What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-02-22 compared with 2021-02-23 · 315 added, 337 removed, 994 unchanged (40% of the section changed)

7 unchanged sentences

Our core investment strategy focuses on lending to U.S.

middle market companies supported by financial sponsors, which we define as companies with approximately $25 million to $100 million of EBITDA, which we believe is a useful proxy for cash flow.

middle market companies supported by financial sponsors, which we define as companies with approximately $25 million to

$100 million of EBITDA, which we believe is a useful proxy for cash flow.

This core strategy is supplemented with complementary specialty lending and opportunistic investing strategies, which take advantage of the broad capabilities of Carlyle’s Global Credit platform while offering risk diversifying portfolio benefits.

13 unchanged sentences

Both our Investment Adviser and our Administrator are wholly owned subsidiaries of Carlyle Investment Management L.L.C., a subsidiary of Carlyle.

Investment Adviser’s five-person investment committee is responsible for reviewing and approving our investment

opportunities.

Our Investment Adviser’s five-person investment committee is responsible for reviewing and approving our investment opportunities.

The members of the investment committee have experience investing through different credit cycles.

December 31, 2020, our Investment Adviser’s investment team included a team of 170 investment professionals

across the Carlyle Global Credit segment.

As of December 31, 2021, our Investment Adviser’s investment team included a team of more than 180 investment professionals across the Carlyle Global Credit segment.

Our Investment Adviser’s investment committee comprises five of the most senior credit professionals within the Global Credit segment, with backgrounds and expertise across asset classes and over 26 years of average industry experience and 10 years of average tenure.

In addition, our Investment Adviser and its investment team are supported by a team of finance, operations and administrative professionals currently employed by Carlyle Employee Co., a wholly owned subsidiary of Carlyle.

In conducting our investment activities, we believe that we benefit from the significant scale and resources of Carlyle, including our Investment Adviser and its affiliates.

In conducting our investment activities, we believe that we benefit from the significant scale, relationships and resources of Carlyle, including our Investment Adviser and its affiliates.

We have operated our business as a BDC since we began our investment activities in May 2013.

45 unchanged sentences

Count of industries 27 27 28

Count of sponsors 63 63 57

Percentage of total investment fair value:

First lien debt (excluding first lien / last out debt) 63.6 % 74.6 % 68.1 %

First lien / last out debt 3.4 % 3.7 % 10.3 %

First lien debt 64.4 % 67.0 % 78.3 %

Second lien debt 17.9 % 15.6 % 11.0 %

17 unchanged sentences

Principal amount of investments funded:

First Lien Debt (excluding First Lien/Last Out) $ 314,373 $ 653,217 $ 648,034

First Lien/Last Out Debt 30,866 73,272 23,507

First Lien Debt $ 696,018 $ 345,239 $ 726,489

Second Lien Debt 137,465 117,106 144,217

3 unchanged sentences

Principal amount of investments sold or repaid:

First Lien Debt (excluding First Lien/Last Out) $ (694,027) $ (419,151) $ (566,490)

First Lien/Last Out Debt (79,831) (204,702) (29,682)

First Lien Debt $ (718,114) $ (773,858) $ (623,853)

Second Lien Debt (92,370) (57,207) (88,695)

9 unchanged sentences

Amortized Cost Fair Value Amortized Cost Fair Value

First Lien Debt (excluding First Lien/Last Out) $ 1,234,579 $ 1,161,881 $ 1,649,721 $ 1,585,042

First Lien/Last Out Debt 63,575 62,182 78,951 78,096

First Lien Debt $ 1,271,794 $ 1,232,084 $ 1,298,154 $ 1,224,063

Second Lien Debt 341,538 341,776 297,962 284,523

5 unchanged sentences

Amortized Cost Fair Value Amortized Cost Fair Value

First Lien Debt (excluding First Lien/Last Out) 7.08 % 7.53 % 8.00 % 8.17 %

First Lien/Last Out Debt 9.65 % 9.87 % 6.63 % 9.53 %

First Lien Debt Total 7.21 % 7.65 % 7.91 % 8.23 %

First Lien Debt 7.31 % 7.55 % 7.21 % 7.65 %

Second Lien Debt 9.04 9.04 9.15 9.59

2 unchanged sentences

Weighted average yield on debt and income producing securities at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at fair value included in such securities.

Weighted average yield on debt and income producing securities at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at amortized cost included in such securities.

Weighted average yield on debt and income producing securities at amortized

cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at amortized cost included in such securities.

Actual yields earned over the life of each investment could differ materially from the yields presented above.

Total weighted average yields (which includes the effect of accretion of discount and amortization of premiums) of our first and second lien debt investments as measured on an amortized cost basis decreased from 8.22% to 8.12% from December 31, 2019 to December 31, 2020.

The decrease in weighted average yields was primarily due to a decrease in the effective LIBOR rate applicable to loans in the portfolio, partially offset by a higher percentage of second lien debt in the portfolio.

Total weighted average yields (which includes the effect of accretion of discount and amortization of premiums) of our first and second lien debt investments as measured on an amortized cost basis increased from 7.57% to 7.68% from December 31, 2020 to December 31, 2021.

The increase in weighted average yields was primarily due to new fundings being originated at a higher weighted average yield than the yield of positions that repaid or were sold.

The following table summarizes the fair value of our performing and non-accrual/non-performing investments as of December 31, 2021 and 2020:

6 unchanged sentences

(1) For information regarding our non-accrual policy, see Note 2 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

See the Consolidated Schedules of Investments as of December 31, 2020 and 2019 in our consolidated financial statements in Part II, Item 8 of this Form 10-K “Financial Statements and Supplementary Data” for more information on these investments, including a list of companies and type and amount of investments.

As part of the monitoring process, our Investment Adviser has developed risk assessment policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on categories, which we refer to as “Internal Risk Ratings”.

During the second quarter of 2020, our Investment Advisor reevaluated and revised its Internal Risk Ratings and policies across the Carlyle Direct Lending platform to more appropriately assess portfolio risk across all market conditions, including the current COVID-19 environment.

The revised methodology incorporates greater focus on expectations for future company performance and industry outlook, and creates greater consistency in risk rating assignment across all investments by removing from the ratings methodology the direct tie of historical financial results to the "base case" projections derived at the time of our initial investment.

Under the revised methodology, an Internal Risk Rating of 1 – 5, which are defined below, is assigned to each debt investment in our portfolio, compared to Internal Risk Ratings of 1 – 6 under the legacy methodology.

Key drivers of internal risk rating used in the revised methodology are substantially the same as the legacy methodology, including financial metrics, financial covenants, liquidity and enterprise value coverage.

Pursuant to these risk policies, an Internal Risk Rating of 1 – 5, which are defined below, is assigned to each debt investment in our portfolio.

Key drivers of internal risk ratings include financial metrics, financial covenants, liquidity and enterprise value coverage.

Internal Risk Ratings Definitions

13 unchanged sentences

It is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit.

Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio.

Our Investment Adviser monitors and, when appropriate, changes the risk ratings assigned to each debt investment in our portfolio.

Our Investment Adviser reviews our investment ratings in connection with our quarterly valuation process.

The below table summarizes the Internal Risk Ratings as of December 31, 2020.

Given the forward-looking nature of certain elements of the revised methodology, it is impracticable to recast the risk ratings for the portfolio using the revised

methodology as of December 31, 2019.

December 31, 2020

(dollar amounts in millions) Fair Value % of Fair Value

The below table summarizes the Internal Risk Ratings assigned as of December 31, 2021 and 2020.

December 31, 2021 December 31, 2020

(dollar amounts in millions) Fair Value % of Fair Value Fair Value % of Fair Value

Internal Risk Rating 1 $ 3.8 0.2 % $ 19.1 1.3 %

4 unchanged sentences

Total $ 1,573.9 100.0 % $ 1,508.6 100.0 %

As of December 31, 2020, the weighted average Internal Risk Rating of our debt investment portfolio was 2.4.

As of December 31, 2020, 6 of our debt investments, with an aggregate fair value of $80.9 million, were assigned an Internal Risk Rating of 4-5.

As of December 31, 2021 and 2020, the weighted average Internal Risk Rating of our debt investment portfolio was 2.3 and 2.4, respectively.

As of December 31, 2021 and 2020, two and six of our debt investments with an aggregate fair value of $65.1 million and $80.9 million, respectively, were assigned an Internal Risk Rating of 4-5.

As of December 31, 2021 and 2020, five and five first lien debt investments in the portfolio with a fair value of $76.6 million and $58.1 million, respectively, were on non-accrual status, which represented approximately 4.0% and 3.2%, respectively, of total investments at fair value.

The remaining first and second lien debt investments were performing and current on their interest payments as of December 31, 2021 and 2020.

See the Consolidated Schedules of Investments as of December 31, 2021 and 2020, in our consolidated financial statements in Part II, Item 8 of this Form 10-K “Financial Statements and Supplementary Data” for more information on our investments, including a list of companies and type and amount of investments.

CONSOLIDATED RESULTS OF OPERATIONS

13 unchanged sentences

Total investment income $ 171,238 $ 182,118 $ 221,298

The decrease in investment income for the year ended December 31, 2020 from the comparable period in 2019 was primarily driven by the impact of average LIBOR, lower weighted average loan balance, and the impact of loans on non-accrual status.

As of December 31, 2020, the size of our portfolio decreased to $1,922,966 from $2,201,451 as of December 31, 2019 at amortized cost, and total principal amount of investments outstanding decreased to $1,930,782 from $2,207,949 as of December 31, 2019.

The decrease in investment income for the year ended December 31, 2021 from the comparable period in 2020 was primarily driven by a lower average investment balance, partially offset by higher dividend income from the Investment Funds.

As of December 31, 2021, the size of our portfolio increased to $1,957,553 from $1,922,966 as of December 31, 2020 at amortized cost.

As of December 31, 2021, the weighted average yield of our first and second lien debt increased to 7.68% from 7.57% as of December 31, 2020, on amortized cost, primarily due to new fundings being originated at a higher weighted average yield than the yield of positions that repaid or were sold.

The decrease in investment income for the year ended December 31, 2020 from the comparable period in 2019 was primarily driven the impact of average LIBOR, lower average investment balance, and the impact of loans on non-accrual status.

The size of our portfolio decreased to $1,922,966 as of December 31, 2020 from $2,201,451 as of December 31, 2019, at amortized cost.

As of December 31, 2020, the weighted average yield of our first and second lien debt decreased to 7.57% from 8.22% as of December 31, 2019, on amortized cost, primarily due to the decrease in LIBOR.

The increase in investment income for the year ended December 31, 2019 from the comparable period in 2018 was primarily driven by our increasing invested balance.

The size of our portfolio increased to $2,201,451 as of December 31, 2019 from $2,043,591 as of December 31, 2018, at amortized cost, and total principal amount of investments outstanding increased to $2,207,949 as of December 31, 2019 from $2,073,835 as of December 31, 2018.

As of December 31, 2019, the weighted average yield of our first and second lien debt decreased to 8.22% from 9.54% as of December 31, 2018, on amortized cost, primarily due to the decrease in LIBOR and loans placed on non-accrual status.

Interest income on our first and second lien debt investments is dependent on the composition and credit quality of the portfolio.

