10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from______ to______

Commission File Number 814-01427

LAFAYETTE SQUARE USA, INC.

(Exact name of registrant as specified in its charter)

Delaware	87-2807075
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

175 SW 7th St, Unit 1911

Miami, FL 33130

(Address of principal executive offices)

(786) 753-7096

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol	Name of each exchange on which registered
None	None	None

Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:

Common Stock, par value $0.001 per share
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 8, 2023, the Registrant had 13,068,112 shares of common stock, $0.001 par value per share, outstanding.

		Page
	Cautionary Statement Regarding Forward-Looking Statements	1
Part I. Financial Information
Item 1.	Financial Statements
	Consolidated Statements of Assets and Liabilities as of September 30, 2023 (unaudited) and December 31, 2022	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited)	5
	Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2023 and 2022 (unaudited)	7
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited)	10
	Consolidated Schedule of Investments as of September 30, 2023 (unaudited) and December 31, 2022	12
	Notes to Consolidated Financial Statements (unaudited)	17
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	62
Item 4.	Controls and Procedures	63
Part II. Other Information
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	64
Item 6.	Exhibits	65
SIGNATURES		66

Lafayette Square USA, Inc.

Cautionary Statement Regarding Forward-Looking Statements

This report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about Lafayette Square USA, Inc., together with its consolidated subsidiaries (“we,” “us,” “our,” or the “Company”), our prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as “ anticipates,” “ expects,” “ intends,” “ plans,” “will,” “may,” “ continue,” “ believes,” “ seeks,” “ estimates,” “would,” “ could,” “ should,” “ targets,” “ projects,” “ outlook,” “ potential,” “ predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

•our business prospects and the prospects of the companies in which we may invest;

•the effect of the investments that we expect to make;

•our ability to raise sufficient capital to execute our investment strategy;

•the impact of economic recessions or downturns, which could impair our portfolio companies and lead to defaults by our portfolio companies, could harm our operating results;

•price inflation and changes in the general interest rate environment, which could adversely affect the operating results of our portfolio companies and impact their ability to pay interest and principal on our loans;

•general economic and political trends and other external factors, including the impact of any future pandemic or epidemic;

•heightened global political and economic uncertainty caused by the war, social unrest and political tension;

•the demand from middle market businesses for capital investment and managerial assistance;

•our ability to create and preserve jobs and stimulate the economy;

•the ability of our portfolio companies to achieve their objectives;

•our expected financing arrangements and expected investments;

•changes in the general interest rate environment, including recent increases in interest rates;

•the adequacy of our cash resources, financing sources and working capital;

•the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;

•our contractual arrangements and relationships with third parties;

•actual and potential conflicts of interest with LS BDC Adviser, LLC (the “Adviser”) or any of its affiliates;

•the dependence of our future success on the general economy and its effect on the industries in which we invest;

•our use of financial leverage;

•the ability of the Adviser to source suitable investments for us and to monitor and administer our investments;

•the ability of the Adviser or its affiliates to attract and retain highly talented professionals;

•the impact on our business of U.S. and international financial reform legislation, rules and regulations;

•the effect of changes to tax legislation and our tax position;

•the ability of any of our subsidiaries (in existence now or which may be formed in the future) to obtain or maintain a small business investment companies license from the SBA (as defined herein);

•our ability to adhere to or meet our goals, including our 2030 Goals (as defined herein);

•our ability to deploy at least 51% of our invested capital to borrowers in underserved communities;

•our ability to improve the retention, well-being, and productivity of employees in our portfolio companies;

•our ability to enhance the risk-adjusted financial returns of our portfolio companies;

•our ability to convince our portfolio companies to use our services platform, Worker Solutions;

•our ability to reduce employee turnover and increase median income of employees within our portfolio companies;

•our ability to encourage and increase participation in medical care benefits and retirement benefits by employees within our portfolio companies;

•our ability to create and preserve jobs and stimulate the economy;

•the potential benefits of obtaining a license to operate a wholly owned specialized small business investment company (“SSBIC”) subsidiary and whether the SBA ultimately issues the SSBIC license and the timing thereof; and

•our ability to qualify for and maintain our qualification as a regulated investment company (a “RIC”) and as a business development company (a “BDC”).

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of any projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. Moreover, we assume no duty and do not undertake to update the forward-looking statements, except as required by applicable law. Because we are an investment company, the forward-looking statements and projections contained in this report are excluded from the safe harbor protection provided by Section 21E of the U.S. Securities Exchange Act of 1934 Act, as amended (the “Exchange Act”).

