What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-02-24 compared with 2020-02-20 · 386 added, 366 removed, 546 unchanged (58% of the section changed)

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of High Closing

Price to NAV (2)

Distributions (3)

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DISTRIBUTIONS

Tax characteristics of all

distributions will be reported to stockholders on Form 1099 after the end of the calendar year.

Future quarterly distributions, if any, will be determined by our Board.

We expect that our distributions to stockholders will generally be from

accumulated net investment income, from net realized capital gains or non-taxable return of capital, if any, as applicable.

Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the calendar year.

Future quarterly

distributions, if any, will be determined by our Board.

We expect that our distributions to stockholders will generally be from accumulated net investment income, from net realized capital gains or non-taxable

return of capital, if any, as applicable.

We have elected to be taxed as a RIC under Subchapter M of the Code.

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STOCK PERFORMANCE GRAPH

compares the cumulative total return on our common stock with that of the Standard & Poors BDC Index, Standard & Poors 500 Stock Index and the Russell 2000 Financial Services Index, for the period

from December 31, 2014 through December 31, 2019.

This graph compares the cumulative total return on our common stock with that of the Standard & Poors BDC Index,

Standard & Poors 500 Stock Index and the Russell 2000 Financial Services Index, for the period from December 31, 2015 through December 31, 2020.

The graph assumes that a person invested $10,000 in each of the following:

our common stock (SLRC), the S&P BDC Index, the S&P

500 Index, and the Russell 2000 Financial Services Index.

common stock (SLRC), the S&P BDC Index, the S&P 500 Index, and the Russell 2000 Financial Services Index.

The graph measures total stockholder return, which takes into account both changes in stock price and dividends.

It assumes that dividends paid are invested in additional shares of the same

class of equity securities at the frequency with which dividends are paid of such securities during the applicable fiscal year.

It assumes that

dividends paid are invested in additional shares of the same class of equity securities at the frequency with which dividends are paid of such securities during the applicable fiscal year.

The graph and other information furnished under this Part II Item 5 of this Form 10-K shall not be deemed to be soliciting material or to be filed with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the 1934 Act.

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December 31, 2020.

The base management fee is reduced to 1.00% on gross assets that execeed 200% of total net assets as of the immediately preceding quarter.

Assumes that annual incentive fees earned by our investment adviser, Solar Capital Partners, remain consistent

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As such, the below example is based on an annual expense ratio of 7.07%.

See Note 7 below for additional information regarding certain assumptions regarding our level of leverage.

In the event that shares are sold to or through

underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.

See Note 7 above for

additional information regarding certain

assumptions regarding our level of leverage.

In the event that shares are sold to or through underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.

You would pay the following expenses on a $1,000 investment, assuming a 5% annual return

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expenses, and actual expenses may be greater or less than those shown.

While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less

The incentive fee under the Investment Advisory and Management Agreement, which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the

expense amounts shown above, is not included in the example.

This illustration assumes that we will not realize any capital gains (computed net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods.

If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses and returns to our investors would be higher.

For example, if we assumed that we

received our 5% annual return completely in the form of net realized capital gains on our investments, computed net of all cumulative unrealized depreciation on our investments, the projected dollar amount of total cumulative expenses set forth in

the above illustration would be as follows:

While the example assumes,

as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%.

The incentive fee under the Investment Advisory and Management Agreement,

which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example.

This illustration assumes that we will not realize any capital gains (computed

net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods.

If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a

material amount, our expenses and returns to our investors would be higher.

For example, if we assumed that we received our 5% annual return completely in the form of net realized capital gains on our investments, computed net of all cumulative

unrealized depreciation on our investments, the projected dollar amount of total cumulative expenses set forth in the above illustration would be as follows:

You would pay the following expenses on a $1,000 investment, assuming a 5% annual return

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The forward-looking statements contained herein involve risks and uncertainties, including statements as to:

our future operating results;

our future operating results, including our ability to achieve objectives as a result of the current COVID-19 pandemic;

our business prospects and the prospects of our portfolio companies;

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the dependence of our future success on the general economy and its impact on the industries in which we invest

the ability of our portfolio companies to achieve their objectives;

and the impact of the COVID-19 pandemic thereon;

the impact of any protracted decline in the liquidity of credit markets on our business and the impact of the COVID-19 pandemic thereon;

the ability of our portfolio companies to achieve their objectives, including as a result of the current COVID-19 pandemic;

the valuation of our investments in portfolio companies, particularly those having no liquid trading market, and

the impact of the COVID-19 pandemic thereon;

market conditions and our ability to access alternative debt markets and additional debt and equity capital, and

the impact of the COVID-19 pandemic thereon;

our expected financings and investments;

the adequacy of our cash resources and working capital;

the timing of cash flows, if any, from the operations of our portfolio companies.

the timing of cash flows, if any, from the operations of our portfolio companies and the impact of the COVID-19 pandemic thereon;

the ability of our investment adviser to locate suitable investments for us and to monitor and administer our

investments and the impacts of the COVID-19 pandemic thereon.

These statements

are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted

in the forward-looking statements, including without limitation:

an economic downturn, including as a result of the current COVID-19

pandemic, could impair our portfolio companies ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

a contraction of available credit and/or an inability to access the equity markets, including as a result of the

current COVID-19 pandemic, could impair our lending and investment activities;

interest rate volatility could adversely affect our results, particularly because we use leverage as part of our

investment strategy;

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to

the extent that we receive payments denominated in foreign currency rather than U.S.

the risks, uncertainties and other factors we identify in Item 1A.

Risk Factors contained in this Annual

Report on Form 10-K for the year ended December 31, 2020 and in our other filings with the SEC.

We generally use words such as anticipates, believes, expects, intends and similar expressions

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it continues to apply the guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946.

In addition, for tax purposes, the Company has elected to be treated as a regulated

investment company (RIC) under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code).

February 9, 2010, we priced our initial public offering, selling 5.68 million shares of our common stock.

In addition, for U.S federal income tax purposes, the Company has elected to be treated

as a regulated investment company (RIC) under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code).

On February 9, 2010, we priced our initial public offering, selling 5.68 million

shares of our common stock.

Concurrent with our initial public offering, Michael S.

Gross, our Chairman, Co-Chief

Executive Officer and

President, and Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, collectively purchased an additional 0.6 million shares of

our common stock through a private placement transaction exempt from registration under the Securities Act.

We invest primarily in

privately held U.S.

middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive.

Our investment objective is to generate both current income and capital appreciation through

debt and equity investments.

We invest primarily in leveraged middle-market companies in the form of senior secured loans, stretch-senior loans, financing leases and to a lesser extent, unsecured loans and equity securities.

From time to time, we

may also invest in public companies that are thinly traded.

