Note 8. Borrowings

As a BDC, we are only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200% after giving effect to such leverage, or, 150% if certain requirements under the 1940 Act are met. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, our board of directors, including a majority of our directors who are not “interested persons” (as defined in Section 2(a)(19) of the 1940 Act”) of the Company (“independent directors”), approved a minimum asset coverage ratio of 150%, which became effective on April 16, 2019. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing. Our asset coverage ratio, as defined in the 1940 Act, was 168.4% as of February 28, 2026 and 162.9% as of February 28, 2025.

Encina Credit Facility

On October 4, 2021, the Company entered into the Credit and Security Agreement (as amended from time to time, the “Encina Credit Agreement”) relating to a senior secured revolving credit facility (the “Encina Credit Facility”) with Encina Lender Finance, LLC (“Encina”), supported by loans held by SIF II and pledged to the Encina Credit Facility. The terms of the Encina Credit Facility required a minimum drawn amount of $12.5 million at all times during period through April 4, 2022, which increased to the greater of $25.0 million or 50% of the commitment amount in effect at any time thereafter. On January 27, 2023, we entered into the first amendment to the Encina Credit Agreement which, among other things: (i) increased the borrowings available under the Encina Credit Facility from up to $50.0 million to up to $65.0 million; (ii) changed the underlying benchmark used to compute interest under the Encina Credit Agreement from LIBOR to Term SOFR for a one-month tenor plus a 0.10% credit spread adjustment; (iii) increased the applicable effective margin rate on borrowings from 4.00% to 4.25%; (iv) extended the revolving period from October 4, 2024 to January 27, 2026; (v) extended the period during which the borrower may request one or more increases in the borrowings available under the Encina Credit Facility (each such increase, a “Facility Increase”) from October 4, 2023 to January 27, 2025, and increased the maximum borrowings available pursuant to the Encina Facility Increase from $75.0 million to $150.0 million; (vi) revised the eligibility criteria for eligible collateral loans to exclude certain industries in which an obligor or related guarantor may be involved; and (vii) amended the provisions permitting the borrower to request an extension in the Commitment Termination Date (as defined in the Encina Credit Agreement) to allow requests to extend any applicable Commitment Termination Date, rather than a one-time request to extend the original Commitment Termination Date, subject to a notice requirement.

In addition to any fees or other amounts payable under the terms of the Encina Credit Facility, an administrative agent fee per annum equal to $0.1 million was payable in equal monthly installments in arrears. The Company paid the lender a commitment fee of 0.75% per year (or 0.50% if the ratio of advances outstanding to aggregate commitments was greater than or equal to 50%) on the unused amount of the Encina Credit Facility. Availability on the Encina Credit Facility was subject to a borrowing base calculation, based on, among other things, applicable advance rates (which varied from 50.0% to 75.0% of par or fair value depending on the type of loan asset) and the value of certain “eligible” loan assets included as part of the borrowing base. Funds could be borrowed at the greater of the prevailing one-month SOFR rate, plus an applicable effective margin of 4.25%.

On November 6, 2025, the Company terminated in full (i) the Encina Credit Agreement, and (ii) the Equity Pledge Agreement, dated as of October 4, 2021 (the “Encina Equity Pledge Agreement”), by and between the Company and Encina, as collateral agent, and repaid all outstanding amounts. The Encina Credit Agreement and the Encina Equity Pledge Agreement terminated upon the satisfaction of all obligations and liabilities of SIF II and the Company to secured parties thereunder, including, without limitation, payments of principal and interest, other fees, breakage costs and other amounts owing to the secured parties.

As of February 28, 2026 and February 28, 2025, there were $0.0 million and $32.5 million outstanding borrowings under the Encina Credit Facility. During the applicable periods, the Company was in compliance with all of the limitations and requirements under the Encina Credit Agreement. The repayment and termination of the Encina Credit Facility resulted in a realized loss on the extinguishment of debt of $0.1 million.

For the year ended February 28, 2026, February 28, 2025, and February 29, 2024, we recorded $2.2 million, $3.4 million and $3.9 million of interest expense related to the Encina Credit Facility, respectively, which includes commitment and administrative agent fees. For the year ended February 28, 2026, February 28, 2025, and February 29, 2024, we recorded $0.4 million, $0.5 million and $0.5 million of deferred financing costs related to the Encina Credit Facility, respectively. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. For the year ended February 28, 2026, February 28, 2025, and February 29, 2024, the weighted average interest rate on the outstanding borrowings under the Encina Credit Facility was 8.8%, 9.5%, and 9.7% respectively, and the average dollar amount of outstanding borrowings under the Encina Credit Facility was $22.3 million, $33.1 million and $37.9 million, respectively.