Part I. Financial Information

Item1. Financial Statements

Lafayette Square USA, Inc.
Consolidated Statements of Assets and Liabilities

(dollar amounts in thousands, except share and per share data or otherwise noted)

	September 30, 2023		December 31, 2022
	(unaudited)
Assets
Investments, at fair value:
Non-controlled/non-affiliated investments at fair value (amortized cost of $142,543 and $63,838 as of September 30, 2023 and December 31, 2022, respectively)	$	143,295	$	63,636
Non-controlled/affiliated investments at fair value (amortized cost of $27,137 and $20,707 as of September 30, 2023 and December 31, 2022, respectively)	26,983		20,707
Cash and cash equivalents	82,219		20,687
Deferred financing costs	1,240		306
Deferred offering costs	—		151
Interest receivable	707		90
Other assets	115		—
Total assets	$	254,559	$	105,577
Liabilities
SBA-guaranteed debentures (see Note 5)	$	31,000	$	—
Secured borrowings (see Note 5)	23,400		31,500
Distributions payable	2,614		—
Accounts payable and accrued expenses	1,495		1,135
Due to affiliate	941		120
Incentive fee payable (see Note 6)	535		—
Management fee payable (see Note 6)	431		167
Administrative services fee payable (see Note 6)	251		550
Interest and financing payable	148		323
Total liabilities	60,815		33,795
Commitments and Contingencies (See Note 7)
Net assets
Preferred stock, par value $0.001 per share (50,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022)	—		—
Common stock, par value $0.001 per share (450,000,000 shares authorized, 13,068,112 and 4,916,554 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)	13		5
Paid-in capital in excess of par	193,462		72,610
Distributable earnings (losses)	269		(833)
Total net assets	193,744		71,782
Total liabilities and net assets	$	254,559	$	105,577

The accompanying notes are an integral part of these consolidated financial statements.

3

Part I. Financial Information

Item1. Financial Statements

Lafayette Square USA, Inc.
Consolidated Statements of Assets and Liabilities

(dollar amounts in thousands, except share and per share data or otherwise noted)

Net asset value per common share $ 14.83  $ 14.60 

The accompanying notes are an integral part of these consolidated financial statements.

4

Lafayette Square USA, Inc.
Consolidated Statements of Operations

(dollar amounts in thousands, except share and per share data or otherwise noted)

	For the three months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Investment Income:
Interest income from non-controlled/non-affiliated investments:
Cash	$	4,139	$	1,197	$	9,784	$	1,218
Fee income	18		80		28		80
Interest income from non-controlled/affiliated investments:
Cash	860				2,250		—
Fee income	—				—		—
Interest from cash and cash equivalents	724		—		$	1,269	—
Total investment income	5,741		1,277		13,331		1,298
Expenses:
General and administrative expenses	$	601	$	383	$	1,922	$	659
Interest and financing expenses (see Note 5)	307		261		1,193		356
Incentive fee (see Note 6)	535		—		1,050		—
Management fee (see Note 6)	431		108		1,035		110
Professional fees	449		163		851		275
Administrative services fee (see Note 6)	251		145		600		157
Organizational costs (See Note 2)	46		—		332		22
Directors' fees	80		80		240		96
Offering expenses	—		77		151		80
Total expenses, before expense support reimbursement	2,700		1,217		7,374		1,755
Expense support reimbursement (see Note 6)	123		(225)		452		(452)
Total expenses, including expenses support reimbursement	2,823		992		7,826		1,303
Net investment income (loss)	2,918		285		5,505		(5)

The accompanying notes are an integral part of these consolidated financial statements.

5

Lafayette Square USA, Inc.
Consolidated Statements of Operations

(dollar amounts in thousands, except share and per share data or otherwise noted)

Net change in unrealized gains (losses) on investments:
Net change in unrealized gains (losses) on investments in non-controlled/non-affiliated investments	767		(505)		954		(376)
Net change in unrealized gains (losses) on investments in non-controlled/affiliated investments	(209)				(154)		—
Total net change in unrealized gains (losses) on investments	558		(505)		800		(376)
Net increase (decrease) in net assets resulting from operations	$	3,476	$	(220)	$	6,305	$	(381)
Weighted average common shares outstanding	13,053,832		2,098,009		10,254,893		733,084
Net investment income (loss) per common share (basic and diluted)	0.22		0.14		0.54		(0.01)
Earnings (loss) per common share (basic and diluted)	0.27		(0.10)		0.61		(0.52)

The accompanying notes are an integral part of these consolidated financial statements.

