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Item 9A. Controls and Procedures

2022-03-11 compared with 2021-03-12 · 563 added, 536 removed, 142 unchanged (89% of the section changed)

CONTROLS AND PROCEDURES

of Disclosure Controls and Procedures

Our management, with

the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure

controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or

the Exchange Act), as of the end of the period covered by this Annual Report on Form 10-K.

Based on such evaluation, our Chief

Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were

effective at a reasonable assurance level.

Control Over Financial Reporting

This Annual Report

on Form 10-K does not include a report of management’s assessment regarding internal control over financial

reporting or an attestation report of our independent registered public accounting firm as permitted in this transition period

under the rules of the SEC for newly public companies.

in Internal Control over Financial Reporting

have been no changes in our internal control over financial reporting during our fiscal quarter ended December 31, 2020 that

have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

Our management, with the

participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls

and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act),

as of the end of the period covered by this Annual Report on Form 10-K.

Based on such evaluation, our Chief Executive Officer and Chief

Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance

Internal Control Over Financial Reporting

Our management, including

our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over

financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Our internal control over financial

reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation

of our financial statements for external reporting purposes in accordance with GAAP.

Internal control over financial reporting includes

those policies and procedures that:

(i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect

the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary

to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made

only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention

or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect

on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect

misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become

inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management (with the participation

of our Chief Executive Officer and Chief Financial Officer) conducted an evaluation of the effectiveness of our internal control over

financial reporting based on the framework in Internal Control —

Integrated Framework issued in 2013 by the Committee of

Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that our internal control over financial

reporting was effective as of December 31, 2021.

Changes in Internal Control over Financial

There have been no changes

in our internal control over financial reporting during our fiscal quarter ended December 31, 2021 that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

On December 18, 2020,

the Company, through a special purpose wholly-owned subsidiary, PS BDC Funding II, entered into the Loan Agreement with the WF

Lenders, WFB as the administrative agent and U.S.

Bank, as Collateral Agent and Custodian, pursuant to which the WF Lenders agreed

to provide the Company with a line of credit.

Under the WF Credit

Facility, which matures on December 18, 2025, the WF Lenders have agreed to extend credit to PS BDC Funding II in an aggregate

amount up to the Facility Amount (as defined in the Loan Agreement).

The Facility Amount for the WF Credit Facility was $150.0

million as of the closing date of the Loan Agreement.

The WF Borrowers’

ability to draw under the WF Credit Facility is scheduled

to terminate on December 18, 2023.

All amounts outstanding under the WF Credit Facility are required to be repaid by December 18,

The loans under the

WF Credit Facility may be Broadly Syndicated Loans or Middle Market Loans and shall be eurocurrency rate loans unless such rate

is unavailable, in which case the loans shall be base rate loans until such rate is available.

Broadly Syndicated Loans will bear

interest at the LIBOR or base rate, as applicable, plus 1.85%, and Middle Market Loans will bear interest at LIBOR or base rate,

as applicable, plus 2.35%.

The “base rate”

will be equal to the highest of (a) the federal funds rate plus 1/2 of 1%

and (b) the prime rate.

The Loan Agreement includes fallback language in the event that LIBOR becomes unavailable.

payable quarterly, as determined by the WFB as the administrative agent.

The WF Loan Agreement requires the payment of a non-usage

fee of (x) 0.50% multiplied by daily unused Facility Amounts during the first six months following the closing of the WF Credit

Facility, (y) 0.50% multiplied by the lesser of (1) daily unused Facility Amounts and (2) 50% of the Facility Amount plus 2.00%

multiplied by the greater of (i) the difference between the daily unused Facility Amount and 50% of the Facility Amount and (ii)

zero between six and twelve months following the closing of the WF Credit Facility, and, (z) thereafter, 0.50% multiplied by the

lesser of (1) daily unused Facility Amounts and (2) 20% of the Facility Amount plus 2.00% multiplied by the greater of (i) the

difference between the daily unused Facility Amount and 20% of the Facility Amount and (ii) zero.

Such fee is payable quarterly

The applicable percentage for PS BDC Funding II’s Eligible Loans ranges from 67.5% for Middle Market Loans to

70% for Broadly Syndicated Loans (as each such term is defined in the Loan Agreement).

In connection with

the WF Credit Facility, the Company transferred certain loans and assets to PS BDC Funding II through a Loan Sale Agreement (the

“Loan Sale Agreement”).

PS BDC Funding II has pledged all of its assets to U.S.

Bank, in its capacity as Collateral

Agent, to secure its obligations under the WF Credit Facility.

Both the Company and PS BDC Funding II have made customary representations

and warranties and are required to comply with various covenants, reporting requirements, and other customary requirements for

similar credit facilities.

Borrowing under the WF Credit Facility is subject to the leverage restrictions contained in the 1940

The obligations under the Loan Agreement may be accelerated upon the occurrence of an event of default under the Loan Agreement,

including in the event of a change of control of PS BDC Funding II, if the Investment Advisor ceases to serve as investment adviser

to the Company, or if Palmer Square or its affiliates cease to directly or indirectly own a majority of the membership interests

of the Investment Advisor.

As of December 31,

2020, we had no principal outstanding and $150 million of available Commitments under the WF Credit Facility.

The description above

is only a summary of the material provisions of the WF Credit Facility and is qualified in its entirety to copies of the Loan Agreement

and Loan Sale Agreement, which are filed as Exhibits 10.11 and 10.12, respectively, to this annual report on Form 10-K.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Certain information

with respect to the directors of the Company is set forth below, including their names, ages, a brief description of their recent

business experience, including present occupations and employment, certain directorships that each person holds, and the year in

which each person became a director.

For purposes of this

presentation, our directors have been divided into two groups –

DIRECTORS, EXECUTIVE OFFICERS AND

CORPORATE GOVERNANCE

Certain information with

respect to the directors of the Company is set forth below, including their names, ages, a brief description of their recent business

experience, including present occupations and employment, certain directorships that each person holds, and the year in which each person

became a director.

For purposes of this presentation,

our directors have been divided into two groups –

independent directors and interested directors.

directors are “interested persons”

Interested directors are “interested

persons”

as defined in the 1940 Act.

1 unchanged sentence

Long and Jeffrey D.

Fox are interested

directors of the Company because they are officers of the Company and/or the Investment Advisor.

Fox are interested directors of the Company because they

are officers of the Company and/or the Investment Advisor.

Name, Address and Age

held with Company

Term of Office and Length of Time Served

Principal Occupation(s) During the Past 5 Years

Other Public Directorships Held During the Past 5 years (2)

Term of Office and

of Time Served

Principal Occupation(s)

During the Past 5 Years

Directorships Held

During the Past 5 years (2)

Independent Director

1 unchanged sentence

Nelson –

Class II Director since November 2019;

Class II Director since

November 2019;

Term Expires 2023

Wealth Advisor at SeaCrest Wealth Management, a financial advisory firm, since May 2018.

Vice President at Enterprise Trust Company, an investment management firm, from February 2013 to February 2018.

Wealth Advisor at SeaCrest Wealth

Management, a financial advisory firm, since May 2018.

Vice President at Enterprise Trust Company, an investment management firm,

from February 2013 to February 2018.

Webber –

Class I Director since November 2019;

Class I Director since

November 2019;

Term Expires 2022

Financial Reporting Manager at The Anschutz Corporation, a private holding company.

Member of the Board of Trustees of Palmer Square Opportunistic Income Fund since August 2014.

Member of the Board of Trustees of Montage Managers Trust, a registered investment company (ceased operations in 2017).

Class I Director since November 2019;

Financial Reporting Manager

at The Anschutz Corporation, a private holding company.

Member of the Board of Trustees

of Palmer Square Opportunistic Income Fund since August 2014.

Member of the Board of Trustees of Montage Managers Trust, a registered

investment company (ceased operations in 2017).

Class III Director since

November 2019;

Term Expires 2024

1 unchanged sentence

Portfolio Manager at Great Plains Principal Trading, an asset management firm, from January 2012 through June 2019.

Member of the Board of Trustees of Palmer Square Opportunistic Income Fund since August 2014.

Member of the Board of Trustees of Montage Managers Trust, a registered investment company (ceased operations in 2017).