2 unchanged sentences

The remaining first and second lien debt investments were performing and current on their interest payments as of December 31, 2021 and 2020.

As of December 31, 2018, two first lien debt investments in the portfolio were non-performing.

The fair value of the loans in the portfolio on non-accrual status was $14,327, which represented approximately 0.73% of total investments at fair value.

The remaining first and second lien debt investments were performing and current on their interest payments as of December 31, 2018 and for the year then ended.

Net investment income (loss) for the years ended December 31, 2021, 2020 and 2019 was as follows:

27 unchanged sentences

Weighted average interest rate 2.76 % 3.15 % 4.41 %

The decrease in interest expense for the year ended December 31, 2020 compared to the comparable period in 2019 was primarily driven by lower LIBOR.

The increase in interest expense for the year ended December 31, 2019 compared to the comparable period in 2018 was driven by increased drawings under the Facilities related to increased deployment of capital for investments.

The decrease in interest expense for the year ended December 31, 2021 compared to the comparable period in 2020 was primarily driven by lower weighted average interest rates and lower average debt outstanding.

The decrease in interest expense for the year ended December 31, 2020 compared to the comparable period in 2019 was driven by lower LIBOR.

Below is a summary of the base management fees and incentive fees incurred during the years ended December 31, 2021, 2020 and 2019:

8 unchanged sentences

Total base management fees and incentive fees $ 46,023 $ 47,203 $ 54,188

The decrease in base management fees for the year ended December 31, 2020 from the comparable period in 2019 was driven by lower weighted average loan balance.

The decrease in base management fees for the year ended December 31, 2021 from the comparable period in 2020 was driven by lower average fair value of investments during the year.

The decrease in incentive fees for the year ended December 31, 2021 from the comparable period in 2020 was driven by lower pre-incentive fee net investment income.

The increase in base management fees for the year ended December 31, 2019 from the comparable period in 2018 was driven by our deployment of capital.

The decrease in base management fees for the year ended December 31, 2020 from the comparable period in 2019 was driven by lower average fair value of investments.

The decrease in incentive fees for the year ended December 31, 2020 from the comparable period in 2019 was driven by lower pre-incentive fee net investment income.

For the years ended December 31, 2021, 2020 and 2019, we recorded no accrued capital gains incentive fees based upon our cumulative net realized and unrealized appreciation (depreciation) as of December 31, 2021, 2020 and 2019, respectively.

25 unchanged sentences

As a result, $4,391 of unrealized appreciation was reversed and we realized a gain of $7,990 during the year ended December 31, 2019.

During September 2018, Tweddle Group, Inc.

completed a restructuring whereby a portion of the first lien debt held by us was exchanged into common equity.

As a result, $3,832 of unrealized depreciation was reversed and we realized a loss of $4,087 during the year ended December 31, 2018.

Net realized gain (loss) and net change in unrealized appreciation (depreciation) for the years ended December 31, 2021, 2020 and 2019 were as follows:

13 unchanged sentences

Total $ 19,038 $ 52,718 $ (58,472) $ (23,929) $ (38,376) $ (6,053)

Net change in unrealized appreciation in our investments for the year ended December 31, 2021 compared to the comparable period in 2020 was primarily driven by improving credit fundamentals and tightening market yields in 2021.

Net change in unrealized depreciation in our investments for the year ended December 31, 2020 compared to the comparable period in 2019 was primarily driven by unrealized depreciation related to investments more heavily impacted by the COVID-19 pandemic, combined with higher market yields.

Net change in unrealized depreciation in our investments for the year ended December 31, 2019 compared to the comparable period in 2018 was primarily due to the unrealized depreciation in Dimensional Dental Management, LLC and Dermatology Associates, offset by the reversal of prior period unrealized depreciation on Product Quest Manufacturing, LLC and SolAero Technologies Corp.

Net change in unrealized appreciation (depreciation) is also driven by changes in other inputs utilized under our valuation methodology, including, but not limited to, market spreads, enterprise value multiples, borrower leverage multiples and borrower ratings, and the impact of exits.

Net change in unrealized appreciation (depreciation) is also driven by changes in other inputs utilized under our valuation methodology, including, but not limited to, enterprise value multiples, borrower leverage multiples and borrower ratings, and the impact of exits.

MIDDLE MARKET CREDIT FUND, LLC

9 unchanged sentences

Portfolio and investment decisions with respect to Credit Fund must be unanimously approved by a quorum of Credit Fund’s investment committee consisting of an equal number of representatives of the Company and Credit Partners.

Therefore, although the Company owns more than 25% of the voting securities of Credit Fund, the Company does not believe that it has control over Credit Fund (other than for purposes of the Investment Company Act).

Middle Market Credit Fund SPV, LLC (the “Credit Fund Sub”), MMCF CLO 2017-1 LLC (the “2017-1 Issuer”), MMCF CLO 2019-2, LLC (the "2019-2 Issuer", formerly known as MMCF Warehouse, LLC (the "Credit Fund Warehouse")) and MMCF Warehouse II, LLC (the "Credit Fund Warehouse II"), each a Delaware limited liability company, were formed on April 5, 2016 and October 6, 2017, November 26, 2018 and August 16, 2019, respectively.

Middle Market Credit Fund SPV, LLC (“Credit Fund Sub”), MMCF CLO 2017-1 LLC (the “2017-1 Issuer”), MMCF CLO 2019-2, LLC (the "2019-2 Issuer") and MMCF Warehouse II, LLC (“Credit Fund Warehouse II”), each a Delaware limited liability company, were formed on April 5, 2016 and October 6, 2017, November 26, 2018 and August 16, 2019, respectively.

Credit Fund Sub, the 2019-2 Issuer, and Credit Fund Warehouse II are wholly owned subsidiaries of Credit Fund and are consolidated in Credit Fund’s consolidated financial statements commencing from the date of their respective formations.

In December 2020, the 2017-1 Issuer was redeemed in full and notes outstanding were repaid in full.

Credit Fund Sub, the 2019-2 Issuer and Credit Fund Warehouse II primarily invest in first lien loans of middle market companies.

In December 2020, the 2017-1 Notes, as defined below, were redeemed in full and repaid in full.

In August 2021, the 2019-2 Notes, as defined below, were redeemed and repaid in full.

Credit Fund Sub and Credit Fund Warehouse II primarily invest in first lien loans of middle market companies.

Credit Fund and its wholly owned subsidiaries follow the same Internal Risk Rating System as the Company.

Refer to “Debt” below for discussions regarding the credit facilities entered into and the notes issued by such wholly-owned subsidiaries.

managers of Credit Fund, and is reimbursed by Credit Fund for its costs and expenses and Credit Fund’s allocable portion of overhead incurred by the Credit Fund Administrative Agent in performing its obligations thereunder.

Credit Fund, the Company and Credit Partners entered into an administration agreement with Carlyle Global Credit Administration L.L.C., the administrative agent of Credit Fund (in such capacity, the “Credit Fund Administrative Agent”), pursuant to which the Credit Fund Administrative Agent is delegated certain administrative and non-discretionary functions, is authorized to enter into sub-administration agreements at the expense of Credit Fund with the approval of the board of managers of Credit Fund, and is reimbursed by Credit Fund for its costs and expenses and Credit Fund’s allocable portion of overhead incurred by the Credit Fund Administrative Agent in performing its obligations thereunder.

Selected Financial Data

Since inception of Credit Fund and through December 31, 2021 and 2020, the Company and Credit Partners each made capital contributions of $1 and $1 in members’ equity, respectively, and $216,000 and $216,000 in subordinated loans, respectively, to Credit Fund.

On May 25, 2021, the Company and Credit Partners received an aggregate return of capital on the subordinated loans of $46,000, of which the Company received $23,000.

Below is certain summarized consolidated information for Credit Fund as of December 31, 2021 and 2020.

2 unchanged sentences

Cash and cash equivalents (1)

54,041 119,796

Other assets 7,698 7,553

3 unchanged sentences

Notes payable, net of unamortized debt issuance costs of $0 and $1,559, respectively) — 253,933

Mezzanine loans (1)

Other liabilities 19,828 15,543

2 unchanged sentences

Total liabilities and members’ equity $ 988,698 $ 1,183,730

(1) As of December 31, 2020 and 2019, the fair value of the Company's ownership interest in the subordinated loans and members' equity was $205,891 and $111,596, respectively, and $0 and $93,000, respectively in the mezzanine loans.

(1) As of December 31, 2021 and 2020, $10,816 and $83,574, respectively, of Credit Fund’s cash and cash equivalents was restricted.

(2) As of December 31, 2021 and 2020, the fair value of the Company's ownership interest in the subordinated loans and members' equity was $184,141 and $205,891, respectively.

For the Years Ended December 31,

6 unchanged sentences

Net change in unrealized appreciation (depreciation) on investments 11,024 (12,839)

Net increase (decrease) resulting from operations $ 28,365 $ 38,060

Net increase in members’ equity resulting from operations $ 54,226 $ 28,365

Below is a summary of Credit Fund’s portfolio, followed by a listing of the loans in Credit Fund’s portfolio as of December 31, 2021 and 2020:

27 unchanged sentences

First Lien Debt (100.0% of fair value)

ACR Group Borrower, LLC ^+ (2)(3)(6) Aerospace & Defense L + 4.25% 5.50% 3/31/2028 $ 34,477 $ 33,913 $ 34,477

Acrisure, LLC +# (2)(3) Banking, Finance, Insurance & Real Estate L + 3.50% 3.78% 2/13/2027 25,376 25,353 25,203

Alku, LLC +# (2)(3) Business Services L + 5.50% 5.75% 7/29/2026 23,666 23,466 23,512

Alpha Packaging Holdings, Inc.

+\ (2)(3) Containers, Packaging & Glass L + 6.00% 7.00% 11/12/2021 16,378 16,378 16,378

AmeriLife Holdings LLC # (2)(3) Banking, Finance, Insurance & Real Estate L + 4.00% 4.15% 3/18/2027 9,951 9,929 9,802

Acrisure, LLC + (2)(3) Banking, Finance, Insurance & Real Estate L + 4.25% 4.75% 2/13/2027 6,700 6,650 6,687

Analogic Corporation ^+ (2)(3)(6) Capital Equipment L + 5.25% 6.25% 6/22/2024 19,796 19,781 19,587

4 unchanged sentences

+# (2)(3) Software L + 4.25% 4.35% 4/23/2026 12,157 12,113 12,087

AQA Acquisition Holding, Inc.

+\ (2)(3)(6) High Tech Industries L + 4.25% 5.25% 5/24/2023 18,759 18,752 18,757

Astra Acquisition Corp.

+# (2)(3) Software L + 5.50% 6.50% 3/1/2027 28,783 28,392 28,783

Avalign Technologies, Inc.

+# (2)(3) Healthcare & Pharmaceuticals L + 4.50% 4.63% 12/22/2025 14,443 14,354 14,320

Big Ass Fans, LLC +\# (2)(3) Capital Equipment L + 3.75% 4.75% 5/21/2024 13,766 13,714 13,766

BK Medical Holding Company, Inc.

^+ (2)(3)(6) Healthcare & Pharmaceuticals L + 5.25% 6.25% 6/22/2024 24,165 23,951 22,363

Avenu Holdings, LLC + (2)(3) Sovereign & Public Finance L + 5.25% 6.25% 9/28/2024 23,350 23,350 23,350

BMS Holdings III Corp.

