Stellus Capital Investment Corp

Previous wording

On April 4, 2018, the board of directors of the Company (the “Board”), including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. At our 2018 annual meeting of stockholders our stockholders also approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, the asset coverage ratio applicable to us was decreased from 200% to 150%, effective June 29, 2018, which effectively increased the amount of leverage we may incur. As of March 31, 2025, our asset coverage ratio was 216%. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing.

Current wording

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

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 investment.

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) with a focus on investing through first lien (including unitranche) loans, often with a corresponding equity investmen.

Previous wording

As of March 31, 2025, we had $991.1 million (at fair value) invested in 110 portfolio companies. As of March 31, 2025, 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 March 31, 2025 was as follows:

Current wording

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

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 March 31, 2025 and December 31, 2024, we had unfunded commitments of $46.5 million and $41.3 million, respectively, to provide financing to 72 and 71 portfolio companies, respectively. As of March 31, 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 June 30, 2025 and December 31, 2024, we had unfunded commitments of $58.7 million and $41.3 million, respectively, to provide financing to 71 and 71 portfolio companies, respectively. As of June 30, 2025, we had sufficient liquidity (through cash on hand and available borrowings under the Credit Facility (as defined below)) to fund such unfunded commitments should the need arise.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

At March 31, 2025, our average portfolio company investment at amortized cost and fair value was approximately $9.1 million and $9.0 million, respectively, and our largest portfolio company investment at amortized cost and fair value was $23.6 million and $21.8 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 June 30, 2025, our average portfolio company investment at amortized cost and fair value was approximately $8.8 million and $8.8 million, respectively, and our largest portfolio company investment at amortized cost and fair value was approximately $24.2 million and $21.2 million, respectively. At December 31, 2024, our average portfolio company investment at amortized cost and fair value was approximately $9.2 million and $9.2 million, respectively, and our largest portfolio company investment at amortized cost and fair value was approximately $23.2 million and $21.2 million, respectively.

Previous wording

At March 31, 2025 and December 31, 2024, 91.4% and 94.5% of our debt investments bore interest based on floating rates (subject to interest rate floors) and 8.6% and 5.5% bore interest at fixed rates, respectively.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

As of March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $10.9 million and $20.1 million, respectively.

Current wording

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

Previous 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.

Current wording

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

Previous wording

During the three months ended March 31, 2024, we made an aggregate of $28.5 million of investments in three new portfolio companies and eight existing portfolio companies. During the three months ended March 31, 2024, we received an aggregate of $31.2 million in proceeds from repayments of our investments.

Current wording

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

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 March 31, 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 4.0% 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 March 31, 2025 and December 31, 2024, $7.8 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 June 30, 2025, we had loans to five portfolio companies that were on non-accrual status, which represented approximately 6.8% of our loan portfolio at cost and 3.8% at fair value. As of December 31, 2024, we had loans to seven portfolio companies that were on non-accrual status, which represented approximately 8.3% of our loan portfolio at cost and 5.4% at fair value. As of June 30, 2025 and December 31, 2024, $8.7 million and $6.5 million of income from investments on non-accrual had not been accrued, respectively.

Previous wording

Comparison of the Three Months Ended March 31, 2025 and 2024

Current wording

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

Previous wording

The following shows the breakdown of investment income for the three months ended March 31, 2025 and 2024 (in millions).

Current wording

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

Previous wording

The decrease in investment income for the three months ended March 31, 2025 was due primarily to a decrease in prevailing market rates on our loans, typically in reference to the Secured Overnight Financing Rate (“SOFR”), and a decrease in non-recurring income, partially offset by an increase in our principal debt outstanding.

Current wording

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

Previous wording

The following shows the breakdown of operating expenses for the three months ended March 31, 2025 and 2024 (in millions).

Current wording

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

Previous wording

The decrease in operating expenses for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, was due to the income incentive fee waiver, offset by increased management fees, interest expense and other fees due to overall portfolio growth.

Current wording

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

Previous wording

Net investment income for the three months ended March 31, 2025 decreased compared to the three months endedMarch 31, 2024 as a result of decreased interest income as explained in the “Revenues” section above, offset by lower operating expenses as explained in the “Expenses” section above.

Current wording

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

Previous wording

Net change in unrealized appreciation on investments and cash equivalents for the three months ended March 31, 2025 and 2024 totaled $1.2 million and $23.5 million, respectively.

Current wording

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

Previous wording

Provision for Taxes on Unrealized Investments

Current wording

Benefit 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 the three months ended March 31, 2025 and 2024, we recognized a provision for income tax on unrealized investments of $0.0 million and ($0.2) million for the Taxable Subsidiaries, respectively. As of both March 31, 2025 and December 31, 2024, there was $0.0 million of deferred tax liabilities on the Consolidated Statements of Assets and Liabilities.

Current wording

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

Previous wording

For the three months ended March 31, 2025, net investment income was $9.8 million, or $0.35 per common share (based on 27,602,612 weighted average shares outstanding for the three months ended March 31, 2025).

Current wording

For the three months ended June 30, 2024, net increase in net assets resulting from operations totaled $8.5 million, or $0.35 per common share (based on 24,733,966 weighted average shares outstanding for the three months ended June 30, 2024).