Member of the Board of Trustees

of Palmer Square Opportunistic Income Fund since August 2014.

Member of the Board of Trustees of Montage Managers Trust, a registered

investment company (ceased operations in 2017).

Interested Director

3 unchanged sentences

Class I Director since November 2019;

Term Expires 2022

Chief Executive Officer of Palmer Square Capital Management LLC.

Chief Executive Officer of Palmer Square Capital

Management LLC.

Member of the Board of Trustees of Palmer Square

Opportunistic Income Fund from August 2014 to October 2018.

Chief Financial Officer,

Treasurer and Director

Class I Director since November 2019;

Term Expires 2021

President of Palmer Square Capital Management LLC since March 2020.

Class III Director since November 2019;

President of Palmer Square Capital Management LLC

since March 2020.

Managing Director of Palmer Square Capital Management LLC from April 2013 to March 2020.

(1) The business address of each of our directors is c/o Palmer

Square Capital BDC Inc., 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205.

(2) No director otherwise serves as a director of an investment

company subject to the 1940 Act.

The business address of each of our directors is c/o Palmer Square

Capital BDC Inc., 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205.

No director otherwise serves as a director of an investment company

subject to the 1940 Act.

Executive Officers Who Are Not Directors

Information regarding

our executive officers who do not serve on the Board is as follows:

Name, Address and Age (1)

Positions held with Company

Principal Occupation(s) During the Past 5 Years

Information regarding our

executive officers who do not serve on the Board is as follows:

Address and Age (1)

Positions held with

Occupation(s) During the Past 5 Years

Chief Investment Officer

Long was appointed as our Chief Investment Officer in 2019.

Long also serves as Chief Investment Officer of PSCM and has key responsibilities for all investment-related activities at PSCM.

was appointed as our Chief Investment Officer in 2019.

Long also serves as Chief Investment Officer of PSCM and has key responsibilities

for all investment-related activities at PSCM.

Prior to joining PSCM in 2011, Ms.

Long worked for JPMorgan Chase & Co.

in New York for 13 years.

Long held many senior roles including Deputy Head of North American Credit Trading, Head of High Yield Trading, and Head of Credit Derivatives Trading.

Long has been a trader of many products including high yield bonds, high yield credit derivatives, distressed debt, capital structure arbitrage, and structured credit.

In addition, she worked with the Global Head of Credit Trading to help oversee risk management for the High Yield and High Grade credit trading books.

Long is married to Christopher D.

York for 13 years.

Long held many senior roles including Deputy Head of North American Credit Trading, Head of High Yield Trading,

and Head of Credit Derivatives Trading.

Long has been a trader of many products including high yield bonds, high yield credit

derivatives, distressed debt, capital structure arbitrage, and structured credit.

In addition, she worked with the Global Head of

Credit Trading to help oversee risk management for the High Yield and High Grade credit trading books.

Long is married to Christopher

Long, our Chairman, Chief Executive Officer and President.

Long received an AB degree in Economics from Princeton University and is also a CFA®

Long received an AB degree in Economics from Princeton University

and is also a CFA®

charterholder.

1 unchanged sentence

Betz was appointed as our Chief Compliance Officer in 2019.

Betz also serves as Chief Operating Officer and Chief Compliance Officer of PSCM.

Prior to joining PSCM in March 2018, Mr.

Betz worked for over 14 years at Scout Investments, most recently as Chief Operating Officer, Chief Compliance Officer and Treasurer.

to joining in 2019, Mr.

Betz worked for over 14 years at Scout Investments, most recently as Chief Operating Officer, Chief Compliance

Officer and Treasurer.

Prior to joining Scout Investments, Mr.

Betz worked for over six years at UMB Bank as a Performance Measurement Specialist and subsequently as Investment Technology Officer.

Betz received an MBA degree and a BA degree in Political Science from the University of Missouri-Kansas City.

(1) The business address of each of our officers is c/o Palmer

Square Capital BDC Inc., 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205.

Betz worked for over six years at UMB Bank as a Performance Measurement

Specialist and subsequently as Investment Technology Officer.

Betz received an MBA degree and a BA degree in Political Science from

the University of Missouri-Kansas City.

(1) The business address of each of

our officers is c/o Palmer Square Capital BDC Inc., 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205.

Information About Each Director’s Experience, Qualifications,

Attributes or Skills

The Board believes

that, collectively, the directors have balanced and diverse experience, qualifications, attributes and skills, which allow the

Board to operate effectively in governing the Company and protecting the interests of its stockholders.

Below is a description

of the various experiences, qualifications, attributes and/or skills with respect to each director considered by the Board.

The Board believes that,

collectively, the directors have balanced and diverse experience, qualifications, attributes and skills, which allow the Board to operate

effectively in governing the Company and protecting the interests of its stockholders.

Below is a description of the various experiences,

qualifications, attributes and/or skills with respect to each director considered by the Board.

Interested Directors

Christopher D.

Long was appointed as our Chairman,

Chief Executive Officer and President in 2019.

Long has also served as Chief Executive Officer of our Investment Advisor since

2019 and Chief Executive Officer of PSCM since 2009 and is responsible for managing our Investment Advisor’s and PSCM’s

overall business.

Long was appointed as

our Chairman, Chief Executive Officer and President in 2019 and has served on our Board since November 2019.

Long has also served

as Chief Executive Officer of our Investment Advisor since 2019 and Chief Executive Officer of PSCM since 2009 and is responsible for

managing our Investment Advisor’s and PSCM’s overall business.

Long also served as President of PSCM from 2009 to March

Since PSCM’s inception, Mr.

been successful in not only building a highly-experienced investment team, but also an integrated credit investment platform that

manages mutual fund offerings, private funds and separately managed accounts.

PSCM has a client list that spans not only institutions

and family offices, but also RIAs, bank/trust, and broker-dealers.

Long’s previous work experience includes key investment

roles at Prairie Capital and Sandell Asset Management as well as working at Morgan Stanley in the Credit Derivatives and Distressed

Securities Group focused on the firm’s proprietary investments.

Before Morgan Stanley, he worked at TH Lee Putnam Ventures,

a private equity fund sponsored by Thomas H Lee Partners and Putnam Investments.

In that role, he also served on the Board of Directors

of Avero, Inc.

Long has been successful in not only building a highly-experienced investment team, but also

an integrated credit investment platform that manages mutual fund offerings, private funds and separately managed accounts.

a client list that spans not only institutions and family offices, but also registered investment advisers, banks/trusts, and broker-dealers.

Long’s previous work experience includes key investment roles at Prairie Capital and Sandell Asset Management as well as working

at Morgan Stanley in the Credit Derivatives and Distressed Securities Group focused on the firm’s proprietary investments.

Morgan Stanley, he worked at TH Lee Putnam Ventures, a private equity fund sponsored by Thomas H Lee Partners and Putnam Investments.

In that role, he also served on the Board of Directors of Avero, Inc.

and was a Board Observer for Parago, Inc.

He started his career at JPMorgan & Co.

in Leveraged Finance and Mergers

& Acquisitions (FIG Group) advising corporations and private equity firms on investment banking and capital markets.

previously served on the board of trustees of Palmer Square Opportunistic Income Fund (Nasdaq) from August 2014 to October 2018.

He started his career

at JPMorgan & Co.

in Leveraged Finance and Mergers & Acquisitions (FIG Group) advising corporations and private equity firms

on investment banking and capital markets.

Long previously served on the board of trustees of Palmer Square Opportunistic Income

Fund (Nasdaq) from August 2014 to October 2018.

Long is married to Angie K.

Long, our Chief Investment Officer.

He received an MBA degree from the Harvard Business School

and an AB degree in Economics cum laude from Princeton University.

He received an MBA

degree from the Harvard Business School and an AB degree in Economics cum laude from Princeton University.

The Board believes that Mr.

Long’s strong investment and

operating leadership experience qualifies him to serve on the Board.

Fox was appointed

as our Chief Financial Officer and Treasurer in 2019.

Fox has also served as Chief Financial Officer of our Investment Advisor

since 2019 and as President of PSCM since March 2020.

Fox previously served as Managing Director of PSCM from April 2013 to

Long’s strong investment and operating leadership experience qualifies him to serve on the Board.

Fox was appointed as

our Chief Financial Officer and Treasurer in 2019 and has served on our board since November 2019.

