v3.26.1
Borrowings
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Borrowings

Note 7. Borrowings

Banc of California Credit Facility: On September 12, 2018, the Company entered into the Banc of California Credit Facility. The Banc of California Credit Facility, as amended, bore interest at a variable rate of the Prime Rate plus a 0.25% margin, with a 5.00% floor, and included an annual commitment fee of 0.50%.

On June 29, 2026, the Company terminated the Business Loan Agreement with Banc of California, which provided the Company with the Banc of California Credit Facility, that provided for borrowings to the Company in an aggregate principal amount up to $7,500,000. In connection with the termination of the facility, the Company recognized a loss on extinguishment of debt of $25,822 related to the acceleration and write-off of deferred financing costs.

For the three and six months ended June 30, 2026 and 2025, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the Banc of California Credit Facility were as follows:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Stated interest expense

 

$

321

 

 

$

99,483

 

 

$

31,921

 

 

$

189,081

 

Amortization of debt issuance costs

 

 

10,001

 

 

 

20,236

 

 

 

21,173

 

 

 

40,460

 

Total interest and debt financing costs

 

$

10,322

 

 

$

119,719

 

 

$

53,094

 

 

$

229,541

 

Cash paid for interest expense

 

$

1,566

 

 

$

100,140

 

 

$

32,642

 

 

$

192,720

 

Effective interest rate(1)

 

n/m

 

 

 

9.46

%

 

 

11.60

%

 

 

9.46

%

Average outstanding balance

 

$

18,132

 

 

$

5,078,187

 

 

$

923,204

 

 

$

4,894,834

 

 

(1) Not meaningful due to a minimal average outstanding balance relative to the size of the total commitment and the amount of commitment fees incurred during the period.

Unsecured Note: On November 27, 2019, the Company entered into the Note Purchase Agreement under which the Company sold the Unsecured Note.

On September 23, 2021, the Company executed an amendment to the Note Purchase Agreement. The amendment, among other things: (i) extended the scheduled maturity date of the Unsecured Note from November 27, 2024 to November 27, 2026; (ii) reduced the coupon rate of the Unsecured Note from 6.50% to 5.50%; and (iii) reduced the default rate of the Unsecured Note, if applicable, from 8.50% to 7.50%.

On July 22, 2026, the Company entered into an amendment (the “NPA Amendment”) to the Note Purchase Agreement. The NPA Amendment modified certain provisions of the Note Purchase Agreement in connection with the Company’s Plan of Sale and Dissolution. The NPA Amendment, among other things, restricts the Company from repurchasing shares of its common stock and increasing its current monthly distribution rate above $0.01 per common share until the Unsecured Note is fully repaid and terminated. See “Note 10—Subsequent Events—Amendment to Note Purchase Agreement” for additional information.

On July 28, 2026, the Company caused a notice to be issued to the holder of the Unsecured Note regarding the exercise of its option to partially redeem $4,000,000 of the outstanding Unsecured Note on August 10, 2026.

The Company may, at its option, upon notice to the purchaser, redeem at any time all, or from time to time, any part of, the Unsecured Note, in an amount not less than 10% of the aggregate principal amount of the Unsecured Note then outstanding in the case of a partial redemption, at 100% of the principal amount so redeemed, together with interest on such Unsecured Note accrued to, but excluding, the date of redemption, and with no redemption settlement amount paid by the Company in connection with any such redemption. Fees and legal costs incurred with the Unsecured Note are amortized over the life of the facility.

The Note Purchase Agreement, as amended, contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants, such as information reporting, maintenance of the Company’s status as a BDC within the meaning of the 1940 Act and a minimum asset coverage ratio. The Note Purchase Agreement, as amended, also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, certain judgments and orders and certain events of bankruptcy.

On each of June 30, 2026 and December 31, 2025, the Company’s Unsecured Note had an aggregate outstanding principal of $15,000,000.

For the three and six months ended June 30, 2026 and 2025, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the Unsecured Note were as follows:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Stated interest expense

 

$

206,250

 

 

$

206,250

 

 

$

412,500

 

 

$

412,500

 

Amortization of debt issuance costs

 

 

18,172

 

 

 

18,172

 

 

 

36,344

 

 

 

36,344

 

Total interest and debt financing costs

 

$

224,422

 

 

$

224,422

 

 

$

448,844

 

 

$

448,844

 

Cash paid for interest expense

 

$

206,250

 

 

$

206,250

 

 

$

412,500

 

 

$

412,500

 

Effective interest rate

 

 

5.98

%

 

 

5.98

%

 

 

5.98

%

 

 

5.98

%

Average outstanding balance

 

$

15,000,000

 

 

$

15,000,000

 

 

$

15,000,000

 

 

$

15,000,000

 

 

For the three and six months ended June 30, 2026 and 2025, the average dollar borrowings and weighted average effective interest rate on the Company’s outstanding borrowings were as follows:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Average dollar borrowings

 

$

15,018,132

 

 

$

20,078,187

 

 

$

15,923,204

 

 

$

19,894,834

 

Weighted average effective interest rate

 

 

6.27

%

 

 

6.87

%

 

 

6.36

%

 

 

6.88

%