Live Oak Credit Facility

On March 27, 2024, the Company and its wholly owned special purpose subsidiary, SIF III, entered into a credit and security agreement (the “Live Oak Credit Agreement”), by and among SIF III, as borrower, the Company, as collateral manager and equity holder, the lenders from time to time parties thereto, Live Oak, as administrative agent and collateral agent, U.S. Bank National Association, as custodian, and U.S. Bank Trust Company, National Association, as collateral administrator, relating to Live Oak Credit Facility.

The Live Oak Credit Facility originally provided for borrowings in U.S. dollars in an aggregate amount of up to $50.0 million. During the first two years following the closing date, SIF III may request one or more increases in the commitment amount from $50.0 million to an amount not to exceed $150.0 million, subject to certain terms and conditions and a customary fee. The terms of the Live Oak Credit Agreement required a minimum drawn amount of $12.5 million at all times during the period ended March 27, 2025 and, thereafter, the greater of: (i) $25.0 million and (ii) 50% of the facility amount in effect at such time. The Live Oak Credit Facility matures on March 27, 2027. Advances are available during the term of the Live Oak Credit Facility and must be repaid in full at maturity. SIF III may request an extension of the maturity date by an additional one year, subject to the agreement of the lenders and an extension fee.

On June 14, 2024, the Company entered into the first amendment to the Live Oak Credit Agreement (the “Amendment”). The Amendment, among other things:

Advances under the Live Oak Credit Facility are subject to a borrowing base calculation, and the Live Oak Credit Facility has various eligibility criteria for loans to be included in the borrowing base. Advances under the Live Oak Credit Facility bear interest at a floating rate per annum equal to Adjusted Term SOFR plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s utilization. The Live Oak Credit Agreement also provides for an unused fee of 0.50% on the unused commitments. SIF III’s obligations to the lenders under the Live Oak Credit Facility are secured by a first priority security interest in substantially all of SIF III’s assets. In addition, SIF III’s obligations to the lenders under the Live Oak Credit Facility are secured by a pledge by the Company of its equity interests in SIF III, which is evidenced by the equity pledge agreement, dated as of March 27, 2024, by and between the Company, as pledgor, and Live Oak, as collateral agent for the benefit of the secured parties.

In connection with the Live Oak Credit Agreement, the Company entered into a loan sale and contribution agreement with SIF III, dated as of March 27, 2024, by and between the Company, as seller, and SIF III, as purchaser, pursuant to which the Company will sell or contribute certain loans held by the Company to SIF III to be used to support the borrowing base under the Live Oak Credit Facility. The Live Oak Credit Facility permits loan proceeds and excess cash in SIF III’s collection accounts to be distributed to us at any time based on three business days advance notice, subject to compliance with various conditions, including the absence of a default or event of default, the absence of an over-advance against the borrowing base and the absence of a violation of the financial covenant.

As of February 28, 2026 there was $37.5 million in outstanding borrowings under the Live Oak Credit Facility. During the applicable period, the Company was in compliance with all of the limitations and requirements under the Live Oak Credit Agreement.

For the year ended February 28, 2026 and February 28, 2025, we recorded $3.3 million and $1.9 million of interest expense related to the Live Oak Credit Facility, respectively, which includes commitment and administrative agent fees. For the year ended February 28, 2026 and February 28, 2025, we recorded $0.4 million and $0.3 million of deferred financing costs related to the Live Oak Credit Facility, respectively. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. For the year ended February 28, 2026 and February 28, 2025, the weighted average interest rate on the outstanding borrowings under the Live Oak Credit Facility was 8.2% and 9.1%, respectively, and the average dollar amount of outstanding borrowings under the Live Oak Credit Facility was $36.2 million and $18.0 million, respectively.

Our borrowing base under the Live Oak Credit Facility was $99.2 million subject to the Live Oak Credit Facility cap of $75.0 million at February 28, 2026. For purposes of determining the borrowing base, most assets are assigned the values set forth in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q filed with the SEC. Accordingly, the February 28, 2026 borrowing base relies upon the valuations set forth in the Quarterly Report on Form 10-Q for the period ended November 30, 2025. The valuations presented in this Annual Report on Form 10-K will not be incorporated into the borrowing base until after this Annual Report on Form 10-K is filed with the SEC.

Valley Credit Facility

On November 6, 2025, the Company entered into a Credit and Security Agreement (the “Valley Credit Agreement”) establishing an $85.0 million senior secured revolving credit facility with Valley, as administrative agent and as a lender, and certain other lenders, supported by loans held by SIF II and pledged as collateral to secure the obligations under the Valley Credit Facility. The terms of the Valley Credit Facility require a minimum drawn amount at all times equal to the greater of $25.0 million or 38% of the facility amount in effect at such time. The Valley Credit Facility matures on November 6, 2028. The Valley Credit Facility has numerous eligibility criteria for loans to be included in the borrowing base. The Valley Credit Agreement also requires SIF II to pay an unused fee on the amount by which the commitment amount exceeds outstanding principal amounts on each day at a rate per annum equal to 0.75% if the unused amount is greater than 62% of the commitment amount, or otherwise 0.50%.