Previous wording

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

Current wording

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

Previous wording

For the three months ended March 31, 2024, net increase in net assets resulting from operations totaled $13.1 million, or $0.54 per common share (based on 24,125,642 weighted average shares outstanding for the three months ended March 31, 2024).

Current wording

For the six months ended June 30, 2025, net increase in net assets resulting from operations totaled $15.1 million, or $0.54 per common share (based on 28,009,969 weighted average shares outstanding for the six months ended June 30, 2025).

Previous 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.

Current wording

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

Previous wording

Our operating activities provided net cash of $4.5 million for the three months ended March 31, 2024, primarily in connection with sales and repayments of portfolio investments, offset by the purchase of portfolio investments. Our financing activities for the three months ended March 31, 2024 provided cash of $18.2 million, primarily from proceeds from net borrowings on our Credit Facility for the purchase of portfolio investments.

Current wording

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

Previous wording

Our liquidity and capital resources are derived from the Credit Facility, Notes Payable, SBA-guaranteed debentures and cash flows from operations, including investment sales and repayments, the ATM Program (as defined below), and income earned. Our primary use of funds from operations includes investments in portfolio companies and other operating expenses we incur, as well as the payment of dividends to the holders of our common stock. We used, and expect to continue to use, these capital resources as well as proceeds from turnover within our portfolio and from public and private offerings of securities to finance our investment activities.

Current wording

Our liquidity and capital resources are derived from the Credit Facility, Notes Payable (as defined below), SBA-guaranteed debentures and cash flows from operations, including investment sales and repayments, the ATM Program (as defined below), and income earned. Our primary use of funds from operations includes investments in portfolio companies and other operating expenses we incur, as well as the payment of dividends to the holders of our common stock. We used, and expect to continue to use, these capital resources as well as proceeds from turnover within our portfolio and from public and private offerings of securities to finance our investment activities.

Previous wording

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 20, 2025, the one-year anniversary of our 2024 annual stockholders meeting, and (ii) the date of our 2025 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

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.

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 March 31, 2025 and December 31, 2024, our asset coverage ratio was 216% 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 March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $10.9 million and $20.1 million, respectively.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Facility is determined in accordance with Accounting Standards Codification (“ASC”) Topic 820,Fair Value Measurements and Disclosures(“ASC 820”), which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Credit Facility is estimated based upon market interest rates for our own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. We incurred costs of $7.3 million in connection with the current Credit Facility, which are being amortized over the life of the facility. Additionally, $0.3 million of costs from a prior credit facility will continue to be amortized over the remaining life of the Credit Facility. As of March 31, 2025 and December 31, 2024, $2.8 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 June 30, 2025 and December 31, 2024, $163.1 million and $175.4 million, respectively, was outstanding under the Credit Facility. The carrying amount of the amount outstanding under the Credit Facility approximates its fair value. The fair value of the Credit Facility is determined in accordance with Accounting Standards Codification (“ASC”) Topic 820,Fair Value Measurements and Disclosures(“ASC 820”), which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Credit Facility is estimated based upon market interest rates for our own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. We incurred costs of $7.3 million in connection with the current Credit Facility, which are being amortized over the life of the facility. Additionally, $0.3 million of costs from a prior credit facility will continue to be amortized over the remaining life of the Credit Facility. As of June 30, 2025 and December 31, 2024, $2.4 million and $3.1 million of such prepaid loan structure fees and administration fees had yet to be amortized, respectively. These prepaid loan fees are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

Previous 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, 2025 and 2024 (dollars in millions):

Current wording

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

Previous wording

Due to the SBIC subsidiaries’ status as Small Business Investment Companies (“SBICs”), we have the ability to issue debentures guaranteed by the SBA at favorable interest rates (“SBA-guaranteed debentures”). Under the regulations applicable to SBICs, a single licensee can have outstanding SBA-guaranteed debentures, subject to a regulatory leverage limit, up to two times the amount of regulatory capital. As of March 31, 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 $133.8 million and $150.0 million of SBA-guaranteed debentures outstanding, respectively.

Current wording

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

Previous wording

On a stand-alone basis, the SBIC subsidiaries held $494.5 million and $510.1 million in assets at March 31, 2025 and December 31, 2024, respectively, which accounted for approximately 48.9% and 52.0% of our total consolidated assets, respectively.

Current wording

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

Previous wording

The fair values of the SBA-guaranteed debentures are determined in accordance with 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 SBA-guaranteed debentures is estimated based upon market interest rates for our own

Current wording

The fair values of the SBA-guaranteed debentures are determined in accordance with 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 SBA-guaranteed debentures is estimated based upon market interest rates for our own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. At June 30, 2025 and December 31, 2024, the SBA-guaranteed debentures would be deemed to be Level 3, as defined in Note 6 to the Consolidated Financial Statements.

Previous wording

As of March 31, 2025, we have incurred $11.1 million in financing costs related to the SBA-guaranteed debentures since the SBIC subsidiaries received their licenses, which were recorded as prepaid loan fees. As of March 31, 2025 and December 31, 2024, $3.6 million and $3.7 million of prepaid financing costs had yet to be amortized, respectively. These prepaid loan fees are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

Current wording

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

Previous wording

The following table summarizes the interest expense and amortized fees on the SBA-guaranteed debentures for the three months ended March 31, 2025 and 2024 (dollars in millions):

Current wording

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