6

Lafayette Square USA, Inc.
Consolidated Statements of Changes in Net Assets
(unaudited)

(dollar amounts in thousands, except share and per share data or otherwise noted)

	Common Stock
	Shares	Par Amount		Paid in Capital Excess of Par		Distributable Earnings (Losses)		Total net assets
Balance at June 30, 2023	13,038,253	$	13	$	193,022	$	(593)	$	192,442
Capital transactions:
Issuance of common stock	—	—		—		—		—
Reinvestment of stockholder distributions	29,859	—		440		—		440
Net increase in net assets from capital transactions	29,859	—		440		—		440
Net increase (decrease) in net assets resulting from operations:
Net investment income (loss)	—	—		—		2,918		2,918
Net realized gain (loss)	—	—		—		—		—
Net change in unrealized gain (losses)	—	—		—		558		558
Total increase (decrease) in net assets resulting from operations	—	—		—		3,476		3,476
Distributions to stockholders from:
Distributable earnings	—	—		—		(2,614)		(2,614)
Total distributions to stockholders	—	—		—		(2,614)		(2,614)
Total increase (decrease) in net assets for the three months ended September 30, 2023	29,859	—		440		862		1,302
Balance, September 30, 2023	13,068,112	$	13	$	193,462	$	269	$	193,744

The accompanying notes are an integral part of these consolidated financial statements.

7

Lafayette Square USA, Inc.
Consolidated Statements of Changes in Net Assets
(unaudited)

(dollar amounts in thousands, except share and per share data or otherwise noted)

	Common Stock
	Shares	Par Amount		Paid in Capital Excess of Par		Distributable Earnings (Losses)		Total net assets
Balance at June 30, 2022	1,747,783	$	2	$	26,215	$	(676)	$	25,541
Issuance of common stock	1,790,045	2		26,204		—		26,206
Net increase (decrease) in net assets resulting from operations:
Net investment income (loss)	—	—		—		285		285
Net change in unrealized gain (losses)	—	—		—		(505)		(505)
Total increase (decrease) for the three months ended September 30, 2022	1,790,045	2		26,204		(220)		25,986
Balance, September 30, 2022	3,537,828	$	4	$	52,419	$	(896)	$	51,527

	Common Stock
	Shares	Par Amount		Paid in Capital Excess of Par		Distributable Earnings (Losses)		Total net assets
Balance at December 31, 2022	4,916,554	$	5	$	72,610	$	(833)	$	71,782
Capital transactions:
Issuance of common stock	8,091,531	8		119,964		—		119,972
Reinvestment of stockholder distributions	60,027	—		888		—		888
Net increase in net assets from capital transactions	8,151,558	8		120,852		—		120,860
Net increase (decrease) in net assets resulting from operations:
Net investment income (loss)	—	—		—		5,505		5,505
Net change in unrealized gain (losses)	—	—		—		800		800
Total increase (decrease) in net assets from operations	—	—		—		6,305		6,305
Distributions to stockholders from:
Distributable earnings	—	—		—		(5,203)		(5,203)
Total distributions to stockholders	—	—		—		(5,203)		(5,203)
Total increase (decrease) in net assets for the nine months ended September 30, 2023	8,151,558	8		120,852		1,102		121,962
Balance, September 30, 2023	13,068,112	$	13	$	193,462	$	269	$	193,744

The accompanying notes are an integral part of these consolidated financial statements.

8

Lafayette Square USA, Inc.
Consolidated Statements of Changes in Net Assets
(unaudited)

(dollar amounts in thousands, except share and per share data or otherwise noted)

	Common Stock
	Shares	Par Amount*		Paid in Capital Excess of Par		Distributable Earnings (Losses)		Total net assets
Balance at December 31, 2021	700	$	—	$	11	$	(515)	$	(504)
Issuance of common stock	3,537,128	4		52,408		—		52,412
Net increase (decrease) in net assets resulting from operations:
Net investment income (loss)	—	—		—		(5)		(5)
Net change in unrealized gain (losses)	—	—		—		(376)		(376)
Total increase (decrease) for the nine months ended September 30, 2022	3,537,128	4		52,408		(381)		52,031
Balance, September 30, 2022	3,537,828	$	4	$	52,419	$	(896)	$	51,527

* Less than $1 as of December 31, 2021.

