In accordance with the authoritative guidance on fair value measurements and disclosures under U.S. GAAP, the Company discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 — Quoted prices in markets that are not considered to be active or financial instruments for which significant inputs are observable, either directly or indirectly;

Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by management.

The Company considers whether the volume and level of activity for the asset or liability have significantly decreased and identifies transactions that are not orderly in determining fair value. Accordingly, if the Company determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value. Valuation techniques such as an income approach might be appropriate to supplement or replace a market approach in those circumstances.

At September 30, 2022, the Company had investments in 89 portfolio companies. The total cost and fair value of the investments were $899,059,872 and $871,733,280, respectively. The composition of our investments as of September 30, 2022 is as follows:

(1)

Includes unitranche investments, which account for 3.0% of our portfolio at fair value. Unitranche structures may combine characteristics of first lien senior secured as well as second lien and/or subordinated loans. Our unitranche loans will expose us to the risks associated with the second lien and subordinated loans to the extent we invest in the “last-out” tranche.

At December 31, 2021, the Company had investments in 73 portfolio companies. The total cost and fair value of the investments were $785,005,957 and $772,873,326 respectively. The composition of our investments as of December 31, 2021 was as follows:


	Cost		Fair Value
Senior Secured – First Lien⁽¹⁾	$	652,561,144	$	646,352,935
Senior Secured – Second Lien		79,806,598		56,733,110
Unsecured Debt		5,030,143		4,883,854
Equity		47,608,072		64,903,427
Total Investments	$	785,005,957	$	772,873,326

(1)

Includes unitranche investments, which account for 1.6% of our portfolio at fair value. Unitranche structures may combine characteristics of first lien senior secured as well as second lien and/or subordinated loans. Our unitranche loans will expose us to the risks associated with the second lien and subordinated loans to the extent we invest in the “last-out” tranche.

The Company’s investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements. As of September 30, 2022 and December 31, 2021, the Company had 49 and 32 of such investments with aggregate unfunded commitments of $30,269,900 and $30,982,734, respectively. The Company maintains sufficient liquidity (through cash on hand and available borrowings under the Credit Facility) to fund such unfunded loan commitments should the need arise.

The aggregate gross unrealized appreciation and depreciation and the aggregate cost and fair value of the Company’s portfolio company securities as September 30, 2022 and December 31, 2021 were as follows:


	2022		2021
Aggregate cost of portfolio company securities	$	899,059,872	$	785,005,957
Gross unrealized appreciation of portfolio company securities		30,662,296		27,283,421
Gross unrealized depreciation of portfolio company securities		(57,988,888)		(39,416,052)
Aggregate fair value of portfolio company securities	$	871,733,280	$	772,873,326

The fair values of our investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of September 30, 2022 are as follows:


	Quoted Prices
	in Active
	Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
	Securities		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Senior Secured – First Lien	$	—	$	—	$	742,272,654	$	742,272,654
Senior Secured – Second Lien		—		—		58,220,675		58,220,675
Unsecured Debt		—		—		4,760,750		4,760,750
Equity		—		—		66,479,201		66,479,201
Total Investments	$	—	$	—	$	871,733,280	$	871,733,280

The fair values of our investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of December 31, 2021 are as follows:


	Quoted Prices
	in Active
	Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
	Securities		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Senior Secured – First Lien	$	—	$	—	$	646,352,935	$	646,352,935
Senior Secured – Second Lien		—		—		56,733,110		56,733,110
Unsecured Debt		—		—		4,883,854		4,883,854
Equity		—		—		64,903,427		64,903,427
Total Investments	$	—	$	—	$	772,873,326	$	772,873,326

The aggregate values of Level 3 portfolio investments change during the nine months ended September 30, 2022 are as follows:


	Senior Secured		Senior Secured
	Loans-First		Loans-Second		Unsecured
	Lien		Lien		Debt		Equity		Total
Fair value at beginning of period	$	646,352,935	$	56,733,110	$	4,883,854	$	64,903,427	$	772,873,326
Purchases of investments		168,278,616		4,900,000		83,511		7,694,683		180,956,810
Payment-in-kind interest		618,968		—		391,093		—		1,010,061
Sales and redemptions		(62,655,976)		—		—		(11,897,663)		(74,553,639)
Realized gains		(3,930,891)		—		—		8,731,852		4,800,961
Change in unrealized depreciation included in earnings⁽¹⁾		(5,691,477)		(3,557,615)		(607,983)		(2,953,098)		(12,810,173)
Change in unrealized depreciation on foreign currency included in earnings		(2,383,786)		—		—		—		(2,383,786)
Amortization of premium and accretion of discount, net		1,684,265		145,180		10,275		—		1,839,720
Fair value at end of period	$	742,272,654	$	58,220,675	$	4,760,750	$	66,479,201	$	871,733,280

(1)	Includes reversal of positions during the nine months ended September 30, 2022.

