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Debt
 3 Months Ended
Mar. 31, 2025
Debt Disclosure [Abstract]  
Debt

Note 6. Debt

Revolving Credit Facility: On June 16, 2014, FIC entered into a senior secured revolving credit agreement (the "Credit Agreement" and the senior secured revolving credit facility, the “Credit Facility”) with ING Capital LLC (“ING”), as the administrative agent, collateral agent, and lender. The Credit Facility is secured by certain portfolio investments held by the Company, but portfolio investments held by the SBIC Funds are not collateral for the Credit Facility. On April 24, 2019, the Company entered into an Amended & Restated Senior Secured Revolving Credit Agreement (the “Amended Credit Agreement”) among the Company, as borrower, the lenders party thereto, and ING, as administrative agent. On June 26, 2020, the Company entered into an amendment to the Amended Credit Agreement that, among other changes, modified certain financial covenants. On August 17, 2022, the Company entered into a second amendment to the Amended Credit Agreement ("Second Amendment"). The Second Amendment, among other things: (i) changed the underlying benchmark used to compute interest under the Amended Credit Agreement to SOFR from LIBOR; (ii) reduced the applicable margin from 3.00% to 2.675% on SOFR loans prior to satisfying certain step-down conditions, and from 2.675% to 2.50% after satisfying certain step-down conditions, with commensurate reductions in the applicable margins for base rate loans; (iii) provided for a loan commitment availability period ending on August 17, 2026; (iv) extended the maturity date to August 17, 2027 from April 24, 2023; and (v) amended certain financial covenants, including (a) amending the asset coverage ratio to no less than 1.50 to 1.00 from no less than 2.00 to 1.00 (on a regulatory basis); and (b) requiring the Company to maintain a senior asset coverage ratio of no less than 2.00 to 1.00. On July 25, 2024, the Company entered into an incremental commitment agreement that increased the total commitment under the Credit Facility from $100,000 to $140,000.

The Company pays a commitment fee that varies depending on the size of the unused portion of the Credit Facility: 2.500% to 2.675% per annum on the unused portion of the Credit Facility at or below 35% of the commitments and 0.50% per annum on any remaining unused portion of the Credit Facility between the total commitments and the 35% minimum utilization. The Credit Facility is secured by a first priority security interest in all of our assets, excluding the assets of our SBIC subsidiaries.

Amounts available to borrow under the Credit Facility are subject to a minimum borrowing/collateral base that applies an advance rate to certain investments held by the Company, excluding investments held by the SBIC Funds. The Company is subject to limitations with respect to the investments securing the Credit Facility, including, but not limited to, restrictions on sector concentrations, loan size, payment frequency and status and collateral interests, as well as restrictions on portfolio company leverage, which may also affect the borrowing base and therefore amounts available to borrow.

The Company has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility. As of March 31, 2025 and December 31, 2024, the Company was in compliance in all material respects with the terms of the Credit Agreement.

SBA debentures: The SBIC Funds use debenture leverage provided through the SBA to fund a portion of its investment purchases.

Under the SBA debenture program, the SBA commits to purchase debentures issued by SBICs; such debentures have 10-year terms with the entire principal balance due at maturity and are guaranteed by the SBA. Interest on SBA debentures is payable semi-annually on March 1 and September 1. As of March 31, 2025 and December 31, 2024, approved and unused SBA debenture commitments were $155,500 and $175,000, respectively. The SBA may limit the amount that may be drawn each year under any SBA debenture commitments, and each issuance of leverage is conditioned on such SBIC Fund’s full compliance, as determined by the SBA, with the terms and conditions under SBA regulations.

As of March 31, 2025 and December 31, 2024, the Company’s issued and outstanding SBA debentures mature as follows:

 

Pooling

 

Maturity

 

Fixed

 

 

March 31,

 

 

December 31,

 

Date (1)

 

Date

 

Interest Rate

 

 

2025

 

 

2024

 

9/25/2019

 

9/1/2029

 

 

2.377

 

 

 

7,500

 

 

 

7,500

 

3/25/2020

 

3/1/2030

 

 

2.172

 

 

 

6,000

 

 

 

6,000

 

9/22/2021

 

9/1/2031

 

 

1.398

 

 

 

11,500

 

 

 

11,500

 

3/23/2022

 

3/1/2032

 

 

3.209

 

 

 

43,000

 

 

 

43,500

 

9/21/2022

 

9/1/2032

 

 

4.533

 

 

 

17,500

 

 

 

17,500

 

3/22/2023

 

3/1/2033

 

 

5.439

 

 

 

4,000

 

 

 

4,000

 

3/22/2023

 

3/1/2033

 

 

5.341

 

