount rates and overall market conditions.
Previous report
Live Oak Facility
Previous report
On March 27, 2024, the Company and its wholly owned special purpose subsidiary, SIF III, entered into a credit and security agreement (the “Live Oak Credit Agreement”), by and among SIF III, as borrower, the Company, as collateral manager and equityholder, the lenders from time to time parties thereto, Live Oak, as administrative agent and collateral agent, U.S. Bank National Association, as custodian, and U.S. Bank Trust Company, National Association, as collateral administrator, relating to Live Oak Credit Facility.
Previous report
The Live Oak Credit Facility originally provided for borrowings in U.S. dollars in an aggregate amount of up to $50.0 million. During the first two years following the closing date, SIF III may request one or more increases in the commitment amount from $50.0 million to an amount not to exceed $150.0 million, subject to certain terms and conditions and a customary fee. The terms of the Live Oak Credit Agreement require a minimum drawn amount of $12.5 million at all times during the period ending March 27, 2025 and, thereafter, the greater of: (i) $25.0 million and (ii) 50% of the facility amount in effect at such time. The Live Oak Credit Facility matures on March 27, 2027. Advances are available during the term of the Live Oak Credit Facility and must be repaid in full at maturity. SIF III may request an extension of the maturity date by an additional one year, subject to the agreement of the lenders and an extension fee.
Previous report
On June 14, 2024, the Company entered into the first amendment to the Live Oak Credit Agreement (the “Amendment”). The Amendment, among other things:
Previous report
Advances under the Live Oak Credit Facility are subject to a borrowing base calculation, and the Live Oak Credit Facility has various eligibility criteria for loans to be included in the borrowing base. Advances under the Live Oak Credit Facility bear interest at a floating rate per annum equal to Adjusted Term SOFR plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s utilization. The Live Oak Credit Agreement also provides for an unused fee of 0.50% on the unused commitments. SIF III’s obligations to the lenders under the Live Oak Credit Facility are secured by a first priority security interest in substantially all of SIF III’s assets. In addition, SIF III’s obligations to the lenders under the Live Oak Credit Facility are secured by a pledge by the Company of its equity interests in SIF III, which is evidenced by the equity pledge agreement, dated as of March 27, 2024, by and between the Company, as pledgor, and Live Oak, as collateral agent for the benefit of the secured parties.
Previous report
In connection with the Live Oak Credit Agreement, the Company entered into a loan sale and contribution agreement with SIF III, dated as of March 27, 2024, by and between the Company, as seller, and SIF III, as purchaser, pursuant to which the Company will sell or contribute certain loans held by the Company to SIF III to be used to support the borrowing base under the Live Oak Credit Facility. The Live Oak Credit Facility permits loan proceeds and excess cash in SIF III’s collection accounts to be distributed to us at any time based on three business days advance notice, subject to compliance with various conditions, including the absence of a default or event of default, the absence of an over-advance against the borrowing base and the absence of a violation of the financial covenants.
Previous report
SBA-guaranteed debentures
Previous report
The SBIC license allows our SBIC Subsidiaries to obtain leverage by issuing SBA-guaranteed debentures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest payable semi-annually and have a ten-year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with 10-year maturities.
Previous report
The SBIC Subsidiaries are regulated by the SBA. SBA regulations currently limit the amount that our SBIC Subsidiaries may individually borrow up to a maximum of $175.0 million of SBA debentures if the SBIC Subsidiary has at least $87.5 million in regulatory capital, subject to the SBA’s approval. Under current SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million. The SBIC Subsidiaries are able to borrow funds from the SBA against regulatory capital (which generally approximates equity capital in the respective SBIC) and are subject to customary regulatory requirements, including, but not limited to, periodic examination by the SBA.
Previous report
On June 24, 2020, we issued $37.5 million aggregate principal amount of our 7.25% 2025 Notes for net proceeds of $36.3 million after deducting underwriting commissions of approximately $1.2 million. Offering costs incurred were approximately $0.3 million. On July 6, 2020, the underwriters exercised their option in full to purchase an additional $5.625 million in aggregate principal amount of its 7.25% 2025 Notes. Net proceeds to the Company were $5.4 million after deducting underwriting commissions of approximately $0.2 million. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $1.6 million related to the 7.25% 2025 Notes have been capitalized and were amortized over the term of the 7.25% 2025 Notes.
Previous report
On July 14, 2022, we redeemed $43.1 million in aggregate principal amount of the issued and outstanding 7.25% 2025 Notes. The 7.25% 2025 Notes were listed on the NYSE under the trading symbol of “SAK” and have been delisted following the full redemption on July 14, 2022.
Previous report
The Company has evaluated subsequent events through the filing of this Form 10-K and determined that there have been no events that have occurred that would require adjustments to the Company’s consolidated financial statements and disclosures in the consolidated financial statements as of and for the year ended February 28, 2025.
Reworded paragraphs (70)
Previous wording
We are a Maryland corporation that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from our investments. We invest primarily in senior and unitranche leveraged loans and mezzanine debt issued by private U.S. middle-market companies, which we define as companies having earnings before interest, tax, depreciation and amortization (“EBITDA”) of between $2 million and $50 million, both through direct lending and through participation in loan syndicates. We may also invest up to 30.0% of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed debt, which may include securities of companies in bankruptcy, foreign debt, private equity, securities of public companies that are not thinly traded and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention to do so, to the extent we invest in private equity funds, we will limit our investments in entities that are excluded from the definition of “investment company” under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act, which includes private equity funds, to no more than 15.0% of our net assets. We have elected and qualified to be treated as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
Current wording
We are a Maryland corporation that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from our investments. We invest primarily in senior and unitranche leveraged loans and mezzanine debt issued by private U.S. middle-market companies, which we define as companies having earnings before interest, tax, depreciation and amortization (“EBITDA”) of between $2 million and $50 million, both through direct lending and through participation in loan syndicates. We may also invest up to 30.0% of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed debt, which may include securities of companies in bankruptcy, foreign debt, private equity, securities of public companies that are not thinly traded and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention to do so, we may invest in private equity funds in the future. Private equity funds are not limited in how they invest their assets, and the underlying investments held by private equity funds may impact our strategies, risks, and costs. Shareholders may have limited information about the underlying investments of the private equity funds in which we invest, including with respect to such funds’ holdings, liquidity, and valuation. We have elected and qualified to be treated as a RIC under subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
Previous wording
We have formed a wholly owned special purpose entity, Saratoga Investment Funding II LLC, a Delaware limited liability company (“SIF II”), for the purpose of entering into a $50.0 million senior secured revolving credit facility with Encina Lender Finance, LLC (“Encina”), supported by loans held by SIF II and pledged to Encina under the credit facility (the “Encina Credit Facility). The Encina Credit Facility closed on October 4, 2021. During the first two years following the closing date, SIF II may request an increase in the commitment amount under the Encina Credit Facility to up to $75.0 million. The terms of the Encina Credit Facility require a minimum drawn amount of $12.5 million at all times during the first six months following the closing date, which increases to the greater of $25.0 million or 50% of the commitment amount in effect at any time thereafter. The term of the Encina Credit Facility is three years. Advances under the Encina Credit Facility bear interest at a floating rate per annum equal to LIBOR plus 4.0%, with LIBOR having a floor of 0.75%, with customary provisions related to our and Encina’s selection of a replacement benchmark rate. Concurrently with the closing of the Encina Credit Facility, all remaining amounts outstanding on our existing revolving credit facility with Madison Capital Funding, LLC were repaid and the facility was terminated. On January 27, 2023, among other things, the borrowings available under the Encina Credit Facility was increased from up to $50.0 million to up to $65.0 million, the underlying benchmark rate used to compute interest changed from LIBOR to Term SOFR for one-month tenor plus a 0.10% credit spread adjustment; the applicable effective margin rate on borrowings increased from 4.00% to 4.25% and the maturity date was extended from October 4, 2024 to January 27, 2026.