There were no Level 3 transfers during the nine months ended September 30, 2022.

The aggregate values of Level 3 portfolio investments change during the year ended December 31, 2021 are as follows:


	Senior Secured		Senior Secured
	Loans-First		Loans-Second		Unsecured
	Lien		Lien		Debt		Equity		Total
Fair value at beginning of period	$	508,673,064	$	70,720,186	$	21,191,245	$	52,840,000	$	653,424,495
Purchases of investments		354,637,555		965,250		11,705,915		22,105,811		389,414,531
Payment-in-kind interest		521,595		—		417,435		—		939,030
Sales and redemptions		(214,319,978)		(13,161,428)		(29,384,595)		(33,210,915)		(290,076,916)
Realized gains (losses)		1,475,577		(1,781,665)		—		23,993,443		23,687,355
Change in unrealized (depreciation) appreciation included in earnings⁽¹⁾		(6,821,212)		(157,390)		875,354		(824,912)		(6,928,160)
Amortization of premium and accretion of discount, net		2,186,334		148,157		78,500		—		2,412,991
Fair value at end of period	$	646,352,935	$	56,733,110	$	4,883,854	$	64,903,427	$	772,873,326

(1)	Includes reversal of positions during the twelve months ended December 31, 2021.

There were no Level 3 transfers during the twelve months ended December 31, 2021.

The following is a summary of geographical concentration of our investment portfolio as of September 30, 2022:


					% of Total
	Cost		Fair Value		Investments
Texas	$	201,139,725	$	179,543,296	20.60	%
California		161,803,119		159,142,278	18.26	%
Illinois		66,129,076		60,270,478	6.91	%
Florida		56,001,786		55,461,152	6.36	%
Arizona		43,211,187		43,543,647	4.99	%
Pennsylvania		42,867,943		41,965,443	4.81	%
Ohio		34,745,618		37,284,222	4.28	%
Wisconsin		35,829,829		32,737,796	3.75	%
Washington		29,022,571		28,411,087	3.26	%
New Jersey		25,391,042		25,077,935	2.88	%
District of Columbia		17,442,141		20,718,474	2.38	%
Georgia		10,794,107		19,016,228	2.18	%
South Carolina		19,293,358		19,020,058	2.18	%
United Kingdom		21,662,273		16,880,158	1.94	%
Maryland		16,893,052		16,738,333	1.92	%
Minnesota		16,903,698		15,915,549	1.83	%
New York		11,427,678		15,055,505	1.73	%
Colorado		15,265,769		14,555,303	1.67	%
Indiana		14,334,657		14,334,657	1.64	%
Canada		13,354,136		13,244,350	1.52	%
North Carolina		10,477,022		10,621,949	1.22	%
Massachusetts		10,231,602		10,567,200	1.21	%
Idaho		10,456,322		10,238,234	1.17	%
Missouri		9,597,884		10,117,698	1.16	%
Virginia		500,000		1,100,000	0.13	%
Michigan		174,753		172,250	0.02	%
Puerto Rico		4,109,524		—	—	%
	$	899,059,872	$	871,733,280	100.00	%

The following is a summary of geographical concentration of our investment portfolio as of December 31, 2021:


					% of Total
					Investments
	Cost		Fair Value		at fair value
California	$	153,793,390	$	157,446,299	20.37	%
Texas		161,550,893		142,657,160	18.46	%
Illinois		69,780,236		71,066,882	9.20	%
Pennsylvania		42,866,707		42,604,002	5.51	%
Washington		41,067,458		40,790,941	5.28	%
Ohio		36,551,789		38,218,517	4.94	%
Arizona		31,165,320		31,117,284	4.03	%
New York		25,161,998		27,334,823	3.54	%
Wisconsin		25,880,018		25,893,643	3.35	%
New Jersey		25,518,474		23,548,670	3.05	%
United Kingdom		21,320,828		19,537,231	2.53	%
Georgia		11,066,059		19,045,442	2.46	%
Maryland		16,838,603		16,974,999	2.20	%
Minnesota		15,922,220		15,688,073	2.03	%
Colorado		15,151,135		14,980,283	1.94	%
South Carolina		13,270,660		13,270,530	1.71	%
Canada		13,418,371		13,265,324	1.71	%
Florida		12,966,130		13,220,344	1.71	%
District of Columbia		11,798,134		13,137,892	1.70	%
Missouri		9,871,933		10,600,866	1.37	%
North Carolina		10,503,957		10,360,521	1.34	%
Massachusetts		10,281,055		10,348,341	1.34	%
Puerto Rico		8,760,589		1,149,047	0.15	%
Virginia		500,000		616,212	0.08	%
	$	785,005,957	$	772,873,326	100.00	%

