On August 21, 2017, the Company issued $42,500,000 in aggregate principal amount of 5.75% fixed-rate notes due September 15, 2022 (the “2022 Notes”). On September 8, 2017, the Company issued an additional $6,375,000 in aggregate principal amount of the 2022 Notes pursuant to a full exercise of the underwriters’ overallotment option. On January 13, 2021, the Company caused notices to be issued to the holders of its 2022 Notes regarding the Company’s exercise of its option to redeem all of the issued and outstanding 2022 Notes, pursuant to the Second Supplemental Indenture dated as of August 21, 2017, between the Company and U.S. Bank National Association, as trustee. The Company redeemed all $48,875,000 in aggregate principal amount of the 2022 Notes on February 12, 2021. The 2022 Notes were redeemed at 100% of their principal amount, plus the accrued and unpaid interest thereon through the redemption date. As a result of the redemption, the Company recognized a loss on debt extinguishment of $539,250 due to the write off of the remaining deferred financing costs on the 2022 Notes. This loss is included in the Consolidated Statements of Operations for the nine months ended September 30, 2021.

Prior to their redemption on February 12, 2021, the 2022 Notes were listed on New York Stock Exchange under the trading symbol “SCA”. As of December 31, 2020, the fair value of the 2022 Notes was $49,168,250. The carrying value of the 2022 Notes approximates fair value.

The following table summarizes the interest expense and deferred financing costs on the 2022 Notes for the nine months ended September 30, 2021:

(1)	The loss on debt extinguishment is not included in interest expense or net investment income.

(2)	Excludes the loss on debt extinguishment.

(3)	For the nine months ended September 30, 2021, the average is calculated for the period January 1, 2021 through February 12, 2021; the repayment date of the 2022 Notes.

On January 14, 2021, the Company issued $100,000,000 in aggregate principal amount of 4.875% fixed-rate notes due 2026 (the “2026 Notes”). The 2026 Notes will mature on March 30, 2026 and may be redeemed in whole or in part at any time or from time to time at our option on or after December 31, 2025 at a redemption price equal to 100% of the outstanding principal, plus accrued and unpaid interest. Interest on the 2026 Notes is payable semi-annually beginning September 30, 2021.

The Company used the net proceeds from the 2026 Notes offering to fully redeem the 2022 Notes and repay a portion of the amount outstanding under the Credit Facility. As of both September 30, 2022 and December 31, 2021, the aggregate carrying amount of the 2026 Notes was approximately $100,000,000.

In connection with the issuance and maintenance of the 2026 Notes, the Company incurred $2,327,835 of fees which are being amortized over the term of the 2026 Notes. As of September 30, 2022 and December 31, 2021, $1,562,905 and $1,897,027 of prepaid financing costs had yet to be amortized, respectively. These financing costs are presented on the Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.

The following table summarizes the interest expense and deferred financing costs on the 2026 Notes for the three and nine months ended September 30, 2022 and 2021:


	For the three months ended						For the nine months ended
	September 30,			September 30,			September 30,			September 30,
	2022			2021			2022			2021
Interest expense	$	1,218,750		$	1,218,750		$	3,656,250		$	3,480,208
Deferred financing costs		112,598			117,598			339,122			323,211
Total interest and financing expenses	$	1,331,348		$	1,336,348		$	3,995,372		$	3,803,419
Weighted average interest rate		4.8	%		4.8	%		4.9	%		4.9	%
Effective interest rate (including fee amortization)		5.3	%		5.3	%		5.3	%		5.3	%
Average debt outstanding	$	100,000,000		$	100,000,000		$	100,000,000		$	100,000,000⁽¹⁾
Cash paid for interest	$	2,437,500		$	3,466,667		$	4,880,000		$	3,466,667

(1)	Calculated for the period from January 14, 2021, the date of the 2026 bond offering, through September 30, 2021.

The following is a summary of the 2026 Notes Payable, net of deferred financing costs:


	September 30,		December 31,
	2022		2021
Notes payable	$	100,000,000	$	100,000,000
Deferred financing costs		(1,562,905)		(1,897,027)
Notes payable, net of deferred financing costs	$	98,437,095	$	98,102,973

The indenture and supplements thereto relating to the 2026 Notes contain certain covenants, including but not limited to (i) a requirement that the Company comply with the asset coverage requirements of the 1940 Act or any successor provisions, and (ii) a requirement to provide financial information to the holders of the notes and the trustee under the indenture if the Company should no longer be subject to the reporting requirements under the Exchange Act. As of September 30, 2022 and 2021, the Company was in compliance with these covenants.