Current wording
We have utilized a wholly owned special purpose entity, Saratoga Investment Funding II LLC, a Delaware limited liability company (“SIF II”), for the purpose of entering into a $85.0 million senior secured revolving credit facility with Valley National Bank (“Valley”), supported by loans held by SIF II and pledged to Valley under the credit facility (the “Valley Credit Facility). The Valley Credit Facility closed on November 6, 2025. The terms of the Valley Credit Facility require a minimum drawn amount equal to the greater of $25.0 million or 38% of the facility amount in effect at such time. The term of the Valley Credit Facility is three years. Advances under the Valley Credit Facility bear interest at a floating rate per annum equal to Term SOFR plus an applicable margin of 2.85%, with a SOFR Floor of 1.00%. Concurrently with the closing of the Valley Credit Facility, all remaining amounts outstanding on our existing revolving credit facility with Encina Lender Finance, LLC were repaid and the facility was terminated.
Previous wording
We and TJHA have committed to provide up to a combined $50.0 million of financing to SLF JV through cash contributions, where we provided $43.75 million and TJHA provides $6.25 million, resulting in an 87.5% and 12.5% ownership between the two parties. The financing is issued in the form of an unsecured note and equity. The unsecured note will pay a fixed rate of 10.0% per annum and is due and payable in full on October 20, 2033. As of February 28, 2025, our and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively. As of February 29, 2024, the Company and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively. As of February 28, 2025, and February 29, 2024, the Company’s investment in the unsecured note of SLF JV had a fair value of $16.5 million and $15.8 million, respectively, and the Company’s investment in the membership interests of SLF JV had a fair value of $3.1 million and $9.4 million, respectively.
Current wording
We and TJHA have committed to provide up to a combined $50.0 million of financing to SLF JV through cash contributions, where we provided $43.75 million and TJHA provides $6.25 million, resulting in an 87.5% and 12.5% ownership between the two parties. The financing is issued in the form of an unsecured note and equity. The unsecured note will pay a fixed rate of 10.0% per annum and is due and payable in full on October 20, 2033. As of February 28, 2026, our and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $19.2 million and $2.7 million, respectively. As of February 28, 2025, the Company and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively. As of February 28, 2026, and February 28, 2025, the Company’s investment in the unsecured note of SLF JV had a fair value of $16.1 million and $16.5 million, respectively, and the Company’s investment in the membership interests of SLF JV had a fair value of $1.5 million and $3.1 million, respectively.
Previous wording
In December 2023, the FASB issued ASU 2023-09,* Improvements to Income Tax Disclosures*. The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09 is effective for years beginning after December 15, 2024. Early adoption is permitted, however the Company has not elected to early adopt this provision as of the date of the financial statements contained in this report. The Company is still assessing the impact of the new guidance.
Current wording
In December 2023, the FASB issued ASU 2023-09,* Improvements to Income Tax Disclosures*. The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024. We have adopted ASU 2023-09 effective as of February 28, 2026, and concluded that the application of this guidance did not have a material impact on our consolidated financial statements. See Note 6 in Item 8,Financial Statements and Supplementary Data, for further information.
Previous wording
During the fiscal year ended February 28, 2023, we invested $385.1 million in new and existing portfolio companies and had $222.2 million in aggregate amount of exits and repayments resulting in net investments of $162.9 million for the year.
Current wording
During the fiscal year ended February 28, 2026, we invested $309.5 million in new and existing portfolio companies and had $184.6 million in aggregate amount of exits and repayments, including $180.0 million of proceeds from sales and repayments of debt and equity investments in the current period and $4.6 million of additional proceeds from sales of equity investments realized in a prior period, resulting in net investments of $124.9 million for the year.
Previous wording
At February 28, 2025, our investment in the subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $0.2 million and constituted 0.02% of our portfolio. This investment constitutes a first loss position in a portfolio that, as of February 28, 2025 and February 29, 2024, was composed of $527.1 million and $640.8 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In addition, as of February 28, 2025, we also own $9.4 million in aggregate principal of the F-2-R-3 Notes in the Saratoga CLO, which only rank senior to the subordinated notes.
Current wording
At February 28, 2026, our investment in the subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $0.0 million and constituted 0.0% of our portfolio. This investment constitutes a first loss position in a portfolio that, as of February 28, 2026 and February 28, 2025, was composed of $391.0 million and $527.1 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In addition, as of February 28, 2026, we also own $9.4 million in aggregate principal of the F-2-R-3 Notes in the Saratoga CLO, which only rank senior to the subordinated notes, and had a fair value of $0.0 million.
Previous wording
This investment is subject to unique risks. (See “Part 1. Item 1A. Risk Factors—Our investment in Saratoga CLO constitutes a leveraged investment in a portfolio of subordinated notes representing the lowest-rated securities issued by a pool of predominantly senior secured first lien term loans and is subject to additional risks and volatility. All losses in the pool of loans will be borne by our subordinated notes and only after the value of our subordinated notes is reduced to zero will the higher-rated notes issued by the pool bear any losses”). We do not consolidate the Saratoga CLO portfolio in our consolidated financial statements. Accordingly, the metrics below do not include the underlying Saratoga CLO portfolio investments. However, at February 28, 2025, $484.3 million or 98.4% of the Saratoga CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and eight of the Saratoga CLO portfolio investments were in default with a fair value of $4.4 million. At February 29, 2024, $603.0 million or 99.2% of the Saratoga CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and two of the Saratoga CLO portfolio investments were in default with a fair value of $0.3 million. For more information relating to Saratoga CLO, see the audited financial statements for Saratoga CLO included elsewhere herein.