The following is a summary of industry concentration of our investment portfolio as of September 30, 2022:


					% of Total
	Cost		Fair Value		Investments
Services: Business	$	204,607,775	$	216,144,996	24.80	%
Healthcare & Pharmaceuticals		85,931,481		83,081,912	9.53	%
Media: Advertising, Printing & Publishing		52,871,690		52,545,237	6.03	%
Consumer Goods: Non-Durable		55,272,075		52,204,827	5.99	%
Consumer Goods: Durable		46,305,068		45,631,242	5.23	%
Aerospace & Defense		49,263,250		42,197,058	4.84	%
Capital Equipment		41,803,330		41,772,219	4.79	%
Software		37,641,126		38,124,297	4.37	%
Beverage, Food, & Tobacco		34,277,269		32,515,226	3.73	%
Media: Broadcasting & Subscription		24,771,765		31,094,050	3.57	%
Chemicals, Plastics, & Rubber		29,763,100		29,310,956	3.36	%
Environmental Industries		27,757,137		26,742,482	3.07	%
Construction & Building		27,049,132		26,382,118	3.03	%
Services: Consumer		43,293,446		24,404,811	2.80	%
Transportation & Logistics		16,795,563		17,417,956	2.00	%
Metals & Mining		16,741,058		16,591,093	1.90	%
Containers, Packaging, & Glass		17,466,658		14,528,718	1.67	%
Retail		13,384,274		13,303,091	1.53	%
High Tech Industries		14,148,629		12,046,313	1.38	%
FIRE: Real Estate		15,655,039		11,303,322	1.30	%
Automotive		11,269,059		11,197,250	1.28	%
Education		10,996,579		10,409,233	1.19	%
Utilities: Oil & Gas		9,916,397		9,800,000	1.12	%
Energy: Oil & Gas		9,052,102		8,590,797	0.99	%
Finance		2,726,480		3,413,460	0.39	%
Hotel, Gaming, & Leisure		-		685,208	0.08	%
Media: Diversified & Production		300,390		295,408	0.03	%
Total	$	899,059,872	$	871,733,280	100.00	%

The following is a summary of industry concentration of our investment portfolio as of December 31, 2021:


					% of Total
					Investments
	Cost		Fair Value		at fair value
Services: Business	$	167,253,835	$	177,242,299	22.93	%
Healthcare & Pharmaceuticals		104,933,428		99,584,343	12.89	%
Aerospace & Defense		66,503,939		63,467,579	8.21	%
Media: Advertising, Printing & Publishing		53,136,718		51,125,659	6.62	%
Media: Broadcasting & Subscription		39,319,912		42,892,137	5.55	%
Consumer Goods: Durable		36,216,806		36,537,445	4.73	%
Beverage, Food, & Tobacco		34,089,805		33,791,047	4.37	%
Consumer Goods: Non-Durable		30,597,444		29,447,632	3.81	%
Construction & Building		27,333,360		27,282,504	3.53	%
Environmental Industries		26,826,229		26,355,789	3.41	%
Software		21,498,947		23,841,617	3.08	%
Services: Consumer		40,034,415		22,682,119	2.93	%
Transportation & Logistics		18,583,797		18,934,004	2.45	%
Containers, Packaging, & Glass		17,557,212		17,710,907	2.29	%
Metals & Mining		16,838,603		16,974,999	2.20	%
FIRE: Real Estate		15,694,701		15,824,998	2.05	%
Chemicals, Plastics, & Rubber		14,638,210		14,288,322	1.85	%
Education		11,053,167		11,053,167	1.43	%
Automotive		11,064,612		10,800,000	1.40	%
Energy: Oil & Gas		11,098,912		10,461,417	1.35	%
Utilities: Oil & Gas		9,901,900		9,800,000	1.27	%
Capital Equipment		8,322,806		8,182,736	1.06	%
Finance		2,507,199		4,108,356	0.53	%
Hotel, Gaming, & Leisure		—		484,250	0.06	%
	$	785,005,957	$	772,873,326	100.00	%

The following provides quantitative information about Level 3 fair value measurements as of September 30, 2022:


Description:	Fair Value		Valuation Technique	Unobservable Inputs	Range (Average)⁽¹⁾⁽³⁾
First lien debt	$	742,272,654	Income/Market	HY credit spreads,	-1.31% to 5.10% (1.68%)
			approach⁽²⁾	Risk free rates	-0.33% to 3.88% (2.72%)
				Market multiples	3.7x to 23.6x (10.7x)⁽⁴⁾