+ (2)(3) Construction & Building L + 5.50% 6.50% 9/30/2026 11,244 11,143 11,071

Chartis Holding, LLC + (2)(3)(6) Business Services L + 5.50% 6.50% 5/1/2025 6,964 6,964 6,964

Chemical Computing Group ULC (Canada) ^+ (2)(3)(6) Software L + 4.50% 5.50% 8/30/2024 13,912 13,480 13,845

Clarity Telecom LLC.

+ (2)(3) Media:

Broadcasting & Subscription L + 4.25% 4.40% 8/30/2026 14,813 14,773 14,813

Clearent Newco, LLC ^ (2)(3)(6) High Tech Industries L + 6.50% 7.50% 3/20/2025 4,079 4,079 3,907

Clearent Newco, LLC ^+\ (2)(3) High Tech Industries L + 5.50% 7.50% 3/20/2025 29,486 29,236 28,722

DecoPac, Inc.

^+\ (2)(3)(6) Non-durable Consumer Goods L + 4.25% 5.25% 9/29/2024 12,336 12,253 12,318

Chudy Group, LLC ^+ (2)(3)(6) Healthcare & Pharmaceuticals L + 5.75% 6.75% 6/30/2027 33,021 32,465 33,657

Diligent Corporation ^+ (2)(3)(6) Telecommunications L + 6.25% 7.25% 8/4/2025 9,049 8,816 9,228

Divisions Holding Corporation +# (2)(3) Business Services L + 4.75% 5.50% 5/27/2028 24,938 24,706 24,953

DTI Holdco, Inc.

1 unchanged sentence

Eliassen Group, LLC + (2)(3) Business Services L + 4.50% 4.60% 11/5/2024 15,159 15,103 15,152

EPS Nass Parent, Inc.

^+ (2)(3)(6) Utilities:

Electric L + 5.75% 6.75% 4/19/2028 32,846 32,169 32,507

EvolveIP, LLC ^+ (2)(3)(6) Telecommunications L + 5.50% 6.50% 6/7/2025 40,196 40,126 39,973

4 unchanged sentences

Frontline Technologies Holdings, LLC + (2)(3) Software L + 5.25% 6.25% 9/18/2023 14,736 14,269 14,736

Golden West Packaging Group LLC +\ (2)(3) Containers, Packaging & Glass L + 5.25% 6.25% 6/20/2023 29,012 28,896 28,974

GSM Acquisition Corp.

^+ (2)(3)(6) Hotel, Gaming & Leisure L + 5.00% 6.00% 11/16/2026 25,623 25,331 25,396

Heartland Home Services, Inc + (2)(3)(6) Consumer Services L + 6.00% 7.00% 12/15/2026 17,664 17,664 17,735

HMT Holding Inc.

5 unchanged sentences

Electric L + 4.50% 5.50% 3/22/2024 34,392 34,347 33,395

K2 Insurance Services, LLC + (2)(3)(6) Banking, Finance, Insurance & Real Estate L + 5.00% 6.00% 7/1/2026 12,929 12,929 12,906

KAMC Holdings, Inc.

2 unchanged sentences

KBP Investments, LLC + (2)(3)(6) Beverage, Food & Tobacco L + 5.00% 5.75% 5/25/2027 36,973 36,599 36,570

Marco Technologies, LLC ^+\ (2)(3)(6) Media:

Advertising, Printing & Publishing L + 4.00% 5.00% 10/30/2023 7,332 7,293 7,332

Mold-Rite Plastics, LLC +\ (2)(3) Chemicals, Plastics & Rubber L + 4.25% 5.25% 12/14/2021 14,520 14,501 14,520

Consolidated Schedule of Investments as of December 31, 2020

Investments (1)

Reference Rate & Spread (2)

Newport Group Holdings II, Inc.

+\# (2)(3) Banking, Finance, Insurance & Real Estate L + 3.50% 3.75% 9/13/2025 23,475 23,285 23,405

Odyssey Logistics & Technology Corp.

3 unchanged sentences

Advertising, Printing & Publishing L + 4.50% 5.50% 3/27/2024 19,222 19,194 16,467

Pasternack Enterprises, Inc.

+\ (2)(3) Capital Equipment L + 4.00% 5.00% 7/2/2025 22,524 22,513 22,218

Pharmalogic Holdings Corp.

+\ (2)(3) Healthcare & Pharmaceuticals L + 4.00% 5.00% 6/11/2023 11,205 11,189 11,158

Premise Health Holding Corp.

+# (2)(3) Healthcare & Pharmaceuticals L + 3.50% 3.72% 7/10/2025 13,445 13,409 13,419

Propel Insurance Agency, LLC ^+\ (2)(3)(6) Banking, Finance, Insurance & Real Estate L + 5.00% 6.00% 6/1/2024 38,134 37,662 37,716

Consolidated Schedule of Investments as of December 31, 2021

Investments (1)

Reference Rate & Spread (2)

Q Holding Company +# (2)(3) Automotive L + 5.00% 6.00% 12/31/2023 $ 21,515 $ 21,421 $ 21,098

5 unchanged sentences

Advertising, Printing & Publishing L + 4.25% 4.47% 10/11/2025 29,149 29,001 29,067

Situs Group Holdings Corporation +\ (2)(3) Banking, Finance, Insurance & Real Estate L + 4.75% 5.75% 6/28/2025 14,781 14,689 14,636

T2 Systems, Inc.

^+ (2)(3)(6) Transportation:

Consumer L + 6.75% 7.75% 9/28/2022 29,119 28,743 29,118

The Original Cakerie, Ltd.

(Canada) +\ (2)(3)(6) Beverage, Food & Tobacco L + 4.50% 5.50% 7/20/2022 6,295 6,281 6,289

The Original Cakerie, Ltd.

(Canada) + (2)(3) Beverage, Food & Tobacco L + 5.00% 6.00% 7/20/2022 8,837 8,815 8,829

Thoughtworks, Inc.

\# (2)(3) Business Services L + 3.75% 4.75% 10/11/2024 11,704 11,683 11,704

Acute Care Solutions, LLC +\ (2)(3) Healthcare & Pharmaceuticals L + 6.00% 7.00% 5/15/2021 31,211 31,184 29,104

Striper Buyer, LLC + (2)(3) Containers, Packaging & Glass L + 5.50% 6.25% 12/30/2026 14,850 14,720 14,850

Turbo Buyer, Inc.

+ (2)(3)(6) Automotive L + 6.00% 7.00% 12/2/2025 13,960 13,960 13,661

TelePacific Holdings Corp.

+ (2)(3) Telecommunications L + 5.50% 6.50% 5/2/2023 6,660 6,643 4,995

USALCO, LLC + (2)(3) Chemicals, Plastics & Rubber L + 6.00% 7.00% 10/19/2027 14,995 14,704 14,704

VRC Companies, LLC ^+ (2)(3)(6) Business Services L + 5.50% 6.25% 6/29/2027 26,520 26,103 26,162

Water Holdings Acquisition LLC ^+ (2)(3)(6) Utilities:

Water L + 5.25% 6.25% 12/18/2026 26,316 25,520 25,516

Welocalize, Inc.

1 unchanged sentence

WRE Holding Corp.

^+ (2)(3)(6) Environmental Industries L + 5.25% 6.25% 1/3/2023 8,367 8,336 8,252

^+ (2)(3)(6) Environmental Industries SOFR + 5.50% 6.50% 1/3/2025 8,740 8,724 8,584

Yellowstone Buyer Acquisition, LLC + (2)(3) Consumer Goods:

Durable L + 5.75% 6.75% 9/13/2027 39,900 39,135 39,095

First Lien Debt Total

$ 934,728 $ 926,959

Second Lien Debt (2.28% of fair value)

DBI Holding, LLC ^ (2) Transportation:

Cargo 9.00% PIK 9.00% 2/1/2026 $ 24,113 $ 23,768 $ 24,113

Second Lien Debt Total

$ 23,768 $ 24,113

Equity Investments (0.00% of fair value)

8 unchanged sentences

Credit Fund has entered into a revolving credit facility (the "Credit Fund Facility").

Accordingly, such assets are not available to creditors of Credit Fund Sub, the 2019-2 Issuer or Credit Fund Warehouse II.

Accordingly, such assets are not available to creditors of Credit Fund Sub or Credit Fund Warehouse II.

+ Denotes that all or a portion of the assets are owned by Credit Fund Sub.

1 unchanged sentence

The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub.

Accordingly, such assets are not available to creditors of Credit Fund, the 2019-2 Issuer or Credit Fund Warehouse II.

\ Denotes that all or a portion of the assets are owned by the 2019-2 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on May 21, 2019 (the “2019-2 Debt Securitization”).

Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or Credit Fund Warehouse II.

Accordingly, such assets are not available to creditors of Credit Fund or Credit Fund Warehouse II.

# Denotes that all or a portion of the assets are owned by the Credit Fund Warehouse II.

1 unchanged sentence

The lenders of the Credit Fund Warehouse II Facility have a first lien security interest in substantially all of the assets of the Credit Fund Warehouse II.

Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or 2019-2 Issuer.

Accordingly, such assets are not available to creditors of Credit Fund or Credit Fund Sub.

(1) Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States.

10 unchanged sentences

First Lien Debt – unfunded delayed draw and revolving term loans commitments Type Unused Fee Par/ Principal Amount Fair Value

ACR Group Borrower, LLC Revolver 0.38 % $ 7,350 $ —

Analogic Corporation Revolver 0.50 847 (9)

AQA Acquisition Holding, Inc.

Revolver 0.50 2,459 —

BK Medical Holding Company, Inc.

Revolver 0.50 2,609 (176)

Chartis Holding, LLC Revolver 0.50 2,183 —

Chemical Computing Group ULC (Canada) Revolver 0.50 873 (4)

Clearent Newco, LLC Delayed Draw 1.00 2,549 (66)

DecoPac, Inc.

Revolver 0.50 2,143 (3)

Chudy Group, LLC Delayed Draw 1.00 5,517 88

Chudy Group, LLC Revolver 0.50 1,379 22

Diligent Corporation Delayed Draw 1.00 1,653 26

Diligent Corporation Revolver 0.50 703 11

EvolveIP, LLC Delayed Draw 1.00 1,904 (2)

EPS Nass Parent, Inc.

Delayed Draw 1.00 3,136 (29)

EPS Nass Parent, Inc.

Revolver 0.50 941 (9)

EvolveIP, LLC Revolver 0.50 3,360 (17)

GSM Acquisition Corp.

Delayed Draw 1.00 4,313 (33)

Heartland Home Services, Inc Revolver 0.50 746 3

HMT Holding Inc.

Revolver 0.50 6,173 (223)

Integrity Marketing Acquistion, LLC Delayed Draw 1.00 4,144 41

Jensen Hughes, Inc.

Delayed Draw 1.00 1,127 (35)

Integrity Marketing Acquisition, LLC Delayed Draw — 7,000 (71)

Integrity Marketing Acquisition, LLC Delayed Draw 1.00 4,453 (45)

Jensen Hughes, Inc.