Fox has also served as Chief Financial

Officer of our Investment Advisor since 2019 and as President of PSCM since March 2020.

Fox previously served as Managing Director

of PSCM from April 2013 to March 2020.

Prior to joining Palmer Square in April 2013, Mr.

Fox worked for Sandler O’Neill and Partners from September

2011 to March 2013 where he was a Managing Director within Fixed Income where he was involved in the structuring and sales of

many products including Collateralized Loan Obligations.

Fox worked for Sandler O’Neill and Partners

from September 2011 to March 2013 where he was a Managing Director within Fixed Income where he was involved in the structuring and sales

of many products including Collateralized Loan Obligations.

Before Sandler O’Neill, Mr.

Fox worked for Societe Generale as

a Director within Global Markets Advisory where he was instrumental in the US CDO/CLO and RMBS Credit Advisory effort.

included the restructuring of various structured credit legacy positions for European institutions as well as the modeling behind

the corporate rating and pricing for various structured products.

Prior to Societe Generale, Mr.

Fox worked for Société

Générale

as a Director within Global Markets Advisory where he was instrumental in the US CDO/CLO and RMBS Credit Advisory effort.

His work included

the restructuring of various structured credit legacy positions for European institutions as well as the modeling behind the corporate

rating and pricing for various structured products.

Prior to Société

Générale, Mr.

Fox was employed by JPMorgan

Chase & Co/Bear Stearns, where he was an Associate Director in the FAST organization focusing on the structuring of Trust

Preferred CDOs and CLOs.

Chase & Co/Bear Stearns, where he was an Associate Director in the FAST organization focusing on the structuring of Trust Preferred

CDOs and CLOs.

Also while at Bear Stearns, Mr.

Fox managed the global CDO analytics desk which included intensive credit

modeling of various asset classes.

Fox received a MS degree in Computer Information Systems from Arizona State University

and a BS degree in Mathematics and Geology from Northern Arizona University.

Fox managed the global CDO analytics desk which included intensive credit modeling of

various asset classes.

Fox received a MS degree in Computer Information Systems from Arizona State University and a BS degree in

Mathematics and Geology from Northern Arizona University.

Fox holds the Series 7 and 63 licenses.

believes that Mr.

Fox’s strong operational and financial experience qualifies him to serve on the Board.

The Board believes that Mr.

strong operational and financial experience qualifies him to serve on the Board.

Independent Directors

Webber is a Financial Reporting Manager

at The Anschutz Corporation, where she has worked for over 19 years.

Prior to Anschutz Corporation, she was a Supervising Audit

Senior at KPMG, LLP from 1997 to 2000.

Webber has served on the board of trustees of Palmer Square Opportunistic Income Fund

(Nasdaq) since 2014, and previously served on the board of trustees of Montage Managers Trust from July 2015 to March 2017.

Webber received a BS in Accounting from Indiana University and received her CPA license in 1997.

Webber has served on

our Board since November 2019.

Webber is a Financial Reporting Manager at The Anschutz Corporation, where she has worked for over

Prior to Anschutz Corporation, she was a Supervising Audit Senior at KPMG, LLP from 1997 to 2000.

Webber has served on

the board of trustees of Palmer Square Opportunistic Income Fund (Nasdaq) since 2014, and previously served on the board of trustees

of Montage Managers Trust from July 2015 to March 2017.

Webber received a BS in Accounting from Indiana University and received her

CPA license in 1997.

The Board believes that Ms.

Webber’s

strong financial and audit experience qualifies her to serve on the Board.

Neville is an active proprietary trader

and investor.

He was a Portfolio Manager at Great Plains Principal Trading from January 2012 through June 2019.

Prior to Great

Plains Principal Trading, Mr.

Neville served as a proprietary trader for over 23 years, focusing on agriculture futures and options

as well as stock index futures and energy.

Neville has served on the board of directors of Palmer Square Opportunistic Income

Fund (Nasdaq) since 2014.

Webber’s strong financial and audit experience qualifies her to serve on the Board.

Neville has served on

our Board since November 2019.

Neville is an active proprietary trader and investor.

He was a Portfolio Manager at Great Plains Principal

Trading from January 2012 through June 2019.

Prior to Great Plains Principal Trading, Mr.

Neville served as a proprietary trader for

over 23 years, focusing on agriculture futures and options as well as stock index futures and energy.

Neville has served on the board

of directors of Palmer Square Opportunistic Income Fund (Nasdaq) since 2014.

The Board believes that Mr.

Neville’s strong investment management and trading experience qualifies

him to serve on the Board.

Neville’s strong investment

management and trading experience qualifies him to serve on the Board.

Christopher C.

Nelson is a Wealth Advisor at SeaCrest

Wealth Management, where he has worked since May 2018.

Prior to SeaCrest Wealth Management, Mr.

Nelson was a Vice President at

Enterprise Trust Company from February 2013 to February 2018, where he led the Kansas City team.

Nelson has served on

our Board since November 2019.

Nelson is a Wealth Advisor at SeaCrest Wealth Management, where he has worked since May 2018.

to SeaCrest Wealth Management, Mr.

Nelson was a Vice President at Enterprise Trust Company from February 2013 to February 2018, where

he led the Kansas City team.

Prior to that, Mr.

investment management roles at The Private Bank, Kornitzer Capital Management, and The Bank of New York.

Nelson received a

Bachelor of Arts in English from Gettysburg College in Gettysburg, Pennsylvania.

The Board believes that Mr.

Nelson’s strong

investment management experience qualifies him to serve on the Board.

Nelson held investment management roles at The Private Bank, Kornitzer Capital Management,

and The Bank of New York.

Nelson received a Bachelor of Arts in English from Gettysburg College in Gettysburg, Pennsylvania.

Board believes that Mr.

Nelson’s strong investment management experience qualifies him to serve on the Board.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a)

of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of our Common Stock,

to file reports of securities ownership and changes in such ownership with the SEC.

Officers, directors, and greater than 10% stockholders

also are required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.

Based solely on the

Company’s review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors

and officers, the Company believes that during the year ended December 31, 2020, all Section 16(a) filing requirements

applicable to such persons were met in a timely manner.

Section 16(a) of the

Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of our Common Stock, to file reports

of securities ownership and changes in such ownership with the SEC.

Officers, directors, and greater than 10% stockholders also are required

by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.

Based solely on the Company’s

review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors and officers, the Company

believes that during the year ended December 31, 2021, all Section 16(a) filing requirements applicable to such persons were

met in a timely manner, with the following inadvertent exception:

Bicknell, beneficial owner of greater than 10% of our

Common Stock, filed late one Form 3 with respect to one transaction in shares of Common Stock during the reporting period.

Code of Conduct, Code of Ethics and Insider Trading Policy

We expect each of our

officers and directors, as well as any person affiliated with our operations, to act in accordance with the highest standards of

personal and professional integrity at all times and to comply with the Company’s policies and procedures and all laws, rules

and regulations of any applicable international, federal, provincial, state or local government.

To this effect, the Board has

adopted a Code of Ethics.

We expect each of our officers

and directors, as well as any person affiliated with our operations, to act in accordance with the highest standards of personal and

professional integrity at all times and to comply with the Company’s policies and procedures and all laws, rules and regulations

of any applicable international, federal, provincial, state or local government.

To this effect, the Board has adopted a Code of Ethics.

The Code of Ethics applies to all of the Company’s directors and officers.

As required by the 1940 Act and the Advisers Act, we and our

Investment Advisor have each adopted a Code of Ethics that establishes procedures that apply to our directors, executive officers,

officers, their respective staffs and the employees of our Investment Advisor with respect to their personal investments and investment

transactions.

Our Code of Ethics generally does not permit investments by our directors, officers or any other covered person in

securities that may be purchased or held by us.

As required by the 1940 Act

and the Advisers Act, we and our Investment Advisor have each adopted a Code of Ethics that establishes procedures that apply to our

directors, executive officers, officers, their respective staffs and the employees of our Investment Advisor with respect to their personal

investments and investment transactions.

Our Code of Ethics generally does not permit investments by our directors, officers or any other

covered person in securities that may be purchased or held by us.

Nomination of Directors

There have been no

material changes to the procedures by which stockholders may recommend nominees to our Board since the filing of our Proxy Statement

for our 2020 Annual Meeting of Stockholders.