In addition to any fees or other amounts payable under the terms of the Valley Credit Facility, an administrative agent fee per annum equal to $35,000 is payable annually in advance.

As of February 28, 2026, there were $32.5 million outstanding borrowings under the Valley Credit Facility. During the applicable periods, the Company was in compliance with all of the limitations and requirements under the Valley Credit Agreement. Financing costs of $1.4 million related to the Valley Credit Facility have been capitalized and are being amortized over the term of the facility, with all existing financing costs amortized through November 6, 2028.

For the period from November 6, 2025 through February 28, 2026, we recorded $0.8 million of interest expense related to the Valley Credit Facility, which includes commitment and administrative agent fees. For the period from November 6, 2025 through February 28, 2026, we recorded $0.03 million of deferred financing costs related to the Valley Credit Facility, including arranger fees. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. For the period from November 6, 2025 through February 28, 2026, the weighted average interest rate on the outstanding borrowings under the Valley Credit Facility was 6.8%, and the average dollar amount of outstanding borrowings under the Valley Credit Facility was $10.2 million.

The Valley Credit Facility contains limitations as to how borrowed funds may be used, such as restrictions on industry concentrations, asset size, weighted average life, currency denomination and collateral interests. The Valley Credit Facility also includes certain requirements relating to portfolio performance, the violation of which could result in the limit of further advances and, in some cases, result in an event of default if not cured in the prescribed period, allowing the lenders to accelerate repayment of amounts owed thereunder. Availability on the Valley Credit Facility is subject to a borrowing base calculation, with advance rates on eligible loans ranging from 25% to 75%. Advances under the Valley Credit Facility bear interest at a floating rate per annum equal to Term SOFR plus an applicable margin of 2.85%, with a SOFR Floor of 1.00%.

Our borrowing base under the Valley Credit Facility was $77.1 million subject to the Valley Credit Facility cap of $85.0 million at February 28, 2026. For purposes of determining the borrowing base, most assets will be assigned the values set forth in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q filed with the SEC. Accordingly, the February 28, 2026 borrowing base relies upon the valuations set forth in the Quarterly Report on Form 10-Q for the period ended November 30, 2025. The valuations presented in this Annual Report on Form 10-K will not be incorporated into the borrowing base until after this Annual Report on Form 10-K is filed with the SEC. 

SBA Debentures

The Company’s wholly owned subsidiaries, SBIC II LP and SBIC III LP, received SBIC licenses from the SBA on August 14, 2019 and September 29, 2022, respectively. Each of the SBIC Subsidiaries provide up to $175.0 million in long-term capital in the form of debentures guaranteed by the SBA. The Company’s wholly owned subsidiary, SBIC LP, repaid its outstanding debentures and subsequently surrendered its license to the SBA on January 3, 2024, providing the Company access to all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the Company. Under current SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million. 

SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to eligible small businesses and invest in the equity securities of small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $24.0 million and have average annual fully taxed net income not exceeding $8.0 million for the two most recent fiscal years. In addition, an SBIC must devote 25.0% of its investment activity to “smaller enterprises” as defined by the SBA. A smaller enterprise is one that has a net worth not exceeding $6.0 million and has an average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services.

The SBIC Subsidiaries are able to borrow funds from the SBA against each SBIC’s regulatory capital (which generally approximates equity capital in the respective SBIC). The SBIC Subsidiaries are subject to customary regulatory requirements including but not limited to, a periodic examination by the SBA and requirements to maintain certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure that the SBIC Subsidiaries will receive SBA-guaranteed debenture funding, which is dependent upon the SBIC Subsidiaries complying with SBA regulations and policies. The SBA, as a creditor, will have a superior claim to each SBIC Subsidiary’s assets over the Company’s stockholders and debtholders in the event that the Company liquidates such SBIC Subsidiary or the SBA exercises its remedies under the SBA-guaranteed debentures issued by the SBIC Subsidiary upon an event of default.

The Company received exemptive relief from the SEC to permit it to exclude the debentures guaranteed by the SBA of the SBIC Subsidiaries from the definition of senior securities in the asset coverage test under the 1940 Act. This allows the Company increased flexibility under the asset coverage requirement by permitting it to borrow up to $350.0 million more than it would otherwise be able to absent the receipt of this exemptive relief.