The accompanying notes are an integral part of these consolidated financial statements.

9

Lafayette Square USA, Inc.
Consolidated Statements of Cash Flows
(unaudited)

(dollar amounts in thousands, except share and per share data or otherwise noted)

	For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
	(unaudited)		(unaudited)
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	6,305	$	(381)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net change in unrealized (gain) loss on investments	(800)		376
Purchases of investments	(86,060)		(48,767)
Net accretion of discount on investments	(290)		(66)
Proceeds from sales and repayments of investments	1,215		324
Amortization of deferred financing costs	294		144
Changes in operating assets and liabilities:
Interest receivable	(617)		(18)
Deferred offering costs	151		43
Other assets	(115)		1
Accounts payable and accrued expenses	360		—
Management fee payable	264		—
Incentive fee payable	535		—
Administrative services fee payable	(299)		145
Interest and financing payable	(175)		20
Due to affiliate	821		322
Net cash provided by (used in) operating activities	(78,411)		(47,857)
Cash flows from financing activities
Proceeds from issuance of shares of common stock	119,972		52,412
Distributions paid	(1,701)		—
Proceeds from secured borrowings	77,448		37,500
Repayments of secured borrowings	(85,548)		(20,000)
Proceeds from SBA-guaranteed debentures	31,000		—
Deferred financing costs paid	(1,228)		(470)
Net cash provided by (used in) financing activities	139,943		69,442
Net increase (decrease) in cash and cash equivalents	61,532		21,585
Cash and cash equivalents at beginning of period	20,687		8
Cash and cash equivalents at end of period	$	82,219	$	21,593
Supplemental information:
Interest expense paid	$	644	$	175
Shares issued from dividend reinvestment plan	$	888	$	—

The accompanying notes are an integral part of these consolidated financial statements.

10

Lafayette Square USA, Inc.
Consolidated Statements of Cash Flows
(unaudited)

(dollar amounts in thousands, except share and per share data or otherwise noted)

Accrual for deferred financing costs $ 1,240  $ 306 

The accompanying notes are an integral part of these consolidated financial statements.

11

Lafayette Square USA, Inc.
Consolidated Schedule of Investments
September 30, 2023
(unaudited)

(dollar amounts in thousands, except share and per share data or otherwise noted)