Revolver 0.50 2,000 (55)

K2 Insurance Services, LLC Revolver 0.50 1,170 (2)

KBP Investments, LLC Delayed Draw 1.00 503 (5)

KBP Investments, LLC Delayed Draw 1.00 2,415 (24)

Marco Technologies, LLC Delayed Draw 1.00 7,500 —

Propel Insurance Agency, LLC Revolver 0.50 1,905 (19)

Propel Insurance Agency, LLC Delayed Draw 1.00 1,733 (17)

QW Holding Corporation Revolver 0.50 5,498 (268)

QW Holding Corporation Delayed Draw 1.00 9,338 (162)

T2 Systems, Inc.

QW Holding Corporation Revolver 0.50 3,794 (66)

Turbo Buyer, Inc.

Revolver 0.50 933 (19)

The Original Cakerie, Ltd.

(Canada) Revolver 0.50 1,665 (1)

VRC Companies, LLC Delayed Draw 0.75 2,521 (30)

VRC Companies, LLC Revolver 0.50 833 (10)

Water Holdings Acquisition LLC Delayed Draw 1.00 8,421 (168)

Water Holdings Acquisition LLC Revolver 0.50 5,263 (105)

Welocalize, Inc.

Revolver 0.50 3,375 (64)

WRE Holding Corp.

Welocalize, Inc.

Revolver 0.50 2,250 (43)

WRE Holding Corp.

Delayed Draw 1.00 563 (7)

Revolver 0.50 624 (10)

Total unfunded commitments $ 80,383 $ (780)

3 unchanged sentences

First Lien Debt (97.5% of fair value)

Achilles Acquisition, LLC \+# (2) (3) Banking, Finance, Insurance & Real Estate L + 4.00% 5.75% 10/13/2025 $ 17,865 $ 17,776 $ 17,763

Acrisure, LLC \# (2)(3) Banking, Finance, Insurance & Real Estate L + 3.50% 3.65% 2/15/2027 $ 25,634 $ 25,606 $ 25,104

Acrisure, LLC +\# (2) (3) Banking, Finance, Insurance & Real Estate L + 4.25% 6.35% 11/22/2023 20,674 20,639 20,674

Advanced Instruments, LLC ^+\* (2) (3) (7) Healthcare & Pharmaceuticals L + 5.25% 6.99% 10/31/2022 35,610 35,536 35,466

Alku, LLC +# (2)(3) Business Services L + 5.50% 5.75% 7/29/2026 23,666 23,466 23,512

1 unchanged sentence

+\ (2)(3) Containers, Packaging & Glass L + 6.00% 7.00% 11/12/2021 16,378 16,378 16,378

AmeriLife Group, LLC ^# (2) (3) (7) Banking, Finance, Insurance & Real Estate L + 4.50% 6.20% 6/5/2026 16,627 16,557 16,558

AmeriLife Holdings LLC # (2)(3) Banking, Finance, Insurance & Real Estate L + 4.00% 4.15% 3/18/2027 9,951 9,929 9,802

Analogic Corporation ^+ (2)(3)(6) Capital Equipment L + 5.25% 6.25% 6/22/2024 18,857 18,837 18,857

Anchor Packaging, Inc.

5 unchanged sentences

+\ (2)(3)(6) High Tech Industries L + 4.25% 5.25% 5/24/2023 18,759 18,752 18,757

Astra Acquisition Corp.

+# (2)(3) Software L + 5.50% 6.50% 3/1/2027 28,783 28,392 28,783

Avalign Technologies, Inc.

1 unchanged sentence

Big Ass Fans, LLC +\# (2)(3) Capital Equipment L + 3.75% 4.75% 5/21/2024 13,766 13,714 13,766

Borchers, Inc.

+*\ (2) (3) (7) Chemicals, Plastics & Rubber L + 4.50% 6.60% 11/1/2024 15,116 15,072 15,085

Brooks Equipment Company, LLC * (2) (3) Construction & Building L + 5.00% 6.91% 8/29/2020 5,144 5,141 5,141

BK Medical Holding Company, Inc.

^+ (2)(3)(6) Healthcare & Pharmaceuticals L + 5.25% 6.25% 6/22/2024 24,165 23,951 22,363

Chemical Computing Group ULC (Canada) ^+ (2)(3)(6) Software L + 5.00% 6.00% 8/30/2023 14,055 13,378 14,055

Clarity Telecom LLC.

2 unchanged sentences

Clearent Newco, LLC ^ (2)(3)(6) High Tech Industries L + 6.50% 7.50% 3/20/2025 4,079 4,079 3,907

+\ (2) (3) High Tech Industries L + 4.25% 5.95% 4/2/2026 12,438 12,375 12,420

Clearent Newco, LLC ^+\ (2)(3) High Tech Industries L + 5.50% 7.50% 3/20/2025 29,486 29,236 28,722

DecoPac, Inc.

^+\ (2)(3)(6) Non-durable Consumer Goods L + 4.25% 5.25% 9/29/2024 12,336 12,253 12,318

Dent Wizard International Corporation +\ (2) (3) Automotive L + 4.00% 5.70% 4/7/2020 36,880 36,843 36,717

Diligent Corporation ^+ (2)(3)(6) Telecommunications L + 6.25% 7.25% 8/4/2025 8,683 8,411 8,819

DTI Holdco, Inc.

1 unchanged sentence

Eliassen Group, LLC +\ (2)(3) Business Services L + 4.25% 4.40% 11/5/2024 7,543 7,516 7,483

EIP Merger Sub, LLC (Evolve IP) +^ (2) (3) (7) Telecommunications L + 5.75% 7.45% 6/7/2023 19,661 19,605 19,661

EvolveIP, LLC ^+ (2)(3)(6) Telecommunications L + 5.75% 6.75% 6/7/2023 19,800 19,759 19,775

Exactech, Inc.

2 unchanged sentences

+# (2)(3) Hotel, Gaming & Leisure L + 5.25% 6.25% 10/7/2025 24,750 24,546 22,780

Frontline Technologies Holdings, LLC + (2)(3) Software L + 5.75% 6.75% 9/18/2023 14,886 14,198 14,589

Golden West Packaging Group LLC +\ (2)(3) Containers, Packaging & Glass L + 5.25% 6.25% 6/20/2023 29,012 28,896 28,974

2 unchanged sentences

Oil & Gas L + 5.00% 6.00% 11/17/2023 32,821 32,458 30,984

Integrity Marketing Acquisition, LLC ^+ (2)(3)(6) Banking, Finance, Insurance & Real Estate L + 6.25% 7.25% 8/27/2025 7,836 7,701 7,956

Jensen Hughes, Inc.

4 unchanged sentences

Electricity L + 4.00% 4.23% 8/14/2026 13,825 13,768 12,531

^+\ (2) (3) (7) Aerospace & Defense L + 4.75% 6.46% 6/6/2025 28,471 28,242 28,286

Maravai Intermediate Holdings, LLC +\# (2) (3) Healthcare & Pharmaceuticals L + 4.25% 6.00% 8/2/2025 29,625 29,378 29,400

KBP Investments, LLC ^+ (2)(3)(6) Beverage, Food & Tobacco L + 5.00% 6.00% 5/15/2023 9,292 9,059 9,350

Marco Technologies, LLC ^+\ (2)(3)(6) Media:

Advertising, Printing & Publishing L + 4.00% 5.00% 10/30/2023 7,332 7,293 7,332

Consolidated Schedule of Investments as of December 31, 2019

Investments (1)

Reference Rate & Spread (2)

Mold-Rite Plastics, LLC +\ (2)(3) Chemicals, Plastics & Rubber L + 4.25% 5.25% 12/14/2021 14,520 14,501 14,520

^+*\ (2) (3) (7) Construction & Building L + 4.25% 5.95% 12/31/2024 38,251 38,138 38,166

Newport Group Holdings II, Inc.

5 unchanged sentences

Advertising, Printing & Publishing L + 4.50% 5.50% 3/27/2024 19,421 19,382 14,178

PAI Holdco, Inc.

+*\ (2) (3) Automotive L + 4.25% 6.35% 1/5/2025 19,532 19,458 19,532

Park Place Technologies, Inc.

+\# (2) (3) High Tech Industries L + 4.00% 5.70% 3/28/2025 22,566 22,489 22,566

Pasternack Enterprises, Inc.

+\ (2)(3) Capital Equipment L + 4.00% 5.00% 7/2/2025 22,524 22,513 22,218

Pathway Vet Alliance LLC +\ (2) (3) (7) Consumer Services L + 4.50% 6.21% 12/20/2024 19,085 18,708 19,217

Pharmalogic Holdings Corp.

4 unchanged sentences

Q Holding Company +\# (2)(3) Automotive L + 5.00% 6.00% 12/31/2023 21,735 21,604 20,229

QW Holding Corporation (Quala) ^+* (2) (3) (7) Environmental Industries L + 5.75% 7.73% 8/31/2022 11,630 11,449 11,531

QW Holding Corporation + (2)(3)(6) Environmental Industries L + 6.25% 7.25% 8/31/2022 11,566 11,465 10,727

Radiology Partners, Inc.

4 unchanged sentences

Situs Group Holdings Corporation +\ (2)(3) Banking, Finance, Insurance & Real Estate L + 4.75% 5.75% 6/28/2025 14,781 14,689 14,636

Systems Maintenance Services Holding, Inc.

+* (2) (3) High Tech Industries L + 5.00% 6.70% 10/30/2023 23,765 23,672 18,180

Surgical Information Systems, LLC +*\ (2) (3) (6) High Tech Industries L + 4.75% 7.47% 4/24/2023 26,168 26,005 25,715

T2 Systems, Inc.

10 unchanged sentences

+\ (2)(3) Telecommunications L + 5.50% 6.50% 5/2/2023 26,660 26,585 23,984

Valet Waste Holdings, Inc.

+\ (2) (3) Construction & Building L + 3.75% 5.70% 9/28/2025 11,850 11,825 11,688

VRC Companies, LLC + (2)(3)(6) Business Services L + 6.50% 7.50% 3/31/2023 30,582 29,464 30,582

Water Holdings Acquisition LLC ^+ (2)(3)(6) Utilities:

Water L + 5.25% 6.25% 12/18/2026 26,316 25,520 25,516

Welocalize, Inc.

+ (2)(3)(6) Business Services L + 4.50% 5.50% 12/23/2023 22,629 22,414 22,584

WIRB - Copernicus Group, Inc.

+*\ (2) (3) (7) Healthcare & Pharmaceuticals L + 4.25% 5.95% 8/15/2022 20,888 20,822 20,887

WRE Holding Corp.

^+ (2)(3)(6) Environmental Industries L + 5.25% 6.25% 1/3/2023 8,367 8,336 8,252

+*\ (2) (3) (7) High Tech Industries L + 5.00% 6.93% 11/17/2022 19,228 19,107 19,211

First Lien Debt Total

$ 1,051,406 $ 1,029,687

Consolidated Schedule of Investments as of December 31, 2019

Investments (1)

Reference Rate & Spread (2)

Second Lien Debt (2.3% of fair value)

1 unchanged sentence

Cargo 9.00% PIK 9.00% 2/1/2026 $ 24,113 $ 23,768 $ 24,113

* (2) (3) High Tech Industries L + 9.00% 10.94% 11/17/2023 666 660 664

Second Lien Debt Total

3 unchanged sentences

Cargo 2,961 $ — $ —

DBI Holding, LLC ^ Transportation:

Cargo 13,996 5,364 2,581

Equity Investments Total $ 5,364 $ 2,581

3 unchanged sentences

Credit Fund has entered into a revolving credit facility (the "Credit Fund Facility").