As of February 28, 2026, we have funded SBIC II LP and SBIC III LP with an aggregate total of equity capital of $87.5 million and $87.5 million, respectively, and have $160.0 million in SBA-guaranteed debentures outstanding, of which $84.0 million was held by SBIC II LP and $76.0 million held in SBIC III LP.

At February 28, 2026 and February 28, 2025, there was $160.0 million and $170.0 million outstanding of SBA debentures, respectively. The carrying amount of the amount outstanding of SBA debentures approximates its fair value, which is based on a waterfall analysis showing adequate collateral coverage and would be classified as a Level 3 liability within the fair value hierarchy. Financing costs of $5.0 million, $6.0 million, and $1.2 million related to the SBA debentures issued by SBIC LP, SBIC II LP and SBIC III LP, respectively, have been capitalized and are being amortized over the term of the commitment and drawdown. During the year ended February 28, 2026, the Company repaid $10.0 million of SBA debentures in SBIC II LP, resulting in a realized loss on extinguishment of $0.7 million related to the acceleration of deferred debt financing costs.

For the years ended February 28, 2026, February 28, 2025 and February 29, 2024, we recorded $5.1 million, $7.1 million and $6.2 million of interest expense related to the SBA debentures, respectively. For the years ended February 28, 2026, February 28, 2025 and February 29, 2024, we recorded $0.7 million, $0.9 million and $1.0 million of amortization of deferred financing costs related to the SBA debentures, respectively. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. The weighted average interest rate during the years ended February 28, 2026, February 28, 2025 and February 29, 2024 on the outstanding borrowings of the SBA debentures was 3.06%, 3.32% and 3.08%, respectively. During the years ended February 28, 2026 and February 28, 2025, the average dollar amount of SBA debentures outstanding was $167.5 million and $213.8 million, respectively.

Unsecured Notes

7.75% 2025 Notes

On July 9, 2020, the Company issued $5.0 million in aggregate principal amount of 7.75% fixed-rate notes due in 2025 (the “7.75% 2025 Notes”) for net proceeds of $4.8 million after deducting underwriting commissions of approximately $0.2 million. Offering costs incurred were approximately $0.1 million. Interest on the 7.75% 2025 Notes was paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.75% per year. The 7.75% 2025 Notes matured and were paid off on July 9, 2025.

As of February 28, 2026, the total amount of 7.75% 2025 Notes outstanding was $0.0 million. The carrying amount of the outstanding 7.75% 2025 Notes had a fair value of $0.0 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy. As of February 28, 2025, the total amount of 7.75% 2025 Notes outstanding was $5.0 million, and they had a fair value of $5.0 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy.

For the years ended February 28, 2026 and February 28, 2025, we recorded $0.1 million and $0.4 million, respectively, of interest expense and $0.02 million and $0.05 million, respectively, of amortization of deferred financing costs related to the 7.75% 2025 Notes. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. For the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 7.75% 2025 Notes outstanding was $1.8 million and $5.0 million, respectively.

6.25% 2027 Notes

On December 29, 2020, the Company issued $5.0 million in aggregate principal amount of 6.25% fixed-rate notes due in 2027 (the “Existing 6.25% 2027 Notes”). Offering costs incurred were approximately $0.1 million. On January 28, 2021, the Company issued an additional $10.0 million in aggregate principal amount of the 6.25% 2027 Notes for net proceeds of $9.7 million after deducting underwriting commissions of approximately $0.3 million. Offering costs incurred were approximately $0.1 million on the additional $10.0 million aggregate principal amount, (the “Additional 6.25% 2027 Notes” and together with the Existing 6.25% 2027 Notes, the “6.25% 2027Notes”). The Additional 6.25% 2027 Notes are treated as a single series with the existing 6.25% 2027 Notes under the indenture and have the same terms as the existing 6.25% 2027 Notes. Interest on the 6.25% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.25% per year. The 6.25% 2027 Notes mature on December 29, 2027 and may be redeemed in whole or in part at any time or from time to time at the Company’s option, on or after December 29, 2024. The net proceeds from the offering were used for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing costs of $0.5 million related to the 6.25% 2027 Notes have been capitalized and are being amortized over the term of the Notes.

As of February 28, 2026, the total amount of 6.25% 2027 Notes outstanding was $15.0 million. The 6.25% 2027 Notes are not listed and have a par value of $25.00 per note. The carrying amount of the outstanding 6.25% 2027 Notes had a fair value of $14.8 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy. As of February 28, 2025, the total amount of 6.25% 2027 Notes outstanding was $15.0 million, and they had a fair value of $14.2 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy.