Company (1)(2)(3)	Footnotes	Investment Type	Reference Rate and Spread	Interest Rate	Maturity Date	Par Amount/ Shares (4)		Amortized Cost		Fair Value		Percentage of Net Assets (5)
Non-controlled/non-affiliated investments
Commercial Services & Supplies
Rotolo Consultants, Inc.	(6)(7)	First lien senior secured loan	S+7.00%	12.68%	12/18/2026	$	3,183	$	3,142	$	3,143	1.6	%
Zero Waste Recycling LLC	(6)(7)(8)	First lien senior secured loan	S+6.45%	12.13%	5/15/2026	3,954		3,948		3,897		2.0	%
Zero Waste Recycling LLC	(6)(7)	First lien senior secured loan	S+6.45%	12.13%	5/15/2026	10,028		9,966		9,916		5.1	%
ZWR Holdings, Inc.		Subordinated debt	14.00% (Inc. 10.00% PIK)	14.00%	2/16/2027	1,826		1,826		1,686		0.9	%
ZWR Holdings, Inc.		Warrants				24,953		—		—		—	%
								18,882		18,642		9.6	%
Construction & Engineering
H.W. Lochner, Inc.	(6)(7)	First lien senior secured loan	S+6.75%	12.17%	7/02/2027	8,159		7,934		8,159		4.2	%
Synergi, LLC	(6)(7)	First lien senior secured loan	S+7.00%	12.65%	12/17/2027	22,343		22,156		22,343		11.5	%
Synergi, LLC	(6)(7)(8)	First lien senior secured loan	S+7.00%	12.65%	12/17/2027	—		(32)		—		—	%
TCFIII Owl Buyer LLC	(6)(7)	First lien senior secured loan	S+5.50%	10.93%	4/19/2026	10,925		10,829		10,897		5.6	%
Trilon Group, LLC	(6)(7)	First lien senior secured loan	S+6.25%	11.77%	5/25/2029	6,078		5,979		6,078		3.1	%
Trilon Group, LLC	(6)(7)(8)	First lien senior secured loan	S+6.25%	11.67%	5/25/2029	3,582		3,516		3,582		1.8	%
Trilon Group, LLC	(6)(7)(8)	First lien senior secured loan	S+6.25%	11.80%	5/25/2029	—		(8)		—		—	%
								50,374		51,059		26.2	%
Event Management
Dance Nation Holdings LLC	(6)(7)	First lien senior secured loan	S+6.50%	12.15%	8/24/2028	32,217		31,895		31,895		16.5	%
Dance Nation Holdings LLC	(6)(7)(8)	First lien senior secured loan	S+6.50%	12.15%	8/24/2028	—		(40)		—		—	%
Dance Nation Topco LLC		Preferred Equity				1,652,200		1,652		1,652		0.9	%
								33,507		33,547		17.4	%
Health Care Providers & Services
Salt Dental Collective LLC	(6)(7)	First lien senior secured loan	S+7.50%	12.92%	2/15/2028	7,960		7,853		7,960		4.1	%
								7,853		7,960		4.1	%
Hotels, Restaurants & Leisure
Aetius Holdings, LLC	(6)(7)	First lien senior secured loan	S+7.00%	12.51%	1/25/2024	3,500		3,487		3,500		1.8	%
								3,487		3,500		1.8	%
IT Services
Dartpoints Operating Company, LLC	(6)(7)(9)	First lien senior secured loan	S+9.39%	14.74%	5/14/2026	3,425		3,376		3,425		1.8	%
								3,376		3,425		1.8	%
Media
Direct Digital Holdings, LLC	(6)(7)	First lien senior secured loan	S+7.95%	13.52%	12/3/2026	4,155		4,123		4,150		2.1	%
Direct Digital Holdings, LLC	(6)(7)	First lien senior secured loan	S+7.95%	13.52%	12/3/2026	21,038		20,941		21,012		10.8	%
								25,064		25,162		12.9	%
Total non-controlled/non-affiliated investments								142,543		143,295		73.8	%

The accompanying notes are an integral part of these consolidated financial statements.

12

Lafayette Square USA, Inc.
Consolidated Schedule of Investments
September 30, 2023
(unaudited)

(dollar amounts in thousands, except share and per share data or otherwise noted)

Non-controlled/affiliated investments (10)
Commercial Services & Supplies
GK9 Global Companies, LLC	(6)(7)	First lien senior secured loan	S+8.95%	14.60%	10/07/2027	18,973	18,842		18,831		9.7	%
GK9 Global Companies, LLC	(6)(7)(8)	First lien senior secured loan	S+8.95%	14.60%	10/07/2027	3,433	3,414		3,393		1.8	%
IVM GK9 Holdings LLC		Equity				14,364	4,881		4,759		2.5	%
							27,137		26,983		14.0	%
Total non-controlled/affiliated investments							27,137		26,983		14.0	%
Total Portfolio Investments							$	169,680	$	170,278	87.8	%

(1)	Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".
(2)	All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.
(3)	All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.
(4)	The total funded par amount is presented for debt investments, while the number of shares or units owned is presented for equity investments.
(5)	Percentage is based on net assets of $193,744 as of September 30, 2023.
(6)	Loan includes interest rate floor feature.
(7)	Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to the Secured Overnight Financing Rate ("SOFR" or "S") or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of September 30, 2023. As of September 30, 2023, the reference rates for our variable rate loans were the 90-day SOFR at 5.27% and 30-day SOFR at 5.32%.
(8)	Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may earn unused commitment fees. Negative cost and fair value, if any, results from unamortized fees, which are capitalized to the cost of the investment. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. See below for more information on the Company’s unfunded commitments as of September 30, 2023:

Investments	Unused Fee Rate	Commitment Type	Commitment Expiration Date	Unfunded Commitment		Fair Value
First Lien Debt
Zero Waste Recycling LLC	0.50%	Delayed Draw Term Loan	5/15/2026	$	1,141	$	(13)
GK9 Global Companies, LLC	0.50%	Delayed Draw Term Loan	10/07/2027	1,940		(15)
Synergi, LLC	0.50%	Revolver	12/17/2027	3,750		—
Dance Nation Holdings LLC	0.50%	Revolver	8/24/2028	4,131		—
Trilon Group, LLC	1.00%	Delayed Draw Term Loan	5/27/2029	3,000		—
Trilon Group, LLC	0.50%	Revolver	5/27/2029	400		—
				$	14,362	$	(28)

The accompanying notes are an integral part of these consolidated financial statements.

13

Lafayette Square USA, Inc.
Consolidated Schedule of Investments
September 30, 2023
(unaudited)

(dollar amounts in thousands, except share and per share data or otherwise noted)

(9)	The Company categorized its unitranche loan as First Lien Senior Secured Loan. The First Lien Senior Secured Loan is comprised of two components: a first out tranche (“First Out”) and last out tranche (“Last Out”). The Company syndicates the First Out tranche and retains the Last Out tranche. The First Out and Last Out tranches have the same maturity date. Interest disclosed reflects the contractual rate of First Lien Senior Secured Loan. The First Out tranche has priority as to the Last Out tranche with respect to payments of principal, interest and any amounts due thereunder. The Company may be entitled to receive additional interest as a result of the Agreement Among Lenders (“AAL”) entered into with the First Out lender. In exchange for the higher interest rate, the Last Out portion is at a greater risk of loss.
(10)	Under the 1940 Act, the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of September 30, 2023, the Company did not “control” any of these portfolio companies. Under the 1940 Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owned 5% or more of the portfolio company’s outstanding voting securities. As of September 30, 2023, the Company’s non-controlled/affiliated investments were as follows:
Non-controlled/affiliated investments		Fair Value as of December 31,2022		Gross Additions		Gross Reductions		Change in Unrealized Gains (Losses)		Fair Value as of September 30, 2023		Investment Income
IVM GK9 Holdings LLC		$	20,707	$	6,663	$	(233)	$	(154)	$	26,983	$	2,250
Total non-controlled/affiliated investments		$	20,707	$	6,663	$	(233)	$	(154)	$	26,983	$	2,250

The accompanying notes are an integral part of these consolidated financial statements.

14

Lafayette Square USA, Inc.
Consolidated Schedule of Investments
December 31, 2022

(dollar amounts in thousands, except share and per share data or otherwise noted)

Company (1)(2)(3)		Footnotes	Investment Type	Reference Rate and Spread	Interest Rate	Maturity Date	Par Amount/ Shares (4)	Amortized Cost		Fair Value		Percentage of Net Assets (5)
Non-controlled/non-affiliated investments
Commercial Services & Supplies
Rotolo Consultants, Inc.		(6)(7)(8)	First lien senior secured loan	L+7.50%	12.23%	12/18/2026	3,209	$	3,158	$	3,160	4.4	%
								3,158		3,160		4.4	%
Zero Waste Recycling LLC		(6)(7)(8)(9)	First lien senior secured loan	L+6.45%	11.13%	5/15/2026	3,442	3,422		3,334		4.6	%
Zero Waste Recycling LLC		(6)(7)(8)	First lien senior secured loan	L+6.45%	11.18%	5/15/2026	10,105	10,044		9,890		13.8	%
ZWR Holdings, Inc.		(6)	Subordinated debt	14.00% (Inc. 10.00% PIK)	14.00%	2/16/2027	1,694	1,693		1,556		2.2	%
ZWR Holdings, Inc.		(6)	Warrants				24,953	—		—		—	%
								15,159		14,780		20.6	%
								18,317		17,940		25.0	%
Construction & Engineering
Synergi, LLC		(6)(7)(8)	First lien senior secured loan	L+7.50%	12.34%	12/17/2027	20	20,049		20,049		27.9	%
Synergi, LLC		(6)(7)(8)(9)	First lien senior secured loan	L+7.50%	12.34%	12/17/2027	—	(37)		(37)		(0.1)	%
								20,012		20,012		27.9	%
Media
Direct Digital Holdings, LLC		(6)(7)(8)	First lien senior secured loan	L+8.45%	12.86%	12/3/2026	4,234	4,191		4,234		5.9	%
Direct Digital Holdings, LLC		(6)(7)(8)	First lien senior secured loan	L+8.45%	13.18%	12/3/2026	21,450	21,318		21,450		29.9	%
								25,509		25,684		35.8	%
Total non-controlled/non-affiliated investments								63,838		63,636		88.7	%
Non-controlled/affiliated investments (10)
Commercial Services & Supplies
GK9 Global Companies, LLC		(6)(7)(8)	First lien senior secured loan	L+9.50%	14.34%	10/07/2027	16,272	16,112		16,112		22.4	%
GK9 Global Companies, LLC		(6)(7)(8)(9)	First lien senior secured loan	L+9.50%	14.34%	10/07/2027	—	(36)		(36)		(0.1)	%
IVM GK9 Holdings LLC		(6)	Equity				4,750	4,631		4,631		6.5	%
								20,707		20,707		28.8	%
Total non-controlled/affiliated investments								20,707		20,707		28.8	%
Total Portfolio Investments								$	84,545	$	84,343	117.5	%
(1)	Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".
(2)	All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.
(3)	All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.
(4)	The total funded par amount is presented for debt investments, while the number of shares or units owned is presented for equity investments.
(5)	Percentage is based on net assets of $71,782 as of December 31, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

15

Lafayette Square USA, Inc.
Consolidated Schedule of Investments
December 31, 2022

(dollar amounts in thousands, except share and per share data or otherwise noted)

(6)	Unless otherwise indicated, all investments are "restricted securities" as defined in the Securities Act of 1933.
(7)	Loan includes interest rate floor feature.
(8)	Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR, SOFR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2022. As of December 31, 2022, the reference rates for our variable rate loans were the 90-day LIBOR at 4.77% and SOFR at 4.30%.
(9)	Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may earn unused commitment fees. Negative cost and fair value, if any, results from unamortized fees, which are capitalized to the cost of the investment. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. See below for more information on the Company’s unfunded commitments as of December 31, 2022:

Investments	Unused Fee Rate	Commitment Type	Commitment Expiration Date	Unfunded Commitment		Fair Value
First Lien Debt
ZWR Holdings, Inc.	0.50%	Delayed Draw Term Loan	5/15/2026	$	1,682	$	(36)
GK9 Global Companies, LLC	0.50%	Delayed Draw Term Loan	10/07/2027	7,563		(36)
Synergi, LLC	0.50%	Revolver	12/17/2027	3,750		(37)
				$	12,995	$	(109)

(10)	Under the 1940 Act, the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of December 31, 2022, the Company did not “control” any of these portfolio companies. Under the 1940 Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owned 5% or more of the portfolio company’s outstanding voting securities. As of December 31, 2022, the Company’s non-controlled/affiliated investments were as follows:
Non-controlled/affiliated investments		Fair Value as of December 31,2021	Gross Additions	Gross Reductions	Change in Unrealized Gains (Losses)	Fair Value as of December 31,2022	Investment Income
IVM GK9 Holdings LLC		$—	$20,707	$—	$—	$20,707	$600
Total non-controlled/affiliated investments		$—	$20,707	$—	$—	$20,707	$600

The accompanying notes are an integral part of these consolidated financial statements.

16

Lafayette Square USA, Inc.
Notes to Consolidated Financial Statements
(unaudited)

September 30, 2023

(dollar amounts in thousands, except per share data or otherwise noted)

Note 1. Organization

Lafayette Square USA, Inc. (the “Company,” which term refers to either Lafayette Square USA, Inc. or Lafayette Square USA, Inc. together with its consolidated subsidiaries, as the context may require) is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). On May 16, 2022, Lafayette Square Empire BDC, Inc. filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation to change its corporate name from “Lafayette Square Empire BDC, Inc.” to “Lafayette Square USA, Inc.,” effective May 16, 2022. In addition, for U.S. federal income tax purposes, the Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for the tax periods ending December 31, 2021 and December 31, 2022. The Company intends to elect to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) for the tax period ending December 31, 2023, as well as maintain such election in future taxable years. However, there is no guarantee that the Company will qualify to make such an election for any taxable year.

The Company is externally managed by LS BDC Adviser, LLC (the “Adviser”) pursuant to an investment advisory and management agreement between the Company and the Adviser, dated August 7, 2023 (and as may be amended, the “Investment Advisory Agreement”). The Adviser is a subsidiary of Lafayette Square Holding Company, LLC (together with its controlled subsidiaries, including the Adviser and LS Administration, LLC, “Lafayette Square”).

The Company invests in businesses that are primarily domiciled, headquartered and/or have a significant operating presence in each of the ten regions below, with a goal to invest at least 5% of its assets in each region over time. However, the Company anticipates that it could take time to invest substantially all of the capital it expects to raise in a geographically diverse manner due to general market conditions, the time necessary to identify, evaluate, structure, negotiate and close suitable investments in private middle market companies, and the potential for allocations to other affiliated investment vehicles which focus their investments on a specific region. As a result, at any point in time, the Company may have a disproportionate amount of investments in certain regions, and there can be no assurance that the Company will achieve geographic diversification across all ten regions.