There have been no material

changes to the procedures by which stockholders may recommend nominees to our Board since the filing of our Proxy Statement for our 2021

Annual Meeting of Stockholders.

Audit Committee

The members of our

Audit Committee are Megan L.

The members of our Audit

Committee are Megan L.

Webber, James W.

Neville and Christopher C.

Nelson, each of whom meets the independence standards

established by the SEC for audit committees and is independent for purposes of the 1940 Act.

Webber serves as Chair of our

Audit Committee.

Our Board has determined that Ms.

Nelson, each of whom meets the independence standards established

by the SEC for audit committees and is independent for purposes of the 1940 Act.

Webber serves as Chair of our Audit Committee.

Board has determined that Ms.

Webber is an “audit committee financial expert”

under SEC rules.

Our Audit Committee’s responsibilities include establishing guidelines and making recommendations to our Board regarding

the valuation of our loans and investments;

Our Audit Committee’s

responsibilities include establishing guidelines and making recommendations to our Board regarding the valuation of our loans and investments;

selecting our independent registered public accounting firm;

reviewing with such independent

registered public accounting firm the planning, scope and results of their audit of our financial statements;

pre-approving the

fees for services performed;

reviewing, in consultation with the independent registered public accounting firm, the adequacy of

internal control systems;

reviewing with such independent registered public accounting firm the planning,

scope and results of their audit of our financial statements;

pre-approving the fees for services performed;

reviewing, in consultation

with the independent registered public accounting firm, the adequacy of internal control systems;

reviewing our annual financial statements;

2 unchanged sentences

EXECUTIVE COMPENSATION

None of our officers

receives direct compensation from us.

None of our officers receives

direct compensation from us.

However, Messrs.

Long and Fox, through their indirect financial interests in our Investment

Advisor, have an indirect pecuniary interest in the investment advisory fees paid by us under the Advisory Agreement.

the Company is responsible for expenses incurred by the Administrator in connection with administering the Company’s business,

including making payments to the Administrator based upon the Company’s allocable portion of the Administrator’s overhead

and other expenses associated with performing its obligations under the Administration Agreement, including rent, the fees and

expenses associated with performing compliance functions and the allocable portion of the costs of compensation and related expenses

of the Company’s Chief Compliance Officer and Chief Financial Officer and their respective administrative support staffs.

Long and Fox, through their indirect financial interests in our Investment Advisor,

have an indirect pecuniary interest in the investment advisory fees paid by us under the Advisory Agreement.

In addition, the Company

is responsible for expenses incurred by the Administrator in connection with administering the Company’s business, including making

payments to the Administrator based upon the Company’s allocable portion of the Administrator’s overhead and other expenses

associated with performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with

performing compliance functions and the allocable portion of the costs of compensation and related expenses of the Company’s Chief

Compliance Officer and Chief Financial Officer and their respective administrative support staffs.

Compensation of Directors

9 unchanged sentences

The Board reviews and determines the compensation of Independent Directors.

The following table

shows information regarding the compensation earned by our directors for the year ended December 31, 2020.

No compensation

is paid by us to any interested director or executive officer of the Company.

The following table shows

information regarding the compensation earned by our directors for the year ended December 31, 2021.

No compensation is paid by

us to any interested director or executive officer of the Company.

from Palmer Square Capital BDC Inc.

9 unchanged sentences

compensation,

(2) We do not have a profit-sharing or retirement plan, and

directors do not receive any pension or retirement benefits.

We do not have a profit-sharing or retirement plan, and directors do

not receive any pension or retirement benefits.

Compensation Committee

The Company does not

have a compensation committee because its executive officers do not receive compensation from us.

The Board, as a whole, is responsible

for reviewing the reimbursement by the Company to the Administrator of the allocable portion of the cost of the Company’s

Chief Financial Officer and Chief Compliance Officer and their respective staffs on an annual basis and also participates in the

consideration of director compensation.

The Company does not have

a compensation committee because its executive officers do not receive compensation from us.

The Board, as a whole, is responsible for

reviewing the reimbursement by the Company to the Administrator of the allocable portion of the cost of the Company’s Chief Financial

Officer and Chief Compliance Officer and their respective staffs on an annual basis and also participates in the consideration of director

compensation.

Decisions on director compensation are based on a review of data of comparable BDCs.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table

shows information as of the March 12, 2021, unless otherwise indicated, regarding the beneficial ownership of our Common Stock

(i) each person that the Company believes beneficially holds more than 5% of the outstanding shares of Common Stock based

solely on the Company’s review of filings with the SEC pursuant to Section 13(d) or 13(g) of the Securities Exchange

Act of 1934, as amended (the “Exchange Act”) and Section 16 of the Exchange Act;

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table shows

information as of the March 11, 2022, unless otherwise indicated, regarding the beneficial ownership of our Common Stock by:

person that the Company believes beneficially holds more than 5% of the outstanding shares of Common Stock based solely on the Company’s

review of filings with the SEC pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the “Exchange

Act”) and Section 16 of the Exchange Act;

(ii) each director and nominee;

1 unchanged sentence

and (iv) all directors and executive officers as a group.

The percentage ownership

is based on 12,776,672 shares of our Common Stock issued and outstanding as of March 12, 2021.

Unless otherwise indicated, all

persons named as beneficial owners of our Common Stock have sole voting power and sole investment power with respect to the shares

indicated as beneficially owned.

In addition, unless otherwise indicated, the address for each person named below is c/o Palmer

Square Capital BDC Inc., Attention:

The percentage ownership is

based on 22,810,727 shares of our Common Stock issued and outstanding as of March 11, 2022.

Unless otherwise indicated, all persons named

as beneficial owners of our Common Stock have sole voting power and sole investment power with respect to the shares indicated as beneficially

In addition, unless otherwise indicated, the address for each person named below is c/o Palmer Square Capital BDC Inc., Attention:

Secretary, 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205.

Name and Address

Shares Owned (1)

Percentage of Common Stock Outstanding (2)

Percentage of

Outstanding (2)

Christopher D.

Christopher C.

All directors and executive officers as a group (7 persons)

All directors

and executive officers as a group (7 persons)

Excelsior Holdings D2 LLC (4)

1 unchanged sentence

Caravel Holdings LLC (6)

BFFV19, LLC (7)

Pilot Credit, LLC (8)

* Represents less than 1.0% of the issued and outstanding

shares of our Common Stock as of the Record Date.

(1) Beneficial ownership has been determined in accordance

with Rule 13d-3 under the Exchange Act.

Assumes no other purchases or sales of our common stock since the most recently available

This assumption has been made under the rules and regulations of the SEC and does not reflect any knowledge that

we have with regard to the present intent of the beneficial owners of our common stock listed in this table.

(2) Based on a total of 12,776,672 shares of Common Stock issued

and outstanding as of March 12, 2021.

(3) Includes 26,131 shares of Common Stock indirectly held

by the Christopher D.

Chinquapin Trust Company (8)

Represents less than 1.0% of the issued and outstanding shares of our

Common Stock as of the Record Date.

Beneficial ownership has been determined in accordance with Rule 13d-3

under the Exchange Act.

Assumes no other purchases or sales of our common stock since the most recently available SEC filings.

assumption has been made under the rules and regulations of the SEC and does not reflect any knowledge that we have with regard to

the present intent of the beneficial owners of our common stock listed in this table.

Based on a total of 22,810,727 shares of Common Stock issued and outstanding as of March 11, 2022.

Includes 26,131 shares of Common Stock indirectly held by the Christopher

Long Revocable Trust, for which Mr.

Long disclaim beneficial ownership except to the extent

of his or her pecuniary interests therein.

(4) Based on information provided in a Schedule 13D filed on

March 27, 2020, Excelsior Holdings D2 LLC (“Excelsior”) reported shared voting and dispositive power with respect

to 2,613,051 shares of our Common Stock.

Excelsior Holdings D LLC, a Delaware limited liability company (“Holdings LLC”)

is the managing member of Excelsior.

As managing member of Excelsior, Holdings LLC exercises dispositive and voting power over

the shares beneficially owned by Excelsior.

The principal business address of each of Excelsior and Holdings LLC is 6000 France

Long disclaim beneficial ownership except to the extent of his or her pecuniary

interests therein.