For the years ended February 28, 2026 and February 28, 2025, we recorded $0.9 million and $0.9 million, respectively, of interest expense and $0.07 million and $0.07 million, respectively, of amortization of deferred financing costs related to the 6.25% 2027 Notes. Interest expense and amortization of deferred financing cost are reported as interest and debt financing expense on the consolidated statements of operations. For the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 6.25% 2027 Notes outstanding was $15.0 million and $15.0 million, respectively.

4.375% 2026 Notes

On March 10, 2021, the Company issued $50.0 million in aggregate principal amount of the 4.375% fixed-rate notes due 2026 (the “Existing 4.375% 2026 Notes”) for net proceeds of $49.0 million after deducting underwriting commissions of approximately $1.0 million. Offering costs incurred were approximately $0.3 million.  On July 15, 2021, the Company issued an additional $125.0 million in aggregate principal amount of the 4.375% 2026 Notes (the “Additional 4.375% 2026 Notes” and together with the Existing 4.375% 2026 Notes, the “4.375% 2026 Notes”) for net proceeds for approximately $123.8 million, based on the public offering price of 101.00% of the aggregate principal amount of the Additional 4.375% 2026 Notes, after deducting the underwriting commissions of $2.5 million. Offering costs incurred were approximately $0.2 million. The Additional 4.375% 2026 Notes were treated as a single series with the existing 4.375% 2026 Notes under the indenture and had the same terms as the existing 4.375% 2026 Notes. Interest on the 4.375% 2026 Notes was paid semi-annually in arrears on February 28 and August 28, at a rate of 4.375% per year. The 4.375% 2026 Notes matured and were paid off on February 28, 2026.

As of February 28, 2026, the total amount of 4.375% 2026 Notes outstanding was $0.0 million. The carrying amount of the outstanding 4.375% 2026 Notes had a fair value of $0.0 million, which was based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy. As of February 28, 2025, the total amount of 4.375% 2026 Notes outstanding was $175.0 million, and they had a fair value of $163.4 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy.

For the years ended February 28, 2026 and February 28, 2025, we recorded $7.6 million and $7.7 million, respectively, of interest expense, $0.6 million and $0.8 million, respectively, of amortization of deferred financing costs and $0.3 million and $0.3 million, respectively, of amortization of premium on issuance of 4.375% Notes due 2026 (inclusive of the issuance of the Additional 4.375% 2026 Notes). Interest expense, amortization of deferred financing costs and amortization of premium on issuance of notes are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 4.375% 2026 Notes outstanding was $174.5 million and $175.0 million respectively.

4.35% 2027 Notes

On January 19, 2022, the Company issued $75.0 million in aggregate principal amount of 4.35% fixed-rate notes due in 2027 (the “4.35% 2027 Notes”) for net proceeds of $73.0 million, based on the public offering price of 99.317% of the aggregate principal amount of the 4.35% 2027 Notes, after deducting the underwriting commissions of approximately $1.5 million. Offering costs incurred were approximately $0.3 million. Interest on the 4.35% 2027 Notes is paid semi-annually in arrears on February 28 and August 28, at a rate of 4.35% per year. The 4.35% 2027 Notes mature on February 28, 2027 and may be redeemed in whole or in part at the Company’s option at any time prior to November 28, 2026, at par plus a “make-whole” premium, and thereafter at par. The net proceeds from the offering were used for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing costs of $1.8 million related to the 4.35% 2027 Notes have been capitalized and are being amortized over the term of the 4.35% 2027 Notes.

As of February 28, 2026, the total amount of 4.35% 2027 Notes outstanding was $75.0 million. The 4.35% 2027 Notes are not listed. The carrying amount of the outstanding 4.35% 2027 Notes had a fair value of $72.7 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy. As of February 28, 2025, the total amount of 4.35% 2027 Notes outstanding was $75.0 million, and they had a fair value of $70.3 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy.

For the years ended February 28, 2026 and February 28, 2025, we recorded $3.3 million and $3.3 million, respectively, of interest expense, $0.3 million and $0.3 million, respectively, of amortization of deferred financing costs and $0.1 million and $0.1 million, respectively, of amortization of discount on issuance of 4.35% Notes due 2027 (inclusive of the issuance of the Additional 4.35% 2027 Notes). Interest expense, amortization of deferred financing costs and amortization of discount on issuance of notes are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 4.35% 2027 Notes outstanding was $75.0 million and $75.0 million respectively.