Current wording
We do not consolidate the Saratoga CLO portfolio in our consolidated financial statements. Accordingly, the metrics below do not include the underlying Saratoga CLO portfolio investments. However, at February 28, 2026, $348.3 million or 98.4% of the Saratoga CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and one of the Saratoga CLO portfolio investments were in default with a fair value of $0.9 million. At February 28, 2025, $484.3 million or 98.4% of the Saratoga CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and eight of the Saratoga CLO portfolio investments were in default with a fair value of $4.4 million. For more information relating to Saratoga CLO, see the audited financial statements for Saratoga CLO included elsewhere herein.
Previous wording
The change in reserve from $9.5 million as of February 29, 2024 to $0.2 million as of February 28, 2025 was primarily related to the reversal and receipt of the non-accrual of interest income related to our investment in Knowland Group, and the write-down of all reserved interest income related to our investments in Pepper Palace and Zollege as part of their restructurings this year.
Current wording
The change in reserve from $0.2 million as of February 28, 2025 to $0.5 million as of February 28, 2026 was primarily related to the non-accrual of interest income related to our investments in Pepper Palace, Inc. and Class F-2-R-3 Notes of the Saratoga CLO.
Previous wording
For the fiscal year ended February 29, 2024, total investment income increased $44.6 million, or 45.0%, to $143.7 million for the fiscal year ended February 29, 2024 compared to $99.1 million for the fiscal year ended February 28, 2023. Interest income from investments increased $42.6 million, or 50.0%, to $127.8 million for the year ended February 29, 2024 from $85.2 million for the fiscal year ended February 28, 2023. The increase in interest income for the fiscal year ended February 29, 2024 is primarily attributable to an increase of 17.1% in total investments to $1,138.8 million from $972.6 million in the prior period, as well as the increase in the weighted average current yield on investments of 11.4% compared to 10.7% in the prior period.
Current wording
For the fiscal year ended February 28, 2026, total investment income decreased $23.2 million, or 15.6%, to $125.7 million compared to $148.9 million for the fiscal year ended February 28, 2025. Interest income from investments decreased $24.1 million, or 18.4%, to $106.9 million for the year ended February 28, 2026 from $131.0 million for the fiscal year ended February 28, 2025. The decrease in interest income for the fiscal year ended February 28, 2026 is primarily attributable to (i) the non-recurrence of $7.9 million interest income related to our Knowland investment recognized last year that was previously on non-accrual, (ii) decrease of our average investment portfolio by 2.8% from $1,042.6 million last year to $1,013.4 million this year, and (iii) the decrease of the weighted average current yield on our core investments to 9.6% as of February 28, 2026, down from 10.8% at February 28, 2025, reflecting both the reduction in SOFR base rates during this period, as well as the tightening of spreads in the middle market.
Previous wording
For the fiscal year ended February 28, 2025 and February 29, 2024, total PIK income was $4.0 million and $2.5 million, respectively. This increase was primarily due to the recognition of reserved Knowland PIK interest previously on non-accrual and fully repaid during this year.
Current wording
For the fiscal year ended February 28, 2026 and February 28, 2025, total PIK income was $2.9 million and $4.0 million, respectively. This decrease was primarily due to the recognition of reserved Knowland PIK interest recognized last year.
Previous wording
For the fiscal year ended February 29, 2024 and February 28, 2023, total PIK income was $2.5 million and $1.2 million, respectively. This increase was due to investment growth and amended terms of debt securities that elected to pay a portion of their interest in PIK.
Current wording
For the fiscal year ended February 28, 2025 and February 29, 2024, total PIK income was $4.0 million and $2.5 million, respectively. This increase was due to investment growth and amended terms of debt securities that elected to pay a portion of their interest in PIK.
Previous wording
Management fee income reflects the fee income received for managing the Saratoga CLO. For the years ended February 28, 2025, February 29, 2024 and February 28, 2023, total management fee income was $3.1 million, $3.3 million and $3.3 million, respectively.
Current wording
Management fee income reflects the fee income received for managing the Saratoga CLO. For the years ended February 28, 2026, February 28, 2025 and February 29, 2024, total management fee income was $2.6 million, $3.1 million and $3.3 million, respectively. The reduction reflects the reduction of the asset levels in the Saratoga CLO as it is currently in winddown mode.
Previous wording
For the fiscal year ended February 28, 2025, February 29, 2024 and February 28, 2023, total dividend income was $4.6 million, $6.5 million and $2.7 million, respectively. Dividends received is recorded in the consolidated statements of operations when earned, and the decrease primarily reflects the reduced $4.0 million of dividend income received on the SLF JV as of February 28, 2025 compared to $5.9 million as of February 29, 2024.
Current wording
For the fiscal year ended February 28, 2026, February 28, 2025 and February 29, 2024, total dividend income was $4.5 million, $4.6 million and $6.5 million, respectively. Dividends received is recorded in the consolidated statements of operations when earned.
Previous wording
For the fiscal year ended February 28, 2025, February 29, 2024 and February 28, 2023, total structuring and advisory fee income was $1.6 million, $2.1 million and $3.6 million, respectively. Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during the closing of new investments, with the changes year-over-year primarily reflecting the increased or decreased originations during the period.
Current wording
For the fiscal year ended February 28, 2026, February 28, 2025 and February 29, 2024, total structuring and advisory fee income was $2.2 million, $1.6 million and $2.1 million, respectively. Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during the closing of new investments, with the changes year-over-year primarily reflecting the increased or decreased originations during the period.
Previous wording
For the fiscal year ended February 28, 2025, February 29, 2024 and February 28, 2023, other income was $2.0 million, $1.5 million and $2.9 million, respectively. Other income primarily includes prepayment, amendment and redemption fees and is recorded in the consolidated statements of operations when earned.
Current wording
For the fiscal year ended February 28, 2026, February 28, 2025 and February 29, 2024, other income was $1.5 million, $2.0 million and $1.5 million, respectively. Other income primarily includes prepayment, monitoring and amendment fees and is recorded in the consolidated statements of operations when earned.