Our business is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors.

Our investments generally range between $5 million

and $100 million each, although we expect that this investment size will vary proportionately with the size of our capital base and/or with strategic initiatives.

Our investment activities are managed by Solar Capital Partners, LLC (the

Investment Adviser) and supervised by our board of directors, a majority of whom are non-interested, as such term is defined in the 1940 Act.

Solar Capital Management, LLC (the

Administrator) provides the administrative services necessary for us to operate.

In addition, we may invest a portion of our

portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns.

These investments may include, but are not limited to, direct investments in

public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States.

As of December 31, 2019, the Investment Adviser has directly invested approximately $9.0 billion in more than 390 different

portfolio companies since 2006.

Over the same period, the Investment Adviser completed transactions with approximately 200 different financial sponsors.

Gross, our Chairman, Co-Chief Executive Officer and President, and Bruce Spohler, our

Co-Chief Executive Officer and Chief Operating Officer, collectively purchased an additional 0.6 million shares of our common stock through a private placement transaction exempt from registration under

the Securities Act.

We invest primarily in privately held U.S.

middle-market companies, where we believe the supply of primary capital is

limited and the investment opportunities are most attractive.

Our investment objective is to generate both current income and capital appreciation through debt and equity investments.

We invest primarily in leveraged middle-market companies in the

form of senior secured loans, stretch-senior loans, financing leases and to a lesser extent, unsecured loans and equity securities.

From time to time, we may also invest in public companies that are thinly traded.

Our business is focused primarily

on the direct origination of investments through portfolio companies or their financial sponsors.

Our investments generally range between $5 million and $100 million each, although we expect that this investment size will vary

proportionately with the size of our capital base and/or with strategic initiatives.

Our investment activities are managed by Solar Capital Partners, LLC (the Investment Adviser) and supervised by our board of directors, a majority of

whom are non-interested, as such term is defined in the 1940 Act.

Solar Capital Management, LLC (the Administrator) provides the administrative services necessary for us to operate.

In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are

not our primary focus but are intended to enhance our overall returns.

These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select

countries outside of the United States.

As of December 31, 2020, the Investment Adviser has directly invested approximately

$10.0 billion in more than 400 different portfolio companies since 2006.

Over the same period, the Investment Adviser completed transactions with over 200 different financial sponsors.

Recent Developments

On February 24,

2020, a new lender to the Company executed a commitment increase to our Credit Facility providing for an additional $75.0 million of revolving credit, bringing our Credit Facilitys total revolving credit capacity to $545.0 million.

On February 20, 2020, our Board declared a quarterly distribution of $0.41 per share payable on April 3, 2020 to holders of record

as of March 19, 2020.

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt

and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.

As a BDC, we must not

acquire any assets other than qualifying assets specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions).

Qualifying assets include

investments in eligible portfolio companies. The definition of eligible portfolio company includes certain public companies that do not have any securities listed on a national securities exchange and companies whose

securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

2021, our Board declared a quarterly distribution of $0.41 per share payable on April 2, 2021 to holders of record as of March 18, 2021.

The global outbreak of the COVID-19 pandemic, and the related effect on the U.S.

and global economies,

has continued to have adverse consequences for the business operations of some of the Companys portfolio companies and, as a result, has had adverse effects on the Companys operations.

The ultimate economic fallout from the pandemic, and

the long-term impact on economies, markets, industries and individual issuers, including the Company, remain uncertain.

The operational and financial performance of the issuers of securities in which the Company invests depends on future

developments, including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Companys investments and negatively impact the Companys performance.

Our level of investment

activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the

general economic environment and the competitive environment for the types of investments we make.

As a BDC, we must not acquire any assets other than qualifying assets specified in the 1940 Act unless, at the time the acquisition is

made, at least 70% of our total assets are qualifying assets (with certain limited exceptions).

Qualifying assets include investments in eligible portfolio companies. The definition of eligible portfolio company includes

certain public companies that do not have any securities listed on a national securities exchange and companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment

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Such amounts of accrued PIK interest are added to the cost of the investment on the respective capitalization dates and generally

become due at maturity of the

investment or upon the investment being called by the issuer.

We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and,

if applicable, consulting fees, etc.

All investment professionals of the investment adviser and their respective staffs, when and to the extent engaged in providing investment

advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by Solar Capital Partners.

We bear all other costs and expenses of our operations and

transactions, including (without limitation):

become due at maturity of the investment or upon the investment being called by the issuer.

We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable,

consulting fees, etc.

investment professionals of the investment adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable

to such services, are provided and paid for by Solar Capital Partners.

We bear all other costs and expenses of our operations and transactions, including (without limitation):

the cost of our organization and public offerings;

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including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and their respective

We expect our general and administrative operating expenses related to our ongoing operations to increase

moderately in dollar terms.

We expect our general and administrative operating expenses related to our ongoing

operations to increase moderately in dollar terms.

During periods of asset growth, we generally expect our general and administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines.

Incentive fees, interest

expense and costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities relative to comparative

periods, among other factors.

Incentive fees, interest expense and costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities

relative to comparative periods, among other factors.

Portfolio and Investment Activity

During the year ended December 31, 2019, we invested approximately $404 million across over 50 portfolio companies.

During the year ended December 31, 2020, we invested approximately $427 million across 40 portfolio companies.

This compares to

investing approximately $586 million in 65 portfolio companies for the year ended December 31, 2018.

investing approximately $404 million in over 50 portfolio companies for the year ended December 31, 2019.

Investments sold, prepaid or repaid during the year ended December 31, 2020 totaled approximately $363 million versus

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At December 31, 2020, our portfolio consisted of 105

portfolio companies and was invested 31.0% in cash flow senior secured loans, 28.2% in asset-based senior secured loans / Crystal, 21.5% in equipment senior secured financings / NEF, and 19.3% in life science senior secured loans, in each case,

measured at fair value, versus 117 portfolio companies invested 33.1% in cash flow senior secured loans, 27.8% in asset-based senior secured loans / Crystal, 21.6% in equipment senior secure financings / NEF, and 17.5% in life science senior secured

loans, in each case, measured at fair value, at December 31, 2018.

At December 31, 2019, 77.5% or $1.14 billion of our

income producing investment portfolio * is floating rate and 22.5% or $331.9 million is fixed rate, measured at fair value.

At December 31, 2018, 74.6% or $1.08 billion of our income

producing investment portfolio * is floating rate and 25.4% or $366.1 million is fixed rate, measured at fair value.

As of December 31, 2019 and 2018, we had one and zero issuers on non-accrual status, respectively.