6.00% 2027 Notes

On April 27, 2022, the Company issued $87.5 million in aggregate principal amount of 6.00% fixed-rate notes due 2027 (the “Existing 6.00% 2027 Notes”) for net proceeds of $84.8 million after deducting underwriting commissions of approximately $2.7 million. Offering costs incurred were approximately $0.1 million. On May 10, 2022, the underwriters partially exercised their option to purchase an additional $10.0 million in aggregate principal amount of the Existing 6.00% 2027 Notes for net proceeds to the Company were $9.7 million after deducting underwriting commissions of approximately $0.3 million. On August 15, 2022, the Company issued an additional $8.0 million in aggregate principal amount of the Existing 6.00% 2027 Notes (the “Additional 6.00% 2027 Notes” and together with the Existing 6.00% 2027 Notes, the “6.00% 2027 Notes”) for net proceeds of $7.8 million, based on the public offering price of 97.80% of the aggregate principal amount of the 6.00% 2027 Notes. Additional offering costs incurred were approximately $0.2 million. The Additional 6.00% 2027 Notes are treated as a single series with the Existing 6.00% 2027 Notes under the indenture and have the same terms as the Existing 6.00% 2027 Notes. Interest on the 6.00% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.00% per year. The 6.00% 2027 Notes mature on April 30, 2027 and commencing April 27, 2024, may be redeemed in whole or in part at any time or from time to time at the Company’s option. The net proceeds from the offering were used for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing costs of $3.3 million related to the 6.00% 2027 Notes have been capitalized and are being amortized over the term of the 6.00% 2027 Notes. The 6.00% 2027 Notes are listed on the NYSE under the trading symbol “SAT” with a par value of $25.00 per note.

As of February 28, 2026, the total amount of 6.00% 2027 Notes outstanding was $105.5 million. The 6.00% 2027 Notes are listed on the NYSE under the trading symbol “SAT” with a par value of $25.00 per note. As of February 28, 2026, the carrying amount and fair value of the 6.00% 2027 Notes was $105.5 million and $104.4 million, respectively. The fair value of the 6.00% 2027 Notes, which are publicly traded, is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2025, the carrying amount and fair value of the 6.00% 2027 Notes was $105.5 million and $104.1 million, respectively.

For the years ended February 28, 2026 and February 28, 2025, we recorded $6.3 million and $6.3 million, respectively, of interest expense, $0.7 million and $0.7 million, respectively, of amortization of deferred financing costs related to the 6.00% Notes due 2027. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 6.00% 2027 Notes outstanding was $105.5 million and $105.5 million respectively.

7.00% 2025 Notes 

On September 8, 2022, the Company issued $12.0 million in aggregate principal amount of 7.00% fixed-rate notes due 2025 (the “7.00% 2025 Notes”) for net proceeds of $11.6 million after deducting underwriting discounts of approximately $0.4 million. Additional offering costs incurred were approximately $0.05 million. Interest on the 7.00% 2025 Notes was paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.00% per year. The 7.00% 2025 Notes matured and were paid off on September 8, 2025. Financing costs of $0.04 million related to the 7.00% 2025 Notes have been capitalized and are being amortized over the term of the 7.00% 2025 Notes.

As of February 28, 2026, the total amount of 7.00% 2025 Notes outstanding was $0.0 million. As of February 28, 2025, the total amount of 7.00% 2025 Notes outstanding was $12.0 million, and they had a fair value of $11.9 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy.

For the years ended February 28, 2026 and February 28, 2025, we recorded $0.4 million and $0.8 million, respectively, of interest expense, $0.01 million and $0.01 million, respectively, of amortization of deferred financing costs and $0.1 million and $0.1 million, respectively, of amortization of discount on issuance of 7.00% Notes due 2025. Interest expense, amortization of deferred financing costs and amortization of discount on issuance of notes are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 7.00% 2025 Notes outstanding was $6.3 million and $12.0 million respectively.

8.00% 2027 Notes

On October 27, 2022, the Company issued $40.0 million in aggregate principal amount of our 8.00% fixed-rate notes due 2027 (the “8.00% 2027 Notes”) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were approximately $0.2 million. On November 10, 2022, the underwriters partially exercised their option to purchase an additional $6.0 million in aggregate principal amount of the 8.00% 2027 Notes for net proceeds to the Company of $5.8 million after deducting underwriting commissions of approximately $0.2 million. Interest on the 8.00% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.00% per year. The 8.00% 2027 Notes mature on October 31, 2027 and commencing October 27, 2024, may be redeemed in whole or in part at any time or from time to time at the Company’s option. The net proceeds from the offering were used for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing costs of $1.7 million related to the 8.00% 2027 Notes have been capitalized and are being amortized over the term of the 8.00% 2027 Notes.

As of February 28, 2026, the total amount of 8.00% 2027 Notes outstanding was $46.0 million. The 8.00% 2027 Notes are listed on the NYSE under the trading symbol “SAJ” with a par value of $25.00 per note. As of February 28, 2026, the carrying amount and fair value of the 8.00% 2027 Notes was $46.0 million and $46.4 million, respectively. The fair value of the 8.00% 2027 Notes, which are publicly traded, is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2025, the carrying amount and fair value of the 8.00% 2027 Notes was $46.0 million and $46.5 million, respectively.