Previous wording
For the year ended February 28, 2025, total operating expenses increased $9.0 million, or 10.4%, to $95.9 million compared to $86.8 million for the year ended February 29, 2024. For the year ended February 29, 2024, total operating expenses increased $22.9 million, or 35.9%, to $86.8 million compared to $63.9 million for the year ended February 28, 2023.
Current wording
For the year ended February 28, 2026, total operating expenses decreased $7.0 million, or 7.3%, to $88.9 million compared to $95.9 million for the year ended February 28, 2025. For the year ended February 28, 2025, total operating expenses increased $9.0 million, or 10.4%, to $95.9 million compared to $86.8 million for the year ended February 29, 2024.
Previous wording
For the year ended February 28, 2025, interest and debt financing expenses increased $2.9 million, or 5.9% compared to the year ended February 29, 2024. The increase is attributable to both the total average outstanding debt increasing from $798.9 million for the year ended February 29, 2024 to $836.2 million for the year ended February 28, 2025, as well as the weighted average interest rate on our outstanding indebtedness increasing from 5.46% to 5.56% for the same periods.
Current wording
For the year ended February 28, 2026, interest and debt financing expenses decreased $2.8 million, or 5.2% compared to the year ended February 28, 2025. The decrease is primarily attributable to both the total average outstanding debt decreasing from $836.2 million for the year ended February 28, 2025 to $791.3 million for the year ended February 28, 2026. The weighted average interest rate on our outstanding indebtedness also decreased slightly from 5.56% to 5.55% for the same periods.
Previous wording
For the year ended February 29, 2024, interest and debt financing expenses increased $15.7 million, or 46.8% compared to the year ended February 28, 2023. The increase is attributable to both the total average outstanding debt increasing from $663.0 million for the year ended February 28, 2023 to $798.9 million for the year ended February 29, 2024, as well as the weighted average interest rate on our outstanding indebtedness increasing from 4.48% to 5.46% for the same periods. The increase in total average outstanding debt and the weighted average interest rate was primarily due to the issuance during the year ended February 29, 2024 of the higher-cost 8.75% 2025 Notes and 8.50% 2028 Notes. At February 29, 2024 and February 28, 2023, the lower-cost SBA debentures represented 26.1% and 27.7% of overall debt, respectively.
Current wording
For the year ended February 28, 2025, interest and debt financing expenses increased $2.9 million, or 5.9% compared to the year ended February 29, 2024. The increase is attributable to both the total average outstanding debt increasing from $798.9 million for the year ended February 29, 2024 to $836.2 million for the year ended February 28, 2025, as well as the weighted average interest rate on our outstanding indebtedness increasing from 5.46% to 5.56% for the same periods. The increase in total average outstanding debt and the weighted average interest rate was primarily due to the issuance during the year ended February 28, 2025 of the higher-cost 8.75% 2025 Notes and 8.50% 2028 Notes. At February 28, 2025 and February 29, 2024, the lower-cost SBA debentures represented 26.1% and 27.7% of overall debt, respectively.
Previous wording
For the year ended February 29, 2024, base management fees increased $2.8 million, or 17.0% compared to the fiscal year ended February 28, 2023. The increase in base management fees is due to the 17.0% increase in the average value of our total assets, less cash and cash equivalents, from $938.5 million as of February 28, 2023 to $1,097.8 million as of February 29, 2024.
Current wording
For the year ended February 28, 2026, base management fees decreased $0.6 million, or 3.3% compared to the fiscal year ended February 28, 2025. The decrease in base management fees is due to the 3.3% decrease in the average value of our total assets, less cash and cash equivalents, from $1,050.5 million as of February 28, 2025 to $1,015.4 million as of February 28, 2026.
Previous wording
For the year ended February 29, 2024, incentive fees increased $3.0 million, or 58.7% compared to the fiscal year ended February 28, 2023. The incentive fee on income increased this year from $6.8 million for the year ended February 28, 2023 to $13.0 million for the year ended February 29, 2024, reflecting the increased operating performance of our debt investments during this period. The incentive fees on capital gains decreased from ($1.8) million benefit for the fiscal year ended February 28, 2023 to ($8.3) million benefit for the fiscal year ended February 29, 2024, both reflecting the incentive fee income and expense on net unrealized appreciation and depreciation recognized during both these periods.
Current wording
For the year ended February 28, 2026, incentive fees decreased $4.0 million, or 30.4% compared to the fiscal year ended February 28, 2025. The incentive fee on income decreased this year from $13.2 million for the year ended February 28, 2025 to $9.2 million for the year ended February 28, 2026, reflecting the decrease in net investment income during this period. The incentive fees on capital gains remained unchanged at $0.0 million for both the twelve months ended February 28, 2026 and 2025, reflecting no incentive fee on net realized and unrealized depreciation recognized during both these periods, with the liability floor capped at zero.
Previous wording
For the year ended February 28, 2025, incentive fees increased $5.2 million, or 65.1% compared to the fiscal year ended February 29, 2024. The incentive fee on income increased this year from $13.0 million for the year ended February 29, 2024 to $13.2 million for the year ended February 28, 2025, reflecting the increased operating performance of our debt investments during this period. The incentive fees on capital gains increased from $(8.3) million benefit for the fiscal year ended February 29, 2024 to $(5.9) million benefit for the fiscal year ended February 28, 2025, both reflecting the incentive fee income and expense on net unrealized appreciation and depreciation recognized during both these periods, with the liability floor capped at zero.
Current wording
For the year ended February 28, 2025, incentive fees increased $5.2 million, or 65.1% compared to the fiscal year ended February 29, 2024. The incentive fee on income increased this year from $13.0 million for the year ended February 29, 2024 to $13.2 million for the year ended February 28, 2025, reflecting the increased operating performance of our debt investments during this period. The incentive fees on capital gains increased from $(8.3) million benefit for the fiscal year ended February 29, 2024 to $(5.9) million benefit for the fiscal year ended February 28, 2025, both reflecting the incentive fee income and expense on net unrealized appreciation and depreciation recognized during both these periods.
Previous wording
For the year ended February 29, 2024, professional fees decreased $0.05 million, or 2.5% compared to the fiscal year ended February 28, 2023. This decrease primarily reflects the benefit of scale and optimization of costs and vendors across accounting, legal and consulting fees across the Company.
Current wording
For the year ended February 28, 2026, professional fees increased $0.8 million, or 36.9% compared to the fiscal year ended February 28, 2025. This increase primarily reflects the growth across accounting, legal and consulting fees in connection with an increase in our assets and legal entities, as well as inflationary increases across these vendors.