 

 

3,000

 

 

 

3,000

 

3/22/2023

 

3/1/2033

 

 

5.341

 

 

 

3,000

 

 

 

3,000

 

3/22/2023

 

3/1/2033

 

 

5.439

 

 

 

5,000

 

 

 

5,000

 

3/22/2023

 

3/1/2033

 

 

5.439

 

 

 

5,000

 

 

 

5,000

 

3/22/2023

 

3/1/2033

 

 

5.341

 

 

 

7,000

 

 

 

7,000

 

3/22/2023

 

3/1/2033

 

 

5.341

 

 

 

4,000

 

 

 

4,000

 

9/20/2023

 

9/1/2033

 

 

5.861

 

 

 

8,000

 

 

 

8,000

 

9/20/2023

 

9/1/2033

 

 

5.861

 

 

 

5,000

 

 

 

12,000

 

9/20/2023

 

9/1/2033

 

 

5.861

 

 

 

—

 

 

 

5,000

 

9/20/2023

 

9/1/2033

 

 

5.861

 

 

 

8,000

 

 

 

8,000

 

9/20/2023

 

9/1/2033

 

 

5.735

 

 

 

3,000

 

 

 

3,000

 

3/20/2024

 

3/1/2034

 

 

5.082

 

 

 

3,000

 

 

 

3,000

 

3/20/2024

 

3/1/2034

 

 

5.082

 

 

 

12,000

 

 

 

12,000

 

3/20/2024

 

3/1/2034

 

 

5.082

 

 

 

2,000

 

 

 

2,000

 

3/20/2024

 

3/1/2034

 

 

5.082

 

 

 

2,000

 

 

 

2,000

 

3/20/2024

 

3/1/2034

 

 

5.082

 

 

 

3,000

 

 

 

3,000

 

3/26/2025

 

3/1/2035

 

 

5.310

 

 

 

19,500

 

 

 

—

 

Total outstanding SBA debentures

 

 

 

 

 

 

$

182,000

 

 

$

175,000

 

 

(1)

The SBA has two scheduled pooling dates for debentures (in March and in September). Certain debentures funded during the reporting periods may not be pooled until the subsequent pooling date.

Notes: On December 23, 2020, the Company closed the offering of $125,000 in aggregate principal amount of its 4.75% notes due 2026 (the “January 2026 Notes”). The total net proceeds to the Company from the January 2026 Notes, based on a public offering price of 100.00% of par, after deducting underwriting discounts of $2,500 and offering expenses of $366, were $122,134. The January 2026 Notes will mature on January 31, 2026 and bear interest at a rate of 4.75%. The January 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed before October 31, 2025 (the date falling three months prior to maturity) and at par thereafter. Interest on the January 2026 Notes is payable on January 31 and July 31 of each year. The Company does not intend to list the January 2026 Notes on any securities exchange or automated dealer quotation system.

On October 8, 2021, the Company closed the offering of $125,000 in aggregate principal amount of its 3.50% notes due 2026 (the “November 2026 Notes”). The total net proceeds to the Company from the November 2026 Notes, based on a public offering price of 99.996% of par, after deducting underwriting discounts of $2,500 and offering expenses of $318, were $122,177. The November 2026 Notes will mature on November 15, 2026 and bear interest at a rate of 3.50%. The November 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed before August 15, 2026 (the date falling three months prior to maturity) and at par thereafter. Interest on the November 2026 Notes is payable on May 15 and November 15 of each year. The Company does not intend to list the November 2026 Notes on any securities exchange or automated dealer quotation system.

On March 19, 2025, the Company closed the offering of $100,000 in aggregate principal amount of its 6.75% notes due 2030 (the “March 2030 Notes” and together with the January 2026 Notes and the November 2026 Notes, the “Notes”). The total net proceeds to the Company from the March 2030 Notes, based on a public offering price of 99.29954% of par, after deducting underwriting discounts of $2,000 and estimated offering expenses of $350, were approximately $96,950. The March 2030 Notes will mature on March 19, 2030 and bear interest at a rate of 6.75%. The March 2030 Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed before September 19, 2029 (the date falling six months prior to maturity) and at par thereafter. Interest on the March 2030 Notes is payable on March 19 and September 19 of each year, beginning September 19, 2025. The Company does not intend to list the March 2030 Notes on any securities exchange or automated dealer quotation system.

Each of the Notes are unsecured obligations of the Company and rank pari passu with the Company’s existing and future unsecured indebtedness; effectively subordinated to all of the Company’s existing and future secured indebtedness; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, financing vehicles, or similar facilities the Company may form in the future, with respect to claims on the assets of any such subsidiaries, financing vehicles, or similar facilities, including the Credit Facility.