Since inception through December 31, 2019, Solar Capital and its

predecessor companies have invested approximately $6.3 billion in more than 280 portfolio companies.

portfolio companies and was invested 18.8% in cash flow senior secured loans, 27.0% in asset-based senior secured loans / Crystal Financial LLC (Crystal), 14.2% in Kingsbridge Holdings LLC (KBH), 18.6% in equipment senior

secured financings / NEF Holdings, LLC (NEF), and 21.4% in life science senior secured loans, in each case, measured at fair value, versus 108 portfolio companies invested 31.0% in cash flow senior secured loans, 28.2% in asset-based

senior secured loans / Crystal, 21.5% in equipment senior secured financings / NEF, and 19.3% in life science senior secured loans, in each case, measured at fair value, at December 31, 2019.

At December 31, 2020, 72.1% or $1.10 billion of our income producing investment portfolio * is floating rate and 27.9% or $425.4 million is fixed rate, measured at fair value.

At December 31, 2019, 77.5% or $1.14 billion of our income producing investment portfolio * is floating rate and 22.5% or $331.9 million is fixed rate, measured at fair value.

As of December 31, 2020 and 2019, we had zero issuers and one issuer on

non-accrual status, respectively.

Since inception through December 31, 2020, Solar Capital

and its predecessor companies have invested approximately $6.7 billion in more than 295 portfolio companies.

Over the same period, Solar Capital has completed transactions with more than 150 different financial sponsors.

We have included Crystal Financial LLC and NEF Holdings LLC within our income producing investment portfolio.

* We have included Crystal Financial LLC and NEF Holdings LLC within our income producing

investment portfolio.

Crystal Financial LLC

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As of December 31, 2019, Crystal Financial LLC

had 31 funded commitments to 26 different issuers with total funded loans of approximately $413.9 million on total assets of $483.8 million.

As of December 31, 2019 and December 31, 2018, the largest loan outstanding totaled

$45.0 million and $37.5 million, respectively.

had 35 funded commitments to 28 different issuers with total funded loans of

approximately $496.8 million on total assets of $518.0 million.

As of December 31, 2020 and December 31, 2019, the largest loan outstanding totaled $45.0 million and

$45.0 million, respectively.

For the same periods, the average exposure per issuer was $16.8 million and $17.7 million, respectively.

Crystal Financial LLCs credit facility, which is non-recourse to Solar Capital, had approximately $276.0 million and $206.0 million of borrowings outstanding at December 31, 2019 and December 31, 2018, respectively.

Crystal Financial LLCs credit facility, which is

non-recourse to Solar Capital, had approximately $183.9 million and $276.0 million of borrowings outstanding at December 31, 2020 and December 31, 2019, respectively.

For the years ended

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As such, and subject to fluctuations in Crystal Financial LLCs funded commitments, the timing of

originations, and the

repayments of financings, the Company cannot guarantee that Crystal Financial LLC will be able to maintain consistent dividend payments to us.

Crystal Financial LLCs consolidated financial

statements for the fiscal years ended December 31, 2019 and December 31, 2018 are attached as an exhibit to this annual report on Form 10-K.

originations, and the repayments of financings, the Company cannot guarantee that Crystal Financial LLC will be able to maintain consistent dividend payments to us.

Crystal Financial LLCs consolidated financial statements for the fiscal years

ended December 31, 2020 and December 31, 2019 are attached as an exhibit to this annual report on Form 10-K.

NEF Holdings, LLC

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into a $150.0 million non-recourse facility with an accordion feature to expand up to $250.0 million.

In September 2019, NEF amended the facility, increasing commitments to $214.0 million with

an accordion feature to expand up to $314.0 million and extended the maturity date of the facility to July 31, 2023.

At July 31, 2017, NEF also had two securitizations outstanding, with an issued note balance of $94.6 million,

which were later redeemed in 2018.

As of December 31, 2019, NEF had 168 funded equipment-backed leases and loans to 78 different

customers with a total net investment in leases and loans of approximately $245.0 million on total assets of $304.2 million.

As of December 31, 2018, NEF had 207 funded equipment-backed leases and loans to 82 different customers with

a total net investment in leases and loans of approximately $237.2 million on total assets of $293.2 million.

In September 2019, NEF amended the facility, increasing commitments to $214.0 million with an

accordion feature to expand up to $314.0 million and extended the maturity date of the facility to July 31, 2023.

At July 31, 2017, NEF also had two securitizations outstanding, with an issued note balance of $94.6 million, which

were later redeemed in 2018.

As of December 31, 2020, NEF had 138 funded equipment-backed leases and loans to 61 different customers

with a total net investment in leases and loans of approximately $188.4 million on total assets of $263.4 million.

As of December 31, 2019, NEF had 168 funded equipment-backed leases and loans to 78 different customers with a total

net investment in leases and loans of approximately $245.0 million on total assets of $304.2 million.

As of December 31, 2020 and December 31, 2019, the largest position outstanding totaled $25.1 million and

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of ($8.9) million and ($6.0) million, respectively, on gross income of $24.5 million and $31.9 million, respectively.

Due to timing and non-cash items, there may be material differences

between GAAP net income and cash available for distributions.

As such, and subject to fluctuations in NEFs funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that NEF will be able to

maintain consistent dividend payments to us.

NEFs consolidated financial statements for the fiscal years ended December 31, 2019 and December 31, 2018 are attached as an exhibit to this annual report on Form 10-K.

Due to timing and non-cash items, there may be material differences between

GAAP net income and cash available for distributions.

As such, and subject to fluctuations in NEFs funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that NEF will be able to maintain

consistent dividend payments to us.

NEFs consolidated financial statements for the fiscal years ended December 31, 2020 and December 31, 2019 are attached as an exhibit to this annual report on Form

Kingsbridge Holdings, LLC

On November 3, 2020, the Company acquired 87.5% of Kingsbridge Holdings, LLC (KBH) through KBH Topco LLC (KBHT), a

newly formed Delaware corporation.

KBH is a residual focused independent mid-ticket lessor of equipment primarily to U.S.

investment grade companies.

The Company invested $216.6 million to

effect the transaction, of which $136.6 million was invested to acquire 87.5% of KBHTs equity and $80.0 million in KBHs debt.

The existing management team of KBH committed to continue to lead KBH after the

Post the transaction, the Company owns 87.5% of KBHT equity and the KBH management team owns the remaining 12.5% of KBHTs equity.

As of December 31, 2020, KBHT had total assets of $744.7 million.

KBHT also had

recourse debt outstanding of $219.0 million as well as non-recourse debt outstanding of $335.9 million.

For the period November 3, 2020 through December 31, 2020, KBHT had net income

of $2.2 million, on gross income of $43.6 million.

Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions.

subject to fluctuations in KBHTs funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that KBHT will be able to maintain consistent dividend payments to us.