Previous wording
For the year ended February 28, 2025, professional fees increased $0.3 million, or 16.5% compared to the fiscal year ended February 29, 2024. This increase is primarily due to inflationary increases from vendors across accounting, legal and consulting fees across the Company, as well as the additional cost of performing a Sarbanes Oxley audit this year with the Company becoming an accelerated filer.
Current wording
For the year ended February 28, 2025, professional fees increased $0.3 million, or 16.5% compared to the fiscal year ended February 29, 2024. This increase is primarily due to inflationary increases from vendors across accounting, legal and consulting fees across the Company.
Previous wording
For the year ended February 29, 2024, administrator expenses increased $0.7 million, or 22.5% compared to the fiscal year ended February 28, 2023, which reflects an increase to the cap on the payment or reimbursement of expenses by the Company from $3.275 million last year to $ 4.3 million, effective August 1, 2023.
Current wording
For the year ended February 28, 2026, administrator expenses increased $0.5 million, or 11.2% compared to the fiscal year ended February 28, 2025, which reflects an increase to the cap on the payment or reimbursement of expenses by the Company from $5.0 million last year to $5.4 million, effective August 1, 2025
Previous wording
For the fiscal years ended February 28, 2025, February 29, 2024 and February 28, 2023, the average borrowings outstanding under the Credit Facilities was approximately $33.1 million, $37.9 million and $26.3 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Credit Facilities was 9.49%, 9.66% and 6.72%, respectively.
Current wording
For the fiscal years ended February 28, 2026, February 28, 2025 and February 29, 2024, the average borrowings outstanding under the Credit Facilities was approximately $68.7 million, $33.1 million and $37.9 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Credit Facilities was 8.20%, 9.49% and 9.66%, respectively.
Previous wording
For the fiscal years ended February 28, 2025, February 29, 2024 and February 28, 2023, the average borrowings outstanding of SBA debentures was $213.8 million, $202.5 million and $230.0 million, respectively. For the years ended February 28, 2025, February 29, 2024 and February 28, 2023, the weighted average interest rate on the outstanding borrowings of the SBA debentures was 3.32%, 3.08% and 2.78%, respectively.
Current wording
For the fiscal years ended February 28, 2026, February 28, 2025 and February 29, 2024, the average borrowings outstanding of SBA debentures was $167.5 million, $213.8 million and $202.5 million, respectively. For the years ended February 28, 2026, February 28, 2025 and February 29, 2024, the weighted average interest rate on the outstanding borrowings of the SBA debentures was 3.06%, 3.32% and 3.08%, respectively.
Previous wording
For the years ended February 28, 2025, February 29, 2024 and February 28, 2023, we recognized income tax expense (benefit) of $0.41 million, $0.04 million and ($0.15) million, respectively. This relates to net deferred federal and state income tax expense (benefit) with respect to operating gains and losses and income derived from equity investments held in entities that are treated as corporations for U.S. federal income tax purposes, as well as current U.S. federal and state income taxes on those operating gains and losses when realized.
Current wording
For the years ended February 28, 2026, February 28, 2025 and February 29, 2024, we recognized income tax expense (benefit) of $(0.14) million, $0.41 million and $0.04 million, respectively. This relates to net deferred federal and state income tax expense (benefit) with respect to operating gains and losses and income derived from equity investments held in entities that are treated as corporations for U.S. federal income tax purposes, as well as current U.S. federal and state income taxes on those operating gains and losses when realized.
Previous wording
For the year ended February 28, 2025, we accrued excise taxes of $2.4 million on undistributed taxable income as of December 31, 2024. For the year ended February 29, 2024, we accrued excise taxes of $1.8 million on undistributed taxable income as of December 31, 2023.
Current wording
For the year ended February 28, 2026, we accrued excise taxes of $1.7 million on undistributed taxable income as of December 31, 2025. For the year ended February 28, 2025, we accrued excise taxes of $2.4 million on undistributed taxable income as of December 31, 2024.
Previous wording
For the fiscal years ended February 28, 2025, February 29, 2024 and February 28, 2023, we recorded a net increase in net assets resulting from operations of $28.1 million, $8.9 million and $24.7 million, respectively. Based on 13,912,170 weighted average common shares outstanding as of February 28, 2025, our per share net increase in net assets resulting from operations was $2.02 for the fiscal year ended February 28, 2025. This compares to a per share net increase in net assets resulting from operations of $0.71 for the fiscal year ended February 29, 2024 (based on 12,670,939 weighted average common shares outstanding as of February 29, 2024), and a per share net increase in net assets resulting from operations of $2.06 for the fiscal year ended February 28, 2023 (based on 11,963,533 weighted average common shares outstanding as of February 28, 2023).
Current wording
For the fiscal years ended February 28, 2026, February 28, 2025 and February 29, 2024, we recorded a net increase in net assets resulting from operations of $36.6 million, $28.1 million and $8.9 million, respectively. Based on 15,850,270 weighted average common shares outstanding as of February 28, 2026, our per share net increase in net assets resulting from operations was $2.31 for the fiscal year ended February 28, 2026. This compares to a per share net increase in net assets resulting from operations of $2.02 for the fiscal year ended February 28, 2025 (based on 13,912,170 weighted average common shares outstanding as of February 28, 2025), and a per share net increase in net assets resulting from operations of $0.71 for the fiscal year ended February 29, 2024 (based on 12,670,939 weighted average common shares outstanding as of February 29, 2024).
Previous wording
We intend to continue to generate cash primarily from cash flows from operations, including interest earned from our investments in debt in middle-market companies, interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less, draws of the Encina Credit Facility and the Live Oak Credit Facility, our continued access to the SBA debentures future borrowings and future offerings of both private and public debt and equity securities.
Current wording
We intend to continue to generate cash primarily from cash flows from operations, including interest earned from our investments in debt in middle-market companies, interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less, draws of the Valley Credit Facility and the Live Oak Credit Facility, our continued access to the SBA debentures future borrowings and future offerings of both private and public debt and equity securities.
Previous wording
Also, as a BDC, we generally are required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which include all of our borrowings and any outstanding preferred stock, of at least 200%, reduced to 150% effective April 16, 2019 following the approval received from our board of directors, including a majority of our independent directors, on April 16, 2018. This requirement limits the amount that we may borrow. Our asset coverage ratio, as defined in the 1940 Act, was 162.9% as of February 28, 2025 and 161.1% as of February 29, 2024. To fund growth in our investment portfolio in the future, we anticipate needing to raise additional capital from various sources, including the equity markets and other public and private debt-related markets, which may or may not be available on favorable terms, if at all.