Based on information provided in a Schedule 13D filed on March 27, 2020, Excelsior Holdings D2 LLC (“Excelsior”) reported shared voting and dispositive power with respect to 2,613,051 shares of our Common Stock.

As of December 31, 2021, Excelsior owned 2,937,224 shares of our Common Stock.

Excelsior Holdings D LLC, a Delaware limited liability company (“Holdings LLC”) is the managing member of Excelsior.

As managing member of Excelsior, Holdings LLC exercises dispositive and voting power over the shares beneficially owned by Excelsior.

The principal business address of each of Excelsior and Holdings LLC is 6000 France Ave.

S., Suite 550, Minneapolis, Minnesota, 55435.

(5) Based on information provided in a Schedule 13G filed on

March 27, 2020 and a Form 4 filed on April 22, 2020, Alaris Master Fund LP reported shared voting and dispositive power with respect

to 1,478,675 shares of our Common Stock.

Alaris Capital, LLC is the general partner of Alaris Master Fund LP and may be deemed

to be an indirect beneficial owner of the shares.

The principal business address of each of Alaris Master Fund LP and Alaris Capital,

LLC is 4900 Main Street, Suite 600, Kansas City, Missouri 64112.

(6) Based on information provided in a Schedule 13G filed on

March 27, 2020, Caravel Holdings LLC reported shared voting and dispositive power with respect to 1,567,831 shares of our Common

The shares are owned directly by Caravel Holdings LLC, which is a wholly owned subsidiary of Seaboard Foods LLC, which

is a wholly owned subsidiary of Seaboard Corporation.

Seaboard Foods LLC and Seaboard Corporation may each be deemed to be an

indirect beneficial owner of the shares.

The principal business address of each of Caravel Holdings LLC, Seaboard Foods LLC and

Seaboard Corporation is 9000 West 67th Street, Merriam, Kansas 66202.

(7) Based on information provided in a Schedule 13G filed on

March 27, 2020, BBFV19, LLC reported shared voting and dispositive power with respect to 783,915 shares of our Common Stock.

shares are owned directly by BFFV19, LLC.

Martin Christopher Bicknell is the Elected Manager of each of the entities that collectively

own all of the outstanding membership interests of BFFV19, LLC, and thus, Mr.

Bicknell may be deemed to be an indirect beneficial

owner of the shares.

The principal business address of each of BFFV19, LLC and Mr.

Bicknell is 5700 W 112 th Street,

Suite 500, Overland Park, Kansas 66211.

(8) The principal business address for Pilot Credit, LLC is

1055 Hillcrest Road, Suite F-4, Mobile, Alabama 36695.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

with Related Persons

Advisory Agreement

have entered into the Advisory Agreement with our Investment Advisor pursuant to which we pay the Investment Advisor a base management

fee and incentive fee (which incentive fee is only payable following a listing of the Company’s Common Stock on a national

securities exchange) in exchange for the Investment Advisor’s services sourcing, reviewing and structuring investment opportunities

for us, underwriting and performing diligence on our investments and monitoring our investment portfolio on an ongoing basis.

Our Board initially approved the Advisory Agreement at an in-person meeting in November 2019, and the Company entered into the

Advisory Agreement in January 2020.

Long and Fox, through their indirect financial interests in our Investment Advisor,

have an indirect pecuniary interest in the investment advisory fees paid by us under the Advisory Agreement.

Administration

have entered into the Administration Agreement with the Administrator pursuant to which the Administrator furnishes us with office

facilities and equipment and provides us with clerical, bookkeeping, recordkeeping and other administrative services.

approved the Administration Agreement in November 2019, and the Company entered into the Administration Agreement in January 2020.

Under the Administration Agreement, the Administrator performs, or oversees the performance of, our required administrative services,

which include, among other things, being responsible for the financial records which we are required to maintain and preparing

reports to our stockholders and reports filed with the SEC.

Sharing Agreement

Investment Advisor is an affiliate of PSCM, with whom it has entered into a resource sharing agreement (the “Resource Sharing

Agreement”).

Under this agreement, PSCM provides the Investment Advisor experienced investment professionals and access

to the senior investment personnel and other resources of PSCM and its affiliates.

The Resource Sharing Agreement provides the

Investment Advisor with access to deal flow generated by the professionals of PSCM and its affiliates and commits the members

of the Investment Advisor’s investment committee to serve in that capacity.

The Investment Advisor seeks to capitalize on

what we believe to be the significant deal origination, credit underwriting, due diligence, investment structuring, execution,

portfolio management and monitoring experience of PSCM’s investment professionals.

The Resource Sharing Agreement may be

terminated by either party on 60 days’

have also entered into a license agreement (the “License Agreement”) with Palmer Square under which Palmer Square

has granted us a non-exclusive, royalty-free license to use the name “Palmer Square”

for specified purposes in our

Under the License Agreement, we have a right to use the “Palmer Square”

name, subject to certain conditions,

for so long as our Investment Advisor or one of its affiliates remains our investment adviser.

Other than with respect to this

limited license, we will have no legal right to the “Palmer Square”

and Procedures for Managing Conflicts;

Based on information provided in a Schedule 13G/A filed on October 18, 2021 and a Form 4 filed on October 18, 2021, Alaris Master Fund LP reported shared voting and dispositive power with respect to 2,804,393 shares of our Common Stock.

As of December 31, 2021, Alaris Master Fund LP owned 2,919,358 shares of our Common Stock.

Alaris Capital, LLC is the general partner of Alaris Master Fund LP and may be deemed to be an indirect beneficial owner of the shares.

The principal business address of each of Alaris Master Fund LP and Alaris Capital, LLC is 4900 Main Street, Suite 600, Kansas City, Missouri 64112.

Based on information provided in a Schedule 13G/A filed on October

18, 2021 and a Form 4 filed on October 18, 2021, Caravel Holdings LLC reported shared voting and dispositive power with respect to

3,983,290 shares of our Common Stock.

The shares are owned directly by Caravel Holdings LLC, which is a wholly owned subsidiary of

Seaboard Foods LLC, which is a wholly owned subsidiary of Seaboard Corporation.

Seaboard Foods LLC and Seaboard Corporation may each

be deemed to be an indirect beneficial owner of the shares.

The principal business address of each of Caravel Holdings LLC, Seaboard

Foods LLC and Seaboard Corporation is 9000 West 67th Street, Merriam, Kansas 66202.

information provided in a Schedule 13G/A filed on November 8, 2021 and a Form 3 filed on November 8, 2021, Martin Christopher

Bicknell reported shared voting and dispositive power with respect to 2,240,226 shares of our Common Stock.

1,456,311 shares are

owned directly by 1248 Holdings, LLC and 783,915 shares are owned directly by BFFV19, LLC.

As of December 31, 2021, Martin

Christopher Bicknell beneficially owned 2,318,325 shares of our Common Stock.

1,534,410 shares are owned directly by 1248 Holdings,

LLC and 783,915 shares are owned directly by BFFV19, LLC.

Bicknell is the Elected Manager of each of the entities that

collectively own all of the outstanding membership interests of BFFV19, LLC, and has sole voting and dispositive power over the

shares owned by 1248 Holdings, LLC, and thus, Mr.

Bicknell may be deemed to be an indirect beneficial owner of the shares owned by

each of BFFV19, LLC and 1248 Holdings, LLC.

The principal business address of each of BFFV19, LLC, 1248 Holdings, LLC and Mr.

Bicknell is 5700 W 112th Street, Suite 500, Overland Park, Kansas 66211.

Based on information provided in a Schedule 13G filed on October 1,

The shares are held of record by Limit & Co., which serves as nominee for Chinquapin Trust Company.

Chinquapin Trust Company

has sole voting and dispositive power over the shares and is deemed to be the beneficial owner of the shares.

The principal business

address for Chinquapin Trust Company is 2480 Pershing Rd, Suite 600, Kansas City, Missouri 64108.

CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

Investment Advisory Agreement

We have entered into the Advisory

Agreement with our Investment Advisor pursuant to which we pay the Investment Advisor a base management fee and incentive fee (which incentive

fee is only payable following a listing of the Company’s Common Stock on a national securities exchange) in exchange for the Investment

Advisor’s services sourcing, reviewing and structuring investment opportunities for us, underwriting and performing diligence on

our investments and monitoring our investment portfolio on an ongoing basis.

