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Item 1A. Risk Factors

2022-03-01 compared with 2021-02-24 · 1335 added, 1231 removed, 472 unchanged (84% of the section changed)

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factors, together with all of the other information included in this annual report on Form 10-K before you decide whether to make an investment in our securities.

The risks described in this document and set

out below are not the only risks we face.

The risks described in this document

and set out below are not the only risks we face.

If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected.

In such case, our net asset value and the trading price of our common

stock could decline or the value of our preferred stock, debt securities, subscription rights or warrants may decline, and you may lose all or part of your investment.

In such case, our net asset value and the trading price of

our common stock could decline or the value of our preferred stock, debt securities, subscription rights or warrants may decline, and you may lose all or part of your investment.

Please refer also to those risk factors relating to our proposed

merger with SLR Senior Investment Corp.

included under the caption Risk FactorsRisks Relating to the Mergers in pre-effective amendment no.

1 to our registration statement on Form N-14 (333-261675) filed with the SEC on January 31, 2022, which are incorporated herein by reference.

SUMMARY RISK FACTORS

Risks Relating to

Our Investments

Risks Relating

to Our Investments

We operate in a highly competitive market for investment opportunities.

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us to a risk of significant loss if any of these companies performs poorly or defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry.

Volatility or a prolonged disruption in the credit markets could materially damage our business.

Adverse developments in the credit markets may impair our ability to secure debt financing.

Economic sanction laws in the United States and other jurisdictions may prohibit us and our affiliates from

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forced to curtail or cease our new lending and investment activities, our net asset value could decrease and our level of distributions and liquidity could be affected adversely.

Changes relating to the LIBOR calculation process may adversely affect the value of our portfolio of

LIBOR-indexed, floating-rate debt securities.

Events outside of our control, including public health crises, could negatively affect our portfolio companies

and our results of our operations.

We are currently operating in a period of capital markets disruption and economic uncertainty.

The continued uncertainty related to the sustainability and pace of economic recovery in the U.S.

could have a negative impact on our business.

We may suffer a loss if a portfolio company defaults on a loan and the underlying collateral is not sufficient.

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and reduce our return on equity.

We may be exposed to higher risks with respect to our investments that include original issue discount or PIK

Risks Relating to an Investment in Our Securities

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there is a risk that investors in our equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital.

Due to the COVID-19 pandemic or other disruptions in

the economy, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur U.S.

Due to the COVID-19 pandemic or other

disruptions in the economy, we may reduce or defer our dividends and choose to incur U.S.

federal excise tax in order preserve cash and maintain flexibility.

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Risks Relating to Our Business and Structure

We are dependent upon Solar Capital Partners key personnel for our future success.

We are dependent upon SLR Capital Partners key personnel for our future success.

Our business model depends to a significant extent upon strong referral relationships with financial sponsors,

and the inability of the senior investment professionals of our Investment Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.

Our financial condition and results of operations will depend on Solar Capital Partners ability to manage

our future growth effectively by identifying, investing in and monitoring companies that meet our investment criteria.

Our financial condition and results of operations will depend on SLR Capital Partners ability to manage our

future growth effectively by identifying, investing in and monitoring companies that meet our investment criteria.

We may need to raise additional capital to grow because we must distribute most of our income.

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There will be uncertainty as to the value of our portfolio investments, which may impact our net asset value.

There are significant potential conflicts of interest, including Solar Capital Partners management of other

investment funds such as Solar Senior Capital Ltd., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC, which could impact our investment returns, and an investment in Solar Capital Ltd.

is not an investment in Solar Senior Capital Ltd., SCP

Private Credit Income BDC LLC, or SLR HC BDC LLC.

There are significant potential conflicts of interest, including SLR Capital Partners management of other

investment funds such as SLR Senior Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC, which could impact our investment returns, and an investment in SLR Investment Corp.

is not an investment in SLR Senior Investment Corp.,

SCP Private Credit Income BDC LLC, or SLR HC BDC LLC.

We may be obligated to pay our Investment Adviser incentive compensation even if we incur a loss.

Our incentive fee may induce Solar Capital Partners to pursue speculative investments.

Our incentive fee may induce SLR Capital Partners to pursue speculative investments.

We may become subject to corporate-level U.S.

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pricing, terms and structure, we may experience decreased net interest income and increased risk of credit loss.

Our investments are very risky and highly speculative.

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.

Our investments are very risky and

highly speculative.

We invest primarily in leveraged middle-market companies in the form of senior secured loans, financing leases and to a lesser

extent, unsecured loans and equity securities.

Senior Secured Loans.

When we make a senior secured term loan investment, including stretch-senior

loan investments, in a portfolio company, we generally take a security interest in the available assets of the portfolio company, including the equity interests of its subsidiaries, which we expect to help mitigate the risk that we will not be

However, there is a risk that the collateral securing our loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and

market conditions, including as a result of the inability of the portfolio company to raise additional capital, and, in some circumstances, our lien could be subordinated to claims of other creditors.

In addition, deterioration in a portfolio

companys financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the loan.

Consequently, the fact that a loan is secured does not guarantee

that we will receive principal and interest payments according to the loans terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies.

When we make a senior secured term loan investment in a portfolio

company, we generally take a security interest in the available assets of the portfolio company, including the equity interests of its subsidiaries, which we expect to help mitigate the risk that we will not be repaid.

However, there is a risk that

the collateral securing our loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a

result of the inability of the portfolio company to raise additional capital, and, in some circumstances, our lien could be subordinated to claims of other creditors.

In addition, deterioration in a portfolio companys financial condition and

prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the loan.

Consequently, the fact that a loan is secured does not guarantee that we will receive principal and

interest payments according to the loans terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies.

Unsecured Loans and Preferred Securities.

Our unsecured and preferred investments are generally subordinated to senior loans and are generally

Our unsecured and preferred investments are generally subordinated to senior loans and are

generally unsecured.

As such, other creditors may rank senior to us in the event of an insolvency.

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Equity Investments.

When we invest in senior secured loans, stretch-senior loans, unitranche loans, unsecured loans or preferred securities, we

may acquire common equity securities as well.

In certain other unique circumstances we may also make equity investments in businesses that make senior loans and/or leases, such as our investments in Crystal, KBH and NEF.

In addition, we may invest

directly in the equity securities of portfolio companies without limitation as to market capitalization.

For instance, we may invest in thinly traded companies, the prices of which may be subject to erratic market movement.

Our goal is ultimately to

exit such equity interests and realize gains upon our disposition of such interests.

However, the equity interests we receive may not appreciate in value and, in fact, may decline in value.

Accordingly, we may not be able to realize gains from our

equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

When we invest in senior secured loans, unitranche loans, unsecured

loans or preferred securities, we may acquire common equity securities as well.

In certain other unique circumstances we may also make equity investments in businesses that make senior loans and/or leases, such as our investments in Kingsbridge

Holdings, LLC, SLR Credit Solutions and SLR Equipment Finance.

In addition, we may invest directly in the equity securities of portfolio companies without limitation as to market capitalization.

For instance, we may invest in thinly traded

companies, the prices of which may be subject to erratic market movement.

Our goal is ultimately to exit such equity interests and realize gains upon our disposition of such interests.

However, the equity interests we receive may not appreciate in

value and, in fact, may decline in value.

Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we

In addition, investing in middle-market companies involves a number of significant risks, including:

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they generally have less predictable operating results, may from time to time be parties to litigation, may be

engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance

expansion or maintain their competitive position.

In addition, our executive officers, directors and our investment adviser may, in the ordinary course of business, be named as defendants in

litigation arising from our investments in the portfolio companies;

engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position.

our executive officers, directors and our Investment Adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies;

they may have difficulty accessing the capital markets to meet future capital needs, which may limit their

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investments and materially harm our business.

In addition, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we have material non-public

information regarding such portfolio company.

In addition, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we have

material non-public information regarding such portfolio company.

Our portfolio may be concentrated in a limited number of portfolio companies and industries, which

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Our portfolio may be concentrated in a limited number of portfolio companies and industries.

For example, as of December 31, 2020, our investments in

Crystal Financial LLC, Kingsbridge Holdings, LLC and NEF Holdings comprised 15.3%, 11.2% and 6.7%, respectively, of our total assets and our investments in multi-sector holdingsd and diversified financial services industries comprised 21.8% and

For example, as of December 31, 2021, our investments in SLR

Credit Solutions, Kingsbridge Holdings, LLC and SLR Equipment Finance comprised 14.9%, 11.2% and 6.4%, respectively, of our total assets and our investments in multi-sector holdings and diversified financial services industries comprised 20.6% and

17.2%, respectively, of our total assets.

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accordance with the terms of the obligations and involve major risk exposure to adverse conditions.

In addition, high yield securities generally offer a higher current yield than that available from higher

grade issues, but typically involve greater risk.

These securities are especially sensitive to adverse changes in general economic conditions, to changes in the financial condition of their

issuers and to price fluctuation in response to changes in interest rates.

During periods of economic downturn or rising interest rates, issuers of below investment grade instruments may experience financial stress that could adversely affect their

ability to make payments of principal and interest and increase the possibility of default.

The secondary market for high yield securities may not be as liquid as the secondary market for more highly rated securities.

In addition, many of our debt

investments will not fully amortize during their lifetime, which means that a borrower may be unable to payoff its debt due to bankruptcy or other reasons and therefore we may write-off such debt investment

prior to its scheduled maturity.

Upon such an occurrence, we may realize a loss or a substantial amount of unpaid principal and interest due upon maturity.

Price declines and illiquidity in the corporate debt markets have adversely affected, and may continue to adversely affect, the fair value of our

portfolio investments, reducing our net asset value through increased net unrealized depreciation.

Any unrealized depreciation that we experience on our loan portfolio may be an indication of future realized losses, which could reduce our income

available for distribution and could adversely affect our ability to service our outstanding borrowings.

As a BDC, we are required to carry our

investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or under the direction of our board of directors.

Decreases in the market values or fair values of our investments are recorded as

unrealized depreciation.

Any unrealized depreciation in our loan portfolio could be an indication of a portfolio companys inability to meet its repayment obligations to us with respect to the affected loans.

This could result in realized

losses in the future and ultimately in reductions of our income available for distribution in future periods and could materially adversely affect our ability to service our outstanding borrowings.

Depending on market conditions, we could incur

substantial losses in future periods, which could further reduce our net asset value and have a material adverse impact on our business, financial condition and results of operations.

Global economic, regulatory and market conditions may adversely affect our business, results of operations and financial condition, including our

revenue growth and profitability.

We and our portfolio companies are subject to regulation by laws at the U.S.

federal, state and local levels.

These laws and regulations, as well as their interpretation, could change from time to time, including as the result of interpretive guidance or other directives from the U.S.

President and others in the executive branch, and new laws, regulations

and interpretations could also come into effect.

Any such new or changed laws or regulations could have a material adverse effect on our business, and political uncertainty could increase regulatory uncertainty in the near term.

The effects of legislative and regulatory proposals directed at the financial services industry or affecting taxation, could negatively impact the operations,

cash flows or financial condition of us and our portfolio companies, impose additional costs on us or our portfolio companies, intensify the regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the

business of our portfolio companies.

In addition, if we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of business and could be subject to civil fines and criminal penalties.

Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector,

raising the possibility that some portion of the non-bank financial sector will be subject to new regulation.

While it cannot be known at this time whether any regulation will be implemented or what form it

will take, increased regulation of non-bank credit extension could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us

or otherwise adversely affect our business, financial condition and results of operations.

On May 24, 2018, the President of the United States

signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act, which increased from $50 billion to $250 billion the asset threshold for

designation of systemically important financial institutions or SIFIs subject to enhanced prudential standards set by the Federal Reserve Board, staggering application of

this change based on the size and risk of the covered bank holding company.

On May 30, 2018, the Federal Reserve Board voted to consider changes to the Volcker Rule that would loosen compliance requirements for all banks.

The effect of this

change and any further rules or regulations are and could be complex and far-reaching, and the change and any future laws or regulations or changes thereto could negatively impact our operations, cash flows or

financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition and results of operations.

Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business, financial condition, operating

results and cash flows.

Until we know what policy changes are made and how those changes impact business and the business of our competitors over the long term, we will not know if, overall, it will benefit from them or be negatively affected by

In 2010, a financial crisis emerged in Europe, triggered by high budget deficits and rising direct and contingent sovereign debt, which created

concerns about the ability of certain nations to continue to service their sovereign debt obligations.

Risks resulting from such debt crisis, including any austerity measures taken in exchange for bailout of certain nations, and any future debt

crisis in Europe or any similar crisis elsewhere could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in certain countries and the financial condition of financial

institutions generally.

On January 31, 2020, the United Kingdom (the UK) ended its membership in the European Union (Brexit).

Under the terms of the withdrawal agreement negotiated and agreed between the UK and the

European Union, the UKs departure from the European Union was followed by a transition period (the Transition Period), which ran until December 31, 2020 and during which the UK continued to apply European Union law and was

treated for all material purposes as if it were still a member of the European Union.

On December 24, 2020, the European Union and UK governments signed a trade deal that became provisionally effective on January 1, 2021 and that now

governs the relationship between the UK and European Union (the Trade Agreement).

The Trade Agreement implements significant regulation around trade, transport of goods and travel restrictions between the UK and the European Union.

Notwithstanding the foregoing, the longer term economic, legal, political and social implications of Brexit are unclear at this stage and are likely to continue to lead to ongoing political and economic uncertainty and periods of increased

volatility in both the UK and in wider European markets for some time.

In particular, Brexit could lead to calls for similar referendums in other European jurisdictions, which could cause increased economic volatility in the European and global

This mid- to long-term uncertainty could have adverse effects on the economy generally and on our ability to earn attractive returns.

In particular, currency volatility could mean that our returns are

adversely affected by market movements and could make it more difficult, or more expensive, for us to execute prudent currency hedging policies.

Potential decline in the value of the British Pound and/or the Euro against other currencies, along with

the potential further downgrading of the UKs sovereign credit rating, could also have an impact on the performance of certain investments made in the UK or Europe.

There is uncertainty surrounding potential legal, regulatory and policy changes by new presidential administrations in the United States that may

directly affect financial institutions and the global economy.

As a result of the November 2020 elections in the United States, the Democratic

Party gained control of both the Presidency and the Senate from the Republican Party.

Therefore, changes in federal policy, including tax policies, and at regulatory agencies are expected to occur over time through policy and personnel changes,

which may lead to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities.

The nature, timing and economic and political effects of potential changes to the current legal and

regulatory framework affecting financial institutions remain highly uncertain.

Uncertainty surrounding future changes may adversely affect our operating environment and therefore our business, financial condition, results of operations and growth

Volatility or a prolonged disruption in the credit markets could materially damage our business.

We are required to record our assets at fair value, as determined in good faith by our board of directors, in accordance with our valuation

As a result, volatility in the capital markets may have a material adverse effect on our valuations and our net asset value, even if we hold investments to maturity.

Volatility or dislocation in the capital markets may depress our stock

price below our net asset value per share and create a challenging environment in which to raise equity and debt capital.

These conditions could continue for a prolonged period of time or worsen in the future.

While these conditions persist, we and

other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital.

Equity capital may be difficult to raise because, subject to some limited exceptions which apply to us, as a BDC we

are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors.

At our 2020 Annual Stockholders

Meeting, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common stock immediately prior to each such offering, at a price or prices below the then current net

asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set forth in the proxy statement pertaining thereto, during a period beginning on October 6, 2020 and expiring on the

earlier of the one-year anniversary of the date of the 2020 Annual Stockholders Meeting and the date of our 2021 Annual Stockholders Meeting.

However, notwithstanding such stockholder approval, since our

initial public offering on February 9, 2010, we have not sold any shares of our common stock in an offering that resulted in proceeds to us of less than our then current net asset value per share.

Any offering of our common stock that requires

stockholder approval must occur, if at all, within one year after receiving such stockholder approval.

In addition, our ability to incur indebtedness (including by issuing preferred stock) is limited by applicable regulations such that our asset

coverage, as defined in the 1940 Act, must equal at least 150% immediately after each time we incur indebtedness.

The debt capital that will be available, if at all, may be at a higher cost and on less favorable terms and conditions in the future.

Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.

Additionally, our ability to

incur indebtedness is limited by the asset coverage ratio for a BDC, as defined under the 1940 Act.

Declining portfolio values negatively impact our ability to borrow additional funds because our net asset value is reduced for purposes of the asset

coverage ratio.

If the fair value of our assets declines substantially, we may fail to maintain the asset coverage ratio stipulated by the 1940 Act, which could, in turn, cause us to lose our status as a BDC and materially impair our business

A lengthy disruption in the credit markets could also materially decrease demand for our investments.

The significant disruption in the

capital markets experienced in the past, including the disruption caused by the COVID-19 pandemic, has had, and may in the future have, a negative effect on the valuations of our investments and on the

potential for liquidity events involving our investments.

The debt capital that may be available to us in the future may be at a higher cost and have less favorable terms and conditions than those currently in effect.

If our financing costs increase

and we have no increase in interest income, then our net investment income will decrease.

A prolonged inability to raise capital may require us to reduce the volume of investments we originate and could have a material adverse impact on our

business, financial condition and results of operations.

This may also increase the probability that other structural risks negatively impact us.

These situations may arise due to circumstances that we may be unable to control, such as a lengthy

disruption in the credit markets, a severe decline in the value of the U.S.

dollar, a sharp economic downturn or recession or an operational problem that affects third parties or us, and could materially damage our business, financial condition and

results of operations.

Adverse developments in the credit markets may impair our ability to secure debt financing.

In past economic downturns, such as the financial crisis in the United States that began in mid-2007 and

during other times of extreme market volatility, many commercial banks and other financial institutions stopped lending

or significantly curtailed their lending activity.

In addition, in an effort to stem losses and reduce their exposure to segments of the economy deemed to be high risk, some financial

institutions limited routine refinancing and loan modification transactions and even reviewed the terms of existing facilities to identify bases for accelerating the maturity of existing lending facilities.

If these conditions recur, for example as

a result of the COVID-19 pandemic, it may be difficult for us to obtain desired financing to finance the growth of our investments on acceptable economic terms, or at all.