KBHTs consolidated

financial statements for the period November 3, 2020 through December 31, 2020 are attached as an exhibit to this annual report on Form 10-K.

Critical Accounting Policies

The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported.

Actual results could

materially differ from those estimates.

We have identified the following items as critical accounting policies.

Within the context of these critical accounting policies and disclosed subsequent events herein, we are not currently aware of any other

reasonably likely events or circumstances that would result in materially different amounts being reported.

Valuation of Portfolio

We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent

with GAAP, and the 1940 Act.

preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and

liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported.

Actual results could materially differ from those estimates.

We have identified the following items as critical accounting

Within the context of these critical accounting policies and disclosed subsequent events herein, we are not currently aware of any other reasonably likely events or circumstances that would result in materially different amounts being

Valuation of Portfolio Investments

We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with GAAP, and the 1940

Our valuation procedures are set forth in more detail below:

Under procedures established by our board of

directors (the Board), we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for

which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value).

We attempt to obtain market quotations from at least two brokers or

dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service).

We utilize mid-market pricing as a practical expedient for fair value unless a

different point within the range is more representative.

If and when market quotations are deemed not to represent fair value, we may utilize independent third-party valuation firms to assist us in determining the fair value of material assets.

Under procedures established by our board of directors (the

Board), we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless

they are deemed not to represent fair value).

We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service).

utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative.

If and when market quotations are deemed not to represent fair value, we may

utilize independent third-party valuation firms to assist us in determining the fair value of material assets.

Accordingly, such investments go through our multi-step valuation process as described below.

In each case, independent valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation

recommendations.

Debt investments with maturities of 60 days or less shall each be valued at cost plus accreted discount, or minus amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the

Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value as determined in good faith by or under the direction of our Board.

Investments that are not publicly traded or whose market quotations

are not readily available are valued at fair value as determined in good faith by or under the direction of our Board.

Such determination of fair values involves subjective judgments and estimates.

With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent

fair value, our Board has approved a multi-step valuation process each quarter, as described below:

In each case, independent valuation firms

consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations.

Debt investments with maturities of 60 days or less shall each be valued at cost plus accreted discount, or minus

amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value as determined in good faith

by or under the direction of our Board.

Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of our Board.

Such determination of

fair values involves subjective judgments and estimates.

With respect to investments for which market quotations are not readily

available or when such market quotations are deemed not to represent fair value, our Board has approved a multi-step valuation process each quarter, as described below:

our quarterly valuation process begins with each portfolio company or investment being initially valued by the

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For the fiscal year ended December 31, 2020, there has been no change to the Companys valuation approaches or techniques and the nature of the related inputs considered in the valuation process.

Accounting Standards Codification (ASC) Topic 820 classifies the inputs used to

measure these fair values into the following hierarchy:

Quoted prices in active markets for identical

assets or liabilities, accessible by the Company at the measurement date.

Quoted prices for similar

assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Accounting Standards Codification (ASC) Topic 820 classifies the inputs used to measure these fair values into the following

Quoted prices in active markets for identical assets or liabilities, accessible by the

Company at the measurement date.

Quoted prices for similar assets or liabilities in active markets, or

quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Unobservable inputs for the asset or liability.

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records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis.

Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more (90 days or more for equipment financing) and/or when it is no longer probable that principal or interest/dividend

cash payments will be collected.

Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in managements judgment, are likely to

continue timely payment of their remaining interest or dividend obligations.

Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-

accrual status when principal or interest/dividend cash payments are past due 30 days or more (90 days or more for equipment financing) and/or when it is no longer probable that principal or interest/dividend cash payments will be collected.

Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in managements judgment, are likely to continue timely payment of their remaining

interest or dividend obligations.

Interest or dividend cash payments received on investments may be recognized as income or applied to principal depending upon managements judgment.

investments may have contractual PIK interest or dividends.

Some of our investments may have contractual PIK interest or

PIK interest and dividends computed at the contractual rate are accrued into income and reflected as receivable up to the capitalization date.

PIK investments offer issuers the option at

each payment date of making payments in cash or in additional securities.

PIK investments offer issuers the option at each payment date of making payments in cash or in

additional securities.

When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued.

On these payment

dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received).

PIK generally becomes due at the maturity of the investment or upon the investment being called

by the issuer.

At the point the Company believes PIK is not expected to be realized, the PIK investment will be placed on non-accrual status.

When a PIK investment is placed on

non-accrual status, the accrued, uncapitalized interest or dividends is reversed from the related receivable through interest or dividend income, respectively.

The Company does not reverse previously

capitalized PIK interest or dividends.

Upon capitalization, PIK is subject to the fair value estimates associated with their related investments.

PIK investments on non-accrual status are restored to accrual

status if the Company again believes that PIK is expected to be realized.

Loan origination fees, original issue discount, and market discounts are capitalized and amortized into income using the effective interest method.

Upon the prepayment of a

loan, any unamortized loan origination fees are recorded as interest income.

We record prepayment premiums on loans and other investments as interest income when we receive such amounts.

Capital structuring fees are recorded as other income when

The typically higher yields and interest rates on PIK securities, to the extent we invested,

reflects the payment deferral and increased credit risk associated with such instruments and that such investments may represent a significantly higher credit risk than coupon loans.

PIK securities may have unreliable valuations because their

continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral.

PIK interest has the effect of generating investment income and increasing the incentive fees payable at a

compounding rate.

In addition, the deferral of PIK interest also increases the loan-to-value ratio at a compounding rate.

PIK securities create the risk that incentive

fees will be paid to the Investment Adviser based on non-cash accruals that ultimately may not be realized, but the Investment Adviser will be under no obligation to reimburse the Company for these fees.

the fiscal years ended December 31, 2019, 2018 and 2017, capitalized PIK income totaled $1.1 million, $0.9 million and $0.2 million, respectively.

Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss

We generally measure realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis

of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized origination or commitment fees and prepayment penalties.

The net change in unrealized gain or loss reflects the change in

portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gain or loss, when gains or losses are realized.

Gains or losses on investments are calculated by using the specific identification

Capital, a U.S.

On these payment dates, the Company capitalizes the accrued interest

or dividends receivable (reflecting such amounts as the basis in the additional securities received).

PIK generally becomes due at the maturity of the investment or upon the investment being called by the issuer.

At the point the Company believes

PIK is not expected to be realized, the PIK investment will be placed on non-accrual status.

When a PIK investment is placed on non-accrual status, the accrued,

uncapitalized interest or dividends is reversed from the related receivable through interest or dividend income, respectively.

The Company does not reverse previously capitalized PIK interest or dividends.

Upon capitalization, PIK is subject to the

fair value estimates associated with their related investments.

PIK investments on non-accrual status are restored to accrual status if the Company again believes that PIK is expected to be realized.

origination fees, original issue discount, and market discounts are capitalized and amortized into income using the effective interest method.