Accordingly, such assets are not available to creditors of Credit Fund Sub, the 2017-1 Issuer, the 2019-2 Issuer or Credit Fund Warehouse II.

Accordingly, such assets are not available to creditors of Credit Fund Sub, the 2019-2 Issuer or Credit Fund Warehouse II.

+ Denotes that all or a portion of the assets are owned by Credit Fund Sub.

1 unchanged sentence

The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub.

Accordingly, such assets are not available to creditors of Credit Fund, the 2017-1 Issuer, the 2019-2 Issuer or Credit Fund Warehouse II.

* Denotes that all or a portion of the assets are owned by the 2017-1 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on December 19, 2017 (the “2017-1 Debt Securitization”).

Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, the 2019-2 Issuer or Credit Fund Warehouse II.

Accordingly, such assets are not available to creditors of Credit Fund, the 2019-2 Issuer or Credit Fund Warehouse II.

Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, the 2017-1 Issuer or Credit Fund Warehouse II.

Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or Credit Fund Warehouse II.

# Denotes that all or a portion of the assets are owned by the Credit Fund Warehouse II.

1 unchanged sentence

The lenders of the Credit Fund Warehouse II Facility have a first lien security interest in substantially all of the assets of the Credit Fund Warehouse II.

Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, 2017-1 Issuer or 2019-2 Issuer.

Accordingly, such assets are not available to creditors of Credit Fund, Credit Fund Sub, or 2019-2 Issuer.

(1) Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States.

1 unchanged sentence

Certain portfolio company investments are subject to contractual restrictions on sales.

(2) Variable rate loans to the portfolio companies bear interest at a rate that may be determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S.

(2) Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S.

Prime Rate), which generally resets quarterly.

For each such loan, Credit Fund has provided the interest rate in effect as of December 31, 2019.

As of December 31, 2019, all of Credit Fund’s LIBOR loans were indexed to the 30-day LIBOR at 1.75%, the 90-day LIBOR at 1.91% and the 180-day LIBOR at 1.91%.

For each such loan, Credit Fund has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2020.

As of December 31, 2020, the reference rates for Credit Fund's variable rate loans were the 30-day LIBOR at 0.15%, the 90-day LIBOR at 0.25% and the 180-day LIBOR at 0.26%.

(3) Loan includes interest rate floor feature, which is generally 1.00%.

(4) Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.

(5) Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements.

(6) In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, Credit Fund is entitled to receive additional interest as a result of an agreement among lenders as follows:

EIP Merger Sub, LLC (Evolve IP) (3.75%) and Surgical Information Systems, LLC (0.89%).

Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.

(7) As of December 31, 2019, Credit Fund had the following unfunded commitments to fund delayed draw and revolving senior secured loans:

(6) As of December 31, 2020, Credit Fund and Credit Fund Sub had the following unfunded commitments to fund delayed draw and revolving senior secured loans:

First Lien Debt – unfunded delayed draw and revolving term loans commitments Type Unused Fee Par/ Principal Amount Fair Value

Advanced Instruments, LLC Revolver 0.50 % $ 563 $ (2)

AmeriLife Group, LLC Delayed Draw 1.00 298 (1)

Anchor Packaging, Inc.

Delayed Draw 1.00 4,487 (1)

Analogic Corporation Revolver 0.50 % $ 1,975 $ —

AQA Acquisition Holding, Inc.

Revolver 0.50 2,459 —

Borchers, Inc.

BK Medical Holding Company, Inc.

Revolver 0.50 2,609 (176)

Chemical Computing Group ULC (Canada) Revolver 0.50 873 —

Clearent Newco, LLC Delayed Draw 1.00 2,549 (66)

1 unchanged sentence

Revolver 0.50 2,143 (3)

EIP Merger Sub, LLC (Evolve IP) Revolver 0.50 1,680 —

EIP Merger Sub, LLC (Evolve IP) Delayed Draw 1.00 2,240 —

Diligent Corporation Delayed Draw 1.00 2,109 25

Diligent Corporation Revolver 0.50 703 8

EvolveIP, LLC Delayed Draw 1.00 1,904 (2)

EvolveIP, LLC Revolver 0.50 1,680 (2)

HMT Holding Inc.

Revolver 0.50 6,173 (291)

Jensen Hughes, Inc.

Revolver 0.50 1,136 (11)

Integrity Marketing Acquistion, LLC Delayed Draw 1.00 4,144 41

Jensen Hughes, Inc.

Delayed Draw 1.00 1,127 (35)

Jensen Hughes, Inc.

Revolver 0.50 1,364 (43)

KBP Investments, LLC Delayed Draw 1.00 503 1

KBP Investments, LLC Delayed Draw 1.00 10,190 30

Marco Technologies, LLC Delayed Draw 1.00 7,500 —

Delayed Draw 1.00 1,913 (4)

Output Services Group Delayed Draw 4.25 116 (1)

Pathway Vet Alliance LLC Delayed Draw 1.00 19,867 68

Premise Health Holding Corp.

Delayed Draw 1.00 1,103 (17)

Propel Insurance Agency, LLC Revolver 0.50 1,905 (19)

Propel Insurance Agency, LLC Delayed Draw 1.00 1,733 (17)

QW Holding Corporation (Quala) Revolver 0.50 5,498 (31)

QW Holding Corporation (Quala) Delayed Draw 1.00 217 (1)

Situs Group Holdings Corporation Delayed Draw 1.00 1,216 (1)

QW Holding Corporation Revolver 0.50 5,498 (268)

QW Holding Corporation Delayed Draw 1.00 161 (8)

T2 Systems, Inc.

2 unchanged sentences

(Canada) Revolver 0.50 1,665 (1)

VRC Companies, LLC Revolver 0.50 858 —

Water Holdings Acquisition LLC Delayed Draw 1.00 8,421 (168)

Water Holdings Acquisition LLC Revolver 0.50 5,263 (105)

Welocalize, Inc.

Revolver 0.50 2,250 (4)

WIRB - Copernicus Group, Inc.

Revolver 0.50 1,000 —

WIRB - Copernicus Group, Inc.

Delayed Draw 1.00 2,592 —

WRE Holding Corp.

2 unchanged sentences

Delayed Draw 1.00 563 (7)

Revolver 0.50 998 (1)

Total unfunded commitments $ 81,129 $ (1,120)

(8) Loan was on non-accrual status as of December 31, 2019.

The Credit Fund, Credit Fund Sub and Credit Fund Warehouse II are party to separate credit facilities as described below.

In addition, until May 15, 2019, the 2019-2 Issuer (formerly known as the Credit Fund Warehouse) was party to the Credit Fund Warehouse Facility.

As of December 31, 2021 and 2020, Credit Fund, Credit Fund Sub, and Credit Fund Warehouse II were in compliance with all covenants and other requirements of their respective credit facility agreements.

1 unchanged sentence

Facility Credit Fund Sub

Facility Credit Fund Warehouse Facility Credit Fund Warehouse II Facility

Facility Credit Fund Warehouse II Facility

Outstanding balance as of December 31, 2019 $ 93,000 $ 343,506 $ 97,571

8 unchanged sentences

The maximum principal amount of the Credit Fund Facility is $175,000.

The maturity date of the Credit Fund Facility is March 22, 2021 (May 21, 2022 following the February 22, 2021 amendment).

The maturity date of the Credit Fund Facility is May 21, 2022.

Amounts borrowed under the Credit Fund Facility bear interest at a rate of LIBOR plus 9.00%.

Credit Fund Sub Facility.

On June 24, 2016, Credit Fund Sub closed on the Credit Fund Sub Facility with lenders, which was subsequently amended on May 31, 2017, October 27, 2017, August 24, 2018, December 12, 2019 and March 11, 2020.

The Credit Fund Sub Facility provides for secured borrowings during the applicable revolving period up to an amount equal to $640,000.

2 unchanged sentences

Amounts borrowed under the Credit Fund Sub Facility bear interest at a rate of LIBOR plus 2.25%.

Credit Fund Warehouse Facility .

On November 26, 2018, Credit Fund Warehouse closed on the Credit Fund Warehouse Facility with lenders.

The Credit Fund Warehouse Facility provided for secured borrowings during the applicable revolving period up to an amount equal to $150,000.

The Credit Fund Warehouse Facility was secured by a first lien security interest in substantially all of the portfolio investments held by the Credit Fund Warehouse.

The maturity date of the Credit Fund Warehouse Facility was November 26, 2019.

Amounts borrowed under the Credit Fund Warehouse Facility bore interest at a rate of LIBOR plus 1.05%.

Effective May 15, 2019, the Warehouse Facility changed its name from “MMCF Warehouse, LLC” to “MMCF CLO 2019-2, LLC” and secured borrowings outstanding were repaid in connection with the 2019-2 Debt Securitization.

Credit Fund Warehouse II Facility .

3 unchanged sentences

The maturity date of the Credit Fund Warehouse II Facility is August 16, 2022.

Amounts borrowed under the Credit Fund Warehouse II Facility bear interest at a rate of LIBOR plus 1.15% until August 2021.

Amounts borrowed under the Credit Fund Warehouse II Facility during the first 12 months bore interest at a rate of LIBOR plus 1.05%, and amounts borrowed in the final 12 months will bear interest at LIBOR plus 1.50%.

Amounts borrowed under the Credit Fund Warehouse II Facility bear interest at a rate of LIBOR plus 1.50%.

Amounts borrowed under the Credit Fund Warehouse II Facility during the first 12 months bore interest at a rate of LIBOR plus 1.05%, and amounts borrowed in the second 12 months bore interest at LIBOR plus 1.15%.

On December 19, 2017, Credit Fund completed the 2017-1 Debt Securitization.

1 unchanged sentence

The 2017-1 Debt Securitization was executed through a private placement of the 2017-1 Notes, consisting of:

• $231,700 of Aaa/AAA Class A-1 Notes, which bear interest at the three-month LIBOR plus 1.17%;

• $48,300 of Aa2/AA Class A-2 Notes, which bear interest at the three-month LIBOR plus 1.50%;

• $15,000 of A2/A Class B-1 Notes, which bear interest at the three-month LIBOR plus 2.25%;

• $9,000 of A2/A Class B-2 Notes which bear interest at 4.30%;

• $22,900 of Baa2/BBB Class C Notes which bear interest at the three-month LIBOR plus 3.20%;

• $25,100 of Ba2/BB Class D Notes which bear interest at the three-month LIBOR plus 6.38%.

• $231,700 of Aaa/AAA Class A-1 Notes, which bore interest at the three-month LIBOR plus 1.17%;

• $48,300 of Aa2/AA Class A-2 Notes, which bore interest at the three-month LIBOR plus 1.50%;

• $15,000 of A2/A Class B-1 Notes, which bore interest at the three-month LIBOR plus 2.25%;

• $9,000 of A2/A Class B-2 Notes which bore interest at 4.30%;

• $22,900 of Baa2/BBB Class C Notes which bore interest at the three-month LIBOR plus 3.20%;

• $25,100 of Ba2/BB Class D Notes which bore interest at the three-month LIBOR plus 6.38%.