Second lien debt	$	58,220,675	Income/Market	HY credit spreads,	-0.27% to 2.34% (1.39%)
			approach⁽²⁾	Risk free rates	1.18% to 3.91% (2.59%)
				Market multiples	5.8x to 18.3x (12.5x)⁽⁴⁾

Unsecured debt	$	4,760,750	Income/Market	HY credit spreads,	4.65% to 4.65% (4.65%)
			approach⁽²⁾	Risk free rates	3.66% to 3.66% (3.66%)
				Market multiples	9.5x to 9.5x (9.5x)⁽⁴⁾

Equity investments	$	66,479,201	Market approach⁽⁵⁾	Underwriting multiple/
				EBITDA Multiple	1.1x to 24.6x (11.5x)
Total Long Term Level 3 Investments	$	871,733,280

(1)	Weighted average based on fair value as of September 30, 2022.

(2)	Included but not limited to (a) the market approach, which is used to determine sufficient enterprise value, and (b) the income approach which is based on discounting future cash flows using an appropriate market yield.

(3)

The Company calculates the price of the loan by discounting future cash flows, which include forecasted future LIBOR, SOFR, or BSBY rates based on the published forward curve at the valuation date, using an appropriate yield calculated as of the valuation date. This yield is calculated based on the loan’s yield at the original investment and is adjusted as of the valuation date based on: changes in comparable credit spreads, changes in risk free interest rates (per swap rates), and changes in credit quality (via an estimated shadow rating). Significant movements in any of these factors could result in a significantly lower or higher fair value measurement. As an example, the “Range (Average)” for first lien debt instruments in the table above indicates that the change in the HY spreads between the date a loan closed and the valuation date ranged from -1.31% (-131 basis points) to 5.10% (510 basis points). The average of all changes was 1.68% (168 basis points).

(4)	Median of LTM (last twelve months) EBITDA multiples of comparable companies.

(5)

The primary significant unobservable input used in the fair value measurement of the Company’s equity investments is the EBITDA multiple (the “Multiple”). Significant increases (decreases) in the Multiple in isolation could result in a significantly higher (lower) fair value measurement. To determine the Multiple for the market approach, the Company considers current market trading and/or transaction multiple, portfolio company performance (financial ratios) relative to public and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate Multiple to use in the market approach.

The following provides quantitative information about Level 3 fair value measurements as of December 31, 2021:



Description:	Fair Value		Valuation Technique	Unobservable Inputs	Range (Average)⁽¹⁾⁽³⁾
First lien debt	$	646,352,935	Income/Market⁽²⁾	HY credit spreads,	-3.93% to 0.48% (-0.24%)
			approach	Risk free rates	-1.95% to 0.86% (-0.05%)
				Market multiples	4.5x to 25x (11.6x)⁽⁴⁾

Second lien debt	$	56,733,110	Income/Market⁽²⁾	HY credit spreads,	-2.54% to 0.53% (-0.53%)
			approach	Risk free rates	-1.79% to 0.94% (-0.29%)
				Market multiples	7.1x to 16.4x (12.9x)⁽⁴⁾

Unsecured debt	$	4,883,854	Income/Market	HY credit spreads,	0.25% to 0.25% (0.25%)
			approach⁽²⁾	Risk free rates	0.75% to 0.75% (0.75%)
				Market multiples	12.4x to 12.4x (12.4x)⁽⁴⁾

Equity investments	$	64,903,427	Market approach⁽⁵⁾	Underwriting	1.6x to 24.9x (11.5x)
				EBITDA Multiple
Total Long Term Level 3 Investments	$	772,873,326

(1)	Weighted average based on fair value as of December 31, 2021.

(2)	Inclusive of but not limited to (a) the market approach, which is used to determine sufficient enterprise value, and (b) the income approach which is based on discounting future cash flows using an appropriate market yield.

(3)

The Company calculates the price of the loan by discounting future cash flows, which include forecasted future LIBOR rates based on the published forward LIBOR curve at the valuation date, using an appropriate yield calculated as of the valuation date. This yield is calculated based on the loan’s yield at the original investment and is adjusted as of the valuation date based on: changes in comparable credit spreads, changes in risk free interest rates (per swap rates), and changes in credit quality (via an estimated shadow rating). Significant movements in any of these factors would result in a significantly lower or higher fair value measurement. As an example, the “Range (Average)” for a first lien debt instruments in the table above indicates that the change in the HY spreads between the date a loan closed and the valuation date ranged from -3.93% (-393 basis points) to 0.48% (48 basis points). The average of all changes was -0.24%.

(4)	Median of LTM (last twelve months) EBITDA multiples of comparable companies.

(5)

transaction multiple, portfolio company performance (financial ratios) relative to public and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate Multiple to use in the market approach.