Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Highly competitive market for investment opportunities.
• Risky investments in Lower Middle Market portfolio companies.
• Limited financial resources of Lower Middle Market businesses.
• Limited publicly available information about Lower Middle Market businesses.
• Less predictable operating results of Lower Middle Market businesses.
• Dependence of Lower Middle Market businesses on one or two persons.
• Limited operating histories of Lower Middle Market businesses.
• Unrated debt securities of Lower Middle Market companies.
• Lack of liquidity of privately held investments.
• Potential for significant loss if portfolio companies fail to repay or industries experience downturns.
• Long-term investments requiring several years to realize liquidation events.
• Potential for contingent liabilities from investment dispositions.
• Potential for portfolio company-related litigation.
• Potential for unrealized depreciation indicating future realized losses.
• Need for capital to finance investments and comply with covenants.
• Potential for inability to renew, extend, or replace Credit Facility.
• Risk of selling assets on disadvantageous terms if replacement financing is unavailable.
• Risk of dilution from issuing common stock below NAV.
• Magnified potential for gain or loss due to leverage.
• Interest rate fluctuations affecting profitability.
• Risk of LIBOR phase-out.
• Lack of involvement in day-to-day operations of portfolio companies.
• Risks associated with change in control transactions.
• Potential for debt ranking equally with or senior to investments.
• Potential for lender liability claims.
• Prepayments of investments impacting results of operations.
• Potential for failure to realize gains from equity investments and yield enhancements.
• Dependence on key management personnel.
• Risk of discontinuation of Adviser’s operations or termination of Advisory Agreement.
• Dependence on Adviser’s contacts and relationships.
• Adviser’s potential resignation.
• Potential conflicts of interest.
• Incentive fee potentially inducing risky investments.
• Obligation to pay incentive compensation even with net asset decrease.
• Incentive compensation on accrued but not yet received income.
• Adviser’s failure to identify suitable securities.
• Fluctuations in quarterly and annual operating results.
• Risk of not receiving distributions or distributions not growing.
• Above-average risk involved in investing in securities.
• Potential for return of capital in distributions.
• Potential dilution from issuance of subscription rights.
• Common shares trading at a discount from NAV.
• Constraints on issuing additional common stock below NAV.
• Potential dilution from selling common stock below NAV.
• Potential for holders of preferred stock to elect a majority of directors.
• Seniority of debt and preferred stock holders' rights over common stockholders.
• Potential for lack of active trading market for preferred stock.
• Interest rate risk for preferred stock with fixed interest rate.
• Risk of early redemption of preferred stock.
• Subordination of preferred stock holders' claims to debt holders.
• Dividend risk for preferred stock.
• Risk of delay in redemption of preferred stock.
• Cybersecurity risks and cyber incidents.
• Dependence on information systems and risk of system failures.
• Changes in laws or regulations governing operations.

Mitigation Strategies

• Extensive due diligence investigations.
• Risk management process to limit downside risk.
• Negotiating covenants in debt agreements.
• Holding board seats or securing board observation rights.
• Opportunistic co-investments with Gladstone Capital.
• Investment allocation procedures to address conflicts of interest.
• Revision of investment objectives and strategies.
• Non-contractual, unconditional, and irrevocable credits from the Adviser to reduce fees.
• Developing and sustaining strong referral relationships.
• Interest rate risk management techniques.
• Targeting a mix of fixed and variable rate loans.
• Implementation of processes, procedures, and internal controls to mitigate cybersecurity risks.

Supply Chain Management

Climate-Related Risks & Opportunities