For the years ended February 28, 2026 and February 28, 2025, the Company recorded $3.7 million and $3.7 million, respectively, of interest expense and $0.3 million and $0.3 million, respectively, of amortization of deferred financing costs related to the 8.00% 2027 Notes. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 8.00% 2027 Notes outstanding was $46.0 million and $46.0 million, respectively.

8.125% 2027 Notes

On December 13, 2022, the Company issued $52.5 million in aggregate principal amount of 8.125% fixed-rate notes due 2027 (the “8.125% 2027 Notes”) for net proceeds of $50.8 million after deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.1 million. On December 21, 2022, the underwriters fully exercised their option to purchase an additional $7.875 million in aggregate principal amount of the 8.125% 2027 Notes for net proceeds to the Company of $7.6 million after deducting underwriting commissions of approximately $0.2 million. Interest on the 8.125% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.125% per year. The 8.125% 2027 Notes mature on December 31, 2027 and commencing December 13, 2024, may be redeemed in whole or in part at any time or from time to time at the Company’s option. The net proceeds from this offering were used to make investments in middle-market companies (including investments made through our SBIC Subsidiaries) in accordance with the Company’s investment objective and strategies and for general corporate purposes. Financing costs of $2.0 million related to the 8.125% 2027 Notes have been capitalized and are being amortized over the term of the 8.125% 2027 Notes.

As of February 28, 2026, the total amount of 8.125% 2027 Notes outstanding was $60.4 million. The 8.125% 2027 Notes are listed on the NYSE under the trading symbol “SAY” with a par value of $25.00 per note. As of February 28, 2026, the carrying amount and fair value of the 8.125% 2027 Notes was $60.4 million and $60.7 million, respectively. The fair value of the 8.125% 2027 Notes, which are publicly traded, is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2025, the carrying amount and fair value of the 8.125% 2027 Notes was $60.4 million and $61.0 million, respectively.

For the years ended February 28, 2026 and February 28, 2025, the Company recorded $4.9 million and $4.9 million, respectively, of interest expense and $0.4 million and $0.4 million, respectively, of amortization of deferred financing costs related to the 8.125% 2027 Notes. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 8.125% 2027 Notes outstanding was $60.4 million and $60.4 million, respectively.

8.75% 2025 Notes

On March 31, 2023, the Company issued $10.0 million in aggregate principal amount of 8.75% fixed-rate notes due 2024 (the “8.75% 2025 Notes”) for net proceeds of $9.7 million after deducting underwriting discounts of approximately $0.4 million. On May 1, 2023, the Company issued an additional $10.0 million in aggregate principal amount of the 8.75% 2025 Notes for net proceeds of $9.7 million after deducting underwriting discounts of approximately $0.4 million. Offering costs incurred were approximately $0.03 million. Interest on the 8.75% 2025 Notes was paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.75% per year. On February 2, 2024, pursuant to the terms of the indenture governing the 8.75% 2025 Notes, the Company elected to exercise its option to extend the maturity date of the 8.75% 2025 Notes from March 31, 2024 to March 31, 2025. The 8.75% 2025 Notes were paid off in full at maturity on March 31, 2025.

As of February 28, 2026, the total amount of 8.75% 2025 Notes outstanding was $0.0 million. As of February 28, 2025, the total amount of 8.75% 2025 Notes outstanding was $20.0 million, and they had a fair value of $20.1 million.

For the years ended February 28, 2026 and February 28, 2025, we recorded $0.1 million and $1.5 million, respectively, of interest expense, $0.01 million and $0.04 million, respectively, of amortization of deferred financing costs and $0.01 million and $0.1 million, respectively, of amortization of discount on issuance of 8.75% Notes due 2025. Interest expense, amortization of deferred financing costs and amortization of discount on issuance of notes are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 8.75% 2025 Notes outstanding was $1.6 million and $20.0 million respectively.

8.50% 2028 Notes

On April 14, 2023, the Company issued $50.0 million in aggregate principal amount of 8.50% fixed-rate notes due 2028 (the “8.50% 2028 Notes”) for net proceeds of $48.4 million after deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.03 million. On April 26, 2023, the underwriters fully exercised their option to purchase an additional $7.5 million in aggregate principal amount of the 8.50% 2028 Notes for net proceeds to the Company of $7.3 million after deducting underwriting commissions of approximately $0.2 million. Interest on the 8.50% 2028 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.50% per year.  The 8.50% 2028 Notes mature on April 15, 2028, and commencing April 14, 2025, may be redeemed in whole or in part at any time or from time to time at the Company’s option. Net proceeds from this offering were used to repay a portion of the outstanding indebtedness under the Encina Credit Facility, make investments in middle-market companies (including investments made through our SBIC Subsidiaries) in accordance with the Company’s investment objective and strategies and for general corporate purposes. Financing costs of $2.0 million related to the 8.50% 2028 Notes have been capitalized and are being amortized over the term of the 8.50% 2028 Notes.