Our Board initially approved the Advisory Agreement at an

in-person meeting in November 2019, and the Company entered into the Advisory Agreement in January 2020.

Our Board most recently determined

to re-approve the Advisory Agreement for an additional one-year term at a meeting held in November 2021.

Long and Fox and Ms.

Long, through their indirect financial interests in our Investment Advisor, have an indirect pecuniary interest in the investment advisory

fees paid by us under the Advisory Agreement.

Under the incentive fee structure, our adjusted net investment income for purposes thereof

will be computed and paid on income that may include interest income that has been accrued but not yet received in cash.

This fee structure

may give rise to a conflict of interest for our Investment Advisor to the extent that it encourages the Investment Advisor to favor debt

financings that provide for deferred interest, rather than current cash payments of interest.

Additionally, we rely on investment professionals

from the Investment Advisor to assist our Board with the valuation of our portfolio investments.

While the valuation for each portfolio

investment that constitutes a material portion of our portfolio and that does not have a readily available market quotation will be reviewed

by an independent valuation firm at least once annually, the ultimate determination of fair value will be made by our Board and not by

such third-party valuation firm.

The participation of the Investment Advisor’s investment professionals in our valuation process

could result in a conflict of interest as the Investment Advisor’s management fee is based, in part, on the value of our total net

For the year ended December 31, 2021, the Investment Advisor earned a base management fee of $6.4 million, offset by $796 thousand

in management fee waiver from the Investment Advisor, and did not earn an incentive fee, as our Common Stock was not listed on a national

securities exchange.

Administration Agreement

We have entered into the

Administration Agreement with the Administrator pursuant to which the Administrator furnishes us with office facilities and equipment

and provides us with clerical, bookkeeping, recordkeeping and other administrative services.

Our Board approved the Administration Agreement

in November 2019, and the Company entered into the Administration Agreement in January 2020.

Our Board most recently determined to re-approve

the Administration Agreement for an additional one-year term at a meeting held in November 2021.

Under the Administration Agreement,

the Administrator performs, or oversees the performance of, our required administrative services, which include, among other things,

being responsible for the financial records which we are required to maintain and preparing reports to our stockholders and reports filed

with the SEC.

Resource Sharing Agreement

The Investment Advisor is

an affiliate of PSCM, with whom it has entered into a resource sharing agreement (the “Resource Sharing Agreement”).

this agreement, PSCM provides the Investment Advisor experienced investment professionals and access to the senior investment personnel

and other resources of PSCM and its affiliates.

The Resource Sharing Agreement provides the Investment Advisor with access to deal flow

generated by the professionals of PSCM and its affiliates and commits the members of the Investment Advisor’s investment committee

to serve in that capacity.

The Investment Advisor seeks to capitalize on what we believe to be the significant deal origination, credit

underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of PSCM’s investment

professionals.

The Resource Sharing Agreement may be terminated by either party on 60 days’

License Agreement

We have also entered into

a license agreement (the “License Agreement”) with Palmer Square under which Palmer Square has granted us a non-exclusive,

royalty-free license to use the name “Palmer Square”

for specified purposes in our business.

Under the License Agreement,

we have a right to use the “Palmer Square”

name, subject to certain conditions, for so long as our Investment Advisor or

one of its affiliates remains our investment adviser.

Other than with respect to this limited license, we will have no legal right to

the “Palmer Square”

Policies and Procedures for Managing Conflicts;

Co-investment Opportunities

have procedures in place for the review, approval and monitoring of transactions involving the Company and certain persons related

to the Company.

As a BDC, the 1940 Act restricts us from participating in certain transactions with certain persons affiliated

with the Company, including our officers, directors, and employees and any person controlling or under common control with us.

In addition, each of our directors and executive officers is required to complete questionnaire on an annual basis designed to

elicit information about any potential related-party transactions.

In order to ensure that we do not engage in any prohibited

transactions with any persons affiliated with the Company, our officers screen each of our transactions for any possible affiliations,

close or remote, between the proposed portfolio investment, the Company, companies controlled by us and our employees and directors.

We will not enter into any transactions unless and until we are satisfied that the transaction is not prohibited by the 1940 Act

or, if such prohibitions exist, we have taken appropriate actions to seek Board review and approval or exemptive relief from the

SEC for such transaction.

Investment Advisor, Palmer Square, and their affiliates, partners and employees (collectively, “PSCM Affiliates”)

may engage in any other business and furnish investment management and advisory services and other types of services to others

which may include, without limitation, serving as investment manager or sponsor of other collective investment vehicles or managed

accounts that acquire interests in, provide financing to or otherwise deal in securities or other investments that would be suitable

investments for us.

PSCM Affiliates furnish investment management or advisory services to other persons with investment policies

similar or different to those of us.

Such persons may own securities or other instruments of the same class or type or which may

be senior to those held by us, and they have incentives, financial or otherwise, to favor certain accounts or vehicles over others.

There is no assurance that accounts with similar strategies or investment objectives will hold the same investments or perform

in a similar manner.

This and other future activities of PSCM Affiliates may give rise to additional conflicts of interest.

to certain 1940 Act restrictions on co-investments with affiliates or in accordance with the conditions of any co-investment exemptive

relief provided by the SEC, the Investment Advisor offers us the right to participate in all investment opportunities that it

determines are appropriate for us in view of our investment objective, positions, policies, strategies and restrictions as well

as regulatory requirements and other relevant factors.

Such offers are subject to the exception that, in accordance with the Investment

Advisor’s code of ethics and allocation policies, we might not participate in each individual opportunity but, on an overall

basis, the Investment Advisor will seek to allocate investments across applicable client accounts in a manner that is fair and

equitable on an overall basis.

The Investment Advisor and its affiliates have both subjective

and objective policies and procedures in place that are designed to manage the potential conflicts of interest between the Investment

Advisor’s fiduciary obligations to us and its similar fiduciary obligations to other clients.

To the extent that we compete

with entities sponsored or managed by the Investment Advisor or its affiliates for a particular investment opportunity, the Investment

Advisor will allocate investment opportunities across the entities for which such opportunities are appropriate, consistent with

(1) its internal conflict of interest and allocation policies, (2) the requirements of the Advisers Act, and (3) certain restrictions

under the 1940 Act regarding co-investments with affiliates.

The Investment Advisor’s allocation policies are intended to

ensure that, over time, we may generally share equitably with other accounts sponsored or managed by the Investment Advisor or

its affiliates in investment opportunities, particularly those involving a security with limited supply or involving differing

classes of securities of the same issuer which may be suitable for us and such other accounts.

There can be no assurance that the

Investment Advisor’s or its affiliates’

efforts to allocate any particular investment opportunity fairly among all

clients for whom such opportunity is appropriate will result in an allocation of all or part of such opportunity to us.

conflicts of interest can be expected to be resolved in our favor.

We have procedures in place

for the review, approval and monitoring of transactions involving the Company and certain persons related to the Company.

As a BDC, the

1940 Act restricts us from participating in certain transactions with certain persons affiliated with the Company, including our officers,

directors, and employees and any person controlling or under common control with us.

In addition, each of our directors and executive

officers is required to complete questionnaire on an annual basis designed to elicit information about any potential related-party transactions.

In order to ensure that we do not engage in any prohibited transactions with any persons affiliated with the Company, our officers screen

each of our transactions for any possible affiliations, close or remote, between the proposed portfolio investment, the Company, companies

controlled by us and our employees and directors.

We will not enter into any transactions unless and until we are satisfied that the

transaction is not prohibited by the 1940 Act or, if such prohibitions exist, we have taken appropriate actions to seek Board review

and approval or exemptive relief from the SEC for such transaction.

The Investment Advisor, Palmer

Square, and their affiliates, partners and employees (collectively, “PSCM Affiliates”) may engage in any other business and

furnish investment management and advisory services and other types of services to others which may include, without limitation, serving

as investment manager or sponsor of other collective investment vehicles or managed accounts that acquire interests in, provide financing

to or otherwise deal in securities or other investments that would be suitable investments for us.

PSCM Affiliates furnish investment

management or advisory services to other persons with investment policies similar or different to those of us.

Such persons may own securities

or other instruments of the same class or type or which may be senior to those held by us, and they have incentives, financial or otherwise,

to favor certain accounts or vehicles over others.