So far, the COVID-19 pandemic has resulted in, and until fully resolved is likely to continue to result in,

among other things, increased draws by borrowers on revolving lines of credit and increased requests by borrowers for amendments, modifications and waivers of their credit agreements to avoid default or change payment terms, increased defaults by

such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans.

In addition, the duration and effectiveness of responsive measures implemented by governments and central banks cannot be predicted.

commencement, continuation, or cessation of government and central bank policies and economic stimulus programs, including changes in monetary policy involving interest rate adjustments or governmental policies, may contribute to the development of

or result in an increase in market volatility, illiquidity and other adverse effects that could negatively impact the credit markets and the Company.

we are unable to consummate credit facilities on commercially reasonable terms, our liquidity may be reduced significantly.

If we are unable to repay amounts outstanding under any facility we may enter into and are declared in default or are unable

to renew or refinance any such facility, it would limit our ability to initiate significant originations or to operate our business in the normal course.

These situations may arise due to circumstances that we may be unable to control, such as

inaccessibility of the credit markets, a severe decline in the value of the U.S.

dollar, a further economic downturn or an operational problem that affects third parties or us, and could materially damage our business.

Moreover, we are unable to

predict when economic and market conditions may become more favorable.

Even if such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our

Economic sanction laws in the United States and other jurisdictions may prohibit us and our affiliates from transacting with certain

countries, individuals and companies.

Economic sanction laws in the United States and other jurisdictions may prohibit us or our affiliates from

transacting with certain countries, individuals and companies.

In addition, high yield securities generally offer a higher current yield than that available from higher grade issues, but typically involve greater

These securities are especially sensitive to adverse changes in general economic conditions, to changes in the financial condition of their issuers and to price fluctuation in response to changes in interest rates.

During periods of economic

downturn or rising interest rates, issuers of below investment grade instruments may experience financial stress that could adversely affect their ability to make payments of principal and interest and increase the possibility of default.

secondary market for high yield securities may not be as liquid as the secondary market for more highly rated securities.

In addition, many of our debt investments will not fully amortize during their lifetime, which means that a borrower may be

unable to payoff its debt due to bankruptcy or other reasons and therefore we may write-off such debt investment prior to its scheduled maturity.

Upon such an occurrence, we may realize a loss or a

substantial amount of unpaid principal and interest due upon maturity.

Price declines and illiquidity in the corporate debt markets have adversely

affected, and may continue to adversely affect, the fair value of our portfolio investments, reducing our net asset value through increased net unrealized depreciation.

Any unrealized depreciation that we experience on our loan portfolio may be an

indication of future realized losses, which could reduce our income available for distribution and could adversely affect our ability to service our outstanding borrowings.

As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or

under the direction of our board of directors.

Decreases in the market values or fair values of our investments are recorded as unrealized depreciation.

Any unrealized depreciation in our loan portfolio could be an indication of a portfolio

companys inability to meet its repayment obligations to us with respect to the affected loans.

This could result in realized losses in the future and ultimately in reductions of our income available for distribution in future periods and could

materially adversely affect our ability to service our outstanding borrowings.

Depending on market conditions, we could incur substantial losses in future periods, which could further reduce our net asset value and have a material adverse impact on

our business, financial condition and results of operations.

Economic sanction laws in the United States and other jurisdictions may prohibit us and our affiliates

from transacting with certain countries, individuals and companies.

Economic sanction laws in the United States and other jurisdictions may

prohibit us or our affiliates from transacting with certain countries, individuals and companies.

In the United States, the U.S.

Department of the Treasurys Office of Foreign Assets Control administers and enforces laws, executive orders and regulations establishing U.S.

Department of the Treasurys Office of Foreign Assets Control administers and enforces laws, executive orders and

regulations establishing U.S.

economic and trade sanctions, which prohibit, among other things, transactions with, and the provision of services to, certain non-U.S.

countries, territories, entities and individuals.

of sanctions may significantly restrict or completely prohibit investment activities in certain jurisdictions, and if we, our portfolio companies or other issuers in which we invest were to violate any such laws or regulations, we may face

significant legal and monetary penalties.

The Foreign Corrupt Practices Act, or FCPA, and other anti-corruption laws and regulations, as well as

anti-boycott regulations, may also apply to and restrict our activities, our portfolio companies and other issuers of our investments.

If an issuer or we were to violate any such laws or regulations, such issuer or we may face significant legal and

monetary penalties.

countries, territories,

entities and individuals.

These types of sanctions may significantly restrict or completely prohibit investment activities in certain jurisdictions, and if we, our portfolio companies or other issuers in which we invest were to violate any such laws

or regulations, we may face significant legal and monetary penalties.

The Foreign Corrupt Practices Act, or FCPA, and other anti-corruption laws and

regulations, as well as anti-boycott regulations, may also apply to and restrict our activities, our portfolio companies and other issuers of our investments.

If an issuer or we were to violate any such laws or regulations, such issuer or we may

face significant legal and monetary penalties.

government has indicated that it is particularly focused on FCPA enforcement, which may increase the risk that an issuer or us becomes the subject of such actual or threatened enforcement.

In addition, certain

commentators have suggested that private investment firms and the funds that they manage may face increased scrutiny and/or liability with respect to the activities of their underlying portfolio companies.

As such, a violation of the FCPA or other

applicable regulations by us or an issuer of our portfolio investments could have a material adverse effect on us.

We are committed to complying with the FCPA and other anti-corruption laws and regulations, as well as anti-boycott regulations, to

which it is subject.

addition, certain commentators have suggested that private investment firms and the funds that they manage may face increased scrutiny and/or liability with respect to the activities of their underlying portfolio companies.

As such, a violation of

the FCPA or other applicable regulations by us or an issuer of our portfolio investments could have a material adverse effect on us.

We are committed to complying with the FCPA and other anti-corruption laws and regulations, as well as anti-boycott

regulations, to which it is subject.

As a result, we may be adversely affected because of our unwillingness to enter into transactions that violate any such laws or regulations.

If we cannot obtain additional capital because of either regulatory or market price constraints, we

could be forced to curtail or cease our new lending and investment activities, our net asset value could decrease and our level of distributions and liquidity could be affected adversely.

Our ability to secure additional financing and satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our future

operating performance, which is subject to the prevailing general economic and credit market conditions, including interest rate levels and the availability of credit generally, and financial, business and other factors, many of which are beyond our

The worsening of current economic and capital market conditions could have a material adverse effect on our ability to secure financing on favorable terms, if at all.

If we are unable to obtain debt capital, then our equity investors will not benefit from the potential for increased returns on equity resulting from leverage

to the extent that our investment strategy is successful and we may be limited in our ability to make new commitments or fundings to our portfolio companies.

Changes relating to the LIBOR calculation process may adversely affect the value of our portfolio of LIBOR-indexed, floating-rate debt securities.

LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on the London interbank market

and is widely used as a reference for setting the interest rate on loans globally.

We typically use LIBOR as a reference rate in floating-rate loans we extend to portfolio companies such that the interest due to us pursuant to a term loan extended

to a portfolio company is calculated using LIBOR.

The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR.

In the recent past, concerns have been publicized that some of the member banks

surveyed by the British Bankers Association (BBA) in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate

applicable to them in order to profit on their derivative positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those

they actually submitted.

A number of BBA member banks entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various

jurisdictions are ongoing.

Actions by the ICE Benchmark Administration, regulators or law enforcement agencies as a result of these or future events, may

result in changes to the manner in which LIBOR is determined.

Potential changes, or uncertainty related to such potential changes may adversely affect the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate

debt securities.

In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based

securities or the value of our portfolio of LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us.

On July 27, 2017, the U.K.

Financial Conduct Authority (the FCA), which regulates LIBOR, announced that it intends to stop persuading or

compelling banks to submit LIBOR rates after 2021.

In addition, on March 25, 2020, the FCA stated that although the central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed, the outbreak of COVID-19 has impacted the timing of many firms transition planning, and the FCA will continue to assess the impact of the COVID-19 pandemic on

transition timelines and update the marketplace as soon as possible.

Furthermore, on November 30, 2020, the Intercontinental Exchange, Inc.

(ICE) announced that the ICE Benchmark Administration Limited, a wholly owned subsidiary of

ICE and the administrator of LIBOR, announced its plan to extend the date that most U.S.

LIBOR values would cease being computed and announced from December 31, 2021 to June 30, 2023.

Despite this extension of the U.S.

LIBOR transition

deadline for certain LIBOR values, U.S.

regulators continue to urge financial institutions to stop entering into new LIBOR transactions by the end of 2021.

It is unclear if after 2021 LIBOR will cease to

exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021.

It is also unclear whether the COVID-19

pandemic will have further effect on LIBOR transition plans.

We have exposure to LIBOR, including in financial instruments that mature after 2021.

Our exposure arises from the value of our portfolio of LIBOR-indexed, floating-rate debt securities.

In the United States, the Federal Reserve Board and the Federal Reserve Bank of New York, in conjunction with the Alternative Reference Rates Committee,

a steering committee comprised of large U.S.

financial institutions, is considering replacing U.S.

dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by Treasury securities called the Secured Overnight Financing

Rate (SOFR).

The Federal Reserve Bank of New York began publishing SOFR in April 2018.

Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the future of LIBOR at this time is uncertain, including

whether the COVID-19 pandemic will have further effect on LIBOR transition plans.

The elimination of

LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for or value of any LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of

credit held by or due to us or on our overall financial condition or results of operations.

If LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor

in determining the interest rate to replace LIBOR with the new standard that is established.

In the event that the LIBOR rate is no longer available or published on a current basis or no longer made available or used for determining the interest

rate of loans, our administrative agent that manages our loans will generally select a comparable successor rate;

provided that (i) to the extent a comparable or successor rate is approved by the administrative agent, the approved rate shall be

applied in a manner consistent with market practice;

and (ii) to the extent such market practice is not administratively feasible for the administrative agent, such approved rate shall be applied as otherwise reasonably determined by the

administrative agent.

Events outside of our control, including public health crises, could negatively affect our portfolio companies and our

results of our operations.

Periods of market volatility have occurred and could continue to occur in response to pandemics or other events

outside of our control.

These types of events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies.

For example, the COVID-19 pandemic has

delivered a shock to the global economy.

This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby, including a recession and a steep

increase in unemployment in the United States.

With respect to the U.S.

credit markets (in particular for middle market loans), this outbreak has

resulted in, and until fully resolved is likely to continue to result in, the following among other things:

(i) government imposition of various forms

of shelter-in-place orders and the closing of non-essential businesses, resulting in significant

disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these

effects are hoped to be temporary, some effects could be persistent or even permanent;

(ii) increased draws by borrowers on revolving lines of credit;

(iii) increased requests by borrowers for amendments and waivers of their credit

agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans;

(iv) volatility and disruption of these markets including greater volatility in pricing

and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues;

and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets

and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses.

While several countries, as well as certain states, counties and cities in the United States, have relaxed initial public health restrictions with the view to

partially or fully reopening their economies, many cities have since

experienced a surge in the reported number of cases, hospitalizations and deaths related to the COVID-19 pandemic.

These surges have led to the re-introduction of such restrictions and business shutdowns in certain states in the United States and globally and could continue to lead to the re-introduction of such

restrictions elsewhere.

Health advisors warn that recurring COVID-19 outbreaks will continue if reopening is pursued too soon or in the wrong manner, which may lead to the

re-introduction or continuation of certain public health restrictions (such as instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools, retail stores and other public

Additionally, as of late December 2020, travelers from the United States are not allowed to visit Canada, Australia or the majority of countries in Europe, Asia, Africa and South America.

These continued travel restrictions may prolong the

global economic downturn.

In addition, although the Federal Food and Drug Administration authorized vaccines produced by Pfizer-BioNTech and Moderna for emergency use starting in December 2020, it remains

unclear how quickly the vaccines will be distributed nationwide and globally or when herd immunity will be achieved and the restrictions that were imposed to slow the spread of the virus will be lifted entirely.

The delay in distributing

the vaccines could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time.

Even after the

COVID-19 pandemic subsides, the U.S.

economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected

by a prolonged recession in the United States and other major markets.

This outbreak is having, and any future outbreaks could have, an adverse impact on

the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted

to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things.

As of the date of

this annual report on Form 10-K, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect

any governmental actions will have or the full potential impact on us and our portfolio companies.

Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding

the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all

of which are beyond our control.

These potential impacts, while uncertain, could adversely affect our and our portfolio companies operating results.

If the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase.

In addition, collateral for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity of

loan guarantors could decline, impairing their ability to honor commitments to us.

An increase in loan delinquencies and non-accruals or a decrease in loan collateral and guarantor net worth could

result in increased costs and reduced income which would have a material adverse effect on our business, financial condition or results of operations.

Additionally, oil prices collapsed to an 18-year low on

supply glut concerns, as shutdowns across the global economy sharply reduced oil demand while Saudi Arabia and Russia engaged in a price war.

Central banks and governments have responded with liquidity injections to ease the strain on financial

systems and stimulus measures to buffer the shock to businesses and consumers.

These measures have helped stabilize certain portions of the financial markets over the short term, but volatility will likely remain elevated until the health crisis

itself is under control (via fewer new cases, lower infection rates and/or verified treatments).

There are still many unknowns and new information is incoming daily, compounding the difficulty of modeling outcomes for epidemiologists and economists

We cannot be certain as to the duration or magnitude of the economic impact of the COVID-19 pandemic in

the markets in which we and our portfolio companies operate, including with respect to travel restrictions, business closures, mitigation efforts (whether voluntary, suggested, or mandated by law) and corresponding declines in economic activity that

may negatively impact the U.S.

economy and the markets for the various types of goods and services provided by U.S.

middle market companies.

Depending on the duration, magnitude and severity of these conditions and their related economic and market

impacts, certain portfolio companies may suffer declines

in earnings and could experience financial distress, which could cause them to default on their financial obligations to us and their other lenders.

We will also be negatively affected if our operations and effectiveness or the operations and effectiveness of a portfolio company (or any of the key

personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted.

Any public health

emergency, including the COVID-19 pandemic or any outbreak of other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a

significant adverse impact on us and the fair value of our investments.

Our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based

on estimates, comparisons and qualitative evaluations of private information that may not show the complete impact of the COVID-19 pandemic and the resulting measures taken in response thereto.

These potential

impacts, while uncertain, could adversely affect our and our portfolio companies operating results.

We are currently operating in a period of

capital markets disruption and economic uncertainty.

capital markets have experienced extreme volatility and disruption following the

global outbreak of COVID-19 that began in December 2019.

The global impact of the outbreak is rapidly evolving, and many countries have reacted by instituting quarantines, prohibitions on travel and the

closure of offices, businesses, schools, retail stores and other public venues.

Businesses are also implementing similar precautionary measures.

Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, have created significant disruption in supply chains and economic activity.

The impact of COVID-19 has led to significant volatility and declines in the global

public equity markets and it is uncertain how long this volatility will continue.

As COVID-19 continues to spread, the potential impacts, including a global, regional or other economic recession, are

increasingly uncertain and difficult to assess.

Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn.

General uncertainty surrounding the dangers and impact of COVID-19 (including the preventative measures taken in

response thereto and additional uncertainty regarding new variants of COVID-19 that have emerged in the U.K, South Africa and Brazil) has to date created significant disruption in supply chains and economic

Disruptions in the capital markets caused by the COVID-19 pandemic have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets.

future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows.

Unfavorable economic conditions also would be expected to increase our funding

costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us.

These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative

impact on our operating results and the fair values of our debt and equity investments.

In addition, due to the outbreak in the United States, certain

personnel of our investment adviser are currently working remotely, which may introduce additional operational risk to us.

Staff members of certain of our other service providers may also work remotely during the

COVID-19 outbreak.

An extended period of remote working could lead to service limitations or failures that could impact us or our performance.

Further, current market conditions resulting from the COVID-19 pandemic may make it difficult for us to obtain debt

capital on favorable terms and any failure to do so could have a material adverse effect on our business.

The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than

what we would otherwise expect, including being at a higher cost in rising rate environments.

If we are unable to raise debt, then our equity investors may not benefit from the potential for increased returns

on equity resulting from leverage and we may be limited in our ability to make or fund commitments to portfolio companies.

An inability to obtain indebtedness could have a material adverse effect

on our business, financial condition or results of operations.

The continued uncertainty related to the sustainability and pace of economic

recovery in the U.S.

and globally could have a negative impact on our business.

Our business is directly influenced by the economic cycle, and

could be negatively impacted by a downturn in economic activity in the U.S.

as well as globally.

Fiscal and monetary actions taken by U.S.

government and regulatory authorities could have a

material adverse impact on our business.

To the extent uncertainty regarding the U.S.

or global economy, including as a result of the global COVID-19 pandemic, negatively impacts consumer confidence and

consumer credit factors, our business, financial condition and results of operations could be adversely affected.

Moreover, Federal Reserve policy, including with respect to certain interest rates and the decision to end its quantitative easing

policy, along with the general policies of the current Presidential administration, may also adversely affect the value, volatility and liquidity of dividend- and interest-paying securities.

Market volatility, rising interest rates and/or a return

to unfavorable economic conditions could adversely affect our business.

We may suffer a loss if a portfolio company defaults on a loan and the

underlying collateral is not sufficient.

In the event of a default by a portfolio company on a secured loan, we will only have recourse to the

assets collateralizing the loan.

If the underlying collateral value is less than the loan amount, we will suffer a loss.

In addition, we sometimes make loans that are unsecured, which are subject to the risk that other lenders may be directly

secured by the assets of the portfolio company.

In the event of a default, those collateralized lenders would have priority over us with respect to the proceeds of a sale of the underlying assets.

In cases described above, we may lack control over

the underlying asset collateralizing our loan or the underlying assets of the portfolio company prior to a default, and as a result the value of the collateral may be reduced by acts or omissions by owners or managers of the assets.

If we cannot obtain additional capital because of either regulatory or market price constraints, we could be forced to curtail or cease our new lending

and investment activities, our net asset value could decrease and our level of distributions and liquidity could be affected adversely.

ability to secure additional financing and satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our future operating performance, which is subject to the prevailing general economic and credit market

conditions, including interest rate levels and the availability of credit generally, and financial, business and other factors, many of which are beyond our control.

The worsening of current economic and capital market conditions could have a

material adverse effect on our ability to secure financing on favorable terms, if at all.

If we are unable to obtain debt capital, then our equity

investors will not benefit from the potential for increased returns on equity resulting from leverage to the extent that our investment strategy is successful and we may be limited in our ability to make new commitments or fundings to our portfolio

We may suffer a loss if a portfolio company defaults on a loan and the underlying collateral is not sufficient.

In the event of a default by a portfolio company on a secured loan, we will only have recourse to the assets collateralizing the loan.

If the underlying

collateral value is less than the loan amount, we will suffer a loss.

In addition, we sometimes make loans that are unsecured, which are subject to the risk that other lenders may be directly secured by the assets of the portfolio company.

event of a default, those collateralized lenders would have priority over us with respect to the proceeds of a sale of the underlying assets.

In cases described above, we may lack control over the underlying asset collateralizing our loan or the

underlying assets of the portfolio company prior to a default, and as a result the value of the collateral may be reduced by acts or omissions by owners or managers of the assets.

In the event of bankruptcy of a portfolio company, we may not have full recourse to its assets in order to satisfy our loan, or our loan may be subject to

equitable subordination.

In addition, certain of our loans are subordinate to other debt of the portfolio company.

If a portfolio company defaults on our loan or on debt senior to our loan, or in the event of a portfolio company bankruptcy, our loan

will be satisfied only after the senior debt receives payment.

Where debt senior to our loan exists, the presence of inter-creditor arrangements may limit our ability to amend our loan documents, assign our loans, accept prepayments, exercise our

remedies (through standstill periods) and control decisions made in bankruptcy proceedings relating to the portfolio company.

Bankruptcy and portfolio company litigation can significantly increase collection losses and the time needed

for us to acquire the underlying collateral in the event of a default, during which time the collateral may decline in value, causing us to suffer further losses.

If the value of collateral underlying our loan declines or interest rates increase during the term of our loan, a portfolio company may not be able to obtain

the necessary funds to repay our loan at maturity through refinancing.

Decreasing collateral value and/or increasing interest rates may hinder a portfolio companys ability to refinance our loan because the underlying collateral cannot satisfy

the debt service coverage requirements necessary to obtain new financing.

If a borrower is unable to repay our loan at maturity, we could suffer a loss which may adversely impact our financial performance.

The business, financial condition and results of operations of our portfolio companies could be adversely affected by worldwide economic conditions, as

well as political and economic conditions in the countries in which they conduct business.

The business and operating results of our portfolio

companies may be impacted by worldwide economic conditions.

Although the U.S.

economy has in recent years shown signs of recovery from the 20082009 global recession, the

strength and duration of any economic recovery will be impacted by worldwide economic growth.

For instance, the global outbreak of COVID-19 has disrupted

economic markets, and the prolonged economic impact is uncertain.

Many manufacturers of goods have seen a downturn in production due to the suspension of business and temporary closure of factories globally in an attempt to curb the spread of the

As a result of these disruptions, our non-performing assets may increase and the value of its portfolio may decrease during these periods as we are required to record the values of our investments.

Furthermore, concerns of economic slowdown in China and other emerging markets and signs of deteriorating sovereign debt conditions in Europe could lead to disruption and instability in the global financial markets.

The significant debt in the

United States and European countries is expected to hinder growth in those countries for the foreseeable future.

In addition, certain of our loans are subordinate

to other debt of the portfolio company.

If a portfolio company defaults on our loan or on debt senior to our loan, or in the event of a portfolio company bankruptcy, our loan will be satisfied

only after the senior debt receives payment.

Where debt senior to our loan exists, the presence of inter-creditor arrangements may limit our ability to amend our loan documents, assign our loans, accept prepayments, exercise our remedies (through

standstill periods) and control decisions made in bankruptcy proceedings relating to the portfolio company.

Bankruptcy and portfolio company litigation can significantly increase collection losses and the time needed for us to acquire

the underlying collateral in the event of a default, during which time the collateral may decline in value, causing us to suffer further losses.

value of collateral underlying our loan declines or interest rates increase during the term of our loan, a portfolio company may not be able to obtain the necessary funds to repay our loan at maturity through refinancing.

Decreasing collateral value

and/or increasing interest rates may hinder a portfolio companys ability to refinance our loan because the underlying collateral cannot satisfy the debt service coverage requirements necessary to obtain new financing.

If a borrower is unable

to repay our loan at maturity, we could suffer a loss which may adversely impact our financial performance.

The business, financial condition and

results of operations of our portfolio companies could be adversely affected by worldwide economic conditions, as well as political and economic conditions in the countries in which they conduct business.

The business and operating results of our portfolio companies may be impacted by worldwide economic conditions, such as the economic impact that the COVID-19 pandemic has imposed, and may continue to impose, on the U.S.

and worldwide economy.

Any deterioration of general economic conditions may lead to significant declines in corporate earnings or loan

performance, and the ability of corporate borrowers to service their debt, any of which could trigger a period of global economic slowdown, and have an adverse impact on our performance and financial results, and the value and the liquidity of our

In an economic downturn, we could have non-performing assets or an increase in non-performing assets, and we would anticipate that the value of our

portfolio would decrease during these periods.

For instance, concerns of economic slowdown in China and other emerging markets and signs of deteriorating sovereign debt conditions in Europe could lead to disruption and instability in the global

financial markets.

The significant debt in the United States and European countries is expected to hinder growth in those countries for the foreseeable future.

In the future, the U.S.

government may not be able to meet its debt payments unless the federal debt ceiling is raised.

If legislation

increasing the debt ceiling is not enacted, as needed, and the debt ceiling is reached, the U.S.

government may not be able to meet its debt payments unless the

federal debt ceiling is raised.

If legislation increasing the debt ceiling is not enacted, as needed, and the debt ceiling is reached, the U.S.

federal government may stop or delay making payments on its obligations.

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economy and our portfolio companies.

Multiple factors relating to the international operations of some of our portfolio companies and to particular countries in which they operate could negatively

impact their business, financial condition and results of operations.

Some of the products of our portfolio companies are developed, manufactured,

assembled, tested or marketed outside the United States.

Any conflict or uncertainty in these countries, including due to natural disasters, public health concerns (including the global COVID-19 pandemic),

political unrest or safety concerns, could harm their business, financial condition and results of operations.

In addition, if the government of any country in which their products are developed, manufactured or sold sets technical or regulatory

standards for products developed or manufactured in or imported into their country that are not widely shared, it may lead some of their customers to suspend imports of their products into that country, require manufacturers or developers in that

country to manufacture or develop products with different technical or regulatory standards and disrupt cross-border manufacturing, marketing or business relationships which, in each case, could harm their businesses.

Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.

Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as follow-on investments, in order to:

(i) increase or maintain in whole or in part our ownership percentage;

(ii) exercise warrants, options or convertible securities that were acquired in the

original or subsequent financing;

or (iii) attempt to preserve or enhance the value of our investment.

We may elect not to make follow-on investments or otherwise lack sufficient funds to make those

We will have the discretion to make any follow-on investments, subject to the availability of capital resources.

The failure to make follow-on investments

may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful operation.

Even if we have sufficient

capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our concentration of risk, either

because we prefer other opportunities or because we are subject to BDC requirements that would prevent such follow-on investments or the desire to maintain our RIC tax treatment.

Multiple factors relating to the international operations of some of our portfolio companies and to

particular countries in which they operate could negatively impact their business, financial condition and results of operations.

Some of the products of

our portfolio companies are developed, manufactured, assembled, tested or marketed outside the United States.

Any conflict or uncertainty in these countries, including due to natural disasters, public health concerns (including the global COVID-19 pandemic), political unrest or safety concerns, could harm their business, financial condition and results of operations.

In addition, if the government of any country in which their

products are developed, manufactured or sold sets technical or regulatory standards for products developed or manufactured in or imported into their country that are not widely shared, it may lead some of their customers to suspend imports of their

products into that country, require manufacturers or developers in that country to manufacture or develop products with different technical or regulatory standards and disrupt cross-border manufacturing, marketing or business relationships which, in

each case, could harm their businesses.

Our failure to make follow-on investments in our

portfolio companies could impair the value of our portfolio.

Following an initial investment in a portfolio company, we may make additional

investments in that portfolio company as follow-on investments, in order to:

(i) increase or maintain in whole or in part our ownership

(ii) exercise warrants, options or convertible securities that were acquired in the original or subsequent financing;

or (iii) attempt to preserve or enhance the value of

our investment.

We may elect not to make follow-on investments or otherwise lack sufficient funds to make those investments.

We will have the discretion to make

any follow-on investments, subject to the availability of capital resources.

The failure to make follow-on investments may, in some circumstances,

jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful operation.

Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our concentration of risk, either because

we prefer other opportunities or because we are subject to BDC requirements that would prevent such follow-on investments or the desire to maintain our RIC tax treatment.

Where we do not hold controlling equity interests in our portfolio companies, we may not be in a position to exercise control over our portfolio

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the value of our investments.

Prepayments of our debt investments by our portfolio companies could adversely impact our results of

operations and reduce our return on equity.

We are subject to the risk that the investments we make in our portfolio companies may be prepaid

prior to maturity.

Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and

reduce our return on equity.

We are subject to the risk that the investments we make in our portfolio companies may be prepaid prior to maturity.

When this occurs, we may reduce our borrowings outstanding or reinvest these proceeds in temporary investments, pending their future investment in new portfolio companies.

These temporary investments, if any, will typically have

substantially lower yields than the debt investment being prepaid and we could experience significant delays in reinvesting these amounts.

Any future investment in a new portfolio company may also be at lower yields than the debt investment that was

As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us.

Additionally, prepayments could negatively impact our return on equity, which could

result in a decline in the market price of our common stock.

We may choose to waive or defer enforcement of covenants in the debt securities held

in our portfolio, which may cause us to lose all or part of our investment in these companies.

These temporary investments, if any, will typically have substantially lower

yields than the debt investment being prepaid and we could experience significant delays in reinvesting these amounts.

Any future investment in a new portfolio company may also be at lower yields than the debt investment that was prepaid.

result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us.

Additionally, prepayments could negatively impact our return on equity, which could result in a

decline in the market price of our common stock.

We may choose to waive or defer enforcement of covenants in the debt securities held in our

portfolio, which may cause us to lose all or part of our investment in these companies.

We structure the debt investments in our portfolio

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to refer generally to loans that do not have a complete set of financial maintenance covenants.

Generally, covenant-lite loans provide borrower companies more freedom to negatively impact lenders because their covenants are

incurrence-based, which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrowers financial condition.

Accordingly, to the extent we invest in

covenant-lite loans, we may have fewer rights against a borrower and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with financial maintenance covenants.

Generally, covenant-lite loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and

can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrowers financial condition.

Accordingly, to the extent we invest in covenant-lite loans, we may have fewer rights

against a borrower and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with financial maintenance covenants.

Our loans could be subject to equitable subordination by a court which would increase our risk of loss with respect to such loans.

9 unchanged sentences

or common equity in the portfolio company.

In that case, if the portfolio company were to liquidate, we would be entitled to repayment of our loan on a pro-rata basis with other unsecured debt or, if the

effect of subordination was to place us at the level of common equity, then on an equal basis with other holders of the portfolio companys common equity only after all of its obligations relating to its debt and preferred securities had been

An investment strategy focused primarily on privately held companies presents certain challenges,

including the lack of available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns.

In that case, if the portfolio company were to liquidate, we would be entitled to repayment of our loan on a pro-rata basis with other unsecured debt or, if

the effect of subordination was to place us at the level of common equity, then on an equal basis with other holders of the portfolio companys common equity only after all of its obligations relating to its debt and preferred securities had

been satisfied.

An investment strategy focused primarily on privately held companies presents certain challenges, including the lack of available

information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns.

We invest primarily in privately held companies.

Generally, little public information exists about these companies, and we are required to rely on the ability

of Solar Capital Partners investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies.

If we are unable to uncover all material information about these companies, we may not make

a fully informed investment decision, and we may lose money on our investments.

of SLR Capital Partners investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies.

If we are unable to uncover all material information about these companies, we may not make a

fully informed investment decision, and we may lose money on our investments.

Also, smaller privately held companies frequently have less diverse product lines and smaller market presence than larger competitors.

These factors could adversely

affect our investment returns as compared to companies investing primarily in the securities of public companies.

Our portfolio companies may incur

debt that ranks equally with, or senior to, our investments in such companies.

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.

Our portfolio companies typically have, or may be permitted to incur, other debt that ranks equally with, or senior

to, the debt securities in which we invest.

By their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of

the debt securities in which we invest.

Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would

typically be entitled to receive payment in full before we receive any distribution in respect of our investment.

After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to

In the case of debt ranking equally with debt securities in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution,

reorganization or bankruptcy of the relevant portfolio company.

Any such limitations on the ability of our portfolio companies to make principal or interest payments to us, if at all, may reduce our net asset value and have a negative material

adverse impact to our business, financial condition and results of operation.

Our investments in foreign securities may involve significant risks

in addition to the risks inherent in U.S.

Our investment strategy contemplates potential investments in debt securities of foreign

companies, including emerging market companies.

Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S.

These risks include changes in exchange control regulations, political and

social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and

issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

These risks may be more pronounced for portfolio companies located or operating

primarily in emerging markets, whose economies, markets and legal systems may be less developed.

These factors could adversely affect

our investment returns as compared to companies investing primarily in the securities of public companies.

Our portfolio companies may incur debt

that ranks equally with, or senior to, our investments in such companies.

We invest primarily in leveraged middle-market companies in the form of

senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities.

Our portfolio companies typically have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in

which we invest.

receive payment in full before we receive any distribution in respect of our investment.

After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us.

In the case of debt

ranking equally with debt securities in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency,

liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

Any such limitations on the ability of our portfolio companies to make principal or interest payments to

us, if at all, may reduce our net asset value and have a negative material adverse impact to our business, financial condition and results of operation.

Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S.

Our investment strategy contemplates potential investments in debt securities of foreign companies, including emerging market companies.

Investing in foreign

companies may expose us to additional risks not typically associated with investing in U.S.

These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less

liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing

contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

These risks may be more pronounced for portfolio companies located or operating primarily in emerging markets, whose economies, markets and

legal systems may be less developed.

Although most of our investments will be U.S.

dollar-denominated, any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies.

Among the factors that may affect currency values are

trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments.

We may employ hedging

techniques to minimize these risks, but we can offer no assurance that we will, in fact, hedge currency risk, or that if we do, such strategies will be effective.

We may expose ourselves to risks if we engage in hedging transactions.

dollar-denominated, any investments denominated in a foreign currency

will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies.

Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in

relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments.

We may employ hedging techniques to minimize these risks, but we can offer no assurance that we

will, in fact, hedge currency risk, or that if we do, such strategies will be effective.

We may expose ourselves to risks if we engage in hedging

transactions.

If we engage in hedging transactions, we may expose ourselves to risks associated with such transactions.

We may utilize instruments such as forward

contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates.

Hedging against

a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline.

However, such hedging can establish other positions

designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions.

Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should

We may utilize

instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market

interest rates.

Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline.

However, such hedging

can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions.

Such hedging transactions may also limit the opportunity for gain if the values of the underlying

portfolio positions should increase.

It may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.

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not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S.

currencies because the value of those securities is likely to fluctuate as a

result of factors not related to currency fluctuations.

To the extent we engage in hedging transactions, we also face the risk that counterparties to the derivative instruments we hold may default, which may expose us to unexpected losses from

positions where we believed that our risk had been appropriately hedged.

Our investment adviser may not be able to achieve the same or similar

returns as those achieved for other funds it currently manages or by our senior investment professionals while they were employed at prior positions.

Our investment adviser manages other funds, including other BDCs, and may manage other entities in the future.

The track record and achievements of these

other entities are not necessarily indicative of future results that will be achieved by our investment adviser because these other entities may have investment objectives and strategies that differ from ours.

Additionally, although in the past our

senior investment professionals held senior positions at a number of investment firms, their track record and achievements are not necessarily indicative of future results that will be achieved by our investment adviser.

In their roles at such other

firms, our senior investment professionals were part of investment teams, and they were not solely responsible for generating investment ideas.

currencies because the value of those securities is likely to

fluctuate as a result of factors not related to currency fluctuations.

To the extent we engage in hedging transactions, we also face the risk that counterparties to the derivative instruments we hold may default, which may expose us to unexpected

losses from positions where we believed that our risk had been appropriately hedged.

Our Investment Adviser may not be able to achieve the same or similar returns as those achieved for

other funds it currently manages or by our senior investment professionals while they were employed at prior positions.

Our Investment Adviser

manages other funds, including other BDCs, and may manage other entities in the future.

The track record and achievements of these other entities are not necessarily indicative of future results that will be achieved by our Investment Adviser

because these other entities may have investment objectives and strategies that differ from ours.

Additionally, although in the past our senior investment professionals held senior positions at a number of investment firms, their track record and

achievements are not necessarily indicative of future results that will be achieved by our Investment Adviser.

In their roles at such other firms, our senior investment professionals were part of investment teams, and they were not solely

responsible for generating investment ideas.

In addition, such investment teams arrived at investment decisions by consensus.

We may be exposed to

higher risks with respect to our investments that include original issue discount or PIK interest.

Zero-coupon bonds pay interest only at

maturity rather than at intervals during the life of the security.

Deferred interest rate bonds generally provide for a period of delay before the regular payment of interest begins.

PIK securities are debt obligations that pay

interest in the form of other debt obligations, instead of in cash.

Each of these instruments is normally issued and traded at a deep discount from face value.

Zero-coupon bonds, deferred interest rate bonds and PIKs allow an

issuer to avoid or delay the need to generate cash to meet current interest payments and, as a result, may involve greater credit risk than bonds that pay interest currently or in cash.

In addition, such investments experience greater volatility in

market value due to changes in interest rates than debt obligations that provide for regular payments of interest.