The 2017-1 Notes were scheduled to mature on January 15, 2028.

Credit Fund received 100% of the preferred interests issued by the 2017-1 Issuer (the “2017-1 Issuer Preferred Interests”) on the closing date of the 2017-1 Debt Securitization in exchange for Credit Fund’s contribution to the 2017-1 Issuer of the initial closing date loan portfolio.

The 2017-1 Issuer Preferred Interests do not bear interest and had a nominal value of $47,900 at closing.

The 2017-1 Issuer Preferred Interests did not bear interest and had a nominal value of $47,900 at closing.

The 2017-1 Notes were fully redeemed during the year ended December 31, 2020.

As of the redemption date, the 2017-1 Issuer was in compliance with all covenants and other requirements of the indenture.

On May 21, 2019, Credit Fund completed the 2019-2 Debt Securitization.

1 unchanged sentence

The 2019-2 Debt Securitization was executed through a private placement of the 2019-2 Notes, consisting of:

• $233,000 of Aaa/AAA Class A-1 Notes, which bear interest at the three-month LIBOR plus 1.50%;

• $48,000 of Aa2/AA Class A-2 Notes, which bear interest at the three-month LIBOR plus 2.40%;

• $23,000 of A2/A Class B Notes, which bear interest at the three-month LIBOR plus 3.45%;

• $27,000 of Baa2/BBB- Class C Notes which bear interest at the three-month LIBOR plus 4.55%;

• $21,000 of Ba2/BB- Class D Notes which bear interest at the three-month LIBOR plus 8.03%.

The 2019-2 Notes are scheduled to mature on April 15, 2029.

• $233,000 of Aaa/AAA Class A-1 Notes, which bore interest at the three-month LIBOR plus 1.50%;

• $48,000 of Aa2/AA Class A-2 Notes, which bore interest at the three-month LIBOR plus 2.40%;

• $23,000 of A2/A Class B Notes, which bore interest at the three-month LIBOR plus 3.45%;

• $27,000 of Baa2/BBB- Class C Notes which bore interest at the three-month LIBOR plus 4.55%;

• $21,000 of Ba2/BB- Class D Notes which bore interest at the three-month LIBOR plus 8.03%.

The 2019-2 Notes were scheduled to mature on April 15, 2029.

Credit Fund received 100% of the preferred interests issued by the 2019-2 Issuer (the “2019-2 Issuer Preferred Interests”) on the closing date of the 2019-2 Debt Securitization in exchange for Credit Fund’s contribution to the 2019-2 Issuer of the initial closing date loan portfolio.

The 2019-2 Issuer Preferred Interests do not bear interest and had a nominal value of $48,300 at closing.

As of December 31, 2020, the 2019-2 Issuer was in compliance with all covenants and other requirements of the indenture.

The 2019-2 Issuer Preferred Interests did not bear interest and had a nominal value of $48,300 at closing.

The 2019-2 Notes were fully redeemed during the year ended December 31, 2021.

As of the redemption date and December 31, 2020, the 2019-2 Issuer was in compliance with all covenants and other requirements of the indenture.

MIDDLE MARKET CREDIT FUND II, LLC

15 unchanged sentences

Credit Fund II Senior Notes

On November 3, 2020, Credit Fund II Sub closed on the Credit Fund II Senior Notes (the “Credit Fund II Senior Notes”) with lenders.

The Credit Fund II Senior Notes provides for secured borrowings totaling $157,500 with two tranches,

A-1 and A-2 outstanding.

On November 3, 2020 and as amended on December 29, 2021, Credit Fund II Sub closed on the Credit Fund II Senior Notes (the “Credit Fund II Senior Notes”) with lenders.

The Credit Fund II Senior Notes provides for secured borrowings

totaling $157,500 with two tranches, A-1 and A-2 outstanding.

The facility is secured by a first lien security interest in substantially all of the portfolio investments held by Credit Fund II Sub.

3 unchanged sentences

The terms of the Credit Fund II Senior Notes provide that as loans pay down, up to $50,000 is available from principal proceeds for reinvestment, and then the investment principal proceeds are used to directly pay down the principal balance on the Credit Fund II Senior Notes.

As of December 31, 2020, Credit Fund II Sub was in compliance with all covenants and other requirements of its respective credit agreements.

As of December 31, 2021 and 2020, Credit Fund II Sub was in compliance with all covenants and other requirements of its respective credit agreements.

Selected Financial Data

Since inception of Credit Fund II and through December 31, 2021, the Company and CCLF each made capital contributions of $78,096 and $12,709 in members’ equity, respectively, to Credit Fund II.

Below is certain summarized consolidated information for Credit Fund II as of December 31, 2020.

Below is certain summarized consolidated information for Credit Fund II as of December 31, 2021 and 2020.

As of December 31,

Investments, at fair value (amortized cost of $245,312) $ 246,421

Investments, at fair value (amortized cost of $238,615 and $245,312, respectively) $ 239,289 $ 246,421

Cash and cash equivalents (1)

2 unchanged sentences

LIABILITIES AND MEMBERS’ EQUITY

Notes payable, net of unamortized debt issuance costs of $875 $ 156,625

Notes payable, net of unamortized debt issuance costs of $802 and $875, respectively $ 156,698 $ 156,625

Other liabilities 5,557 2,675

Total liabilities 159,300

Members’ equity

Members’ contributions 90,805

Members’ distributions (1,718)

Accumulated income from operations 2,855

Total members' equity (2)

92,732 91,942

Total liabilities and members’ equity $ 254,987 $ 251,242

(1) As of December 31, 2020, the fair value of the Company's ownership interest in the members' equity was $77,395.

(1) As of December 31, 2021 and 2020, all of Credit Fund II’s cash and cash equivalents was restricted.

(2) As of December 31, 2021 and 2020, the fair value of Company's ownership interest in the members' equity was $77,958 and $77,395, respectively.

For the Year Ended December 31,

6 unchanged sentences

Net increase (decrease) resulting from operations $ 12,790 $ 2,855

Below is a summary of Credit Fund II’s portfolio, followed by a listing of the loans in Credit Fund II’s portfolio as of December 31, 2020:

Below is a summary of Credit Fund II’s portfolio, followed by a listing of the loans in Credit Fund II’s portfolio as of December 31, 2021 and 2020:

As of December 31,

Senior secured loans (1)

$ 240,878 $ 248,172

Weighted average yields of senior secured loans based on amortized cost (2)

7.26 % 7.32 %

Weighted average yields of senior secured loans based on fair value (2)

7.24 % 7.29 %

Number of portfolio companies in Credit Fund II 36 44

Average amount per portfolio company (1)

$ 6,691 $ 5,640

Percentage of portfolio at floating interest rates (3) (4)

97.7 % 99.1 %

Percentage of portfolio at fixed interest rates (4)

2 unchanged sentences

(1) At par/principal amount.

(2) Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2020.

(2) Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2021 and 2020.

13 unchanged sentences

^ (2)(3) Containers, Packaging & Glass L + 5.00% 6.00% 12/19/2025 $ 9,946 $ 9,930 $ 9,946

American Physician Partners, LLC ^ (2)(3) Healthcare & Pharmaceuticals L + 6.75%, 1.50% PIK 9.25% 2/21/2022 8,415 8,415 8,415

Appriss Health, LLC ^ (2)(3) Healthcare & Pharmaceuticals L + 7.25% 8.25% 5/6/2027 1,197 1,178 1,198

^ (2)(3) Software L + 7.25% 8.25% 1/10/2025 5,357 5,295 5,357

Aurora Lux FinCo S.Á.R.L.

(Luxembourg) ^ (2)(3) Software L + 6.00% 7.00% 12/24/2026 4,355 4,273 3,924

Avenu Holdings, LLC ^ (2)(3) Sovereign & Public Finance L + 5.25% 6.25% 9/28/2024 987 980 987

BMS Holdings III Corp.

^ (2)(3) Construction & Building L + 5.50% 6.50% 9/30/2026 3,275 3,216 3,224

Captive Resources Midco, LLC ^ (2)(3) Banking, Finance, Insurance & Real Estate L + 5.50% 6.25% 5/31/2027 8,193 8,108 8,147

Chartis Holding, LLC ^ (2)(3) Business Services L + 5.50% 6.50% 5/1/2025 9,924 9,907 9,924

Comar Holding Company, LLC ^ (2)(3) Containers, Packaging & Glass L + 5.75% 6.75% 6/18/2024 8,710 8,632 8,536

Cority Software Inc.

(Canada) ^ (2)(3) Software L + 5.00% 6.00% 7/2/2026 8,712 8,591 8,707

Dwyer Instruments, Inc ^ (2)(3) Capital Equipment L + 5.50% 6.25% 7/21/2027 10,000 9,939 9,974

Ethos Veterinary Health LLC ^ (2)(3) Consumer Services L + 4.75% 4.85% 5/15/2026 8,134 8,080 8,134

EvolveIP, LLC ^ (2)(3) Telecommunications L + 5.50% 6.50% 6/7/2025 8,710 8,701 8,666

Harbour Benefit Holdings, Inc.

^ (2)(3) Business Services L + 5.25% 6.25% 12/13/2024 4,717 4,707 4,669

K2 Insurance Services, LLC ^ (2)(3) Banking, Finance, Insurance & Real Estate L + 5.00% 6.00% 7/1/2026 9,012 8,914 8,998

^ (2)(3) High Tech Industries L + 5.50%, 1.00% PIK 7.50% 5/3/2025 9,092 8,987 9,038

Material Holdings, LLC ^ (2)(3) Business Services L + 5.75% 6.50% 8/19/2027 7,980 7,896 7,891

Maverick Acquisition, Inc.

^ (2)(3) Aerospace & Defense L + 6.00% 7.00% 6/1/2027 7,980 7,814 7,808

National Technical Systems, Inc.

^ (2)(3) Aerospace & Defense L + 5.50% 6.50% 6/12/2023 8,733 8,720 8,733

NMI AcquisitionCo, Inc.

^ (2)(3) High Tech Industries L + 5.75% 6.50% 9/6/2025 8,708 8,680 8,601

Redwood Services Group, LLC ^ (2)(3) High Tech Industries L + 6.00% 7.00% 6/6/2024 8,736 8,724 8,737

Riveron Acquisition Holdings, Inc.

^ (2)(3) Banking, Finance, Insurance & Real Estate L + 5.75% 6.75% 5/22/2025 8,173 8,074 8,173

RSC Acquisition, Inc.

^ (2)(3) Banking, Finance, Insurance & Real Estate L + 5.50% 6.25% 11/1/2026 8,401 8,277 8,434

Superior Health Linens, LLC ^ (2)(3) Business Services L + 6.50% 7.50% 3/31/2022 6,875 6,875 6,875

TCFI Aevex LLC ^ (2)(3) Aerospace & Defense L + 6.00% 7.00% 3/18/2026 1,701 1,676 1,458

Turbo Buyer, Inc.

^ (2)(3) Automotive L + 6.00% 7.00% 12/2/2025 8,091 7,950 7,929

US INFRA SVCS Buyer, LLC ^ (2)(3) Environmental Industries L + 6.50% 7.50% 4/13/2026 3,267 3,217 3,189

USLS Acquisition, Inc.