Current wording
Also, as a BDC, we generally are required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which include all of our borrowings and any outstanding preferred stock, of at least 200%, reduced to 150% effective April 16, 2019 following the approval received from our board of directors, including a majority of our independent directors, on April 16, 2018. This requirement limits the amount that we may borrow. Our asset coverage ratio, as defined in the 1940 Act, was 168.4% as of February 28, 2026 and 162.9% as of February 28, 2025. To fund growth in our investment portfolio in the future, we anticipate needing to raise additional capital from various sources, including the equity markets and other public and private debt-related markets, which may or may not be available on favorable terms, if at all.
Previous wording
Below is a summary of the terms of the Encina Credit Facility.
Current wording
Below is a summary of the terms of the senior secured revolving credit facility we entered into with Encina Lender Finance, LLC on October 4, 2021 and as amended on January 27, 2023 (the “Encina Credit Facility” and the related credit agreement, the “Encina Credit Agreement”). On November 6, 2025, the Company terminated in full (i) the Encina Credit Agreement, and (ii) the Equity Pledge Agreement, dated as of October 4, 2021 (the “Encina Equity Pledge Agreement”), by and between the Company and Encina, as collateral agent. All outstanding obligations were repaid. The Encina Credit Agreement and the Encina Equity Pledge Agreement terminated upon the satisfaction of all obligations and liabilities of SIF II and the Company to secured parties thereunder, including, without limitation, payments of principal and interest, other fees, breakage costs and other amounts owing to the secured parties.
Previous wording
Availability. We can draw up to the lesser of (i) the Encina Facility Amount and (ii) the Borrowing Base. The Borrowing Base is an amount equal to (i) the difference of (A) the product of the applicable advance rate which varies from 50.0% to 75.0% depending on the type of loan asset (Defaulted Loans being excluded in that they carry an advance rate of 0%) and the value, determined in accordance with the Encina Credit Facility (the “Adjusted Borrowing Value”), of certain “eligible” loan assets pledged as security for the loan (the “Borrowing Base Value”) and (B) the Excess Concentration Amount, as calculated in accordance with the Encina Credit Facility, plus (ii) any amounts held in the Prefunding Account and, without duplication, Excess Cash held in the Collection Account, less (iii) the product of (a) the amount of any undrawn funding commitments we have under any loan asset and (b) the Unfunded Exposure Haircut Percentage, and less (iv) $100,000. Each loan asset we held as of the date on which the Encina Credit Facility was closed was valued as of that date and each loan asset that we acquire after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase price paid for such loan asset. Adjustments to the value of a loan asset will be made to reflect, among other things and under certain circumstances, changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan asset, and certain modifications to the terms of the loan asset.
Current wording
Availability. We were able to draw up to the lesser of (i) the Encina Facility Amount and (ii) the borrowing base. The borrowing base is an amount equal to (i) the difference of (A) the product of the applicable advance rate which varied from 50.0% to 75.0% depending on the type of loan asset (Defaulted Loans being excluded in that they carry an advance rate of 0%) and the value, determined in accordance with the Encina Credit Facility (the “Adjusted Borrowing Value”), of certain “eligible” loan assets pledged as security for the loan (the “Borrowing Base Value”) and (B) the Excess Concentration Amount, as calculated in accordance with the Encina Credit Facility, plus (ii) any amounts held in the Prefunding Account and, without duplication, Excess Cash held in the Collection Account, less (iii) the product of (a) the amount of any undrawn funding commitments we have under any loan asset and (b) the Unfunded Exposure Haircut Percentage, and less (iv) $100,000. Each loan asset we held as of the date on which the Encina Credit Facility was closed was valued as of that date and each loan asset that we acquire after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase price paid for such loan asset. Adjustments to the value of a loan asset were made to reflect, among other things and under certain circumstances, changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan asset, and certain modifications to the terms of the loan asset.
Previous wording
The Encina Credit Facility requires certain minimum drawn amounts. For the period beginning on the closing date and ended April 4, 2022, the minimum funding amount was $12.5 million. For the period beginning on April 5, 2022 through maturity, the minimum funding amount is the greater of $25.0 million and 50% of the Encina Facility Amount in effect from time to time.
Current wording
The Encina Credit Facility required certain minimum drawn amounts. For the period beginning on the closing date and ending April 4, 2022, the minimum funding amount was $12.5 million. For the period beginning on April 5, 2022, the minimum funding amount was the greater of $25.0 million and 50% of the Encina Facility Amount in effect from time to time.
Previous wording
Interest Rate and Fees. Under the Encina Credit Facility, funds were borrowed from or through certain lenders at the greater of the prevailing LIBOR rate and 0.75%, plus an applicable margin of 4.00%. The Encina Credit Agreement includes benchmark replacement provisions which permit the Administrative Agent and the borrower to select a replacement rate upon the unavailability of LIBOR. In addition, we pay the lenders a commitment fee of 0.75% per year (or 0.50% if the ratio of advances outstanding to aggregate commitments is greater than or equal to 50%) on the unused amount of the Encina Credit Facility for the duration of the term of the Encina Credit Facility. Accrued interest and commitment fees are payable monthly in arrears. We were also obligated to pay certain other fees to the lenders in connection with the closing of the Encina Credit Facility.
Current wording
Interest Rate and Fees. Under the Encina Credit Facility, funds were borrowed from or through certain lenders at the greater of the prevailing LIBOR rate and 0.75%, plus an applicable margin of 4.00%. The Encina Credit Agreement included benchmark replacement provisions which permitted the Administrative Agent and the borrower to select a replacement rate upon the unavailability of LIBOR. In addition, we paid the lenders a commitment fee of 0.75% per year (or 0.50% if the ratio of advances outstanding to aggregate commitments was greater than or equal to 50%) on the unused amount of the Encina Credit Facility for the duration of the term of the Encina Credit Facility. Accrued interest and commitment fees were payable monthly in arrears. We were also obligated to pay certain other fees to the lenders in connection with the closing of the Encina Credit Facility.
Previous wording
Fees and Expenses. We paid certain fees and reimbursed Encina Lender Finance, LLC for the aggregate amount of all documented, out-of-pocket costs and expenses, including the reasonable fees and expenses of lawyers, incurred by Encina Lender Finance, LLC in connection with the Encina Credit Facility and the carrying out of any and all acts contemplated thereunder up to and as of the date of closing. These amounts totaled $1.4 million.