Upon the prepayment of a loan, any unamortized loan origination fees are recorded as interest income.

record prepayment premiums on loans and other investments as interest income when we receive such amounts.

Capital structuring fees are recorded as other income when earned.

The typically higher yields and interest rates on PIK securities, to the extent we invested, reflects the payment deferral and increased

credit risk associated with such instruments and that such investments may represent a significantly higher credit risk than coupon loans.

PIK securities may have unreliable valuations because their continuing accruals require continuing judgments

about the collectability of the deferred payments and the value of any associated collateral.

PIK interest has the effect of generating investment income and increasing the incentive fees payable at a compounding rate.

In addition, the deferral of

PIK interest also increases the loan-to-value ratio at a compounding rate.

PIK securities create the risk that incentive fees will be paid to the Investment Adviser

based on non-cash accruals that ultimately may not be realized, but the Investment Adviser will be under no obligation to reimburse the Company for these fees.

For the fiscal years ended December 31, 2020

and 2019, capitalized PIK income totaled $5.4 million and $1.1 million, respectively.

Net Realized Gain or Loss and Net Change in

Unrealized Gain or Loss

We generally measure realized gain or loss by the difference between the net proceeds from the repayment

or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized origination or commitment fees and prepayment penalties.

The net change in

unrealized gain or loss reflects the change in portfolio investment values during the reporting

period, including the reversal of previously recorded unrealized gain or loss, when gains or losses are realized.

Gains or losses on investments are calculated by using the specific

identification method.

Solar Capital, a U.S.

corporation, has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code.

In order to qualify for taxation as a RIC, the Company is required, among other things, to timely distribute to its

stockholders at least 90% of investment company taxable income, as defined by the Code, for each year.

Depending on the level of taxable income earned in a given tax year, we may choose to carry forward taxable income in excess of current year

distributions into the next tax year and pay a 4% excise tax on such income, as required.

To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the

Company accrues an estimated excise tax, if any, on estimated excess taxable income.

order to qualify for U.S.

federal income taxation as a RIC, the Company is required, among other things, to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year.

the level of taxable income earned in a given tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a nondeductible 4% U.S.

federal excise tax on such income, as required.

the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues an estimated excise tax, if any, on estimated excess taxable income.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework

Changes to the Disclosure Requirements for Fair Value Measurement.

The amendments in this Update modify and eliminate certain disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement.

ASU 2018-13 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Early adoption is permitted.

The Company will adopt ASU 2018-13 effective in fiscal year 2020.

In March 2017, the FASB issued ASU

2017-08, Premium Amortization on Purchased Callable Debt Securities, which will amend FASB ASC 310-20.

The amendments in this Update shorten the amortization period for

certain callable debt securities held at a premium, generally requiring the premium to be amortized to the earliest call date.

For public business entities, the amendments are effective for fiscal years, and interim periods within those fiscal

years, beginning after December 15, 2018.

Early adoption is permitted, including adoption in an interim period.

The Company has adopted ASU 2017-08 and determined that the adoption has not had a material

impact on its consolidated financial statements and disclosures.

March 2020, the FASB issued Accounting Standards Update No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The

guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be

discontinued because of the reference rate reform.

ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company is evaluating the potential impact that the

adoption of this guidance will have on the Companys financial statements.

RESULTS OF OPERATIONS

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ended December 31, 2020 and 2019, gross investment income totaled $121.7 million and $154.7 million, respectively.

The increase in gross investment income from 2018 to 2019 was primarily due to growth of the average income producing

investment portfolio.

Expenses totaled $82.3 million and $78.6 million, respectively, for the fiscal years ended December 31, 2019 and 2018, of which

$44.9 million and $44.5 million, respectively, were base management fees and performance-based incentive fees and $28.9 million and $24.7 million, respectively, were interest and other credit facility expenses.

Administrative

services and other general and administrative expenses totaled $8.5 million and $9.4 million, respectively, for the fiscal years ended December 31, 2019 and 2018.

Expenses generally consist of management and performance-based

incentive fees, interest and other credit facility expenses, administrative services fees, insurance expenses, legal fees, directors fees, transfer agency fees, printing and proxy expenses, audit and tax services expenses, and other general

and administrative expenses.

Interest and other credit facility expenses generally consist of interest, unused fees, agency fees and loan origination fees, if any, among others.

The increase in expenses from 2018 to 2019 was primarily due to higher

interest expense resulting from generally higher average LIBOR and an increase in average borrowings to support a larger average income producing investment portfolio.

The decrease in gross investment income for the year over year periods was primarily due to a reduction in portfolio

yield, mainly as a result of the approximately 160 basis point decrease in average LIBOR year over year, on a smaller income producing investment portfolio on average.

Additionally, the volatility and disruption to the global economy and capital

markets from the COVID-19 pandemic reduced the volume of our investment activity during much of the year, particularly in the second and third quarters, thus negatively impacting investment income for the

Expenses totaled

$62.5 million and $82.3 million, respectively, for the fiscal years ended December 31, 2020 and 2019, of which $27.2 million and $44.9 million, respectively, were base management fees and performance-based incentive fees and

$27.2 million and $28.9 million, respectively, were interest and other credit facility expenses.

Administrative services and other general and administrative expenses totaled $8.2 million and $8.5 million, respectively, for the

fiscal years ended December 31, 2020 and 2019.

Expenses generally consist of management and performance-based incentive fees, interest and other credit facility expenses, administrative services fees, insurance expenses, legal fees,

directors fees, transfer agency fees, printing and proxy expenses, audit and tax services expenses, and other general and administrative expenses.

Interest and other credit facility expenses generally consist of interest, unused fees, agency

fees and loan origination fees, if any, among others.

The decrease in expenses from 2019 to 2020 was primarily due to lower

management and incentive fees resulting from a reduction in portfolio yield on a smaller income producing investment portfolio on average as well as lower interest expense due to reductions in

Net Investment Income

The Companys

net investment income totaled $72.4 million and $74.9 million, or $1.71 and $1.77, per average share, respectively, for the fiscal years ended December 31, 2019 and 2018.

Net Realized Gain (Loss)

Companys net investment income totaled $59.2 million and $72.4 million, or $1.40 and $1.71, per average share, respectively, for the fiscal years ended December 31, 2020 and 2019.

Net Realized Loss

The Company had

investment sales and prepayments totaling approximately $363 million and $362 million, respectively, for the fiscal years ended December 31, 2020 and 2019.

Net realized gains (losses) over the same periods were ($1.8) million and

Net realized losses over the same periods were $26.6 million and

$1.8 million, respectively.

Net realized loss for fiscal year 2020 was primarily related to the exit of our investment IHS Intermediate, Inc.