^ (2)(3) Business Services L + 5.50% 6.50% 11/30/2024 6,234 6,223 6,165

Westfall Technik, Inc.

^ (2)(3) Chemicals, Plastics & Rubber L + 5.75% 6.75% 9/13/2024 6,418 6,337 6,359

First Lien Debt Total

$ 208,316 $ 208,196

Second Lien Debt (13.0%) of fair value

AI Convoy S.A.R.L (United Kingdom) ^ (2)(3) Aerospace & Defense L + 8.25% 9.25% 1/17/2028 5,514 5,413 5,720

AP Plastics Acquisition Holdings, LLC ^ (2)(3) Chemicals, Plastics & Rubber L + 7.50% 8.25% 8/10/2029 4,500 4,410 4,526

Consolidated Schedule of Investments as of December 31, 2021

Investments (1)

Reference Rate & Spread (2)

Interest Rate (2)

Maturity Date

Par/ Principal Amount

Amortized Cost (4)

Fair Value (5)

AQA Acquisition Holdings, Inc.

^ (2)(3) High Tech Industries L + 7.50% 8.00% 3/3/2029 $ 5,000 $ 4,881 $ 5,004

Quartz Holding Company ^ (2)(3) Software L + 8.00% 8.10% 4/2/2027 4,852 4,781 4,852

Tank Holding Corp.

^ (2)(3) Capital Equipment L + 8.25% 8.35% 3/26/2027 5,514 5,446 5,569

World 50, Inc.

^ (6) Business Services 11.50% 11.50% 1/9/2027 5,465 5,368 5,422

Second Lien Debt Total

$ 30,299 $ 31,093

Total Investments

$ 238,615 $ 239,289

^ Denotes that all or a portion of the assets are owned by Credit Fund II Sub.

Credit Fund II Sub has entered into the Credit Fund II Sub Notes.

The lenders of the Credit Fund II Sub Notes have a first lien security interest in substantially all of the assets of Credit Fund II Sub.

Accordingly, such assets are not available to creditors of Credit Fund II.

(1) Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States.

As of December 31, 2021, the geographical composition of investments as a percentage of fair value was 3.6% in Canada, 1.6% in Luxembourg, 2.4% in the United Kingdom and 92.4% in the United States.

Certain portfolio company investments are subject to contractual restrictions on sales.

Prime Rate), which generally resets quarterly.

For each such loan, Credit Fund II has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2021.

As of December 31, 2021, the reference rates for Credit Fund II's variable rate loans were the 30-day LIBOR at 0.10%, the 90-day LIBOR at 0.22% and the 180-day LIBOR at 0.33%.

(3) Loan includes interest rate floor feature, which is generally 1.00%.

(5) Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund II, pursuant to Credit Fund II’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements, to the consolidated financial statements included in Part II, Item 8 of the Form 10-K.

(6) Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company .

Consolidated Schedule of Investments as of December 31, 2020

Investments (1)

Reference Rate & Spread (2)

Interest Rate (2)

Maturity Date

Par/ Principal Amount

Amortized Cost (4)

Fair Value (5)

First Lien Debt (90.1%) of fair value)

^ (2)(3) Containers, Packaging & Glass L + 5.25% 6.25% 12/19/2025 $ 1,500 $ 1,481 $ 1,501

Alpine SG, LLC ^ (2)(3) High Tech Industries L + 5.75% 6.75% 11/16/2022 4,411 4,390 4,378

89 unchanged sentences

(6) Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company .

3 unchanged sentences

The primary use of existing funds and any funds raised in the future is expected to be for investments in portfolio companies, repayment of indebtedness, cash distributions to our stockholders and for other general corporate purposes.

While aggregate economic activity continued to improve through the fourth quarter of 2020, the dispersion in performance across industries and geographies has been substantial.

The slower than anticipated global vaccination rollout, combined with uncertainties regarding new variants of the virus, will prolong the risk of continued disruption deeper into the year, and we expect that the pace and magnitude of economic recovery will be uneven.

This continued market and business disruption may impact certain aspects of our liquidity.

Depreciation in the valuations of our investments may adversely impact collateral eligibility, which would reduce the availability under the Credit Facility.

We are therefore continuously and critically monitoring our operating results, liquidity and anticipated capital requirements, and taking action to fortify our balance sheet and provide capital flexibility.

For example, in December 2020, we issued an additional $75.0 million aggregate principal amount of senior unsecured notes, and used the proceeds for the repayment of our secured debt, which provides enhanced balance sheet flexibility.

We believe our current cash position, available capacity under the Credit Facility – which is well in excess of our unfunded commitments – and net cash provided by operating activities will provide us with sufficient resources to

meet our obligations and continue to support our investment objectives, including reserving for the capital needs that may arise at our portfolio companies.

On May 24, 2013, the SPV closed on a senior secured credit facility (the "SPV Credit Facility"), which was subsequently amended on June 30, 2014, June 19, 2015, June 9, 2016, May 26, 2017 and August 9, 2018.

On December 11, 2020, the SPV repaid all outstanding amounts under the SPV Credit Facility and the facility was terminated.

The SPV Credit Facility provided for secured borrowings during the applicable revolving period up to $275,000, subject to restrictions imposed on borrowings under the Investment Company Act and certain restrictions and conditions set forth in the SPV Credit Facility, including adequate collateral to support such borrowings.

On March 21, 2014, we closed on a senior secured revolving credit facility (the "Credit Facility", and together with the SPV Credit Facility, the "Facilities"), which was subsequently amended on January 8, 2015, May 25, 2016, March 22, 2017, September 25, 2018, June 14, 2019 and October 28, 2020.

We believe our current cash position, available capacity on our revolving credit facilities – which is well in excess of our unfunded commitments – and net cash provided by operating activities will provide us with sufficient resources to meet our obligations and continue to support our investment objectives, including reserving for the capital needs which may arise at our portfolio companies.

On March 21, 2014, the Company closed on a senior secured revolving credit facility (“the Credit Facility”), which was subsequently amended on January 8, 2015, May 25, 2016, March 22, 2017, September 25, 2018, June 14, 2019 and October 28, 2020.

The maximum principal amount of the Credit Facility is $688,000, subject to availability under the Credit Facility, which is based on certain advance rates multiplied by the value of the Company’s portfolio investments (subject to certain concentration limitations) net of certain other indebtedness that the Company may incur in accordance with the terms of the Credit Facility.

1 unchanged sentence

Maximum capacity under the Credit Facility may be increased, subject to certain conditions, to $900,000 through the exercise by the Company of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing.

The Credit Facility includes a $50,000 limit for swingline loans and a $20,000 limit for letters of credit.

The Credit Facility includes a $50,000 limit for swingline loans and a

$20,000 limit for letters of credit.

Subject to certain exceptions, the Credit Facility is secured by a first lien security interest in substantially all of the portfolio investments held by the Company.

2 unchanged sentences

Failure to comply with these covenants could result in a default under the Credit Facility that, if we were unable to obtain a waiver from the applicable lenders, could result in the immediate acceleration of the amounts due under the Credit Facility, and thereby have a material adverse impact on our business, financial condition and results of operations.

For more information on the SPV Credit Facility and the Credit Facility, see Note 7 to the consolidated financial statements in Part II, Item 8 of this Form 10-K.

For more information on the Credit Facility, see Note 7 to the consolidated financial statements in Part II, Item 8 of this Form 10-K.

On December 30, 2019, the Company closed a private offering of $115.0 million in aggregate principal amount of 4.750% Senior Unsecured Notes due December 31, 2024 (the “2019 Notes”).

20 unchanged sentences

For more information on the Senior Notes and the 2015-1R Notes, see Note 8 to the consolidated financial statements in Part II, Item 8 of this Form 10-K.

As of December 31, 2020 and 2019, we had $68,419 and $36,751, respectively, in cash and cash equivalents.

The Facilities consisted of the following as of December 31, 2020 and 2019:

As of December 31, 2021 and 2020, we had $93,074 and $68,419, respectively, in cash, cash equivalents and restricted cash.

The Credit Facility consisted of the following as of December 31, 2021 and 2020:

December 31, 2021

8 unchanged sentences

Amounts Available (2)

SPV Credit Facility $ 275,000 $ 232,469 $ 42,531 $ 4,225

Credit Facility $ 688,000 $ 347,949 $ 340,051 $ 207,365

18 unchanged sentences

Total $ 449,200 $ 448,843 $ 449,200 $ 440,436

As of December 31, 2020 and 2019, we had a combined $987,149 and $1,180,743, respectively, of outstanding consolidated indebtedness under our Facilities, the 2015-1R Notes and the Senior Notes.

As of December 31, 2021 and 2020, we had a combined $1,046,855 and $987,149, respectively, of outstanding consolidated indebtedness under the Credit Facility, the 2015-1R Notes and the Senior Notes.

Our annualized interest cost as of December 31, 2021 and 2020, was 2.75% and 2.89%, excluding fees (such as fees on undrawn amounts and amortization of upfront fees).

6 unchanged sentences

Common stock outstanding, beginning of year 55,320,309 57,763,811 62,230,251

Reinvestment of dividends on common stock — — 361,056

Repurchase of common stock (2,177,855) (2,443,502) (4,466,440)

1 unchanged sentence

On May 5, 2020, we issued and sold 2,000,000 shares of Preferred Stock to an affiliate of Carlyle in a private placement at a price of $25 per share.

Shares of Preferred Stock issued and outstanding as of December 31, 2020 and 2019 were 2,000,000 and 0, respectively.

Contractual Obligations

A summary of our significant contractual payment obligations was as follows as of December 31, 2020 and 2019:

As of December 31,

Payment Due by Period 2020 2019

Less than 1 Year $ — $ —

1-3 Years — —

3-5 Years (1)

537,949 731,543

More than 5 Years (2)

449,200 449,200

Total $ 987,149 $ 1,180,743

(1) Includes amounts outstanding under the Facilities and the Senior Notes.

(2) Includes amounts outstanding under the 2015-1R Notes.

Shares of Preferred Stock issued and outstanding as of both December 31, 2021 and 2020 were 2,000,000.

OFF BALANCE SHEET ARRANGEMENTS

15 unchanged sentences

Effective on July 5, 2017, we converted our “opt in” dividend reinvestment plan to an “opt out” dividend reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our common stockholders, other than those common stockholders who have “opted out” of the plan.

As a result of adopting the plan, if our Board of Directors authorizes, and we declare, a cash dividend or distribution, our common stockholders who have not elected to “opt out” of our dividend reinvestment plan will have their cash dividends or distributions automatically reinvested in additional shares of our common stock, rather than receiving cash.

As a result of adopting the plan, if our Board of Directors authorizes, and we declare, a cash dividend or distribution on our common stock, our common stockholders who have not elected to “opt out” of our dividend reinvestment plan will have their cash dividends or distributions automatically reinvested in additional shares of our common stock, rather than receiving cash.

Each registered common stockholder may elect to have such common stockholder’s dividends and distributions distributed in cash rather than participate in the plan.

For any registered common stockholder that does not so elect, distributions on such common stockholder’s shares will be reinvested by State Street Bank and Trust Company, our plan administrator, in additional shares of common stock.