Secured Borrowing

As of March 31, 2025 and December 31, 2024, the carrying value of secured borrowings totaled $13,601 and $13,674, respectively, and the fair value of the associated loans included in investments was $13,601 and $13,505, respectively. These secured borrowings were created as a result of our completion of partial loan sales of certain unitranche loan assets that did not meet the definition of a “participating interest” as defined in ASC 860 (see Note 2. Significant Accounting Policies - Partial loan and equity sales for more information). As a result, sale treatment was not permitted and these partial loan sales were treated as secured borrowings. The weighted average interest rate on our secured borrowings was approximately 8.5% and 8.6% as of March 31, 2025, and December 31, 2024, respectively.

Senior Securities

As of March 31, 2025 and December 31, 2024, the aggregate amount outstanding of the senior securities (including secured borrowings) issued by the Company was $363,601 and $308,674, respectively, for which our asset coverage was 286.4% and 312.4%, respectively. The SBA debentures are excluded from the definition “senior securities” in the asset coverage requirement applicable to the Company under the 1940 Act pursuant to exemptive relief granted to us by the SEC on June 30, 2014. The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness.

Interest and Financing Expenses

Interest and fees related to the Company’s debt for the three months ended March 31, 2025 and 2024 which are included in interest and financing expenses on the consolidated statements of operations, were as follows:

 

 

 

 

Three Months Ended March 31, 2025

 

 

 

SBA debentures

 

 

Credit Facility

 

 

Secured Borrowings

 

 

Notes

 

 

Total

 

Stated interest expense

 

$

1,941

 

 

$

1,122

 

 

$

317

 

 

$

2,803

 

 

$

6,183

 

Amortization of deferred financing costs

 

 

195

 

 

 

98

 

 

 

-

 

 

 

297

 

 

 

590

 

Total interest and financing expenses

 

$

2,136

 

 

$

1,220

 

 

$

317

 

 

$

3,100

 

 

$

6,773

 

Weighted average stated interest rate, period end

 

 

4.323

%

 

N/A

 

 

 

8.498

%

 

 

4.875

%

 

 

4.781

%

Effective interest rate (1)

 

 

4.759

%

 

 

0.286

%

 

 

8.498

%

 

 

5.377

%

 

 

5.260

%

Unused commitment fee rate, period end

 

N/A

 

 

 

1.261

%

 

N/A

 

 

N/A

 

 

 

1.261

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2024

 

 

 

SBA debentures

 

 

Credit Facility

 

 

Secured Borrowings

 

 

Notes

 

 

Total

 

Stated interest expense

 

$

2,118

 

 

$

368

 

 

$

413

 

 

$

2,578

 

 

$

5,477

 

Amortization of deferred financing costs

 

 

183

 

 

 

74

 

 

 

-

 

 

 

278

 

 

 

535

 

Total interest and financing expenses

 

$

2,301

 

 

$

442

 

 

$

413

 

 

$

2,856

 

 

$

6,012

 

Weighted average stated interest rate, period end

 

 

4.316

%

 

 

8.118

%

 

 

9.363

%

 

 

4.125

%

 

 

4.568

%

Effective interest rate (1)

 

 

4.658

%

 

 

8.419

%

 

 

9.363

%

 

 

4.576

%

 

 

4.969

%

Unused commitment fee rate, period end

 

N/A

 

 

 

0.851

%

 

N/A

 

 

N/A

 

 

 

0.851

%

(1) The effective interest rate is equal to the weighted average stated interest rate plus the amortization of deferred financing costs.

 

Realized Losses on Extinguishment of Debt

During the three months ended March 31, 2025, the Company prepaid $12,500 of SBA debentures which were scheduled to mature on dates ranging from 2032 to 2033. During the three months ended March 31, 2024, the Company prepaid $35,000 of SBA debentures which were scheduled to mature on dates ranging from 2026 to 2027. As a result of the prepayments, the Company recognized realized losses on extinguishment of debt of $251 and $521 equal to the write-off of the related unamortized deferred financing costs, during the three months ended March 31, 2025 and 2024, respectively.