Net realized loss for fiscal year 2019 was primarily related to the extinguishment of debt.

Net realized gains for fiscal year 2018 were related to the sale of select assets and the redemption of warrants.

Net Change in Unrealized Gain (Loss)

the fiscal years ended December 31, 2019 and 2018, net change in unrealized gain (loss) on the Companys assets and liabilities totaled ($14.7) million and ($10.1) million, respectively.

Net Change in Unrealized Loss

fiscal years ended December 31, 2020 and 2019, net change in unrealized loss on the Companys assets and liabilities totaled $17.1 million and $14.7 million, respectively.

Net unrealized loss for the fiscal year ended

December 31, 2019 is primarily due to unrealized depreciation in the value of our investments in IHS Intermediate, Inc., SOAGG LLC and American Teleconferencing Services, Ltd., among others, partially offset by unrealized appreciation in the

value of our investments in Crystal Financial LLC, PPT Management Holdings, LLC and Alteon Health, LLC, among others.

Net unrealized loss for the fiscal year ended December 31, 2018 is primarily due to unrealized depreciation in the value of

our investments in Crystal Financial LLC, Rug Doctor, LLC and IHS Intermediate, Inc.

among others, partially offset by unrealized appreciation in the value of our investments in SOAGG LLC and Phymed Management LLC, among others.

December 31, 2020 is primarily due to depreciation in the value of our investments in NEF Holdings LLC, Rug Doctor, PhyMed Management LLC, SOINT, LLC and SOAGG LLC, among others, partially offset by the reversal of previously recognized

unrealized depreciation in the value of our investment in IHS Intermediate, Inc.

and unrealized appreciation in the value of our investments in Crystal Financial LLC and B.

Riley Financial Inc., among others.

The year over year net change in

unrealized loss for the fiscal year ended December 31, 2020 was impacted by uncertainty due to the COVID-19 pandemic and its effect on market yields and fundamental portfolio company performance.

unrealized loss for the fiscal year ended December 31, 2019 is primarily due to unrealized depreciation in the value of our investments in IHS Intermediate, Inc., SOAGG LLC and American Teleconferencing Services, Ltd., among others, partially

offset by unrealized appreciation in the value of our investments in Crystal Financial LLC, PPT Management Holdings, LLC and Alteon Health, LLC, among others.

Net Increase in Net Assets From Operations

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investments in portfolio companies, repayment of indebtedness, cash distributions to our stockholders, or for other general corporate purposes.

On February 12, 2020, a new lender to the Company executed a commitment increase to our Credit Facility providing for an additional $75.0

million of revolving credit, bringing our Credit Facilitys total revolving credit capacity to $545.0 million.

On December 18,

2019, the Company closed a private offering of $125 million of the 2024 Unsecured Notes with a fixed interest rate of 4.20% and a maturity date of December 15, 2024.

Interest on the 2024 Unsecured Notes is due semi-annually on June 15

and December 15.

The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 18,

2019, the Company closed a private offering of $75 million of the 2026 Unsecured Notes with a fixed interest rate of 4.375% and a maturity date of December 15, 2026.

Interest on the 2026 Unsecured Notes is due semi-annually on June 15

and December 15.

On February 12, 2020, a new lender to the Company executed a commitment increase to our

Credit Facility providing for an additional $75.0 million of revolving credit, bringing our Credit Facilitys total revolving credit capacity to $545.0 million.

On December 18, 2019, the Company closed a private offering of $125 million of the 2024 Unsecured Notes with a fixed interest rate

of 4.20% and a maturity date of December 15, 2024.

Interest on the 2024 Unsecured Notes is due semi-annually on June 15 and December 15.

The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On August 28,

2019, the Company repaid its existing senior secured credit agreement due September 2021 and entered into the new senior secured credit agreement (the Credit Facility).

The Credit Facility is composed of $470 million of revolving

credit and $75 million of term loans.

On December 18, 2019, the Company closed a private offering of $75 million of the 2026 Unsecured Notes with a fixed interest

rate of 4.375% and a maturity date of December 15, 2026.

Interest on the 2026 Unsecured Notes is due semi-annually on June 15 and December 15.

The 2026 Unsecured Notes were issued in a private placement only to qualified institutional

On August 28, 2019, the Company repaid its existing senior secured credit agreement due September 2021 and entered into the

new senior secured credit agreement (the Credit Facility).

The Credit Facility was originally composed of $470 million of revolving credit and $75 million of term loans, but was expanded to $545 million of revolving credit

and $75 million of term loans in February 2020.

Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of 2.00-2.25% or the alternate base rate plus 1.00%-1.25%.

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institutional buyers.

On November 8, 2016, the Company closed a private offering of $50 million of the

2022 Unsecured Notes with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

On November 8, 2016, the Company closed a private offering of $50 million of the 2022 Unsecured Notes

with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private

placement only to qualified institutional buyers.

On January 11, 2013, the Company closed its most recent follow-on public equity offering of 6.3 million shares of common stock raising approximately $146.9 million in net proceeds.

The primary uses of the funds raised were for investments in portfolio

companies, reductions in revolving debt outstanding and for other general corporate purposes.

The primary uses of existing funds and any

funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate purposes.

The 2022 Unsecured Notes were issued in a private placement only to qualified

institutional buyers.

On January 11, 2013, the Company closed its most recent follow-on

public equity offering of 6.3 million shares of common stock raising approximately $146.9 million in net proceeds.

The primary uses of the funds raised were for investments in portfolio companies, reductions in revolving debt outstanding

and for other general corporate purposes.

Cash Equivalents

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Treasury bills, repurchase agreements and other high-quality, short-term debt securities as cash equivalents.

The Company makes purchases that are consistent with its purpose of making investments in securities described in paragraphs 1 through 3 of

Section 55(a) of the 1940 Act.

From time to time, including at or near the end of each fiscal quarter, we consider using various temporary investment strategies for our business.

One strategy includes taking proactive steps by utilizing cash

equivalents as temporary assets with the objective of enhancing our investment flexibility pursuant to Section 55 of the 1940 Act.

makes purchases that are consistent with its purpose of making investments in securities described in paragraphs 1 through 3 of Section 55(a) of the 1940 Act.

time, including at or near the end of each fiscal quarter, we consider using various temporary investment strategies for our business.

One strategy includes taking proactive steps by utilizing

cash equivalents as temporary assets with the objective of enhancing our investment flexibility pursuant to Section 55 of the 1940 Act.

More specifically, from

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institutional buyers.

On November 8, 2016, the Company closed a private offering of $50 million of the

2022 Unsecured Notes with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

On November 8, 2016, the Company closed a private offering of $50 million of the 2022 Unsecured Notes

with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private

placement only to qualified institutional buyers.