The number of common shares to be issued to the common stockholder will be determined based on the total dollar amount of the cash distribution payable, net of applicable withholding taxes.

intend to use primarily newly issued common shares to implement the plan so long as the market value per common share is equal to or greater than the net asset value per share of common stock on the relevant valuation date.

If the market value per share is less than the net asset value per share of common stock on the relevant valuation date, the plan administrator would implement the plan through the purchase of common stock on behalf of participants in the open market, unless we instruct the plan administrator otherwise.

The number of shares to be issued to the common stockholder will be determined based on the total dollar amount of the cash distribution payable, net of applicable withholding taxes.

We intend to use primarily newly issued shares of common stock to implement the plan so long as the market value per share is equal to or greater than the net asset value per share on the relevant valuation date.

If the market value per share is less than the net asset value per share on the relevant valuation date, the plan administrator would implement the plan through the purchase of common stock on behalf of participants in the open market, unless we instruct the plan administrator otherwise.

The following table summarizes the Company’s dividends declared per share of common stock during the three most recent fiscal years:

2 unchanged sentences

May 6, 2019 June 28, 2019 July 17, 2019 0.37

June 17, 2019 June 28, 2019 July 17, 2019 0.08 (1)

August 5, 2019 September 30, 2019 October 17, 2019 0.37

3 unchanged sentences

May 4, 2020 June 30, 2020 July 17, 2020 0.37

June 17, 2019 June 28, 2019 July 17, 2019 0.08 (1)

August 3, 2020 September 30, 2020 October 16, 2020 0.32 (2)

August 3, 2020 September 30, 2020 October 16, 2020 0.05 (1)

November 2, 2020 December 31, 2020 January 15, 2021 0.32

December 12, 2019 December 31, 2019 January 17, 2020 0.18 (1)

November 2, 2020 December 31, 2020 January 15, 2021 0.04 (1)

February 22, 2021 March 31, 2021 April 16, 2021 $ 0.32

February 22, 2021 March 31, 2021 April 16, 2021 0.05 (1)

May 3, 2021 June 30, 2021 July 15, 2021 0.32

May 3, 2021 June 30, 2021 July 15, 2021 0.04 (1)

August 2, 2021 September 30, 2021 October 15, 2021 0.32

3 unchanged sentences

(1) Represents a special/supplemental dividend.

(2) The Company updated its dividend policy such that the regular dividend is $0.32 per share of common stock, effective with the third quarter 2020 dividend.

The Preferred Stock has a Liquidation Preference plus any accumulated but unpaid dividends up to but excluding the date of distribution.

Dividends are payable on a quarterly basis in an initial amount equal to 7.00% per annum of the Liquidation Preference per share, payable in cash, or at the Company’s option, 9.00% per annum of the Liquidation Preference payable in additional shares of Preferred Stock.

The following table summarizes the Company’s dividends declared on its Preferred Stock during 2020.

Unless otherwise noted, dividends were declared and paid, or are payable, in cash.

(2) The Company updated its dividend policy such that the base dividend is $0.32 per share of common stock, effective with the third quarter 2020 dividend.

Our Preferred Stock has a liquidation preference equal to $25 per share (the “Liquidation Preference) plus any accumulated but unpaid dividends up to but excluding the date of distribution.

Dividends on our Preferred Stock are payable on a quarterly basis in an initial amount equal to 7.00% per annum of the Liquidation Preference per share, payable in cash, or at our option, 9.00% per annum of the Liquidation Preference payable in additional shares of Preferred Stock.

The following table summarizes the Company’s dividends declared per share of Preferred Stock during the prior year and current fiscal year to date.

Unless otherwise noted, dividends declared were paid in cash.

Date Declared Record Date Payment Date Per Share Amount

3 unchanged sentences

Total $ 1.138

March 31, 2021 March 31, 2021 March 31, 2021 $ 0.438

June 30, 2021 June 30, 2021 June 30, 2021 0.438

September 30, 2021 September 30, 2021 September 30, 2021 0.438

December 29, 2021 December 31, 2021 December 31, 2021 0.438

Total $ 1.752

ASSET COVERAGE

13 unchanged sentences

The Company did not utilize this relief.

As of December 31, 2020 and 2019, the Company had total senior securities of $1,037,149 and $1,180,743, respectively, consisting of secured borrowings under the Facilities, the Senior Notes, the 2015-1R Notes and the Preferred Stock, and had asset coverage ratios of 182.09% and 181.01%, respectively.

As of December 31, 2021 and 2020, the Company had total senior securities of $1,096,855 and $1,037,149, respectively, consisting of secured borrowings under the Credit Facility, the Senior Notes, the 2015-1R Notes and the Preferred Stock, and had asset coverage ratios of 181.94% and 182.09%, respectively.

For a discussion of the principal risk factors associated with these senior securities, see Part I, Item 1A of this Form 10‑K.

For purposes of the asset coverage ratio, the Preferred Stock is classified as a senior security.

CRITICAL ACCOUNTING POLICIES

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ.

Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described below.

The critical accounting policies should be read in connection with our “ Risk Factors ” in Part I, Item 1A of this Form 10-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements in conformity with U.S.

GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

These estimates and judgments are based on historical information, information currently available to us and on various other assumptions management believes to be reasonable under the circumstances.

Actual results could vary from those estimates and we may change our estimates and assumptions in future evaluations.

Changes in these estimates and assumptions may have a material effect on our results of operations and financial condition.

We believe the critical accounting policies discussed below affect our more significant judgments and estimates used in the preparation of our consolidated financial statements and should be read in conjunction with our consolidated financial statements and related notes in Part II, Item 8, as well as with our “ Risk Factors ” in Part I, Item 1A of this Form 10-K.

Fair Value Measurements

32 unchanged sentences

For further information on the fair value hierarchies, our framework for determining fair value, and the composition of our portfolio, see Note 3 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for further information on fair value measurements.

Use of Estimates

The preparation of consolidated financial statements in Part II, Item 8 of this Form 10-K in conformity with US GAAP requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Management’s estimates are based on historical experiences and other factors, including expectations of future events that management believes to be reasonable under the circumstances.

It also requires management to exercise judgment in the process of applying the Company’s accounting policies.

Assumptions and estimates regarding the valuation of investments and their resulting impact on base management and incentive fees involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements in Part II, Item 8 of this Form 10-K.

Actual results could differ from these estimates and such differences could be material.

Investment transactions are recorded on the trade date.

2 unchanged sentences

Revenue Recognition

Interest from Investments and Realized Gain/Loss on Investments

Interest income is recorded on an accrual basis and includes the accretion of discounts and amortization of premiums.

Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method.

The amortized cost of debt investments represents the original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any.

At time of exit, the realized gain or loss on an investment is the difference between the amortized cost at time of exit and the cash received at exit using the specific identification method.

The Company may have loans in its portfolio that contain PIK provisions.

PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity.

Such income is included in interest income in the Consolidated Statements of Operations included in Part II, Item 8 of this Form 10-K.

Dividend Income

Dividend income from each investment fund is recorded on the record date for the investment fund to the extent that such amounts are payable by the investment fund and are expected to be collected.

Other income may include income such as consent, waiver, amendment, unused, syndication and prepayment fees associated with the Company’s investment activities as well as any fees for managerial assistance services rendered by the Company to the portfolio companies.

Such fees are recognized as income when earned or the services are rendered.

The Company may receive fees for guaranteeing the outstanding debt of a portfolio company.

Such fees are amortized into other income over the life of the guarantee.

The unamortized amount, if any, is included in other assets in the Consolidated Statements of Assets and Liabilities included in Part II, Item 8 of this Form 10-K.

Non-Accrual Income

2 unchanged sentences

Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.

Non-accrual loans are restored to accrual status when past due principal and interest are paid current and, in management’s judgment, are likely to remain

Management may not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Non-accrual loans are restored to accrual status when past due principal and interest are paid current and, in management’s judgment, are likely to remain current.

Management may determine not to place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

For federal income tax purposes, the Company has elected to be treated as a RIC under the Code, and intends to make the required distributions to its stockholders as specified therein.

4 unchanged sentences

Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.

In addition, based on the excise distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year.

98% of its ordinary income for each calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year.

For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed.

2 unchanged sentences

The SPV and the 2015-1 Issuer are disregarded entities for tax purposes and are consolidated with the tax return of the Company.

Dividends and Distributions to Common Stockholders

To the extent that the Company has taxable income available, the Company intends to make quarterly distributions to its common stockholders.

Dividends and distributions to common stockholders are recorded on the record date.

The amount to be distributed is determined by the Board of Directors each quarter and is generally based upon the taxable earnings estimated by management and available cash.

Net realized capital gains, if any, are generally distributed at least annually, although the Company may decide to retain such capital gains for investment.

RELATED PARTY TRANSACTIONS

4 unchanged sentences

On May 26, 2021, the Company's Board of Directors, including a majority of the Independent Directors, approved the continuance of the Company's Investment Advisory Agreement with the Adviser for an additional one-year term.

Pursuant to relief granted by the SEC in light of the COVID-19 pandemic (the "Order") and a determination by the Board of Directors that reliance on the order was appropriate due to circumstances related to the current or potential side-effects of COVID-19, the May 26, 2021 meeting was held by video- and telephone-conference.

The Investment Advisory Agreement will automatically terminate in the event of an assignment and may be terminated by either party without penalty upon at least 60 days’ written notice to the other party.

Subject to the overall supervision of the Board of Directors, the Investment Adviser provides investment advisory services to

Subject to the overall supervision of the Board of Directors, the Investment Adviser provides investment advisory services to the Company.

For providing these services, the Investment Adviser receives fees from the Company consisting of two components—a base management fee and an incentive fee.

8 unchanged sentences

The second part is determined and payable in arrears based on capital gains as of the end of each calendar year.

Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the operating expenses accrued for the quarter (including the base management fee, expenses payable under the administration agreement, and any interest expense or fees on any credit facilities or outstanding debt and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

agreement, and any interest expense or fees on any credit facilities or outstanding debt and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature, accrued income that the Company has not yet received in cash.

28 unchanged sentences

Board of Directors

The Company’s Board of Directors currently consists of six members, four of whom are Independent Directors.

The Company’s Board of Directors currently consists of seven members, five of whom are Independent Directors.

The Board of Directors has established an Audit Committee, a Nominating and Governance Committee of the Board of Directors and a Compensation Committee, and may establish additional committees in the future.

2 unchanged sentences

See Note 5, Middle Market Credit Fund, LLC, to the consolidated financial statements in Part II, Item 8 of this Form 10-K.

Credit Fund II in exchange for approximately 84.13% of Credit Fund II's membership interests and gross cash proceeds of approximately $170 million.

During the year ended December 31, 2021, the Company sold 17 investments to Credit Fund II for proceeds of $84,554 and realized gains (losses) of $468.

The Company did not sell any investments to Credit Fund II during the years ended December 31, 2020 and 2019.

On November 3, 2020, pursuant to a contribution agreement by and between the Company and Credit Fund II, the Company contributed 45 senior secured debt investments with an aggregate principal balance of approximately $250 million to Credit Fund II in exchange for approximately 84.13% of Credit Fund II’s membership interests and gross cash proceeds of approximately $170 million.

There were no subsequent transfers through December 31, 2020.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis