Summary of Risk Factors

The following is only a summary of the principal risks that may materially adversely affect our business, financial condition, results of operations and cash flows. The following should be read in conjunction with the more complete discussion of the risk factors we face, which are set forth in our latest annual report on Form 10-K, together with any subsequent filings with the SEC, and in our prospectus.

Risks Related to Our Business

• We may suffer credit losses and the lack of liquidity in our investments may adversely affect our business.
• Our financial condition and results of operations depend on our ability to manage future growth effectively.
• We are exposed to risks associated with changes in interest rates, including fluctuations in interest rates which could adversely affect our profitability
• The highly competitive market in which we operate may limit our investment opportunities.
• Any failure on our part to maintain our status as a BDC would reduce our operating flexibility.
• Because we have substantial indebtedness, there could be increased risk in investing in our company.
• Our board of directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval.

Risks Related to the Adviser and its Affiliates

• We are dependent upon senior management personnel of our investment adviser for our future success, and if our investment adviser is unable to retain qualified personnel or if our investment adviser loses any member of its senior management team, our ability to achieve our investment objective could be significantly harmed.
• Our investment adviser and its affiliates, senior management and employees have certain conflicts of interest and serve or may serve as investment advisers, officers, directors or principals of entities that operate in the same or a related line of business.
• Our incentive fee may encourage our investment adviser to make certain investments, including speculative investments.

Risks Related to Our Investments

• Our investments in prospective private and middle market portfolio companies are risky, and we could lose all or part of our investment. We may not be in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.
• Our investments in lower credit quality obligations are risky and highly speculative, and we could lose all or part of our investment. Most of our debt investments are likely to be in lower grade obligations.
• We invest primarily in debt and equity securities of middle market companies and we may not realize gains from our equity investments.
• Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies. Our portfolio companies may be highly leveraged.
• Economic downturns or recessions could impair the value of the collateral for our loans to our portfolio companies and consequently increase the possibility of an adverse effect on our financial condition and results of operations.

Risks Related to Debt Financing

• We borrow money and may issue additional debt securities or preferred stock to leverage our capital structure. Therefore, a decrease in the value of our investments would have a greater negative impact on the value of our common shares than if we did not use leverage. 
• Our Notes are unsecured and therefore are effectively subordinated to any secured indebtedness we have currently incurred or may incur in the future.
• The trading market or market value of our publicly issued debt securities may fluctuate. The indentures under which our Notes were issued contains limited protection for holders of our Notes.

Risks in the Current Environment

• Capital markets may experience periods of disruption and instability and we cannot predict when these conditions will occur. Such market conditions could materially and adversely affect debt and equity capital markets in the United States and abroad, which could have a negative impact on our business, financial condition and results of operations.
• The novel coronavirus COVID-19 could have an adverse impact on our financial condition and results of operations and other aspects of our business.

Risks Related to Our Operations as a BDC

• Our ability to enter into transactions with our affiliates will be restricted. Regulations governing our operation as a BDC may limit our ability to, and the way in which we raise additional capital, which could have a material adverse impact on our liquidity, financial condition and results of operations.
• There is a risk that we may not make distributions or that our distributions may not grow over time.
• If we are unable to qualify for tax treatment as a RIC, we will be subject to corporate-level income tax, which would have a material adverse effect on our results of operations and financial condition.

Risks Related to an Investment in Our Common Stock

• Our common stock price may be volatile and may fluctuate substantially. Our common stock is intended for long-term investors and should not be treated as a trading vehicle. Shares of closed-end management investment companies, which are structured similarly to us, frequently trade at a discount from their net asset value. Our shares may trade at a price that is less than the offering price. This risk may be greater for investors who sell their shares in a relatively short period of time after completion of the offering.
• The market price and liquidity of the market for our common shares may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance.
• Certain provisions of the General Corporation Law of the State of Delaware and our certificate of incorporation could deter takeover attempts and have an adverse effect on the price of our common stock.