Deferred Financing Costs

Deferred financing costs are amortized into interest and financing expenses on the consolidated statements of operations, using the effective interest method, over the term of the respective financing instrument. Deferred financing costs related to the SBA debentures, the Credit Facility, and the Notes as of March 31, 2025 and December 31, 2024 were as follows:

 

 

 

March 31, 2025

 

 

December 31, 2024

 

 

 

SBA

 

 

Credit

 

 

 

 

 

 

 

 

SBA

 

 

Credit

 

 

 

 

 

 

 

 

 

debentures

 

 

Facility

 

 

Notes

 

 

Total

 

 

debentures

 

 

Facility

 

 

Notes

 

 

Total

 

SBA debenture commitment fees

 

$

3,500

 

 

$

—

 

 

$

—

 

 

$

3,500

 

 

$

3,500

 

 

$

—

 

 

$

—

 

 

$

3,500

 

SBA debenture leverage fees

 

 

4,736

 

 

 

—

 

 

 

—

 

 

 

4,736

 

 

 

4,261

 

 

 

—

 

 

 

—

 

 

 

4,261

 

Credit Facility upfront fees

 

 

—

 

 

 

4,717

 

 

 

—

 

 

 

4,717

 

 

 

—

 

 

 

4,717

 

 

 

—

 

 

 

4,717

 

Notes underwriting discounts

 

 

—

 

 

 

—

 

 

 

7,005

 

 

 

7,005

 

 

 

—

 

 

 

—

 

 

 

5,005

 

 

 

5,005

 

Notes debt issue costs

 

 

—

 

 

 

—

 

 

 

1,787

 

 

 

1,787

 

 

 

—

 

 

 

—

 

 

 

685

 

 

 

685

 

Total deferred financing costs

 

 

8,236

 

 

 

4,717

 

 

 

8,792

 

 

 

21,745

 

 

 

7,761

 

 

 

4,717

 

 

 

5,690

 

 

 

18,168

 

Less: accumulated amortization

 

 

(2,106

)

 

 

(3,769

)

 

 

(4,349

)

 

 

(10,224

)

 

 

(1,660

)

 

 

(3,671

)

 

 

(4,052

)

 

 

(9,383

)

Unamortized deferred financing costs

 

$

6,130

 

 

$

948

 

 

$

4,443

 

 

$

11,521

 

 

$

6,101

 

 

$

1,046

 

 

$

1,638

 

 

$

8,785

 

 

Unamortized deferred financing costs are presented as a direct offset to the SBA debentures, the Credit Facility and the Notes liabilities on the consolidated statements of assets and liabilities. The following table summarizes the outstanding debt net of unamortized deferred financing costs as of March 31, 2025 and December 31, 2024:

 

 

 

March 31, 2025(1)

 

 

December 31, 2024(1)

 

 

 

SBA

 

 

Credit

 

 

 

 

 

 

 

 

SBA

 

 

Credit

 

 

 

 

 

 

 

 

 

debentures

 

 

Facility

 

 

Notes

 

 

Total

 

 

debentures

 

 

Facility

 

 

Notes

 

 

Total

 

Outstanding debt

 

$

182,000

 

 

$

—

 

 

$

350,000

 

 

$

532,000

 

 

$

175,000

 

 

$

45,000

 

 

$

250,000

 

 

$

470,000

 

Less: unamortized deferred financing costs

 

 

(6,130

)

 

 

(948

)

 

 

(4,443

)

 

 

(11,521

)

 

 

(6,101

)

 

 

(1,046

)

 

 

(1,638

)

 

 

(8,785

)

Debt, net of deferred financing costs

 

$

175,870

 

 

$

(948

)

 

$

345,557

 

 

$

520,479

 

 

$

168,899

 

 

$

43,954

 

 

$

248,362

 

 

$

461,215

 
(1)
Total excludes $13,601 and $13,674 of Secured Borrowings as of March 31, 2025 and December 31, 2024, respectively.

 

As of March 31, 2025, the Company’s debt liabilities are scheduled to mature as follows (1):

 

 

 

SBA

 

 

Credit

 

 

Secured

 

 

 

 

 

 

 

Year

 

debentures

 

 

Facility (2)

 

 

Borrowings

 

 

Notes

 

 

Total

 

2026

 

$

—

 

 

$

—

 

 

$

13,271

 

 

$

250,000

 

 

$

263,271

 

2027

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

2028

 

 

—

 

 

 

—

 

 

 

330

 

 

 

—

 

 

 

330

 

2029

 

 

7,500

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7,500

 

2030

 

 

6,000

 

 

 

—

 

 

 

—

 

 

 

100,000

 

 

 

106,000

 

Thereafter

 

 

168,500

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

168,500

 

Total

 

$

182,000

 

 

$

—

 

 

$

13,601

 

 

$

350,000

 

 

$

545,601

 

 

(1)

The table above presents scheduled maturities of the Company’s outstanding debt liabilities as of a point in time pursuant to the terms of those instruments. The timing of actual repayments of outstanding debt liabilities may not ultimately correspond with the scheduled maturity dates depending on the terms of the underlying instruments and the potential for earlier prepayments.

(2)

The Credit Facility matures on August 17, 2027.