The 2022 Unsecured Notes were issued in a private placement only to qualified

institutional buyers.

Revolving & Term Loan Facilities

On August 28, 2019, the Company repaid its existing senior secured credit agreement due September 2021 and entered into the new Credit

The Credit Facility is composed of $470 million of revolving credit and $75 million of term loans.

Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of

2.00-2.25% or the alternate base rate plus 1.00%-1.25%.

The Credit Facility has no LIBOR floor requirement.

The Credit Facility matures in August 2024 and includes

ratable amortization in the final year.

The Credit Facility may be increased up to $800 million with additional new lenders or an increase in commitments from current lenders.

The Credit Facility contains certain customary affirmative and

negative covenants and events of default.

In addition, the Credit Facility contains certain financial covenants that among other things, requires the Company to maintain a minimum shareholders equity and a minimum asset coverage ratio.

December 31, 2019, outstanding USD equivalent borrowings under the Credit Facility totaled $117.9 million, composed of $42.9 million of revolving credit and $75.0 million of term loans.

On February 12, 2020, a new lender to the

Company executed a commitment increase to our Credit Facility providing for an additional $75.0 million of revolving credit, bringing our Credit Facilitys total revolving credit capacity to $545.0 million.

On May 31, 2019, the Company as transferor and SSLP 2016-1, LLC, a wholly-owned subsidiary of the

Company, as borrower entered into amendment number two to the $200 million SSLP Facility with Wells Fargo Bank, NA acting as administrative agent.

The Company acted as servicer under the SSLP Facility.

The SSLP Facility was scheduled to mature

on May 31, 2024.

The SSLP Facility generally bore interest at a rate of LIBOR plus 2.25%.

The Company and SSLP 2016-1, LLC, as applicable, had made certain customary representations and warranties, and

were required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities.

The SSLP Facility included usual and customary events of default for credit

facilities of this nature.

On October 31, 2019, the SSLP Facility was extinguished.

On September 26, 2018, NEFPASS SPV LLC, a

newly formed wholly-owned subsidiary of NEFPASS LLC, as borrower entered into the NEFPASS Facility with Keybank acting as administrative agent.

The Credit Facility was originally composed of $470 million of revolving credit and $75 million of term loans.

On February 12, 2020, a new lender to the Company executed a commitment increase to our Credit Facility providing

for an additional $75.0 million of revolving credit, bringing our Credit Facilitys total revolving credit capacity to $545.0 million.

Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of 2.00-2.25% or the alternate base rate plus 1.00%-1.25%.

Credit Facility has no LIBOR floor requirement.

The Credit Facility matures in August 2024 and includes ratable amortization in the final year.

The Credit Facility may be increased up to

$800 million with additional new lenders or an increase in commitments from current lenders.

The Credit Facility contains certain customary affirmative and negative covenants and events of default.

In addition, the Credit Facility contains

certain financial covenants that among other things, requires the Company to maintain a minimum shareholders equity and a minimum asset coverage ratio.At December 31, 2020, outstanding USD equivalent borrowings under the Credit Facility

totaled $201.0 million, composed of $126.0 million of revolving credit and $75.0 million of term loans.

September 26, 2018, NEFPASS SPV LLC, a newly formed wholly-owned subsidiary of NEFPASS LLC, as borrower entered into the NEFPASS Facility with Keybank acting as administrative agent.

The Company acts as servicer under the NEFPASS Facility.

The NEFPASS Facility is scheduled to mature on

September 26, 2023.

NEFPASS Facility is scheduled to mature on September 26, 2023.

The NEFPASS Facility generally bears interest at a rate of LIBOR plus 2.15%.

NEFPASS and NEFPASS SPV LLC, as applicable, have made certain customary representations and warranties, and are required to comply with various

covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities.

The NEFPASS Facility also includes usual and customary events of default for credit facilities of this nature.

were $30.0 million of borrowings outstanding as of December 31, 2019.

Certain covenants on our issued debt may restrict our

business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under Subchapter M of the Code.

At December 31, 2019, the

Company was in compliance with all financial and operational covenants required by our Credit Facilities.

NEFPASS and NEFPASS SPV LLC, as applicable, have made certain customary representations and warranties,

and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities.

The NEFPASS Facility also includes usual and customary events of default for

credit facilities of this nature.There were $30.0 million of borrowings outstanding as of December 31, 2020.

Certain covenants

on our issued debt may restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under Subchapter M of the

At December 31, 2020, the Company was in compliance with all financial and operational covenants required by our Credit Facilities.

Contractual Obligations

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we would also be exposed to typical risks associated with leverage, including an increased risk of loss.

Our stockholders approved being subject to a 150% asset coverage ratio effective October 12, 2018.

Senior Securities

about our senior securities is shown in the following table (in thousands) as of each year ended December 31 for the past ten years, unless otherwise noted.

The indicates information which the SEC expressly does not require

to be disclosed for certain types of senior securities.

Information about our senior securities is shown in the following table (in thousands) as of each year ended December 31 for the past ten

years, unless otherwise noted.

The indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.

Class and Year

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2022 Tranche C Notes

Class and Year

Outstanding(1)

2023 Unsecured Notes

3 unchanged sentences

Senior Secured Notes

Class and Year

Outstanding(1)

NEFPASS Facility

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We have also entered into two contracts under which we have future commitments:

the Advisory Agreement, pursuant to which Solar Capital

Partners, LLC has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which the Administrator has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations and provide on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance.

Payments under the

Advisory Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a two-part incentive fee.

Payments under the Administration Agreement are equal to an amount based

upon our allocable portion of the Administrators overhead in performing its obligations under the Administration Agreement, including rent, technology systems, insurance and our allocable portion of the costs of our chief financial

officer and chief compliance officer and their respective staffs.

Either party may terminate each of the Advisory Agreement and administration agreement without penalty upon 60 days written notice to the other.

See note 3 to our

Consolidated Financial Statements.

On July 31, 2017, the Company, NEFPASS LLC and NEFCORP LLC entered into a servicing agreement.

Agreement, pursuant to which Solar Capital Partners, LLC has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which the Administrator has agreed to furnish us with the facilities and administrative services

necessary to conduct our day-to-day operations and provide on our behalf managerial assistance to those portfolio companies to which we are required to provide such

Payments under the Advisory Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a two-part incentive fee.

Payments under the Administration Agreement

are equal to an amount based upon our allocable portion of the Administrators overhead in performing its obligations under the Administration Agreement, including rent, technology systems, insurance and our allocable portion of

the costs of our chief financial officer and chief compliance officer and their respective staffs.

Either party may terminate each of the Advisory Agreement and administration agreement without penalty upon 60 days written notice to

See note 3 to our Consolidated Financial Statements.