There is no assurance that accounts with similar strategies or investment objectives

will hold the same investments or perform in a similar manner.

This and other future activities of PSCM Affiliates may give rise to additional

conflicts of interest.

Subject to certain 1940 Act

restrictions on co-investments with affiliates or in accordance with the conditions of the co-investment exemptive relief provided by

the SEC (as discussed below), the Investment Advisor offers us the right to participate in all investment opportunities that it determines

are appropriate for us in view of our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements

and other relevant factors.

Such offers are subject to the exception that, in accordance with the Investment Advisor’s code of

ethics and allocation policies, we might not participate in each individual opportunity but, on an overall basis, the Investment Advisor

will seek to allocate investments across applicable client accounts in a manner that is fair and equitable on an overall basis.

We, the Investment Advisor

and Palmer Square have been granted exemptive relief from the SEC to permit greater flexibility to negotiate the terms of co-investments

if our Board determines that it would be advantageous for us to co-invest with investment funds, accounts and investment vehicles managed

by Palmer Square in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory

requirements and other pertinent factors.

We believe that co-investment by us and investment funds, accounts and investment vehicles

managed by the Investment Advisor and its affiliates, including Palmer Square, may afford us additional investment opportunities and

an ability to achieve greater diversification.

Accordingly, our exemptive order permits us to invest with these investment funds, accounts

and investment vehicles managed in the same portfolio companies under circumstances in which such investments would otherwise not be

permitted by the 1940 Act.

Our exemptive relief permitting co-investments applies only if our independent directors review and approve

each co-investment.

The exemptive relief imposes other constraints on co-investments that limit the number of instances when the Company

may rely on its protections.

The Investment Advisor and

its affiliates have both subjective and objective policies and procedures in place that are designed to manage the potential conflicts

of interest between the Investment Advisor’s fiduciary obligations to us and its similar fiduciary obligations to other clients.

To the extent that we compete with entities sponsored or managed by the Investment Advisor or its affiliates for a particular investment

opportunity, the Investment Advisor will allocate investment opportunities across the entities for which such opportunities are appropriate,

consistent with (1) its internal conflict of interest and allocation policies, (2) the requirements of the Advisers Act, and (3) certain

restrictions under the 1940 Act regarding co-investments with affiliates.

The Investment Advisor’s allocation policies are intended

to ensure that, over time, we may generally share equitably with other accounts sponsored or managed by the Investment Advisor or its

affiliates in investment opportunities, particularly those involving a security with limited supply or involving differing classes of

securities of the same issuer which may be suitable for us and such other accounts.

There can be no assurance that the Investment Advisor’s

or its affiliates’

efforts to allocate any particular investment opportunity fairly among all clients for whom such opportunity

is appropriate will result in an allocation of all or part of such opportunity to us.

Not all conflicts of interest can be expected to

be resolved in our favor.

Director Independence

The 1940 Act requires that

at least a majority of the Company’s directors not be “interested persons”

(as defined in the 1940 Act) of the

On an annual basis, each member of our Board is required to complete an independence questionnaire designed to provide

information to assist the Board in determining whether the director is independent under the 1940 Act and our corporate governance

Our Board has determined that each of our directors, other than Mr.

(as defined in the 1940 Act) of the Company.

On an annual basis, each member of our Board is required to complete an independence questionnaire designed to provide information to

assist the Board in determining whether the director is independent under the 1940 Act and our corporate governance guidelines.

has determined that each of our directors, other than Mr.

Christopher D.

independent under the Exchange Act and the 1940 Act.

Our governance guidelines require any director who has previously been determined

to be independent to inform the Chairman of the Board and our Secretary of any change in circumstance that may cause his or her

status as an Independent Director to change.

The Board limits membership on the Audit Committee to Independent Directors.

Fox, is independent under the 1940 Act.

Our governance guidelines require any director who has previously been determined to be independent to inform the Chairman of the Board

and our Secretary of any change in circumstance that may cause his or her status as an Independent Director to change.

The Board limits

membership on the Audit Committee to Independent Directors.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

following aggregate fees by Pricewaterhouse Coopers LLP, the Company’s independent registered accounting firm for the fiscal

years ended December 31, 2020 and December 31, 2019, were billed to the Company for work attributable to audit, tax and other

services provided to the Company for such fiscal year.

The following aggregate fees

by Pricewaterhouse Coopers LLP, the Company’s independent registered accounting firm for the fiscal years ended December 31,

2021 and December 31, 2020, were billed to the Company for work attributable to audit, tax and other services provided to the Company

for such fiscal year.

Audit-Related Fees

All Other Fees

fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services

that were provided by PwC for the fiscal years ended December 31, 2020 and December 31, 2019 in connection with statutory

and regulatory filings.

Audit-Related

Audit-related

services consist of fees billed for assurance and related services that are reasonably related to the performance of the audit

or review of our financial statements and are not reported under “Audit Fees.”

These services include attest services

that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

fees consist of fees billed for professional services for tax compliance and filings.

These services include assistance regarding

federal, state, and local tax compliance and filings.

fees would include fees billed for products and services other than the services reported above.

Audit Committee has established a pre-approval policy that describes the permitted audit, audit-related, tax and other services

to be provided by PwC, the Company’s independent auditor.

The policy requires that the Audit Committee pre-approve the audit

and permissible non-audit services performed by the independent auditor in order to assure that the provision of such service

does not impair the auditor’s independence.

requests for audit, audit-related, tax and other services that have not received general pre-approval must be submitted to the

Audit Committee for specific pre-approval, and cannot commence until such approval has been granted.

Normally, pre-approval is

provided at regularly scheduled meetings of the Audit Committee.

However, the Audit Committee may delegate pre-approval authority

to one or more of its members.

The member or members to whom such authority is delegated must report any pre-approval decisions

to the Audit Committee at its next scheduled meeting.

The Audit Committee does not delegate its responsibilities to pre-approve

services performed by the independent auditor to management.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

DOCUMENTS FILED AS PART OF THIS REPORT

The following is a

list of our consolidated financial statements included in this Annual Report on Form 10-K under Item 8 of Part II hereof:

CONSOLIDATED FINANCIAL STATEMENTS

AND SUPPLEMENTAL DATA

Audit fees consist of fees

billed for professional services rendered for the audit of our year-end financial statements and services that were provided by PwC for

the fiscal years ended December 31, 2021 and December 31, 2020 in connection with statutory and regulatory filings.

Audit-Related Fees

Audit-related services consist

of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial

statements and are not reported under “Audit Fees.”

These services include attest services that are not required by statute

or regulation and consultations concerning financial accounting and reporting standards.

Tax fees consist of fees

billed for professional services for tax compliance and filings.

These services include assistance regarding federal, state, and local

tax compliance and filings.

All Other Fees

Other fees would include

fees billed for products and services other than the services reported above.

The Audit Committee has established

a pre-approval policy that describes the permitted audit, audit-related, tax and other services to be provided by PwC, the Company’s

independent auditor.

The policy requires that the Audit Committee pre-approve the audit and permissible non-audit services performed

by the independent auditor in order to assure that the provision of such service does not impair the auditor’s independence.

Any requests for audit, audit-related,

tax and other services that have not received general pre-approval must be submitted to the Audit Committee for specific pre-approval,

and cannot commence until such approval has been granted.

Normally, pre-approval is provided at regularly scheduled meetings of the Audit

However, the Audit Committee may delegate pre-approval authority to one or more of its members.

The member or members to whom

such authority is delegated must report any pre-approval decisions to the Audit Committee at its next scheduled meeting.

The Audit Committee

does not delegate its responsibilities to pre-approve services performed by the independent auditor to management.

EXHIBITS AND FINANCIAL STATEMENT

(a) DOCUMENTS FILED AS PART OF THIS REPORT

The following is a list of

our consolidated financial statements included in this Annual Report on Form 10-K under Item 8 of Part II hereof:

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL

Index to Consolidated Financial Statements

of Independent Registered Public Accounting Firm for the Period January 23, 2020 (Commencement of Operations) through December

Statement of Assets and Liabilities as of December 31, 2020

Statement of Operations for the Period January 23, 2020 (Commencement of Operations) through December 31, 2020

Statement of Changes in Net Assets for the Period January 23, 2020 (Commencement of Operations) through December 31, 2020

Statement of Cash Flows for the Period January 23, 2020 (Commencement of Operations) through December 31, 2020

Schedule of Investments as of December 31, 2020

to Consolidated Financial Statements

of Articles of Amendment and Restatement (Incorporated by reference to Exhibit 3.1 to

Registrant’s Amendment No.