As of February 28, 2026, the total amount of 8.50% 2028 Notes outstanding was $57.5 million. The 8.50% 2028 Notes are listed on the NYSE under the trading symbol “SAZ” with a par value of $25.00 per note. As of February 28, 2026, the carrying amount and fair value of the 8.50% 2028 Notes was $57.5 million and $58.1 million, respectively. The fair value of the 8.50% 2028 Notes, which are publicly traded, is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2025, the carrying amount and fair value of the 8.50% 2028 Notes was $57.5 million and $58.3 million, respectively.

For the years ended February 28, 2026 and February 28, 2025, we recorded $4.9 million and $4.9 million, respectively, of interest expense and $0.4 million and $0.4 million, respectively, of amortization of deferred financing costs of 8.50% 2028 Notes. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 28, 2026 and February 28, 2025, the average dollar amount of 8.50% 2028 Notes outstanding was $57.5 million and $57.5 million respectively.

7.25% 2030 Notes

On January 23, 2026, the Company issued $50.0 million in aggregate principal amount of 7.25% fixed-rate notes due 2030 (the “7.25% 2030 Notes”) for net proceeds of approximately $48.8 million, based on an offering price of 99.117% per Note, after deducting the placement agent fee and estimated offering expenses of approximately $1.2 million. Interest on the 7.25% 2030 Notes is paid semi-annually in arrears on May 1 and November 1, at a rate of 7.25% per year, commencing on May 1, 2026. The 7.25% 2030 Notes will mature on May 1, 2030 and may be redeemed in whole or in part at the Company’s option at any time prior to January 23, 2028 at par plus a “make-whole” premium, and thereafter at par. Net proceeds from this offering were used to pay off the Company’s outstanding 4.375% 2026 Notes and for general corporate purposes. Financing costs of $0.8 million related to the 7.25% 2030 Notes have been capitalized and are being amortized over the term of the 7.25% 2030 Notes.

As of February 28, 2026, the total amount of 7.25% 2030 Notes outstanding was $50.0 million. The 7.25% 2030 Notes are not listed and have a par value of $1,000 per note. As of February 28, 2026, the carrying amount and fair value of the 7.25% 2030 Notes was $50.0 million and $49.6 million, respectively, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy.

For the year ended February 28, 2026, the Company recorded $0.4 million of interest expense and $0.03 million of amortization of deferred financing costs related to the 7.25% 2030 Notes. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. During the year ended the average dollar amount of 7.25% 2030 Notes outstanding was $5.1 million.

7.50% 2031 Notes

On February 6, 2026, the Company issued $100.0 million in aggregate principal amount of 7.50% fixed-rate notes due 2031 (the “7.50% 2031 Notes”) for net proceeds were approximately $96.4 million, after deducting the underwriting discount of approximately $3.1 million and estimated offering costs of approximately $0.5 million. Interest on the 7.50% 2031 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.50% per year, commencing May 31, 2026. The 7.50% 2031 Notes mature on February 6, 2031 and, commencing February 6, 2028, may be redeemed in whole or in part at any time or from time to time at the Company’s option. Net proceeds from this offering, together with available cash, were used to pay off the outstanding 4.375% 2026 Notes at maturity on February 28, 2026. Financing costs of $3.3 million related to the 7.50% 2031 Notes have been capitalized and are being amortized over the term of the 7.50% 2031 Notes. The 7.50% 2031 Notes are listed on the NYSE under the trading symbol “SAV” with a par value of $25.00 per note.

As of February 28, 2026, the total amount of 7.50% 2031 Notes outstanding was $100.0 million. The 7.50% 2031 Notes are listed on the NYSE with a par value of $25.00 per note. As of February 28, 2026, the carrying amount and fair value of the 7.50% 2031 Notes was $100.0 million and $101.7 million, respectively. The fair value of the 7.50% 2031 Notes, which are publicly traded, is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy.

For the year ended February 28, 2026, the Company recorded $0.5 million of interest expense and $0.04 million of amortization of deferred financing costs related to the 7.50% 2031 Notes. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. During the year ended February 28, 2026, the average dollar amount of 7.50% 2031 Notes outstanding was $6.3 million.

Senior Securities

Information about our senior securities is shown in the following table as of February 28/29 for the fiscal years indicated in the table, unless otherwise noted. See Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial condition, liquidity and capital resources” for more detailed information regarding the senior securities.