On July 31, 2017, the Company, NEFPASS LLC and NEFCORP LLC entered

into a servicing agreement.

NEFCORP LLC was engaged to provide NEFPASS LLC with administrative services related to the loans and capital leases held by NEFPASS LLC.

NEFPASS LLC may terminate this agreement upon 30 days written notice to NEFCORP LLC.

NEFPASS LLC may terminate this agreement upon 30 days written notice to

Off-Balance Sheet Arrangements

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Crystal Financial LLC*

Kindred Biosciences, Inc.

Rubius Therapeutics, Inc.

Smile Doctors LLC

Soleo Health Holdings, Inc.

Cardiva Medical, Inc.

Kindred Biosciences, Inc.

Neuronetics, Inc.

One Touch Direct, LLC

PQ Bypass, Inc.

NEF Holdings, Inc.

Centrexion Therapeutics, Inc.

Atria Wealth Solutions, Inc.

Sentry Data Systems, Inc.

Pinnacle Treatment Centers, Inc.

Delphinus Medical Technologies, Inc.

Basic Fun, Inc.

Rubius Therapeutics, Inc.

Cerapedics, Inc.

PQ Bypass, Inc.

Phynet Dermatology LLC

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Alimera Sciences, Inc.

Atria Wealth Solutions, Inc.

BioElectron Technology Corporation

BAM Capital, LLC

Tetraphase Pharmaceuticals, Inc.

Corindus Vascular Robotics, Inc.

Kingsbridge Holdings, LLC

Breathe Technologies, Inc.

GenMark Diagnostics, Inc.

Delphinus Medical Technologies, Inc.

Total Commitments

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with off-balance sheet risk, which may include forward foreign currency contracts.

Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at

specific terms at future dates.

These financial instruments contain varying degrees of off-balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount

recognized in our Consolidated Statements of Assets and Liabilities.

Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at specific terms at future dates.

These financial instruments contain varying

degrees of off-balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount recognized in our Consolidated Statements of Assets and Liabilities.

Distributions

The following table reflects the cash distributions per share on our common stock for the two most recent fiscal years and the current fiscal

year to date:

The following table

reflects the cash distributions per share on our common stock for the two most recent fiscal years and the current fiscal year to date:

Date Declared

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In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we

have not yet received in cash, such as contractual payment-in-kind interest, which represents contractual interest added to the loan balance that becomes due at the end

of the loan term, or the accrual of original issue or market discount.

Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our

investment company taxable income to obtain tax benefits as a regulated investment company.

With respect to the distributions to stockholders, income from origination, structuring,

closing and certain other upfront fees associated with investments in portfolio companies are treated as taxable income and accordingly, distributed to stockholders.

yet received in cash, such as contractual payment-in-kind interest, which represents contractual interest added to

the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount.

Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the

requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a regulated investment company.

With respect to the distributions to stockholders, income from origination, structuring, closing and certain other upfront fees associated

with investments in portfolio companies are treated as taxable income and accordingly, distributed to stockholders.

Related Parties

We have entered into a

number of business relationships with affiliated or related parties, including the following:

We have entered into a number of business relationships with affiliated or related parties, including the following:

We have entered into the Advisory Agreement with Solar Capital Partners.

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The Investment Adviser may also manage other funds in the future that may have investment mandates that are similar, in whole and in part,

For example, the Investment Adviser presently serves as investment adviser to Solar Senior Capital Ltd., a publicly traded BDC, which focuses on investing in senior secured loans, including first lien and second lien debt instruments.

addition, Michael S.

Gross, our Chairman, Co-Chief Executive Officer and President, Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, and

Peteka, our Chief Financial Officer, serve in similar capacities for Solar Senior Capital Ltd.

and SCP Private Credit Income BDC LLC.

The Investment Adviser and certain investment advisory affiliates may determine that an investment is

appropriate for us and for one or more of those other funds.

well as SCP Private Credit Income BDC LLC, an unlisted BDC that focuses on investing primarily in senior secured loans, including non-traditional asset-based loans and first lien loans and SLR HC BDC LLC, an

unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to middle market companies within the healthcare industry.

In addition, Michael S.

Gross, our Chairman, Co-Chief Executive Officer and President, Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, and Richard L.

Peteka, our Chief Financial Officer, serve

in similar capacities for Solar Senior Capital Ltd., SCP Private Credit Income BDC LLC and SLR HC BDC LLC.

The Investment Adviser and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more

of those other funds.

In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds.

Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its

staff, and consistent with the Investment Advisers allocation procedures.

On June 13, 2017, the Adviser received an exemptive order that permits the Company to participate in

negotiated co-investment transactions with certain affiliates, in a manner consistent with the Companys investment objective, positions, policies, strategies and restrictions as well as

regulatory requirements and other pertinent factors, and pursuant to various conditions (the Order).

If the Company is unable to rely on the Order for a particular opportunity, such opportunity will be allocated first to the entity whose

investment strategy is the most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entitys investment strategy, on an alternating basis.

Although the Advisers

investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, the Company and its stockholders could be adversely affected to the extent investment opportunities are allocated among us and other

investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of the Adviser.

party transactions may occur among Solar Capital Ltd., Crystal Financial LLC, Equipment Operating Leases LLC, Loyer Capital LLC and NEF Holdings LLC.

Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the

Investment Advisers allocation procedures.

On June 13, 2017, the Adviser received an exemptive order that permits the Company to participate in negotiated co-investment transactions with

certain affiliates, in a manner consistent with the Companys investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to various conditions (the

If the Company is unable to rely on the Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most consistent with the opportunity being allocated, and second,

if the terms of the opportunity are consistent with more than one entitys investment strategy, on an alternating

Although the Advisers investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, the Company and its stockholders could be adversely

affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of the Adviser.

Related party transactions may occur among Solar Capital Ltd., Crystal Financial LLC, Equipment Operating Leases LLC, Kingsbridge Holdings,

LLC, Loyer Capital LLC, North Mill Holdco LLC, Gemino Healthcare Finance, LLC and NEF Holdings LLC.

These transactions may occur in the normal course of business.

No administrative fees are paid to

Solar Capital Partners by Crystal Financial LLC, Equipment Operating Leases LLC, Loyer Capital LLC or NEF Holdings LLC.

In addition, we have adopted a formal code of ethics that governs the conduct of our

officers and directors.

Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.

No administrative or other fees are paid to Solar Capital Partners by Crystal

Financial LLC, Equipment Operating Leases LLC, Kingsbridge Holdings, LLC, Loyer Capital LLC, North Mill Holdco LLC, Gemino Healthcare Finance, LLC or NEF Holdings LLC.

In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors.

Our officers and directors also

remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.

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 5. Market for Registrant’s Common Equity