Report of Independent Registered Public Accounting Firm

Consolidated Statement of Assets and Liabilities as of December 31, 2021 and December 31, 2020

Consolidated Statement of Operations for the year ended December 31, 2021 and the Period January 23, 2020 (Commencement of Operations) through December 31, 2020

Consolidated Statement of Changes in Net Assets for the year ended December 31, 2021 and the Period January 23, 2020 (Commencement of Operations) through December 31, 2020

Consolidated Statement of Cash Flows for the year ended December 31, 2021 and the Period January 23, 2020 (Commencement of Operations) through December 31, 2020

Consolidated Schedule of Investments as of December 31, 2021 and December 31, 2020

Notes to Consolidated Financial Statements

Form of Articles of Amendment and Restatement (Incorporated by reference to Exhibit 3.1 to Registrant’s Amendment No.

1 to Registration Statement on Form 10 (File No.

000-56126) filed on January 16, 2020)

(Incorporated by reference to Exhibit 3.2 to Registrant’s Registration Statement

on Form 10 (File No.

Bylaws (Incorporated by reference to Exhibit 3.2 to Registrant’s Registration Statement on Form 10 (File No.

000-56126) filed on November 27, 2019)

4.1* Description

of securities

10.1 Investment

Advisory Agreement, dated as of January 14, 2020, by and between the Registrant and Palmer

Square BDC Advisor LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s

Quarterly Report on Form 10-Q (File No.

Description of securities (Incorporated by reference to Exhibit 4.1 to Registrant’s Annual Report on Form 10-K (File No.

000-56126) filed on March 12, 2021)

Investment Advisory Agreement, dated as of January 14, 2020, by and between the Registrant and Palmer Square BDC Advisor LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q (File No.

000-56126) filed on May 15, 2020)

of Administration Agreement (Incorporated by reference to Exhibit 10.2 to Registrant’s

Registration Statement on Form 10 (File No.

Form of Administration Agreement (Incorporated by reference to Exhibit 10.2 to Registrant’s Registration Statement on Form 10 (File No.

000-56126) filed on November 27, 2019)

of Advisory Agreement Waiver Letter (Incorporated by reference to Exhibit 10.3 to Registrant’s

Registration Statement on Form 10 (File No.

Form of Advisory Agreement Waiver Letter (Incorporated by reference to Exhibit 10.3 to Registrant’s Registration Statement on Form 10 (File No.

000-56126) filed on November 27, 2019)

Agreement, dated as of December 17, 2019, by and between the Registrant and U.S.

National Association (Incorporated by reference to Exhibit 10.4 to Registrant’s

Amendment No.

Custody Agreement, dated as of December 17, 2019, by and between the Registrant and U.S.

Bank National Association (Incorporated by reference to Exhibit 10.4 to Registrant’s Amendment No.

1 to Registration Statement on Form 10 (File No.

000-56126) filed on January 16, 2020)

of Indemnification Agreement for Directors and Officers (Incorporated by reference to

Exhibit 10.5 to Registrant’s Registration Statement on Form 10 (File No.

Form of Indemnification Agreement for Directors and Officers (Incorporated by reference to Exhibit 10.5 to Registrant’s Registration Statement on Form 10 (File No.

000-56126) filed on November 27, 2019)

of Trademark Licensing Agreement (Incorporated by reference to Exhibit 10.6 to Registrant’s

Amendment No.

Form of Trademark Licensing Agreement (Incorporated by reference to Exhibit 10.6 to Registrant’s Amendment No.

1 to Registration Statement on Form 10 (File No.

000-56126) filed on January 16, 2020)

of Subscription Agreement (Incorporated by reference to Exhibit 10.7 to Registrant’s

Amendment No.

Form of Subscription Agreement (Incorporated by reference to Exhibit 10.7 to Registrant’s Amendment No.

1 to Registration Statement on Form 10 (File No.

000-56126) filed on January 16, 2020)

10.8 Dividend

Reinvestment Plan (Incorporated by reference to Exhibit 10.8 to Registrant’s Amendment

Dividend Reinvestment Plan (Incorporated by reference to Exhibit 10.8 to Registrant’s Amendment No.

1 to Registration Statement on Form 10 (File No.

000-56126) filed on January 16, 2020)

Agreement, dated February 18, 2020, by and among Palmer Square BDC Funding I LLC, as

the borrower, Bank of America, N.A., as administrative agent and as lender, and BofA

Securities, Inc., as sole lead arranger and sole book manager (Incorporated by reference

to Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No.

Credit Agreement, dated February 18, 2020, by and among Palmer Square BDC Funding I LLC, as the borrower, Bank of America, N.A., as administrative agent and as lender, and BofA Securities, Inc., as sole lead arranger and sole book manager (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No.

814-01334) filed on February 20, 2020)

and Contribution Agreement, dated February 18, 2020, by and between the Registrant, as

the seller, and Palmer Square BDC Funding I LLC, as the purchaser (Incorporated by reference

to Exhibit 10.2 to Registrant’s Current Report on Form 8-K (File No.

Sale and Contribution Agreement, dated February 18, 2020, by and between the Registrant, as the seller, and Palmer Square BDC Funding I LLC, as the purchaser (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K (File No.

814-01334) filed on February 20, 2020)

10.11* Loan and Security Agreement, dated December 18, 2020, by and

among the Registrant, as the collateral manager, Palmer Square BDC Funding II LLC, as the borrower, Wells Fargo Bank, National

Association, as the administrative agent, U.S.

Bank National Association, as the collateral agent and custodian, and the lenders

party thereto.

10.12* Loan Sale Agreement, dated December 18, 2020, by and between

the Registrant, as the seller, and Palmer Square BDC Funding II LLC, as the purchaser.

21.1* Subsidiaries

of Registrant

31.1* Certification

of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2* Certification

of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1* Certification

of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

32.2* Certification

of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Loan and Security Agreement, dated December 18, 2020, by and among the Registrant, as the collateral manager, Palmer Square BDC Funding II LLC, as the borrower, Wells Fargo Bank, National Association, as the administrative agent, U.S.

Bank National Association, as the collateral agent and custodian, and the lenders party thereto (Incorporated by reference to Exhibit 10.11 to Registrant’s Annual Report on Form 10-K (File No.

000-56126) filed on March 12, 2021)

Loan Sale Agreement, dated December 18, 2020, by and between the Registrant, as the seller, and Palmer Square BDC Funding II LLC, as the purchaser (Incorporated by reference to Exhibit 10.12 to Registrant’s Annual Report on Form 10-K (File No.

000-56126) filed on March 12, 2021)

First Amendment to Credit Agreement, dated October 12, 2020, by and among Palmer Square BDC Funding I LLC, as the borrower, and Bank of America, N.A., as administrative agent and as lender

Second Amendment to Credit Agreement, dated September 29, 2021, by and among Palmer Square BDC Funding I LLC, as the borrower, and Bank of America, N.A., as administrative agent and as lender (Incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q (File No.

814-01334) filed on November 15, 2021)

Subsidiaries of Registrant

Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

FORM 10-K SUMMARY

Registrant has elected not to provide summary information.

to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

Square Capital BDC Inc.

The Registrant has elected not to provide summary

Pursuant to the requirements

of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf

by the undersigned, thereunto duly authorized.

Palmer Square Capital BDC Inc.

March 11, 2022

/s/ Christopher D.

Christopher D.

Executive Officer and President

Executive Officer)

Chief Executive Officer and President

(Principal Executive Officer)

Pursuant to the requirements

of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant

and in the capacities and on the dates indicated.

of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in

the capacities and on the dates indicated.

/s/ Christopher D.

2 unchanged sentences

(Principal Executive Officer)

March 11, 2022

Christopher D.

2 unchanged sentences

(Principal Financial and Accounting Officer)

March 11, 2022

/s/ Christopher C.

March 11, 2022

Christopher C.

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 9A. Controls and Procedures