To the extent the Company invests in

original issue discount instruments, including PIK, zero coupon bonds, and debt securities with attached warrants, investors will be exposed to the risks associated with the inclusion of such non-cash income

in taxable and accounting income prior to receipt of cash, including the following:

The interest payments deferred on a PIK loan are subject to the risk that the borrower may default when the

deferred payments are due in cash at the maturity of the loan;

The interest rates on PIK loans are higher to reflect the time-value of money on deferred interest payments and

the higher credit risk of borrowers who may need to defer interest payments;

PIK instruments may have unreliable valuations because the accruals require judgments about ultimate

collectability of the deferred payments and the value of the associated collateral;

An election to defer PIK income payments by adding them to principal increases the Companys gross assets

and, thus, increases future base fees to the Investment Adviser and, because income payments will then be payable on a larger principal amount, the PIK election also increases the Investment Advisers future income incentive fees at a

compounding rate;

Market prices of original issue discount instruments are more volatile because they are affected to a greater

extent by interest rate changes than instruments that pay interest periodically in cash;

The deferral of interest on a PIK loan increases its loan-to-value ratio, which is a measure of the riskiness of a loan;

Original issue discount creates the risk of non-refundable cash payments

to the Investment Adviser based on non-cash accruals that may never be realized.

Risks Relating to an Investment in Our Securities

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Shares of BDCs may trade at a market price that is less than the net asset value that is attributable to those shares.

For example, as a result of the COVID-19 pandemic, the stocks of BDCs as an industry, including shares of our common stock, have traded below NAV, at or near historic lows as a result of concerns over liquidity, leverage

restrictions and distribution requirements.

The possibility that our shares of common stock will trade at a substantial discount from net asset value over the long term is separate and distinct from the risk that our net asset value will decrease.

We cannot predict whether shares of our common stock will trade above, at or below our net asset value in the future.

If our common stock trades below its net asset value, we will generally not be

able to issue additional shares or sell our common stock at its market price without first obtaining the approval for such issuance from our stockholders and our independent directors.

2020 Annual Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common stock immediately prior to each such offering, at a price or prices below

the then current net asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set forth in the proxy statement pertaining thereto, during a period beginning on October 6, 2020 and

expiring on the earlier of the one-year anniversary of the date of the 2020 Annual Stockholders Meeting and the date of our 2021 Annual Stockholders Meeting.

However, notwithstanding such stockholder approval,

since our initial public offering on February 9, 2010, we have not sold any shares of our common stock in an offering that resulted in proceeds to us of less than our then current net asset value per share.

Any offering of our common stock that

requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval.

If additional funds are not available to us, we could be forced to curtail or cease our new lending and investment activities, and our

net asset value could decrease and our level of distributions could be impacted.

Our common stock price may be volatile and may decrease

substantially.

The possibility that our shares of

common stock will trade at a substantial discount from net asset value over the long term is separate and distinct from the risk that our net asset value will decrease.

We cannot predict whether shares of our common stock will trade above, at or

below our net asset value in the future.

If our common stock trades below its net asset value, we will generally not be able to issue additional shares or sell our common stock at its market price without first obtaining the approval for such

issuance from our stockholders and our independent directors.

At our 2021 Annual Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common

stock immediately prior to each such offering, at a price or prices below the then current net asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set forth in the proxy statement

pertaining thereto, during a period beginning on October 27, 2021 and expiring on the earlier of the one-year anniversary of the date of the 2021 Annual Stockholders Meeting and the date of our

2022 Annual Stockholders Meeting.

However, notwithstanding such stockholder approval, since our initial public offering on February 9, 2010, we have not sold any shares of our common stock in an offering that resulted in proceeds to us of less

than our then current net asset value per share.

Any offering of our common stock that requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval.

If additional funds are not available to us, we

could be forced to curtail or cease our new lending and investment activities, and our net asset value could decrease and our level of distributions could be impacted.

Our common stock price may be volatile and may decrease substantially.

The trading price of our common stock may fluctuate substantially.

The price of our common stock that will prevail in the market

may be higher or lower than the price you pay, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance.

The price of our common stock that will prevail in the market may be higher or lower than

the price you pay, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance.

These factors include, but are not limited to, the following:

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changes, or perceived changes, in the value of our portfolio investments;

departures of Solar Capital Partners key personnel;

departures of SLR Capital Partners key personnel;

operating performance of companies comparable to us;

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general economic conditions and trends and other external factors.

Our business and operation could be negatively affected if we become subject to any securities litigation or shareholder activism, which could cause us

to incur significant expense, hinder execution of investment strategy and impact our stock price.

In the past, following periods of volatility in

the market price of a companys securities, securities class action litigation has often been brought against that company.

Shareholder activism, which could take many forms or

arise in a variety of situations, has been increasing in the BDC space recently.

While we are currently not subject to any securities litigation or shareholder activism, due to the potential

volatility of our stock price and for a variety of other reasons, we may in the future become the target of securities litigation or shareholder activism.

Securities litigation and shareholder activism, including potential proxy contests, could

result in substantial costs and divert managements and our board of directors attention and resources from our business.

Additionally, such securities litigation and shareholder activism could give rise to perceived uncertainties as to

our future, adversely affect our relationships with service providers and make it more difficult to attract and retain qualified personnel.

Also, we may be required to incur significant legal fees and other expenses related to any securities

litigation and activist shareholder matters.

Further, our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and shareholder activism.

Our businesses may be adversely affected by litigation and regulatory proceedings.

From time to time, we may be subject to legal actions as well as various regulatory, governmental and law enforcement inquiries, investigations and subpoenas.

In any such claims or actions, demands for substantial monetary damages may be asserted against us and may result in financial liability or an adverse effect on our reputation among investors.

In connection with acquisitions of, and investments in,

businesses complementary to our business, we have been and may be in the future subject to securities litigation or shareholder activism in connection with such acquisitions or investments.

Securities litigation and shareholder activism, including

potential proxy contests, could result in substantial costs and divert managements and our board of directors attention and resources from our business.

We may be unable to accurately estimate our exposure to litigation risk when we

record balance sheet reserves for probable loss contingencies.

As a result, any reserves we establish to cover any settlements or judgments may not be sufficient to cover our actual financial exposure, which may have a material impact on our results

of operations or financial condition.

In regulatory enforcement matters, claims for disgorgement, the imposition of penalties and the imposition of other remedial sanctions are possible.

If the current period of capital market disruption and instability continues for an extended period of time, there is a risk that investors in our

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incorporated herein by reference, including the COVID-19 pandemic described above.

For example, if the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories in

the jurisdictions, including the United States, affected by the COVID-19 pandemic were to continue for an extended period of time, it could result in reduced cash flows to us from our existing portfolio

companies, which could reduce cash available for distribution to our stockholders.

If we violate certain covenants under our existing or future credit facilities or other leverage, we may be limited in our ability to make distributions.

declare a distribution and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution payments.

To the extent

we make distributions to stockholders that include a return of capital, such portion of the distribution essentially constitutes a return of the stockholders investment.

Although such return of capital may not be taxable, such distributions

would generally decrease a stockholders basis in our common stock and may therefore increase such stockholders tax liability for capital gains upon the future sale of such stock.

A return of capital distribution may cause a stockholder

to recognize a capital gain from the sale of our common stock even if the stockholder sells its shares for less than the original purchase price.

RIC, if we do not distribute a certain percentage of our income annually, we may suffer adverse tax consequences, including possibly losing the U.S.

For example, if the temporary closure of many corporate offices, retail stores, and manufacturing facilities and

factories in the jurisdictions, including the United States, affected by the COVID-19 pandemic were to continue for an extended period of time, it could result in reduced cash flows to us from our

existing portfolio companies, which could reduce cash available for distribution to our stockholders.

If we violate certain covenants under our existing or future credit facilities or other leverage, we may be limited in our ability to make

distributions.

If we declare a distribution and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution

To the extent we make distributions to stockholders that include a return of capital, such portion of the distribution essentially constitutes a return of the stockholders investment.

Although such return of capital may not be

taxable, such distributions would generally decrease a stockholders basis in our common stock and may therefore increase such stockholders tax liability for capital gains upon the future sale of such stock.

A return of capital

distribution may cause a stockholder to recognize a capital gain from the sale of our common stock even if the stockholder sells its shares for less than the original purchase price.

As a RIC, if we do not distribute a certain percentage of our income annually, we may suffer adverse tax consequences, including possibly losing the U.S.

federal income tax benefits allowable to RICs.

We cannot assure you that you will receive

distributions at a particular level or at all.

In certain cases, we may recognize income before or without receiving the accompanying cash.

the amount of noncash income, this could result in difficulty satisfying the annual distribution requirement applicable to RICs.

Accordingly, we may have to sell some portfolio investments at times it would not consider advantageous, raise

additional debt or equity capital or reduce new investments to meet these distribution requirements.

to the COVID-19 pandemic or other disruptions in the economy, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur U.S.

federal excise tax

in order preserve cash and maintain flexibility.

As a BDC, we are not required to make any distributions to shareholders other than in connection

with our election to be taxed as a RIC under subchapter M of the Code.

In order to maintain our tax treatment as a RIC, we must distribute to shareholders for each taxable year at least 90% of our investment company taxable income (i.e., net

ordinary income

plus realized net short-term capital gains in excess of realized net long-term capital losses).

If we qualify for taxation as a RIC, we generally will not be subject to corporate-level US federal

income tax on our investment company taxable income and net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) that we timely distribute to shareholders.

We will be subject to a 4%

federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year, and (iii) any ordinary income and net capital gains that we recognized for preceding years, but were not distributed

during such years and on which we paid no U.S.

We cannot assure you that you will receive distributions at a particular level or at all.

cases, we may recognize income before or without receiving the accompanying cash.

Depending on the amount of noncash income, this could result in difficulty satisfying the annual distribution requirement applicable to RICs.

Accordingly, we may have

to sell some portfolio investments at times it would not consider advantageous, raise additional debt or equity capital or reduce new investments to meet these distribution requirements.

Due to the COVID-19 pandemic or other disruptions in the economy, we may reduce or

defer our dividends and choose to incur U.S.

federal excise tax in order preserve cash and maintain flexibility.

In order to maintain our tax

treatment as a RIC, we must distribute to shareholders for each taxable year at least 90% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital

If we qualify for taxation as a RIC, we generally will not be subject to corporate-level US federal income tax on our investment company taxable income and net capital gains (i.e., realized net long-term capital gains in excess of realized

net short-term capital losses) that we timely distribute to shareholders.

We will be subject to a 4% U.S.

federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98.0% of our

ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year, and

(iii) any ordinary income and net capital gains that were recognized for preceding years, but were not distributed during such years and on which we paid no U.S.

federal income tax.

Under the Code, we may satisfy certain of our RIC distributions with dividends paid

after the end of the current year.

In particular, if we pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year,

the dividend will be treated for all US federal income tax purposes as if it were paid on December 31 of the current year.

In addition, under the Code, we may pay dividends, referred to as spillover dividends, that are paid

during the following taxable year that will allow us to maintain our qualification for taxation as a RIC and eliminate our liability for corporate-level U.S.

Any net operating losses that we incur in periods during which

we qualify as a RIC will not offset net capital gains (i.e., net realized long-term capital gains in excess of net realized short-term capital losses) that we are otherwise required to distribute, and we cannot pass such net operating losses through

to our stockholders.

In addition, net operating losses that we carry over to a taxable year in which we qualify as a RIC normally cannot offset ordinary income or capital gains.

Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year.

In particular, if we pay a

distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, the dividend will be treated for all US federal income tax purposes

as if it were paid on December 31 of the current year.

In addition, under the Code, we may pay dividends, referred to as spillover dividends, that are paid during the following taxable year that will allow us to maintain our

qualification for taxation as a RIC and eliminate our liability for corporate-level U.S.

federal income tax.

Under these spillover dividend procedures, we may defer

distribution of income earned during the current year until December of the following year.

Under these spillover dividend procedures, we may defer distribution of income earned during the current year until December of the

following year.

For example, we may defer distributions of income earned during 2022 until as late as December 31, 2023.

If we choose to pay a spillover

dividend, we will incur the 4% U.S.

federal excise tax on some or all of the distribution.

to the COVID-19 pandemic or other disruptions in the economy, we may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain

For example, we may not be able to increase our dividends.

In addition, we may reduce our dividends and/or defer our dividends to the following taxable year.

If we defer our dividends, we may choose to utilize the

spillover dividend rules discussed above and incur the 4% U.S.

If we choose to pay a spillover dividend, we will incur the 4% U.S.

federal excise tax on some or all of the

distribution.

Due to the COVID-19 pandemic or other disruptions in the economy, we

may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility.

For example, we may reduce our dividends and/or defer dividends to the following taxable year.

defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4% U.S.

federal excise tax on such amounts.

To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in

our stock as discussed below under We may choose to pay distributions in our own stock, in which case our stockholders may be required to pay U.S.

To further preserve cash, we may combine these reductions or deferrals of dividends with one or

more distributions that are payable partially in our stock as discussed below under We may choose to pay distributions in our own stock, in which case our stockholders may be required to pay U.S.

federal income taxes in

excess of the cash distributions they receive.

We may choose to pay distributions in our own common stock, in which case our

stockholders may be required to pay U.S.

federal income taxes in excess of the cash distributions they receive.

We may choose to pay distributions in our own common stock, in which case our stockholders may be required to pay U.S.

federal income taxes in excess of

the cash distributions they receive.

We may distribute taxable distributions that are payable in cash or shares of our common stock at the

election of each stockholder.

Under certain applicable provisions of the Code and the published guidance, distributions payable of a publicly offered RIC that are in cash or in shares of stock at the election of stockholders may be treated as

taxable distributions.

We may distribute taxable

distributions that are payable in part in shares of our common stock.

Under certain applicable provisions of the Code and the published guidance, distributions of a publicly offered RIC that are in cash or in shares of stock at the election of

stockholders may be treated as taxable distributions.

The Internal Revenue Service has issued a revenue procedure indicating that this rule will apply if the total amount of cash to be distributed is not less than 20% of the total distribution.

Under this revenue procedure, if

too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the balance of distributions paid in stock).

In no event will any

stockholder, electing to receive cash, receive less than the lesser of (a) the portion of the distribution such stockholder has elected to receive in cash or (b) an amount equal to his or her entire distribution times the percentage

limitation on cash available for distribution.

If we decide to make any distributions consistent with this revenue procedure that are payable in part in our stock, taxable stockholders receiving such distributions will be required to include the

full amount of the distribution (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain distribution) to the extent of

our current and accumulated earnings and profits for U.S.

Under this revenue procedure, if too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the balance of distributions paid in

In no event will any stockholder electing to receive cash, receive less than the lesser of (a) the portion of the distribution such stockholder has elected to receive in cash or (b) an amount equal to his or her entire distribution

times the percentage limitation on cash available for distribution.

If we decide to make any distributions consistent with

this revenue procedure that are payable in part in our stock, taxable stockholders receiving such distributions will be required to include the full amount of the distribution (whether received

in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain distribution) to the extent of our current and accumulated earnings and profits for

federal income tax purposes.

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stockholder may be required to pay tax with respect to such distributions in excess of any cash received.

stockholder sells the

stock it receives as a distribution in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the distribution, depending on the market price of our stock at the time of the sale.

Furthermore, with respect to non-U.S.

stockholders, we may be required to withhold U.S.

tax with respect to such distributions, including in respect of all or a portion of such distribution that is

payable in stock.

If a significant number of our stockholders determine to sell shares of our stock

in order to pay taxes owed on distributions, it may put downward pressure on the trading price of our stock.

stockholder sells the stock it receives as a distribution in order to pay this

tax, the sales proceeds may be less than the amount included in income with respect to the distribution, depending on the market price of our stock at the time of the sale.

Furthermore, with respect to non-U.S.

stockholders, we may be required to withhold U.S.

stockholders, we may be required to

withhold U.S.

tax with respect to such distributions, including in respect of all or a portion of such distribution that is payable in stock.

If a significant number of our stockholders determine to sell shares of

our stock in order to pay taxes owed on distributions, it may put downward pressure on the trading price of our stock.

Sales of substantial amounts

of our common stock in the public market may have an adverse effect on the market price of our common stock.

The shares of our common stock

beneficially owned by each of Messrs.

Gross and Spohler immediately prior to completion of our initial public offering, including any shares that are attributable to such shares issued pursuant to our dividend reinvestment plan, are no longer

subject to lock-up restrictions that each of Messrs.

If a significant number of our stockholders determine to sell shares of our stock in order to pay taxes

owed on distributions, it may put downward pressure on the trading price of our stock.

Sales of substantial amounts of our common stock in the

public market may have an adverse effect on the market price of our common stock.

The shares of our common stock beneficially owned by each of

Gross and Spohler agreed to in connection with our initial public offering, and are generally available for resale without restriction, subject to the

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then outstanding common stock immediately prior to each such offering, at a price or prices below the then current net asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set forth

in the proxy statement pertaining thereto, during a period beginning on October 6, 2020 and expiring on the earlier of the one-year anniversary of the date of the 2020 Annual Stockholders Meeting and the

date of our 2021 Annual Stockholders Meeting.

However, notwithstanding such stockholder approval, since our initial public offering on February 9, 2010, we have not sold any shares of our common stock in an offering that resulted in proceeds to

us of less than our then current net asset value per share.

Any offering of our common stock that requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval.

In addition, at our 2011 Annual Stockholders Meeting, our stockholders authorized us to sell or otherwise issue warrants or securities to subscribe for or

convertible into shares of our common stock subject to certain limitations (including, without limitation, that the number of shares issuable does not exceed 25% of our then

outstanding common stock and that the exercise or conversion price thereof is not, at the date of issuance, less than the market value per share of our common stock).

Such authorization has no

We may also use newly issued shares to implement our dividend reinvestment plan, whether our shares are trading at a premium or at a discount

to our then current net asset value per share.

Any decision to issue or sell shares of our common stock below our then current net asset value per share or securities to subscribe for or convertible into shares of our common stock would be subject

to the determination by our board of directors that such issuance or sale is in our and our stockholders best interests.

If we were to issue or

sell shares of our common stock below our then current net asset value per share, such issuances or sales would result in an immediate dilution to the net asset value per share of our common stock.

in the proxy statement pertaining thereto, during a period beginning on October 27, 2021 and expiring on the earlier of the one-year anniversary of the date of the 2021 Annual Stockholders

Meeting and the date of our 2022 Annual Stockholders Meeting.

However, notwithstanding such stockholder approval, since our initial public offering on February 9, 2010, we have not

sold any shares of our common stock in an offering that resulted in proceeds to us of less than our then current net asset value per share.

Any offering of our common stock that requires

stockholder approval must occur, if at all, within one year after receiving such stockholder approval.

In addition, at our 2011 Annual Stockholders

Meeting, our stockholders authorized us to sell or otherwise issue warrants or securities to subscribe for or convertible into shares of our common stock subject to certain limitations (including, without limitation, that the number of shares

issuable does not exceed 25% of our then outstanding common stock and that the exercise or conversion price thereof is not, at the date of issuance, less than the market value per share of our common stock).

Such authorization has no expiration.

We may also use newly issued shares to implement our dividend reinvestment plan, whether our shares are trading at a premium or at a discount to our then

current net asset value per share.

determination by our board of directors that such issuance or sale is in our and our stockholders best interests.

If we were to issue or sell

shares of our common stock below our then current net asset value per share, such issuances or sales would result in an immediate dilution to the net asset value per share of our common stock.

This dilution would occur as a result of the issuance or sale of shares at a price below the then current net asset value per share of our common stock and a

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sell an additional 10% of our common stock at a 5% discount from net asset value, a stockholder who does not participate in that offering for its proportionate interest will suffer net asset value dilution of up to 0.5% or $5 per $1,000 of net asset

Similarly, all distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally

automatically reinvested in shares of our common stock.

As a result, stockholders that do not participate in the dividend reinvestment plan may experience dilution over time.

Stockholders who do not elect to receive distributions in shares of common

stock may experience accretion to the net asset value of their shares if our shares are trading at a premium and dilution if our shares are trading at a discount.

The level of accretion or discount would depend on various factors, including the

proportion of our stockholders who participate in the plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.

If we issue preferred stock, the net asset value and market value of our common stock may become more volatile.

Similarly, all distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are automatically

reinvested in shares of our common stock.

As a result, stockholders that opt out of the dividend reinvestment plan may experience dilution over time.

Stockholders who do not elect to receive distributions in shares of common stock may experience

accretion to the net asset value of their shares if our shares are trading at a premium and dilution if our shares are trading at a discount.

The level of accretion or discount would depend on various factors, including the proportion of our

stockholders who participate in the plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.

If we issue preferred stock, the net asset value and market value of our common stock may become more

We cannot assure you that the issuance of preferred stock would result in a higher yield or return to the holders of the common stock.

The issuance of

preferred stock would likely cause the net asset value and market value of the common stock to become more volatile.

If the distribution rate on the preferred stock were to approach the net rate of return on our investment portfolio, the benefit of

leverage to the holders of the common stock would be reduced.

If the distribution rate on the preferred stock were to exceed the net rate of return on our portfolio, the leverage would result in a lower rate of return to the holders of common stock

than if we had not issued

preferred stock.

The issuance of preferred stock would likely cause the net asset value and market value of the common stock to become more volatile.

If the distribution rate on the preferred stock were to approach the net rate of return on our investment portfolio,

the benefit of leverage to the holders of the common stock would be reduced.

If the distribution rate on the preferred stock were to exceed the net rate of return on our portfolio, the leverage would result in a lower rate of return to the holders

of common stock than if we had not issued preferred stock.

Any decline in the net asset value of our investments would be borne entirely by the holders of common stock.

Therefore, if the market value of our portfolio were to decline, the

leverage would result in a greater decrease in net asset value to the holders of common stock than if we were not leveraged through the issuance of preferred stock.

This greater net asset value decrease would also tend to cause a greater decline in

the market price for the common stock.

Therefore, if the market value of our portfolio were to decline, the leverage

would result in a greater decrease in net asset value to the holders of common stock than if we were not leveraged through the issuance of preferred stock.

This greater net asset value decrease would also tend to cause a greater decline in the

market price for the common stock.

We might be in danger of failing to maintain the required asset coverage of the preferred stock or of losing our ratings on the preferred stock or, in an extreme case, our current investment income might not be

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directors until such arrearage is completely eliminated.

Preferred stockholders also have class voting rights on certain matters, including changes in fundamental investment restrictions and conversion to

open-end status, and accordingly can veto any such changes.

Restrictions imposed on the declarations and payment of distributions to the holders of our common stock and preferred stock, both by the 1940 Act

and by requirements imposed by rating agencies or the terms of our credit facilities, might impair our ability to maintain our qualification for tax treatment as a RIC for U.S.

Preferred stockholders also have class voting rights on certain matters, including changes in fundamental investment restrictions and conversion

to open-end status, and accordingly can veto any such changes.

Restrictions imposed on the declarations and payment of distributions to the holders of our common stock and preferred stock, both by

the 1940 Act and by requirements imposed by rating agencies or the terms of our credit facilities, might impair our ability to maintain our qualification for tax treatment as a RIC for U.S.

federal income tax purposes.

While we would intend to redeem our

preferred stock to the extent necessary to enable us to distribute our income as required to maintain our qualification as a RIC, there can be no assurance that such actions could be effected in time to meet the tax requirements.

To the extent we use debt or preferred stock to finance our investments, changes in interest rates will affect our cost of capital and net investment

To the extent we borrow money, or issue preferred stock, to make investments, our net investment income will depend, in part, upon the

difference between the rate at which we borrow funds or pay distributions on preferred stock and the rate at which we invest those funds.

As a result, we can offer no assurance that a significant change in market interest rates will not have a

material adverse effect on our net investment income in the event we use

debt to finance our investments.

In periods of rising interest rates, our cost of funds would increase, except to the extent we issue fixed rate debt or preferred stock, which could reduce our

net investment income.

While we would intend to

redeem our preferred stock to the extent necessary to enable us to distribute our income as required to maintain our qualification as a RIC, there can be no assurance that such actions could be effected in time to meet the tax requirements.

To the extent we use debt or preferred stock to finance our investments, changes in interest rates

will affect our cost of capital and net investment income.

To the extent we borrow money, or issue preferred stock, to make investments, our net

investment income will depend, in part, upon the difference between the rate at which we borrow funds or pay distributions on preferred stock and the rate at which we invest those funds.

As a result, we can offer no assurance that a significant

change in market interest rates will not have a material adverse effect on our net investment income in the event we use debt to finance our investments.

In periods of rising interest rates, our cost of funds would increase, except to the extent we

issue fixed rate debt or preferred stock, which could reduce our net investment income.

We expect that our long-term fixed-rate investments will generally be financed with equity and long-term debt.

We may use interest rate risk management techniques in an effort to limit our exposure to interest rate

fluctuations.

We may use interest rate risk management

techniques in an effort to limit our exposure to interest rate fluctuations.

Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.

You should also be aware that

a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments.

Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee hurdle rate

and may result in a substantial increase of the amount of incentive fees payable to our investment adviser with respect to our pre-incentive fee net investment income.

Further, rising interest rates could also adversely affect our performance if we hold investments with floating interest rates, subject to specified minimum

interest rates (such as a LIBOR floor), while at the same time engaging in borrowings subject to floating interest rates not subject to such minimums.

In such a scenario, rising interest rates may increase our interest expense, even though our

interest income from Investments is not increasing in a corresponding manner as a result of such minimum interest rates.

We may in the future

determine to fund a portion of our investments with preferred stock, which would magnify the potential for loss and the risks of investing in us in a similar way as our borrowings.

Preferred stock, which is another form of leverage, has the same risks to our common stockholders as borrowings because the distributions on any preferred

stock we issue must be cumulative.

Payment of such distributions and repayment of the liquidation preference of such preferred stock must take preference over any distributions or other payments to our common stockholders, and preferred stockholders

are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference.

You should also be aware that a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt

Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee hurdle rate and may result in a substantial increase of the amount of incentive fees payable to our Investment Adviser with

respect to our pre-incentive fee net investment income.

Further, rising interest rates could also

adversely affect our performance if we hold investments with floating interest rates, subject to specified minimum interest rates (such as a LIBOR floor), while at the same time engaging in borrowings subject to floating interest rates not subject

to such minimums.

In such a scenario, rising interest rates may increase our interest expense, even though our interest income from Investments is not increasing in a corresponding manner as a result of such minimum interest rates.

We may in the future determine to fund a portion of our investments with preferred stock, which would magnify the potential for loss and the risks of

investing in us in a similar way as our borrowings.

Preferred stock, which is another form of leverage, has the same risks to our common

stockholders as borrowings because the distributions on any preferred stock we issue must be cumulative.

Payment of such distributions and repayment of the liquidation preference of such preferred stock must take preference over any distributions or

other payments to our common stockholders, and preferred stockholders are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference.

Risks Relating to Our Business and Structure

are dependent upon Solar Capital Partners key personnel for our future success.

are dependent upon SLR Capital Partners key personnel for our future success.

We depend on the diligence, skill and network of business

contacts of Messrs.

Gross and Spohler, who serve as the managing partners of Solar Capital Partners and who lead Solar Capital Partners investment team.

Gross and Spohler, who serve as the managing partners of SLR Capital Partners and who lead SLR Capital Partners investment team.

Gross and Spohler, together with the other dedicated investment professionals

available to Solar Capital Partners, evaluate, negotiate, structure, close and monitor our investments.

available to SLR Capital Partners, evaluate, negotiate, structure, close and monitor our investments.

Our future success will depend on the diligence, skill, network of business contacts and continued service of Messrs.

Gross and Spohler and the

other investment professionals available to Solar Capital Partners.

other investment professionals available to SLR Capital Partners.

We cannot assure you that unforeseen business, medical, personal or other circumstances would not lead any such individual to terminate his relationship with us.

Spohler, or any of the other senior investment professionals who serve on Solar Capital Partners investment team, could have a material adverse effect on our ability to achieve our investment objective as well as on

Spohler, or any of the other senior investment professionals who serve on SLR Capital Partners investment team, could have a material adverse effect on our ability to achieve our investment objective as well as on

our financial condition and results of operations.

In addition, we can offer no assurance that Solar Capital Partners will remain our investment adviser.

The senior investment professionals of Solar Capital Partners are and may in the future become affiliated with entities engaged in business activities similar

In addition, we can offer no assurance that SLR Capital Partners will remain our Investment Adviser.

The senior investment professionals of SLR Capital Partners are and may in the future become affiliated with entities engaged in business activities similar

to those intended to be conducted by us, and may have conflicts of interest in allocating their time.

We expect that Messrs.

Gross and Spohler will dedicate a significant portion of their time to the activities of Solar Capital Partners;

they may be engaged in other business activities which could divert their time and attention in the future.

Specifically, Mr.

Gross serves as Co-Chief Executive Officer and President of Solar Senior

Capital Ltd., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC.

Gross and Spohler will dedicate a significant portion of

their time to the activities of SLR Investment Corp.;

however, they may be engaged in other business activities which could divert their time and attention in the future.

Specifically,

Gross serves as Co-Chief Executive Officer and President of SLR Senior Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC.

In addition, Mr.

Spohler serves as Co-Chief Executive Officer and Chief Operating Officer of Solar Senior Capital Ltd., SCP Private

Credit Income BDC LLC, and SLR HC BDC LLC.

Our business model depends to a significant extent upon strong referral relationships with financial

sponsors, and the inability of the senior investment professionals of our investment adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.

We expect that the principals of our investment adviser will maintain and develop their relationships with financial sponsors, and we will rely

to a significant extent upon these relationships to provide us with potential investment opportunities.

If the senior investment professionals of our investment adviser fail to maintain their existing relationships or develop new relationships with

other sponsors or sources of investment opportunities, we will not be able to grow our investment portfolio.

In addition, individuals with whom the senior investment professionals of our investment adviser have relationships are not obligated to

provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.

If our investment adviser is unable to source investment opportunities, we may hold a greater

percentage of our assets in cash and cash equivalents than anticipated, which could impact potential returns on our portfolio.

A disruption in the

capital markets and the credit markets could negatively affect our business.

As a BDC, we must maintain our ability to raise additional capital

for investment purposes.

Spohler serves as Co-Chief Executive Officer and Chief Operating Officer of SLR Senior Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC.

Our business model depends to a significant extent upon strong referral relationships with financial sponsors, and the inability of the senior

investment professionals of our Investment Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.

We expect that the principals of our Investment Adviser will maintain and develop their relationships with financial sponsors, and we will rely to a

significant extent upon these relationships to provide us with potential investment opportunities.

If the senior investment professionals of our Investment Adviser fail to maintain their existing relationships or develop new relationships with other

sponsors or sources of investment opportunities, we will not be able to grow our investment portfolio.

In addition, individuals with whom the senior investment professionals of our Investment Adviser have relationships are not obligated to provide

us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.

If our Investment Adviser is unable to source investment opportunities, we may hold a greater percentage

of our assets in cash and cash equivalents than anticipated, which could impact potential returns on our portfolio.

A disruption in the capital

markets and the credit markets could negatively affect our business.

As a BDC, we must maintain our ability to raise additional capital for

investment purposes.

Without sufficient access to the capital markets or credit markets, we may be forced to curtail our business operations or we may not be able to pursue new business opportunities.

Disruptive conditions in the financial

industry and the impact of new legislation in response to those conditions could restrict our business operations and could adversely impact our results of operations and financial condition.

Disruptive conditions in the financial industry

and the impact of new legislation in response to those conditions could restrict our business operations and could adversely impact our results of operations and financial condition.

If the fair value of our assets declines substantially, we may fail to maintain the asset coverage ratios imposed upon us by the 1940 Act and our existing

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conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our business.

Our financial condition and results of operations will depend on Solar Capital Partners ability to manage our future growth effectively by

identifying, investing in and monitoring companies that meet our investment criteria.

Our ability to achieve our investment objective and to grow

depends on Solar Capital Partners ability to identify, invest in and monitor companies that meet our investment criteria.

Accomplishing this result on a cost-effective basis is largely a function of Solar Capital Partners structuring of

the investment process, its ability to provide

competent, attentive and efficient services to us and its ability to access financing for us on acceptable terms.

The investment team of Solar Capital Partners has substantial responsibilities

under the Investment Advisory and Management Agreement, and they may also be called upon to provide managerial assistance to our portfolio companies as the principals of our administrator.

In addition, the members of Solar Capital Partners

investment team have similar responsibilities with respect to the management of other investment portfolios, including the investment portfolios of Solar Senior Capital Ltd., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC.

Such demands on

their time may distract them or slow our rate of investment.

In order to grow, we and Solar Capital Partners will need to retain, train, supervise and manage new investment professionals.

However, we can offer no assurance that any such investment

professionals will contribute effectively to the work of the investment adviser.

Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations.

Our financial condition and results of operations will depend on SLR Capital Partners ability to

manage our future growth effectively by identifying, investing in and monitoring companies that meet our investment criteria.

Our ability to

achieve our investment objective and to grow depends on SLR Capital Partners ability to identify, invest in and monitor companies that meet our investment criteria.

Accomplishing this result on a cost-effective basis is largely a function of

SLR Capital Partners structuring of the investment process, its ability to provide competent, attentive and efficient services to us and its ability to access financing for us on acceptable terms.

The investment team of SLR Capital Partners

has substantial responsibilities under the Investment Advisory and Management Agreement, and they may also be called upon to provide managerial assistance to our portfolio companies as the principals of our administrator.

In addition, the members of

SLR Capital Partners investment team have similar responsibilities with respect to the management of other investment portfolios, including the investment portfolios of SLR Senior Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC

Such demands on their time may distract them or slow our rate of investment.

In order to grow, we and SLR Capital Partners will need to retain, train, supervise and manage new investment professionals.

However, we can offer no assurance

that any such investment professionals will contribute effectively to the work of the Investment Adviser.

Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of

We may need to raise additional capital to grow because we must distribute most of our income.

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substantially greater regulation under the 1940 Act as a closed-end investment company.

Compliance with such regulations would significantly decrease our operating flexibility, and could have a material

adverse effect on our business, financial condition and results of operations.

Regulations governing our operation as a BDC affect our ability to,

and the way in which we will, raise additional capital.

Compliance with such regulations would significantly decrease our operating flexibility, and could have a

material adverse effect on our business, financial condition and results of operations.

Regulations governing our operation as a BDC affect our

ability to, and the way in which we will, raise additional capital.

As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.

In order to satisfy the tax requirements applicable to a RIC, to avoid payment of excise taxes and to minimize or avoid payment of income taxes, we intend to

distribute to our stockholders substantially all of our ordinary income and realized net capital gains except for certain realized net long-term capital gains, which we may retain, pay applicable income taxes with respect thereto and elect to treat

as deemed distributions to our stockholders.

We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as senior securities, up to the maximum amount

permitted by the 1940 Act.

Under the provisions of the 1940 Act, we had been permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of gross assets less all

liabilities and indebtedness not represented by senior securities, after each issuance of senior securities.

distribute to our stockholders substantially all of our ordinary

income and realized net capital gains except for certain realized net long-term capital gains, which we may retain, pay applicable income taxes with respect thereto and elect to treat as deemed

distributions to our stockholders.

We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as senior securities, up to the maximum amount permitted by

the 1940 Act.

indebtedness not represented by senior securities, after each issuance of senior securities.

However, our stockholders have approved a resolution permitting us to be subject to a 150% asset coverage ratio effective as of October 12, 2018.

If the value of our assets declines, we may

be unable to satisfy the asset coverage test.

If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be

disadvantageous.

the value of our assets declines, we may be unable to satisfy the asset coverage test.

If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a

time when such sales may be disadvantageous.

Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders.

Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks

associated with leverage, including an increased risk of loss.

In addition, because our management fee is calculated as a percentage of our gross assets, which includes any borrowings for investment purposes, the management fee expenses will

increase if we incur additional indebtedness.

As of December 31, 2020, we had $201 million outstanding under our senior secured revolving

credit facility (the Credit Facility), composed of $126 million of revolving credit and $75 million outstanding of term loans, and $30 million outstanding under our NEFPASS Facility.

We also had $75 million

outstanding of the 2026 Unsecured Notes, $125 million outstanding of the 2024 Unsecured Notes, $75 million outstanding of the 2023 Unsecured Notes, $150 million outstanding of the 2022 Unsecured Notes, and $21 million outstanding

of the 2022 Tranche C Notes.

If we issue preferred stock, the preferred stock would rank senior to common stock in our capital structure, preferred stockholders would generally vote together with common stockholders but would have

separate voting rights on certain matters and might have other rights, preferences, or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a

transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be in your best interest.

generally able to issue and sell our common stock at a price below net asset value per share.

We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per

share of our common stock if our board of directors determines that such sale is in the best interests of Solar Capital and its stockholders, and our stockholders approve such sale.

In any such case, the price at which our securities are to be

issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount).

If we raise additional funds by issuing more

common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease, and you might experience dilution.

This dilution would occur as a result of a

proportionately greater decrease in a stockholders interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance.

Because the number of future shares of common stock that may be

issued below our net asset value per share and the price and timing of such issuances are not currently known, we cannot predict the actual dilutive effect of any such issuance.

We cannot determine the resulting reduction in our net asset value per

share of any such issuance.

We also cannot predict whether shares of our common stock will trade above, at or below our net asset value.

Annual Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common stock immediately prior to each such offering, at a price or prices below the

then current net asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set forth in the proxy statement pertaining thereto, during a period beginning on October 6, 2020 and

expiring on the earlier of the one-year anniversary of the date of the 2020 Annual Stockholders Meeting and the date of our 2021 Annual Stockholders Meeting.

However, notwithstanding such stockholder approval,

Any offering of our common stock that

requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval.

Our credit ratings may not reflect

all risks of an investment in our debt securities.

Furthermore, as a result of issuing senior securities, we would also be

exposed to typical risks associated with leverage, including an increased risk of loss.

In addition, because our management fee is calculated as a percentage of our gross assets, which includes any borrowings for investment purposes, the management

fee expenses will increase if we incur additional indebtedness.

As of December 31, 2021, we had $322.5 million outstanding under the Credit

Facility, composed of $222.5 million of revolving credit and $100.0 million outstanding of term loans.

We also had $50.0 million outstanding of the 2027 Unsecured Notes, $75.0 million outstanding of the 2026 Unsecured Notes,

$125.0 million outstanding of the 2024 Unsecured Notes, $75.0 million outstanding of the 2023 Unsecured Notes, $150.0 million outstanding of the 2022 Unsecured Notes, and $21.0 million outstanding of the 2022 Tranche C Notes.

we issue preferred stock, the preferred stock would rank senior to common stock in our capital structure, preferred stockholders would generally vote together with common stockholders but would have separate voting rights on certain

matters and might have other rights, preferences, or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control

that might involve a premium price for holders of our common stock or otherwise be in your best interest.

We are not generally able to issue and sell our

common stock at a price below net asset value per share.

We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if our board

of directors determines that such sale is in the best interests of SLR Investment Corp.

and its stockholders, and our stockholders approve such sale.

In any such case, the price at which our securities are to be issued and sold may not be less than

a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount).

If we raise additional funds by issuing more common stock or senior securities

convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease, and you might experience dilution.

This dilution would occur as a result of a proportionately greater decrease in

a stockholders interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance.

Because the number of future shares of common stock that may be issued below our net asset value per

share and the price and timing of such issuances are not currently known, we cannot predict the actual dilutive effect of any such issuance.

We cannot determine the resulting reduction in our net asset value per share of any such issuance.

cannot predict whether shares of our common stock will trade above, at or below our net asset value.

At our 2021 Annual Stockholders Meeting, our

stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common stock immediately prior to each such offering, at a price or prices below the then current net asset value per

share, in each case subject to the approval of our board of directors and compliance with the conditions set forth in the proxy statement pertaining thereto, during a period beginning on October 27, 2021 and expiring on the earlier of the one-year anniversary of the date of the 2021 Annual Stockholders Meeting and the date of our 2022 Annual Stockholders Meeting.

However, notwithstanding such stockholder approval, since our initial

public offering on February 9, 2010, we have not

sold any shares of our common stock in an offering that resulted in proceeds to us of less than our then current net asset value per share.

Any offering of our common stock that requires

stockholder approval must occur, if at all, within one year after receiving such stockholder approval.

Our credit ratings may not reflect all risks

of an investment in our debt securities.

Our credit ratings are an assessment by third parties of our ability to pay our obligations.

Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our publicly issued debt

Our credit ratings, however, may not reflect the potential impact of risks related to market conditions generally or other factors discussed above on the market value of, or trading

market for, any publicly issued debt securities.

Our stockholders may experience dilution in their ownership percentage if they opt out of our

dividend reinvestment plan.

All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan

are automatically reinvested in shares of our common stock.

In the event we issue new shares in connection with our dividend reinvestment plan, our stockholders that do not elect to receive distributions in shares of common stock may experience

dilution in their ownership percentage over time as a result of such issuance.

We have and will continue to borrow money, which would magnify the

potential for loss on amounts invested and may increase the risk of investing in us.

Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our publicly issued debt securities.

Our credit ratings, however, may not reflect the potential impact of risks related to market conditions

generally or other factors discussed above on the market value of, or trading market for, any publicly issued debt securities.

Our stockholders may

experience dilution in their ownership percentage if they opt out of our dividend reinvestment plan.

All distributions declared in cash payable

to stockholders that are participants in our dividend reinvestment plan are automatically reinvested in shares of our common stock.

In the event we issue new shares in connection with our dividend reinvestment plan, our stockholders that do not

elect to receive distributions in shares of common stock may experience dilution in their ownership percentage over time as a result of such issuance.

We have and will continue to borrow money, which would magnify the potential for loss on amounts invested and may increase the risk of investing in us.

We borrow money as part of our business plan.

also known as leverage magnify the potential for loss on amounts invested and, therefore, increase the risks associated with investing in our securities.

As of December 31, 2020, we had $201 million outstanding under our Credit Facility,

composed of $126 million of revolving credit and $75 million outstanding of term loans, and $30 million outstanding under our NEFPASS Facility.

We also had $75 million outstanding of the 2026 Unsecured Notes, $125 million

outstanding of the 2024 Unsecured Notes, $75 million outstanding of the 2023 Unsecured Notes, $150 million outstanding of the 2022 Unsecured Notes, and $21 million outstanding of the 2022 Tranche C Notes.

We may borrow from and issue

senior debt securities to banks, insurance companies and other lenders in the future.

Lenders of these senior securities, including the Credit Facility, the 2026 Unsecured Notes, the 2024 Unsecured Notes, the 2022 Unsecured Notes, the 2023 Unsecured

Notes, and the 2022 Tranche C Notes, will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default.

of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged.

Conversely, if the value of our assets decreases, leveraging would cause net

asset value to decline more sharply than it otherwise would have had we not leveraged.

Borrowings, also known as leverage magnify the potential for loss on amounts invested and,

therefore, increase the risks associated with investing in our securities.

As of December 31, 2021, we had $322.5 million outstanding under our Credit Facility, composed of $222.5 million of revolving credit and $100.0 million

outstanding of term loans.

We also had $50.0 million outstanding of the 2027 Unsecured Notes, $75.0 million outstanding of the 2026 Unsecured Notes, $125.0 million outstanding of the 2024 Unsecured Notes, $75.0 million

outstanding of the 2023 Unsecured Notes, $150.0 million outstanding of the 2022 Unsecured Notes, and $21.0 million outstanding of the 2022 Tranche C Notes.

We may borrow from and issue senior debt securities to banks, insurance companies

and other lenders in the future.

Lenders of these senior securities, including the Credit Facility, the 2027 Unsecured Notes, the 2026 Unsecured Notes, the 2024 Unsecured Notes, the 2023 Unsecured Notes, the 2022 Unsecured Notes, and the 2022

Tranche C Notes, will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default.

If the value of our assets

increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged.

Conversely, if the value of our assets decreases, leveraging would cause net asset value to

decline more sharply than it otherwise would have had we not leveraged.

Similarly, any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed.

Also, any increase in our income in

excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have

had we not borrowed.

Also, any increase in our income in excess of

interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we

not borrowed.

Such a decline could also negatively affect our ability to make distribution payments on our common stock, scheduled debt payments or other payments related to our securities.

Leverage is generally considered a speculative

investment technique.

Leverage is generally considered a speculative investment

Our ability to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures.

Moreover, as the management fee payable to our

investment adviser, Solar Capital Partners, will be payable based on our gross assets, including those assets acquired through the use of leverage, Solar Capital Partners will have a financial incentive to incur leverage which may not be consistent

with our stockholders interests.

In addition, our common stockholders will bear the burden of any increase in our expenses as a result of leverage, including any increase in the management fee payable to Solar Capital Partners.

As a BDC, we had generally been required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our

borrowings and any preferred stock that we may issue in the future, of at least 200%.

However, our stockholders have approved a resolution permitting us to be subject to a 150% asset coverage ratio effective as of October 12, 2018.

we are subject to a 150% asset coverage ratio effective as of October 12, 2018, contractual leverage limitations under our existing credit facilities or future borrowings may limit our ability to incur additional indebtedness.

August 28, 2019, we entered into a new Senior Secured Credit Agreement to replace and refinance the Credit Facility, which permits 150% asset coverage.

Some of our wholly and/or substantially owned portfolio companies, including Crystal

Financial LLC,

NEF Holdings and Kingsbridge Holdings, LLC, may incur significantly more leverage than we can but we do not consolidate Crystal Financial LLC, NEF Holdings and Kingsbridge Holdings LLC and their

Moreover, as the management fee payable to our Investment

Adviser, SLR Capital Partners, will be payable based on our gross assets, including those assets acquired through the use of leverage, SLR Capital Partners will have a financial incentive to incur leverage which may not be consistent with our

stockholders interests.

In addition, our common stockholders will bear the burden of any increase in our expenses as a result of leverage, including any increase in the management fee payable to SLR Capital Partners.

As a BDC, we had generally been required to meet a coverage ratio of total assets to total borrowings and

other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 200%.

However, our stockholders have approved a resolution permitting us to be subject to a 150% asset coverage ratio

effective as of October 12, 2018.

Even though we are subject to a 150% asset coverage ratio effective as of October 12, 2018, contractual leverage limitations under our existing credit facilities or future borrowings may limit our ability

to incur additional indebtedness.

On August 28, 2019, we entered into the Credit Agreement, which was amended on December 28, 2021, which permits 150% asset coverage.

Some of our wholly and/or substantially owned portfolio companies,

including Kingsbridge Holdings, LLC, SLR Credit Solutions and SLR Equipment Finance, may incur significantly more leverage than we can but we do not consolidate Kingsbridge Holdings, LLC, SLR Credit Solutions and SLR Equipment Finance and their

leverage is non-recourse to us.

Additionally, the Credit Facility requires us to comply with certain financial and other restrictive covenants including maintaining an asset coverage ratio of not less than

150% at any time.

Additionally, the Credit Facility requires us to comply with certain financial and other restrictive covenants including maintaining an asset coverage ratio of not

less than 150% at any time.

Failure to maintain compliance with these covenants could result in an event of default and all of our debt being declared immediately due and payable.

If this ratio declines below 150%, we may not be able to incur additional debt

and could be required by law to sell a portion of our investments to repay some debt when it is disadvantageous to do so, which could have a material adverse effect on our operations, and we may not be able to make distributions.

The amount of

leverage that we employ will depend on our investment advisers and our board of directors assessment of market and other factors at the time of any proposed borrowing.

We cannot assure you that we will be able to obtain credit at all or

on terms acceptable to us.

In addition, our credit facilities impose, and any other debt facility into which we may enter would likely impose, financial

and operating covenants that 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 RIC tax treatment under Subchapter M of

If this ratio declines below 150%, we may not be able to incur

additional debt and could be required by law to sell a portion of our investments to repay some debt when it is disadvantageous to do so, which could have a material adverse effect on our operations, and we may not be able to make distributions.

amount of leverage that we employ will depend on our Investment Advisers and our board of directors assessment of market and other factors at the time of any proposed borrowing.

We cannot assure you that we will be able to obtain credit

at all or on terms acceptable to us.

In addition, our credit facilities impose, and any other debt facility into which we may enter would likely impose,

financial and operating covenants that 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 RIC tax treatment under

Subchapter M of the Code.

The debt securities that we may issue will be governed by an indenture or other instrument containing covenants restricting our

operating flexibility.

We, and indirectly our stockholders, bear the cost of issuing and servicing such debt securities.

Any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more

favorable than those of our common stock.

Illustration.

The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various

annual returns on our portfolio, net of interest expense.

The following table illustrates the effect of leverage on returns from an investment

in our common stock assuming various annual returns on our portfolio, net of interest expense.

The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

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Our current credit facilities

and borrowings also subject us to various financial and operating covenants, including, but not limited to, maintaining certain financial ratios and minimum tangible net worth amounts.

Future credit facilities and borrowings will likely subject us

to similar or additional covenants.

In addition, we may grant a security interest in our assets in connection with any such credit facilities and borrowings.

Our credit facilities generally contain customary default provisions such as a minimum net worth amount, a profitability test, and a restriction on changing

our business and loan quality standards.

In addition, our credit facilities require or are expected to require the repayment of all outstanding debt on the maturity which may disrupt our business and potentially the business of our portfolio

companies that are financed through our credit facilities.

An event of default under our credit facilities would likely result, among other things, in termination of the availability of further funds under our credit facilities and accelerated

maturity dates for all amounts outstanding under our credit facilities, which would likely disrupt our business and, potentially, the business of the portfolio companies whose loans we finance through our credit facilities.

This could reduce our

revenues and, by delaying any cash payment allowed to us under our credit facilities until the lender has been paid in full, reduce our liquidity and cash flow and impair our ability to grow our business and maintain RIC tax treatment.

and borrowings also subject us to various financial and operating covenants, including, but not limited to, maintaining certain financial ratios and minimum tangible

net worth amounts.

Future credit facilities and borrowings will likely subject us to similar or additional covenants.

In addition, we may grant a security interest in our assets in connection

with any such credit facilities and borrowings.

Our credit facilities generally contain customary default provisions such as a minimum net worth amount,

a profitability test, and a restriction on changing our business and loan quality standards.

In addition, our credit facilities require or are expected to require the repayment of all outstanding debt on the maturity which may disrupt our business

and potentially the business of our portfolio companies that are financed through our credit facilities.

An event of default under our credit facilities would likely result, among other things, in termination of the availability of further funds

under our credit facilities and accelerated maturity dates for all amounts outstanding under our credit facilities, which would likely disrupt our business and, potentially, the business of the portfolio companies whose loans we finance through our

credit facilities.

This could reduce our revenues and, by delaying any cash payment allowed to us under our credit facilities until the lender has been paid in full, reduce our liquidity and cash flow and impair our ability to grow our business and

maintain RIC tax treatment.

The terms of future available financing may place limits on our financial and operation flexibility.

are unable to obtain sufficient capital in the future, we may be forced to reduce or discontinue our operations, not be able to make new investments, or otherwise respond to changing business conditions or competitive pressures.

If we are unable to

obtain sufficient capital in the future, we may be forced to reduce or discontinue our operations, not be able to make new investments, or otherwise respond to changing business conditions or competitive pressures.

Our quarterly and annual operating results are subject to fluctuation as a result of the nature of our business, and if we fail to achieve our

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impact our ability to achieve our investment objectives, which may cause our net asset value of our common stock to decline.

Our investments may be in portfolio companies that may have limited operating histories and financial

We expect that our portfolio will continue to consist of investments that may have relatively limited operating histories.

companies may be particularly vulnerable to U.S.

Our investments may be

in portfolio companies that may have limited operating histories and financial resources.

We expect that our portfolio will continue to consist

of investments that may have relatively limited operating histories.

These companies may be particularly vulnerable to U.S.

and foreign economic downturns such as the U.S.

recession that began in mid-2007, the European financial crisis, and the

COVID-19 related economic downturn, may have more limited access to capital and higher funding costs, may have a weaker financial position and may need more capital to expand or compete.

These businesses also

may experience substantial variations in operating results.

They may face intense competition, including from companies with greater financial, technical and marketing resources.

Furthermore, some of these companies do business in regulated

industries and could be affected by changes in government regulation.

Accordingly, these factors could impair their cash flow or result in other events, such as bankruptcy, which could limit their ability to repay their obligations to us, and may

adversely affect the return on, or the recovery of, our investment in these companies.

We cannot assure you that any of our investments in our portfolio companies will be successful.

Our portfolio companies compete with larger, more established

companies with greater access to, and resources for, further development in these new technologies.

Therefore, we may lose our entire investment in any or all of our portfolio companies.

There will be uncertainty as to the value of our portfolio investments, which may impact our net asset value.

recession that began

in mid-2007, the European financial crisis, and the COVID-19 related economic downturn, may have more limited access to capital and higher funding

costs, may have a weaker financial position and may need more capital to expand or compete.

These businesses also may experience substantial variations in operating results.

They may face intense competition, including from companies with greater

financial, technical and marketing resources.

Furthermore, some of these companies do business in regulated industries and could be affected by changes in government regulation.

Accordingly, these factors could impair their cash flow or result in

other events, such as bankruptcy, which could limit their ability to repay their obligations to us, and may adversely affect the return on, or the recovery of, our investment in these companies.

We cannot assure you that any of our investments in

our portfolio companies will be successful.

Our portfolio companies compete with larger, more established companies with greater access to, and resources for, further development in these new technologies.

Therefore, we may lose our entire

investment in any or all of our portfolio companies.

There will be uncertainty as to the value of our portfolio investments, which may impact our

net asset value.

A large percentage of our portfolio investments are in the form of securities that are not publicly traded.

The fair value of securities and other investments

that are not publicly traded may not be readily determinable.

We value these securities and the 2022 Unsecured Notes on a quarterly basis in accordance with our valuation policy, which is at all times consistent with U.S.

generally accepted

accounting principles (GAAP).

Our board of directors utilizes the services of third-party valuation firms to aid it in determining the fair value of material assets.

The board of directors discusses valuations and determines the fair

value in good faith based on the input of our investment adviser and, when utilized, the respective third-party valuation firms.

The factors that may be considered in fair value pricing our investments include the nature and realizable value of any

collateral, the portfolio companys ability to make payments and its earnings, the markets in which the portfolio company does business, comparisons to publicly traded companies, discounted cash flow and other relevant factors.

valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the

values that would have been used if a ready market for these securities existed.

Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we

ultimately realize upon the disposal of such securities.

The fair value of

securities and other investments that are not publicly traded may not be readily determinable.

these securities and the 2022 Unsecured Notes on a quarterly basis in accordance with our valuation policy, which is at all times consistent with GAAP.

Our board of directors utilizes the

services of third-party valuation firms to aid it in determining the fair value of material assets.

The board of directors discusses valuations and determines the fair value in good faith based on the input of our Investment Adviser and, when

utilized, the respective third-party valuation firms.

The factors that may be considered in fair value pricing our investments include the nature and realizable value of any collateral, the portfolio companys ability to make payments and its

earnings, the markets in which the portfolio company does business, comparisons to publicly traded companies, discounted cash flow and other relevant factors.

Because such valuations, and particularly valuations of private securities and private

companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities

Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.

Our equity ownership in a portfolio company may represent a control investment.

ability to exit an investment in a timely manner because we are in a control position or have access to inside information in the portfolio company could result in a realized loss on the investment.

If we obtain a control investment in a portfolio company our ability to divest ourselves from a debt or equity investment could be restricted due to

illiquidity in a private stock, limited trading volume on a public companys stock, inside information on a companys performance, insider blackout periods, or other factors that could prohibit us from disposing of the investment as we

would if it were not a control investment.

Additionally, we may choose not to take certain actions to protect a debt investment in a control investment portfolio company.

As a result, we could experience a decrease in the value of our portfolio

company holdings and potentially incur a realized loss on the investment.

There are significant potential conflicts of interest, including Solar Capital Partners

management of other investment funds such as Solar Senior Capital Ltd., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC, which could impact our investment returns, and an investment in Solar Capital Ltd.

is not an investment in Solar Senior

Capital Ltd., SCP Private Credit Income BDC LLC, or SLR HC BDC LLC.

Our executive officers and directors, as well as the current and future

partners of our investment adviser, Solar Capital Partners, may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do.

For example, Solar Capital Partners presently serves as the

investment adviser to (i) Solar Senior Capital Ltd., a publicly-traded BDC that focuses on investing primarily in senior secured loans, including first lien and stretch-senior debt instruments, (ii) 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 (iii) 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.

Our ability to exit an investment in a timely manner because we are in a

control position or have access to inside information in the portfolio company could result in a realized loss on the investment.

If we obtain a

control investment in a portfolio company our ability to divest ourselves from a debt or equity investment could be restricted due to illiquidity in a private stock, limited trading volume on a public companys stock, inside information on a

companys performance, insider blackout periods, or other factors that could prohibit us from disposing of the investment as we would if it were not a control investment.

Additionally, we may choose not to take certain actions to protect a debt

investment in a control investment portfolio company.

As a result, we could experience a decrease in the value of our portfolio company holdings and potentially incur a realized loss on the investment.

There are significant potential conflicts of interest, including SLR Capital Partners management of other investment funds such as SLR Senior

Investment Corp., SCP Private Credit Income BDC LLC, and SLR HC BDC LLC, which could impact our investment returns, and an investment in SLR Investment Corp.

is not an investment in SLR Senior Investment Corp., SCP Private Credit Income BDC LLC, or

SLR HC BDC LLC.

Our executive officers and directors, as well as the current and future partners of our Investment Adviser, SLR Capital Partners,

may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do.

For example, SLR Capital Partners presently serves as the Investment Adviser to (i) SLR Senior Investment Corp., a

publicly-traded BDC that focuses on investing in senior secured loans, including first lien and second lien debt instruments, (ii) 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 (iii) 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 board member, 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.

Accordingly, they may have obligations to investors in those entities, the fulfillment of which obligations might

not be in the best interests of us or our stockholders.

In addition, we note that any affiliated investment vehicle formed in the future and managed by our investment adviser or its affiliates may, notwithstanding different stated investment

objectives, have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us.

As a result, Solar Capital Partners may face conflicts in allocating investment opportunities between us

and such other entities.

Although Solar Capital Partners will endeavor to allocate investment opportunities in a fair and equitable manner, it is possible that, in the future, we may not be given the opportunity to participate in investments made by

investment funds managed by our investment adviser or an investment manager affiliated with our investment adviser.

In any such case, when Solar Capital Partners identifies an investment, it will be forced to choose which investment fund should make

the investment.

As a BDC, we were substantially limited in our ability to co-invest in privately negotiated

transactions with affiliated funds until we obtained an exemptive order from the SEC.

The most recent exemptive order, received on June 13, 2017 (the Exemptive Order), permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is controlled by or is under common control with Solar Capital Partners and is registered

as an investment adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to the conditions to

the Exemptive Order.

If we are unable to rely on the Exemptive 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 our investment professionals will endeavor to allocate investment opportunities in a fair and equitable

manner, we and our common 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 our investment adviser.

Solar Capital Partners 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, Solar Capital Partners 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 Solar

Capital Partners allocation procedures.

Related party transactions may occur among Solar Capital Ltd., Crystal Financial LLC, Equipment Operating Leases LLC, NEF Holdings, North Mill Holdco LLC, Gemino Healthcare Finance, LLC and Kingsbridge

Holdings LLC.

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

Peteka, our Chief Financial Officer, serve in similar capacities for SLR Senior Investment Corp., SCP Private

Credit Income BDC LLC, and SLR HC BDC LLC.

Accordingly, they may have obligations to investors in those entities, the fulfillment of which obligations might not be in the best interests of us or our stockholders.

In addition, we note that any

affiliated investment vehicle formed in the future and managed by our Investment Adviser or its affiliates may, notwithstanding different stated investment objectives, have overlapping investment objectives with our own and, accordingly, may invest

in asset classes similar to those targeted by us.

As a result, SLR Capital Partners may face conflicts in allocating investment opportunities between us and such other entities.

Although SLR Capital Partners will endeavor to allocate investment

opportunities in a fair and equitable manner, it is possible that, in the future, we may not be given the opportunity to participate in investments made by investment funds managed by our Investment Adviser or an investment manager affiliated with

our Investment Adviser.

In any such case, when SLR Capital Partners identifies an investment, it will be forced to choose which investment fund should make the investment.

As a BDC, we were substantially limited in our ability

to co-invest in privately negotiated transactions with affiliated funds until we obtained an exemptive order from the SEC.

The most recent exemptive order, received on June 13, 2017 (the

Exemptive Order), permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is

controlled by or is under common control with SLR Capital Partners and is registered as an Investment Adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as

regulatory requirements and other pertinent factors, and pursuant to the conditions to the Exemptive Order.

If we are unable to rely on the Exemptive 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 our investment

professionals will endeavor to allocate investment opportunities in a fair and equitable manner, we and our common 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 our Investment Adviser.

SLR Capital Partners 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, SLR Capital Partners 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 SLR Capital Partners allocation procedures.

Related party transactions may occur among SLR Investment Corp., SLR Credit Solutions, Equipment Operating

Leases LLC, Loyer Capital LLC and SLR Equipment Finance.

These transactions may occur in the normal course of business.

No administrative or other fees are paid to Solar Capital Partners by Crystal Financial LLC, Equipment Operating Leases LLC, NEF Holdings, North Mill Holdco LLC, Gemino

Healthcare Finance, LLC or Kingsbridge Holdings, LLC.

In the ordinary course of our investing activities, we pay management and incentive fees to Solar Capital

Partners and reimburse Solar Capital Partners for certain expenses it incurs.

As a result, investors in our common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in a

lower rate of return than an investor might achieve through direct investments.

Accordingly, there may be times when the management team of Solar Capital Partners has interests that differ from those of our stockholders, giving rise to a conflict.

We have entered into a royalty-free license agreement with our investment adviser, pursuant to which our investment adviser has granted us a non-exclusive license to use the name Solar Capital. Under the license agreement, we have the right to use the Solar Capital name for so long as Solar Capital Partners or one of its

affiliates remains our investment adviser.

In addition, we pay Solar Capital Management, an affiliate of Solar Capital Partners, our allocable portion of overhead and other expenses incurred by Solar Capital Management in performing its obligations

under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the compensation of our chief compliance officer and our chief financial officer and their

respective staffs.

No administrative or other fees are paid to SLR Capital Partners by SLR Credit Solutions, Equipment Operating Leases LLC, Loyer

Capital LLC and SLR Equipment Finance.

In the ordinary course of our investing activities, we pay management and incentive fees to SLR Capital Partners

and reimburse SLR Capital Partners for certain expenses it incurs.

As a result, investors in our common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in a lower rate of

return than an investor might achieve through direct investments.

Accordingly, there may be times when the management team of SLR Capital Partners has interests that differ from those of our stockholders, giving rise to a conflict.

We have entered into an amended and restated royalty-free license agreement on February 25, 2021 with our Investment Adviser, pursuant to which our

Investment Adviser has granted us a non-exclusive license to use the marks SOLAR and SLR. Under the license agreement, we have the right to use the SLR Investment

name for so long as SLR Capital Partners or one of its affiliates remains our Investment Adviser.

In addition, we pay SLR Capital Management, an affiliate of SLR Capital Partners, our allocable portion of overhead and other expenses incurred by SLR

Capital Management in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the compensation of our chief compliance officer

and our chief financial officer and their respective staffs.

These arrangements create conflicts of interest that our board of directors must monitor.

Our ability to enter into transactions

involving derivatives and financial commitment transactions may be limited.

Through comprehensive new global regulatory regimes impacting

derivatives ( e.g.

, the Dodd-Frank Act, European Market Infrastructure Regulation (EMIR), Markets in Financial Investments Regulation (MIFIR)/Markets in Financial Instruments Directive (MIFID II)), certain over-the-counter derivatives transactions in which we may engage are either now or will soon be subject to various requirements, such as mandatory central clearing of

transactions which include additional margin requirements and in certain cases trading on electronic platforms, pre-and post-trade transparency reporting requirements and mandatory bi-lateral exchange of initial margin for non-cleared swaps.

The Dodd-Frank Act also created new categories of regulated market participants, such as swap dealers,

security-based swap dealers, major swap participants, and major security-based swap participants who are subject to significant new capital, registration, recordkeeping, reporting, disclosure, business conduct and

other regulatory requirements.

Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited.

Through comprehensive new global regulatory regimes impacting derivatives ( e.g.

, the Dodd-Frank Act, European Market Infrastructure Regulation

(EMIR), Markets in Financial Investments Regulation (MIFIR)/Markets in Financial Instruments Directive (MIFID II)), certain over-the-counter derivatives transactions in which we may engage are either now or will

soon be subject to various requirements, such as mandatory central clearing of transactions which include additional margin requirements and in certain cases trading on electronic platforms, pre-and post-trade transparency reporting requirements and

mandatory bi-lateral exchange of initial margin for non-cleared swaps.

The Dodd-Frank Act also created new categories of regulated market participants,

such as swap dealers, security-based swap dealers, major swap participants, and major security-based swap participants who are subject to

significant new capital, registration, recordkeeping, reporting, disclosure, business conduct and other regulatory requirements.

The EU and some other jurisdictions are implementing similar requirements.

Because these requirements are new and evolving (and some of the rules are not yet final), their ultimate impact remains unclear.

However, even

if the Company itself is not located in a particular jurisdiction or directly subject to the jurisdictions derivatives regulations, we may still be impacted to the extent we enter into a derivatives transaction with a regulated market

participant or counterparty that is organized in that jurisdiction or otherwise subject to that jurisdictions derivatives regulations.

information available as of the date of this annual report on Form 10-K, the effect of such requirements will be likely to (directly or indirectly) increase our overall costs of entering into derivatives

transactions.

In particular, new margin requirements, position limits and significantly higher capital charges resulting from new global capital regulations, even if not directly applicable to us, may cause an increase in the pricing of derivatives

transactions entered into by market participants to whom such requirements apply or affect our overall ability to enter into derivatives transactions with certain counterparties.

Such new global capital regulations and the need to satisfy the

various requirements by counterparties are resulting in increased funding costs, increased overall transaction costs, and significantly affecting balance sheets, thereby resulting in changes to financing terms and potentially impacting our ability

to obtain financing.

Administrative costs, due to new requirements such as registration, recordkeeping, reporting, and compliance, even if not directly applicable to us, may also be reflected in our derivatives transactions.

New requirements to

trade certain derivatives transactions on electronic trading platforms and trade reporting requirements may lead to (among other things) fragmentation of the markets, higher transaction costs or reduced availability of derivatives, and/or a reduced

ability to hedge, all of which could adversely affect the performance of certain of our trading strategies.

In addition, changes to derivatives regulations may impact the tax and/or accounting treatment of certain derivatives, which could adversely

In November 2020, the SEC adopted new rules regarding the ability of a BDC (or a registered investment

company) to use derivatives and other transactions that create future payment or delivery obligations.

BDCs that use derivatives would be subject to a value-at-risk

leverage limit, certain other derivatives risk management program and testing requirements and requirements related to board reporting.

These new requirements would apply unless the BDC qualified as a limited derivatives user, as defined

in the SECs adopted rules.

A BDC that enters into reverse repurchase agreements or similar financing transactions would need to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing

transactions could either (i) comply with the asset coverage requirements of the Section 18 of the 1940 Act when engaging in reverse repurchase agreements or (ii) choose to treat such agreements as derivative transactions under the

adopted rule.

Under the adopted rule, a BDC may enter into an unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has a reasonable belief, at the time it

enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as it becomes due.

If the BDC cannot meet this test, it is required

to treat unfunded commitments as a derivatives transaction subject to the requirements of the rule.

Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts.

We may be obligated to pay our investment adviser incentive compensation even if we incur a loss.

Our investment adviser will be entitled to incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our pre-incentive fee net investment income for that quarter (before deducting incentive compensation) above a performance threshold for that quarter.

Accordingly, since the performance threshold is based on a

percentage of our net asset value, decreases in our net asset value make it easier to achieve the performance threshold.

Our pre-incentive fee net investment income for incentive compensation purposes excludes

realized and unrealized capital losses or depreciation that we may incur in the fiscal quarter, even if such capital losses or depreciation result in a net loss on our statement of operations for that quarter.

Thus, we may be required to pay Solar

Capital Partners incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.

Our incentive fee may induce Solar Capital Partners to pursue speculative investments.

The incentive fee payable by us to Solar Capital Partners may create an incentive for Solar Capital Partners to pursue investments on our behalf that are

riskier or more speculative than would be the case in the absence of such compensation arrangement.

Because these requirements are new and

evolving (and some of the rules are not yet final), their ultimate impact remains unclear.

However, even if the Company itself is not located in a particular jurisdiction or directly subject to the jurisdictions derivatives regulations, we may

still be impacted to the extent we enter into a derivatives transaction with a regulated market participant or counterparty that is organized in that jurisdiction or otherwise subject to that jurisdictions derivatives regulations.

Based on information available as of the date of this annual report on Form 10-K, the effect of such

requirements will be likely to (directly or indirectly) increase our overall costs of entering into derivatives transactions.

In particular, new margin requirements, position limits and significantly higher capital charges resulting from new global

capital regulations, even if not directly applicable to us, may cause an increase in the pricing of derivatives transactions entered into by market participants to whom such requirements apply or affect our overall ability to enter into derivatives

transactions with certain counterparties.

Such new global capital regulations and the need to satisfy the various requirements by counterparties are resulting in increased funding costs, increased overall transaction costs, and significantly

affecting balance sheets, thereby resulting in changes to financing terms and potentially impacting our ability to obtain financing.

Administrative costs, due to new requirements such as registration, recordkeeping, reporting, and compliance, even

if not directly applicable to us, may also be reflected in our derivatives transactions.

New requirements to trade certain derivatives transactions on electronic trading platforms and trade reporting requirements may lead to (among other things)

fragmentation of the markets, higher transaction costs or reduced availability of derivatives, and/or a reduced ability to hedge, all of which could adversely affect the performance of certain of our trading strategies.

In addition, changes to

derivatives regulations may impact the tax and/or accounting treatment of certain derivatives, which could adversely impact us.

In November 2020, the SEC

adopted new rules regarding the ability of a BDC (or a registered investment company) to use derivatives and other transactions that create future payment or delivery obligations.

BDCs that use derivatives would be subject to a value-at-risk leverage limit, certain other derivatives risk management program and testing requirements and requirements related to board reporting.

requirements would apply unless the BDC qualified as a limited derivatives user, as defined in the SECs adopted rules.

A BDC that enters into reverse repurchase agreements or similar financing transactions would need to aggregate

the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions could either (i) comply with the asset coverage requirements of the Section 18 of the 1940 Act when engaging in reverse

repurchase agreements or (ii) choose to treat such agreements as derivative transactions under the adopted rule.

Under the adopted rule, a BDC may enter into an unfunded commitment agreement that is not a derivatives transaction, such as an

agreement to provide financing to a portfolio company, if the BDC has a reasonable belief, at the time it enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its

unfunded commitment agreements, in each case as it becomes due.

If the BDC cannot meet this test, it is required to treat unfunded commitments as a derivatives transaction subject to the requirements of the rule.

Collectively, these requirements may

limit our ability to use derivatives and/or enter into certain other financial contracts.

We may be obligated to pay our Investment Adviser

incentive compensation even if we incur a loss.

Our Investment Adviser will be entitled to incentive compensation for each fiscal quarter in an

amount equal to a percentage of the excess of our pre-incentive fee net investment income for that quarter (before deducting incentive compensation) above a performance threshold for that quarter.

Accordingly, since the performance threshold is based on a percentage of our net asset value, decreases in our net asset value make it easier to achieve the performance threshold.

Our pre-incentive fee net investment income for incentive compensation purposes excludes realized and unrealized capital losses or depreciation that we may incur in the fiscal quarter, even if such

capital losses or depreciation result in a net loss on our statement of operations for that quarter.

Thus, we may be required to pay SLR Capital Partners incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.

Our incentive fee may induce SLR Capital Partners to pursue speculative investments.

The incentive fee payable by us to SLR Capital Partners may create an incentive for SLR Capital Partners to pursue investments on our behalf that are riskier

or more speculative than would be the case in the absence of such compensation arrangement.

The incentive fee payable to our Investment Adviser is calculated based on a percentage of our return on invested capital.

This may encourage our

investment adviser to use leverage to increase the return on our investments.

This may encourage our Investment

Adviser to use leverage to increase the return on our investments.

Under certain circumstances, the use of leverage may increase the likelihood of default, which would impair the value of our common stock.

In addition, our investment

adviser receives the incentive fee based, in part, upon net capital gains realized on our investments.

Unlike that portion of the incentive fee based on income, there is no hurdle rate applicable to the portion of the incentive fee based on net

capital gains.

In addition, our Investment Adviser

receives the incentive fee based, in part, upon net capital gains realized on our investments.

Unlike that portion of the incentive fee based on income, there is no hurdle rate applicable to the portion of the incentive fee based on net capital

As a result, our Investment Adviser may have a tendency to invest more capital in investments that are likely to result in capital gains as compared to income producing securities.