Current wording
Fees and Expenses. We paid certain fees and reimbursed Encina for the aggregate amount of all documented, out-of-pocket costs and expenses, including the reasonable fees and expenses of lawyers, incurred by Encina in connection with the Encina Credit Facility and the carrying out of any and all acts contemplated thereunder up to and as of the date of closing. These amounts totaled $1.4 million.
Previous wording
On January 27, 2023, we entered into the first amendment to the Encina Credit Agreement to, among other things:
Current wording
On January 27, 2023, we entered into the first amendment to the Encina Credit Agreement which, among other things: (i) increased the borrowings available under the Encina Credit Facility from up to $50.0 million to up to $65.0 million; (ii) changed the underlying benchmark used to compute interest under the Encina Credit Agreement from LIBOR to Term SOFR for a one-month tenor plus a 0.10% credit spread adjustment; (iii) increased the applicable effective margin rate on borrowings from 4.00% to 4.25%; (iv) extended the revolving period from October 4, 2024 to January 27, 2026; (v) extended the period during which the borrower may request one or more increases in the borrowings available under the Encina Credit Facility (each such increase, a “Facility Increase”) from October 4, 2023 to January 27, 2025, and increased the maximum borrowings available pursuant to the Encina Facility Increase from $75.0 million to $150.0 million; (vi) revised the eligibility criteria for eligible collateral loans to exclude certain industries in which an obligor or related guarantor may be involved; and (vii) amended the provisions permitting the borrower to request an extension in the Commitment Termination Date (as defined in the Encina Credit Agreement) to allow requests to extend any applicable Commitment Termination Date, rather than a one-time request to extend the original Commitment Termination Date, subject to a notice requirement.
Previous wording
As of February 28, 2025, we had $32.5 million outstanding borrowings under the Encina Credit Facility. As of February 29, 2024, we had $35.0 million outstanding borrowings under the Encina Credit Facility. Our borrowing base under the Encina Credit Facility at February 28, 2025 and February 29, 2024 was $78.6 million and $65.0 million, respectively.
Current wording
As of February 28, 2026, we had no outstanding borrowings under the Encina Credit Facility. As of February 28, 2025, we had $32.5 million outstanding borrowings under the Encina Credit Facility. Our borrowing base under the Encina Credit Facility at February 28, 2026 and February 28, 2025 was $0 million and $78.6 million, respectively.
Previous wording
The Encina Credit Facility contains limitations on the type of loan assets that are “eligible” to be included in the Borrowing Base and as to the concentration level of certain categories of loan assets in the Borrowing Base such as restrictions on geographic and industry concentrations, asset size and quality, payment frequency, status and terms, average life, and collateral interests. In addition, if an asset is to remain an “eligible” loan asset, we may not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent of the administrative agent that will either result in subordination of the loan asset or be materially adverse to the lenders.
Current wording
The Live Oak Credit Facility contains limitations on the type of loan assets that are “eligible” to be included in the borrowing base and as to the concentration level of certain categories of loan assets in the borrowing base such as restrictions on geographic and industry concentrations, asset size and quality, payment frequency, status and terms, average life, and collateral interests. In addition, if an asset is to remain an “eligible” loan asset, we may not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent of the administrative agent that will either result in subordination of the loan asset or be materially averse to the lenders.
Previous wording
As of February 28, 2025, we had $20.0 million outstanding borrowings under the Live Oak Credit Facility. As of February 29, 2024, we had zero outstanding borrowings under the Live Oak Credit Facility. Our borrowing base under the Live Oak Credit Facility at February 28, 2025 and February 29, 2024 was $86.9 million and $0.0 million, respectively.
Current wording
As of February 28, 2026, we had $37.5 million outstanding borrowings under the Live Oak Credit Facility. During the applicable period, we were in compliance with all of the limitations and requirements under the Live Oak Credit Agreement. As of February 28, 2025, we had $20.0 million outstanding borrowings under the Live Oak Credit Facility. Our borrowing base under the Live Oak Credit Facility at February 28, 2026 and February 28, 2025 was $99.2 million and $86.9 million, respectively.
Showing the first 40 of 70 pairs. Open the source sections for the rest.
Rearranged current paragraphs (18)
Current report — wording carried from elsewhere
On June 10, 2024, we completed our fifth refinancing of the Saratoga CLO, which adjusted the interest rate of two of the existing Notes. Saratoga CLO issued $422.5 million notes (the “2013-1 2024 Reset CLO Notes”), consisting of Class A-1-R-4 and Class A-2-R-4. The 2013-1 2024 Reset CLO Notes were issued pursuant to the indenture with the same trustee. Proceeds of the issuance of the 2013-1 2024 Reset CLO Notes were used along with existing assets of the Saratoga CLO to redeem the existing Class A-1-R-3 and Class A-2-R-3 Notes. No other Notes were refinanced as part of this refinancing. The Saratoga CLO paid $0.5 million of transaction costs related to the refinancing.
Current report — wording carried from elsewhere
This investment is subject to unique risks. (See Part 1. Item 1A. “Risk Factors—Our investment in Saratoga CLO constitutes a leveraged investment in a portfolio of subordinated notes representing the lowest-rated securities issued by a pool of predominantly senior secured first lien term loans and is subject to additional risks and volatility. All losses in the pool of loans will be borne by our subordinated notes and only after the value of our subordinated notes is reduced to zero will the higher-rated notes issued by the pool bear any losses”).
Current report — wording carried from elsewhere
For the year ended February 28, 2026, our investments had a net change in unrealized depreciation of $5.2 million compared to a net change in unrealized appreciation of $19.0 million for the year ended February 28, 2025. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended February 28, 2026, were the following (dollars in thousands):
Current report — wording carried from elsewhere
The $2.3 million net change in unrealized depreciation in our investment Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note was driven by the impact of the performance of individual credits in the CLO portfolio.
Current report — wording carried from elsewhere
The $1.5 million net change in unrealized depreciation in our investment in Chronus LLC was primarily driven by overall company performance.
Current report — wording carried from elsewhere
The $1.1 million net change in unrealized appreciation in our investment in AgencyBloc LLC was primarily driven by strong financial portfolio company performance.
Current report — wording carried from elsewhere
Collateral. The Encina Credit Facility was secured by assets of SIF II, a wholly owned special purpose entity, and pledged to Encina under the Encina Credit Facility.
