Borrowings

9 Months Ended

Sep. 30, 2024

Borrowings [Abstract]

Borrowings

Note 7. Borrowings

On July 2, 2021, the Company entered into a Loan and Servicing Agreement (the “Loan Agreement”) with Sterling National Bank (“SNB”), which provides for a $55 million senior secured revolving credit facility (“Secured Credit Facility”). In February 2022, SNB was subsequently acquired by Webster Bank (“Webster”), which took over the relationship with the Company. On January 12, 2022, the Company entered into a second amendment to the Secured Credit Facility to upsize the Secured Credit Facility to $80 million. On May 6, 2022, the Company entered into an amendment to the Secured Credit Facility to upsize the Secured Credit Facility to $125 million. On September 16, 2022, the Company entered into an amendment to the Secured Credit Facility to upsize the Secured Credit Facility to $200 million. On May 9, 2024, the Company entered into an amendment to the Secured Credit Facility to reassign commitment amounts and negotiate Secured Credit Facility fees.

In May 2024, the Company extended its $200,000,000 Secured Credit Facility with Webster, the Administrative Agent, to June 30, 2028. The Secured Credit Facility carries an interest rate of 3M SOFR plus 2.9%.

As of September 30, 2024 and December 31, 2023, the Secured Credit Facility commitment amounts were as follows:

	As of September 30, 2024		As of December 31, 2023
Secured Credit Facility Lender	Commitment		Commitment
Webster Bank	$	67,500,000	$	67,500,000
Blue Ridge Bank		-		25,000,000
Dime Community Bank		25,000,000		-
First Foundation Bank		20,000,000		20,000,000
Mitsubishi HC Capital America, Inc.		20,000,000		20,000,000
Woodforest National Bank		20,000,000		20,000,000
Forbright Bank		-		17,500,000
Peapack-Gladstone Bank		17,000,000		15,000,000
Hanmai Bank		15,500,000		-
Apple Bank		15,000,000		15,000,000
Total Commitment	$	200,000,000	$	200,000,000

Borrowings can be increased to a maximum of $350 million in accordance with the Secured Credit Facility accordion feature terms and conditions and are limited by various advance rates and concentration limits.

As of September 30, 2024 and December 31, 2023, the total fair value of the borrowings outstanding under the Secured Credit Facility was $129,500,000 and $176,500,000, respectively. The fair value of the borrowings outstanding under the Secured Credit Facility and the Revolving Credit Line are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.

Inclusive of syndication, agency, and administrative fees paid to Webster, the total annualized cost of capital is estimated to be 8.0%. The Company will also pay a non-utilization fee on the average daily unused amount of the aggregate commitments until the commitment termination date (as defined in the Loan Agreement). As of September 30, 2024, the total commitments under the Secured Credit Facility were $200 million. Proceeds from borrowings under the Secured Credit Facility may be used to finance certain investments, fulfill payment obligations under the Secured Credit Facility, make distributions/payments permitted by the Loan Agreement. All amounts outstanding under the Secured Credit Facility must be repaid by the fourth anniversary of the initial closing of the Secured Credit Facility. The Company’s obligations to the lenders under the Secured Credit Facility are secured by a first priority security interest in substantially all of the Company’s assets, subject to certain exclusions.

Borrowings under the Secured Credit Facility are limited by various advance rates and concentration limits. In connection with the Secured Credit Facility, the Company has made certain customary representations/warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The Secured Credit Facility is subject to customary events of default for similar financing transactions. Upon the occurrence and during the continuation of an event of default, Webster may declare the outstanding advances and all other obligations under the Secured Credit Facility immediately due and payable.

On June 22, 2022 the Company entered into a Loan and Security Agreement with East West Bank, which provides for cash or credit advances of up to $25 million (the “Revolving Credit Line”) pursuant to the terms and conditions of the Revolving Credit Line. On September 26, 2022, the Company entered into an amendment with East West Bank, to downsize the Revolving Credit Line to $21 million. On May 17, 2023, the Company repaid the outstanding balance in full and terminated the loan and security agreement initially entered into on June 22, 2022.

The components of the Company’s interest expense and other debt financing expenses, average outstanding balances and average stated interest rates (i.e. the rate in effect plus spread) were as follows:

	For the three months ended September 30,
	2024			2023
Interest expense - Secured Credit Facility	$	2,718,244		$	3,276,457
Unused commitment fees		90,444			50,029
Amortization of deferred financing costs		152,362			142,064
Utilization fees		145,729			263,612
Total interest and other debt financing fees	$	3,106,779		$	3,732,162
Average debt outstanding	$	129,217,391		$	160,838,710
Average stated interest rate		8.35	%		8.00	%

	For the nine months ended September 30,
	2024			2023
Interest expense - Secured Credit Facility	$	8,960,744		$	8,559,805
Interest expense - Revolving Credit Line		-			38,624
Unused commitment fees		209,291			243,936
Amortization of deferred financing costs		437,281			485,547
Utilization fees		603,964			858,421
Total interest and other debt financing fees	$	10,211,280		$	10,186,333
Average debt outstanding	$	145,003,650		$	147,891,941
Average stated interest rate		8.23	%		7.77	%