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speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.

incentive fee payable by us to our investment adviser also may induce Solar Capital Partners to invest on our behalf in instruments that have a deferred interest feature, even if such deferred payments would not provide cash necessary to enable us

to pay current distributions to our stockholders.

incentive fee payable by us to our Investment Adviser also may induce SLR Capital Partners to invest on our behalf in instruments that have a deferred interest feature, even if such deferred payments would not provide cash necessary to enable us to

pay current distributions to our stockholders.

Under these investments, we would accrue interest over the life of the investment but would not receive the cash income from the investment until the end of the term.

Our net investment income used

to calculate the income portion of our investment fee, however, includes accrued interest.

Our net investment income used to

calculate the income portion of our investment fee, however, includes accrued interest.

Thus, a portion of this incentive fee would be based on income that we have not received in cash.

In addition, the

catch-up portion of the incentive fee may encourage Solar Capital Partners to accelerate or defer interest payable by portfolio companies from one calendar quarter to another, potentially resulting

in fluctuations in timing and distribution amounts.

We may invest, to the extent permitted by law, in the securities and instruments of other investment

companies, including private funds, and, to the extent we so invest, will bear our ratable share of any such investment companys expenses, including management and performance fees.

We will also remain obligated to pay management and incentive

fees to Solar Capital Partners with respect to the assets invested in the securities and instruments of other investment companies.

With respect to each of these investments, each of our stockholders will bear his or her share of the management and

incentive fee of Solar Capital Partners as well as indirectly bearing the management and performance fees and other expenses of any investment companies in which we invest.

the catch-up portion of the incentive fee may encourage SLR Capital Partners to accelerate or defer interest payable by portfolio companies from one calendar quarter to another,

potentially resulting in fluctuations in timing and distribution amounts.

We may invest, to the extent permitted by law, in the securities and

instruments of other investment companies, including private funds, and, to the extent we so invest, will bear our ratable share of any such investment companys expenses, including management and performance fees.

We will also remain obligated

to pay management and incentive fees to SLR Capital Partners with respect to the assets invested in the securities and instruments of other investment companies.

With respect to each of these investments, each of our stockholders will bear his or

her share of the management and incentive fee of SLR Capital Partners as well as indirectly bearing the management and performance fees and other expenses of any investment companies in which we invest.

We may become subject to corporate-level U.S.

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If we are unable to obtain cash from other

sources, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S federal income tax.

sources, we could fail to qualify for RIC tax treatment and become subject to corporate-level U.S federal income tax.

The income source requirement will be satisfied if we obtain at least 90% of our income for each year from

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from your investment in our common stock.

Any net operating losses that we incur in periods during which we qualify as a RIC will not offset net capital gains (i.e., net realized long-term capital gains in excess of net realized short-term capital

losses) that we are otherwise required to distribute, and we cannot pass such net operating losses through to our stockholders.

In addition, net operating losses that we carry over to a taxable year in which we qualify as a RIC normally cannot

offset ordinary income or capital gains.

We may have difficulty satisfying the Annual Distribution Requirement in order to qualify and maintain RIC

tax treatment if we recognize income before or without receiving cash representing such income.

In accordance with GAAP and tax requirements, we

include in income certain amounts that we have not yet received in cash, such as contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loans term.

We may have difficulty satisfying the Annual Distribution Requirement in order to qualify and maintain

RIC tax treatment if we recognize income before or without receiving cash representing such income.

In accordance with GAAP and tax requirements,

we include in income certain amounts that we have not yet received in cash, such as contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loans term.

In addition to the cash yields

received on our loans, in some instances, certain loans may also include any of the following:

end-of-term payments, exit fees, balloon payment fees or prepayment fees.

The increases in loan balances as a result of contractual PIK arrangements are included in income for the period in which such PIK interest was accrued, which is often in advance of receiving cash payment, and are separately identified on our

statements of cash flows.

end-of-term payments, exit fees, balloon payment fees or

prepayment fees.

identified on our statements of cash flows.

We also may be required to include in income certain other amounts prior to receiving the related cash.

Any warrants that we receive in connection with our debt investments will generally be valued as part of the

negotiation process with the particular portfolio company.

As a result, a portion of the aggregate purchase price for the debt investments and warrants will be allocated to the warrants that we receive.

This will generally result in original

issue discount for U.S.

federal income tax purposes, which we must recognize as ordinary income, increasing the amount that we are required to distribute to qualify for the U.S.

warrants that we receive in connection with our debt investments will generally be valued as part of the negotiation process with the particular portfolio company.

As a result, a portion of the aggregate purchase price for the debt investments and

warrants will be allocated to the warrants that we receive.

This will generally result in original issue discount for U.S.

federal income tax purposes, which we must recognize as ordinary income, increasing the amount that we are

required to distribute to qualify for the U.S.

federal income tax benefits applicable to RICs.

Because these

warrants generally will not produce distributable cash for us at the same time as we are required to make distributions in respect of the related original issue discount, we would need to obtain cash from other sources or to pay a portion of our

distributions using shares of newly issued common stock, consistent with Internal Revenue Service requirements, to satisfy the Annual Distribution and Excise Tax Avoidance requirements.

Other features of the debt instruments that we hold may also cause such instruments to generate an original issue discount, resulting in a distribution

requirement in excess of current cash interest received.

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

our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any.

Under such circumstances, we may have to sell some of our investments at times we would not consider advantageous, raise

additional debt or equity capital or reduce new investment originations to meet these distribution requirements.

If we are unable to obtain cash from other sources and are otherwise unable to satisfy such distribution requirements, we may fail to

qualify for the U.S.

Because these warrants generally will not produce distributable cash for us at the same time as we are required to make distributions in respect of the

related original issue discount, we would need to obtain cash from other sources or to pay a portion of our distributions using shares of newly issued common stock, consistent with Internal Revenue Service requirements, to satisfy the Annual

Distribution and Excise Tax Avoidance requirements.

Other features of the debt instruments that we hold may also cause such instruments to generate

original issue discount, resulting in a distribution requirement in excess of current cash interest received.

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

the RIC tax requirement to distribute at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any.

Under such circumstances, we may have to sell some of our investments

at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements.

If we are unable to obtain cash from other sources and are otherwise unable to

satisfy such distribution requirements, we may fail to qualify for the U.S.

federal income tax benefits allowable to RICs and, thus, become subject to a corporate-level U.S.

federal income tax on all our income.

The higher yields and interest rates on PIK securities 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 our investment adviser based on

non-cash accruals that ultimately may not be realized, but our investment adviser will be under no obligation to reimburse the Company for these fees.

Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price

of our common stock.

The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more

difficult a change in control of Solar Capital or the removal of our directors.

We are subject to the Maryland Business Combination Act, subject to any applicable requirements of the 1940 Act.

Our board of directors has adopted a resolution

exempting from the Maryland Business Combination Act any business combination between us and any other person, subject to prior approval of such business combination by our board of directors, including approval by a majority of our disinterested

If the resolution exempting business combinations is repealed or our board of directors does not approve a business combination, the Maryland Business Combination Act may discourage third parties from trying to acquire control of us and

increase the difficulty of consummating such an offer.

Our bylaws exempt from the Maryland Control Share Acquisition Act (the Control Share Act) acquisitions of our stock by any person.

If we amend our bylaws to repeal the exemption from

the Control Share Act, the Control Share Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such a transaction.

The SEC staff has rescinded its position that, under the 1940 Act,

an investment company may not avail itself of the Control Share Act.

As a result, we will amend our bylaws to be subject to the Control Share Act only if our board of directors determines that it would be in our best interests.

Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover

attempts and have an adverse impact on the price of our common stock.

The Maryland General Corporation Law and our charter and bylaws contain

provisions that may discourage, delay or make more difficult a change in control of SLR Investment Corp.

or the removal of our directors.

We are subject to the Maryland Business Combination Act, subject to any applicable requirements of the 1940

Our board of directors has adopted a resolution exempting from the Maryland Business Combination Act any business combination between us and any other person, subject to prior approval of such business combination by our board of directors,

including approval by a majority of our disinterested directors.

If the resolution exempting business combinations is repealed or our board of directors does not approve a business combination, the Maryland Business Combination Act may discourage

third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.

Our bylaws exempt from the Maryland Control Share Acquisition Act (the Control Share Act) acquisitions of our stock by any

If we amend our bylaws to repeal the exemption from the Control Share Act, the Control Share Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such a transaction.

SEC staff has rescinded its position that, under the 1940 Act, an investment company may not avail itself of the Control Share Act.

As a result, we will amend our bylaws to be subject to the Control Share Act only if our board of directors

determines that it would be in our best interests.

We have also adopted measures that may make it difficult for a third party to obtain control of us,

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negative effects of the foregoing provisions and determined that they are in the best interest of our stockholders.

The failure in cyber security

systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.

The occurrence of a disaster, such as a cyber-attack against us or against a third-party that has access to our data or networks, a natural catastrophe, an

industrial accident, failure of our disaster recovery systems, or consequential employee error, could have an adverse effect on our ability to communicate or conduct business, negatively impacting our operations and financial condition.

effect can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our data.

Our bylaws designate the

Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders and provide that claims relating to causes of action under the Securities

Act may only be brought in federal district courts, which could limit our stockholders ability to obtain a favorable judicial forum for disputes with us or our directors, officers or agents, if any, and could discourage lawsuits against

us and our directors, officers and agents, if any.

Our bylaws provide that, unless we consent in writing to the selection of an alternative

forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Northern Division, will be the sole and exclusive forum for (a) any Internal

Corporate Claim, as such term is defined in the MGCL, (b) any derivative action or proceeding brought on our behalf (other than actions arising under federal securities laws), (c) any action asserting a claim of breach of any duty owed by any

of our directors, officers or other agents to us or to our stockholders, (d) any action asserting a claim against us or any of our directors, officers or other agents arising pursuant to any provision of the MGCL or our charter or bylaws or

(e) any other action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine.

With respect to any proceeding described in the foregoing

sentence that is in the Circuit Court for Baltimore City, Maryland, our stockholders consent to the assignment of the proceeding to the Business and Technology Case Management Program pursuant to

Maryland Rule 16-308 or any successor thereof.

None of the foregoing actions, claims or proceedings may be brought in any court sitting outside the State of Maryland unless we consent in writing to such court.

Our bylaws do not apply to lawsuits asserting claims brought to enforce a duty or liability arising exclusively under the Securities Act, the Exchange Act, or the 1940 Act, or any other claim for which the federal courts have exclusive jurisdiction.

Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest

extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

This paragraph does not apply to claims arising exclusively under the Exchange Act or the 1940

Act, or any other claim for which the federal courts have exclusive jurisdiction.

These exclusive forum provisions may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with

us or our directors, officers, or agents, if any, which may discourage such lawsuits against us and our directors, officers, and agents, if any.

Alternatively, if a court were to find the choice of forum provisions contained in our bylaws to be

inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and operating results.

under the Securities Act, federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and investors cannot waive compliance with the federal securities laws and the rules and

regulations thereunder.

The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems

and management continuity planning could impair our ability to conduct business effectively.

The occurrence of a disaster, such as a cyber-attack

against us or against a third-party that has access to our data or networks, a natural catastrophe, an industrial accident, failure of our disaster recovery systems, or consequential employee error, could have an adverse effect on our ability to

communicate or conduct business, negatively impacting our operations and financial condition.

This adverse effect can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or

impact the availability, integrity, or confidentiality of our data.

We depend heavily upon computer systems to perform necessary business functions.

Despite our implementation of a variety of security measures, our computer

systems, networks, and data, like those of other companies, could be subject to cyber-attacks and unauthorized access, use, alteration, or destruction, such as from physical and electronic break-ins or

unauthorized tampering.

If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary, and other information processed, stored in, and transmitted through our computer systems and networks.

Such an attack could

cause interruptions or malfunctions in our operations, which could result in financial losses, litigation, regulatory penalties, client dissatisfaction or loss, reputational damage, and increased costs associated with mitigation of damages and

If unauthorized parties gain access to such information and technology systems, they may be able to steal, publish, delete or modify private and sensitive information, including nonpublic personal information related to stockholders

(and their beneficial owners) and material nonpublic information.

The systems we have implemented to manage risks relating to these types of events could prove to be inadequate and, if compromised, could become inoperable for extended periods of

time, cease to function properly or fail to adequately secure private information.

Breaches such as those involving covertly introduced malware, impersonation of authorized users and industrial or other espionage may not be identified even with

sophisticated prevention and detection systems, potentially resulting in further harm and preventing them from being addressed appropriately.

The failure of these systems or of disaster recovery plans for any reason could cause significant

interruptions in our and our Advisers operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to stockholders, material nonpublic information and other

sensitive information in our possession.

A disaster or a disruption in the infrastructure that supports our business, including a disruption involving

electronic communications or other services used by us or third parties with whom we conduct business, or directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our business without

Despite our implementation of a variety of security measures, our computer systems, networks, and data, like those of other companies, could be subject to cyber-attacks and unauthorized access, use, alteration, or destruction, such as from physical

and electronic break-ins or unauthorized tampering.

If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary, and other information processed, stored in,

and transmitted through our computer systems and networks.

Such an attack could cause interruptions or malfunctions in our operations, which could result in financial losses, litigation, regulatory penalties, client dissatisfaction or loss,

reputational damage, and increased costs associated with mitigation of damages and remediation.

If unauthorized parties gain access to such information and technology systems, they may be able to steal, publish, delete or modify private and

sensitive information, including nonpublic personal information related to stockholders (and their beneficial owners) and material nonpublic information.

The systems we have implemented to manage risks relating to these types of events could prove

to be inadequate and, if compromised, could become inoperable for extended periods of time, cease to function properly or fail to adequately secure private information.

Breaches such as those involving covertly introduced malware, impersonation of

authorized users and industrial or other espionage may not be identified even with sophisticated prevention and detection systems, potentially resulting in further harm and preventing them from being addressed appropriately.

The failure of these

systems or of disaster recovery plans for any reason could cause significant interruptions in our and our Investment Advisers operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including

personal information relating to stockholders, material nonpublic information and other sensitive information in our possession.

A disaster or a disruption in the infrastructure that supports our business, including a disruption

involving electronic communications or other services used by us or third parties with whom we conduct business, or directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our business without

interruption.

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Third parties with which we do business may also be sources of cybersecurity or other technological risk.

outsource certain functions and these relationships allow for the storage and processing of our information, as well as client, counterparty, employee, and borrower information.

While we engage in actions to reduce our exposure resulting from

outsourcing, ongoing threats may result in unauthorized access, loss, exposure, destruction, or other cybersecurity incident that affects our data, resulting in increased costs and other consequences as described above.

In addition, cybersecurity has become a top priority for regulators around the world, and some jurisdictions have enacted laws requiring companies to notify

individuals of data security breaches involving certain types of personal data.

If we fail to comply with the relevant laws and regulations, we could suffer financial losses, a disruption of our businesses, liability to investors, regulatory

intervention or reputational damage.

We and our service providers are currently impacted by quarantines and similar measures being enacted by governments

in response to the global COVID-19 pandemic, which are obstructing the regular functioning of business workforces (including requiring employees to work from external locations and their homes).

extended periods of remote working, whether by us or by our Service Providers, could strain technology resources, introduce operational risks and otherwise heighten the risks described above.

Remote working environments may be less secure and more

susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic.

We outsource certain functions and these

relationships allow for the storage and processing of our information, as well as client, counterparty, employee, and borrower information.

While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result in

unauthorized access, loss, exposure, destruction, or other cybersecurity incident that affects our data, resulting in increased costs and other consequences as described above.

In addition, cybersecurity has become a top priority for global lawmakers and regulators around the world, and some jurisdictions have proposed or enacted

laws requiring companies to notify regulators and individuals of data security breaches involving certain types of personal data.

If we fail to comply with the relevant and increasing laws and regulations, we could suffer financial losses, a

disruption of our businesses, liability to investors, regulatory intervention or reputational damage.

We and our service providers are currently impacted

by quarantines and similar measures being enacted by governments in response to the global COVID-19 pandemic, which are obstructing the regular functioning of business workforces (including requiring

employees to work from external locations and their homes).

Policies of extended periods of remote working, whether by us or by our Service Providers, could strain technology resources, introduce operational risks and otherwise heighten the risks

described above.

Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic.

Accordingly, the risks described above are heightened under current conditions.

We, our Investment Adviser and our portfolio companies are subject to risks associated with phishing and other cyber-attacks.

Our business and the business of our portfolio companies relies upon secure information technology systems for data processing, storage and

Despite careful security and controls design, implementation and updating, ours and our portfolio companies information technology systems could become subject to cyber-attacks.

Cyber-attacks include, but are not limited to, gaining

unauthorized access to digital systems (e.g., through hacking, malicious software coding, social engineering or phishing attempts) for purposes of misappropriating assets or sensitive information, corrupting data, or causing

operational disruption.

Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of service attacks on websites (i.e., efforts to make network

services unavailable to intended users).

Our Investment Advisers employees have been and expect to continue to be the target of fraudulent calls, emails and other forms of activities.

The result of these incidents may include disrupted

operations, misstated or unreliable financial data, liability for stolen information, misappropriation of assets, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, regulatory fines or

penalties, or other adverse effects on our business, financial condition or results of operations.

In addition, we may be required to expend significant additional resources to modify our protective measures and to investigate and remediate

vulnerabilities or other exposures arising from operational and security risks related to cyber-attacks.

Our Investment Advisers and other service

providers increased use of mobile and cloud technologies could heighten the risk of a cyber-attack as well as other operational risks, as certain aspects of the security of such technologies may be complex, unpredictable or beyond their

Our Investment Advisers and other service providers reliance on mobile or cloud technology or any failure by mobile technology and cloud service providers to adequately safeguard their systems and prevent cyber-attacks could

disrupt their operations and result in misappropriation, corruption or loss of personal, confidential or proprietary information.

In addition, there is a risk that encryption and other protective measures against cyber-attacks may be circumvented,

particularly to the extent that new computing technologies increase the speed and computing power available.

Additionally, remote working environments

may be less secure and more susceptible to cyber-attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic.

Accordingly, the risks associated with cyber-attacks are

heightened under current conditions.

We can be highly dependent on information systems and systems failures could significantly disrupt our

business, which may, in turn, negatively affect the market price of our common stock and our ability to pay distributions.

Our business is highly

dependent on our and third parties communications and information systems.

Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or

What changed 10-K

Item 1A. Risk Factors