Current report — wording carried from elsewhere
The Encina Credit Facility also required payment of outstanding borrowings or replacement of pledged loan assets upon our breach of our representation and warranty that pledged loan assets included in the borrowing base were “eligible” loan assets. Such ineligible collateral loans were excluded from the calculation of the borrowing base and could have led to a Borrowing Base Deficiency, which could have been cured by effecting one or more (or any combination thereof) of the following actions: (A) deposit into or credit to the collection account cash and eligible investments, (B) repay outstanding borrowings (together with certain costs and expenses), (C) sell or substitute loan assets in accordance with the Encina Credit Facility, or (D) pledge additional loan assets as collateral. Compliance with the Collateral Tests was also a condition to the discretionary sale of pledged loan assets by us.
Current report — wording carried from elsewhere
Commitment. We entered into the Credit and Security Agreement (the “Live Oak Credit Agreement”) relating to the Live Oak Credit Facility in the initial facility amount of $50.0 million (the “Live Oak Facility Amount”). The Live Oak Credit Facility matures on March 27, 2027.
Current report — wording carried from elsewhere
Availability. We can draw up to the lesser of (i) the Live Oak Facility Amount and (ii) the borrowing base. The borrowing base is an amount equal to (i) the difference of (A) the product of the applicable advance rate which varies from 50.0% to 75.0% depending on the type of loan asset (Defaulted Loans being excluded in that they carry an advance rate of 0%) and the value, determined in accordance with the Live Oak Credit Facility (the “Adjusted Borrowing Value”), of certain “eligible” loan assets pledged as security for the loan (the “Borrowing Base Value”) and (B) the Excess Concentration Amount, as calculated in accordance with the Live Oak Credit Facility, plus (ii) any amounts held in the Prefunding Account and, without duplication, Excess Cash held in the Collection Account, less (iii) the product of (a) the amount of any undrawn funding commitments we have under any loan asset and (b) the Unfunded Exposure Haircut Percentage, and less (iv) $100,000. Each loan asset we held as of the date on which the Live Oak Credit Facility was closed was valued as of that date and each loan asset that we acquire after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase price paid for such loan asset. Adjustments to the value of a loan asset will be made to reflect, among other things and under certain circumstances, changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan asset, and certain modifications to the terms of the loan asset.
Current report — wording carried from elsewhere
The Live Oak Credit Facility requires certain minimum drawn amounts. For the period beginning on the closing date of March 27, 2025, and ending March 27, 2027, the minimum funding amount was $12.5 million. For the period beginning on March 28, 2025, through maturity, the minimum funding amount is the greater of $25.0 million and 50% of the Live Oak Facility Amount in effect from time to time.
Current report — wording carried from elsewhere
Interest Rate and Fees. Advances under the Live Oak Credit Facility bear interest at a floating rate per annum equal to the greater of the prevailing Adjusted Term SOFR and 0.75%, plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s utilization. In addition, we pay the lenders a commitment fee of 0.50% per year on the unused amount of the Live Oak Credit Facility for the duration of the term of the Live Oak Credit Facility. Accrued interest and commitment fees are payable monthly in arrears. We were also obligated to pay certain other fees to the lenders in connection with the closing of the Live Oak Credit Facility.
Current report — wording carried from elsewhere
Collateral Tests. It is a condition precedent to any borrowing under the Live Oak Credit Facility that the principal amount outstanding under the Live Oak Credit Facility, after giving effect to the proposed borrowings, not exceed the borrowing base (the “Borrowing Base Test”). In addition to satisfying the Borrowing Base Test, the following tests must also be satisfied (together with Borrowing Base Test, the “Collateral Tests”):
Current report — wording carried from elsewhere
*Priority of Payments.*The priority of payments provisions of the Live Oak Credit Facility require, after payment of specified fees and expenses, that collections of interest from the loan assets and, to the extent that these are insufficient, collections of principal from the loan assets, be applied on each payment date to payment of outstanding borrowings if the Borrowing Base Test, the Overcollateralization Ratio and the Interest Coverage Ratio would not otherwise be met.
Current report — wording carried from elsewhere
Operating Expenses. The priority of payments provision of the Live Oak Credit Facility provides for the payment of certain of our operating expenses out of collections on interest and principal in accordance with the priority established in such provision. The operating expenses payable pursuant to the priority of payment provisions is limited to $200,000 per annum.
Current report — wording carried from elsewhere
Covenants; Representations and Warranties; Events of Default. The Live Oak Credit Agreement contains customary representations and warranties, affirmative covenants, negative covenants and events of default. The Live Oak Credit Agreement does not contain grace periods for breach by us of any negative covenants or of certain of the affirmative covenants, including, without limitation, those related to preservation of the existence and separateness of the Company. Other events of default under the Live Oak Credit Agreement include, among other things, the following:
Current report — wording carried from elsewhere
The Valley Credit Facility contains limitations on the type of loan assets that are “eligible” to be included in the borrowing base and as to the concentration level of certain categories of loan assets in the borrowing base such as restrictions on geographic and industry concentrations, asset size and quality, payment frequency, status and terms, average life, and collateral interests. In addition, if an asset is to remain an “eligible” loan asset, we may not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent of the administrative agent that this change will not result in either the subordination of the loan asset or be materially adverse to the lenders.
Current report — wording carried from elsewhere
On March 17, 2026, the Company declared the following dividends for the quarter ending May 31, 2026. Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the DRIP.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The $3.1 million net change in unrealized appreciation in our investment in Vector Controls Holding Co., LLC was driven by improved financial performance.
Previous report — wording carried elsewhere
At February 28, 2025, the total amount of 7.75% 2025 Notes outstanding was $5.0 million.
Previous report — wording carried elsewhere
On December 29, 2020, we issued $5.0 million in aggregate principal amount of our 6.25% fixed-rate notes due in 2027 (the “6.25% 2027 Notes”). Offering costs incurred were approximately $0.1 million. Interest on the 6.25% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.25% per year. The 6.25% 2027 Notes mature on December 29, 2027 and may be redeemed in whole or in part at any time or from time to time at our option, on or after December 29, 2024. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $0.1 million related to the 6.25% 2027 Notes have been capitalized and are being amortized over the term of the Notes.
Previous report — wording carried elsewhere
On August 15, 2022, we issued an additional $8.0 million in aggregate principal amount of the 6.00% 2027 Notes (the “Additional 6.00% 2027 Notes”) for net proceeds of $7.8 million, based on the public offering price of 97.80% of the aggregate principal amount of the 6.00% 2027 Notes. The Additional 6.00% 2027 Notes are treated as a single series with the existing 6.00% 2027 Notes under the indenture and have the same terms as the existing 6.00% 2027 Notes. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Additional offering costs incurred were approximately $0.03 million. Additional financing costs of $0.03 million related to the 6.00% 2027 Notes have been capitalized and are being amortized over the term of the 6.00% 2027 Notes.