• Cascade Region: Alaska, Idaho, Oregon and Washington

• Empire Region: New York, New Jersey, Connecticut and Pennsylvania

• Far West Region: California, Hawaii and Nevada

• Four Corners Region: Arizona, Colorado, New Mexico and Utah

• Great Lakes Region: Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin

• Gulf Coast Region: Arkansas, Louisiana, Oklahoma and Texas

• Mid-Atlantic Region: Delaware, Kentucky, Maryland, North Carolina, South Carolina, Tennessee, Virginia and West Virginia and the District of Columbia

• Northeast Region: Maine, Massachusetts, New Hampshire, Rhode Island and Vermont

• Plains Region: Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming

• Southeast Region: Alabama, Georgia, Florida, Mississippi and the territory of Puerto Rico

The Company’s investment objective is to generate favorable risk-adjusted returns, including current income and capital appreciation, from directly originated investments in middle market companies.

17

The Company invests primarily in first and second lien loans and, to a lesser extent, in subordinated and mezzanine loans and equity and equity-like securities, including common stock, preferred stock and warrants. The Company defines middle market companies as those with annual revenues between $10 million and $1 billion, and annual earnings before interest, taxes, depreciation, and amortization (“EBITDA”) of between $10 million and $100 million, although the Company may invest in larger or smaller companies. The Company also may purchase interests in loans, corporate bonds or other instruments through secondary market transactions.

The Company formed two wholly owned subsidiaries, LS BDC Holdings, LLC and LS BDC Holdings (DN), LLC , both Delaware limited liability companies, to hold certain equity or equity-like investments in portfolio companies. Additionally, the Company has formed a wholly owned subsidiary, Lafayette Square SBIC, LP (“SBIC LP”), a small business investment company (“SBIC”) licensed by the U.S. Small Business Administration (the "SBA"), to invest in eligible “small businesses” as defined by the SBA. SBIC LP received its SBIC license on February 1, 2023 (made effective as of January 27, 2023). SBA regulations currently permit SBIC LP to borrow up to $175.0 million in SBA-guaranteed debentures with at least $87.5 million in regulatory capital (as defined in the SBA regulations). The Company consolidates its wholly owned subsidiaries in these consolidated financial statements from the date of each subsidiary’s formation. All significant intercompany transactions and balances have been eliminated in such consolidation.

Note 2. Significant Accounting Policies

The following is a summary of significant accounting policies consistently followed by the Company in the preparation of its consolidated financial statements. The Company is an investment company and accordingly applies specific accounting and financial reporting requirements under Accounting Standards Codification, as issued by the Financial Accounting Standards Board (“ASC”) Topic 946—Financial Services—Investment Companies (“Topic 946”). The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and pursuant to Articles 6, 10 and 12 of Regulation S-X.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company deposits its cash in a financial institution and, at times, such deposits may exceed the Federal Deposit Insurance Corporation insurance limits. As of September 30, 2023 and December 31, 2022, the Company held $82,219 and $20,687 in cash and cash equivalents, respectively, of which no cash was restricted. Of the total cash and cash equivalents balance, $82,219 and $20,682 were held in an interest bearing account with U.S. Bank National Association as of September 30, 2023 and December 31, 2022, respectively. For the three and nine months ended September 30, 2023 the Company earned $724 and $1,269, respectively, in interest on cash and cash equivalents balances, and the balance is included under Interest from cash and cash equivalents in Consolidated Statements of Operations. No interest was earned on cash balances for the three and nine months ended September 30, 2022.

Organization and Offering Costs

Organization costs consist of costs incurred to establish the Company and enable it to do business legally. Organization costs are expensed as incurred. Offering costs consist of costs incurred in connection with the offering of the common stock of the Company.

The Company’s initial organizational costs incurred were expensed, and initial offering costs are being amortized over one year.

18

The Company may incur organization and offering expenses of up to $1 million in connection with the formation of the Company and the offering of shares of its common stock, including the out-of-pocket expenses of the Adviser and its agents and affiliates. The Company reimburses the Adviser for the organization and offering costs it incurs on the Company’s behalf. If actual organization and offering costs incurred exceed $1 million, the Adviser or its affiliates will bear the excess costs. As of September 30, 2023, the Company has incurred $804 (since inception) of organization and offering costs.

Deferred Financing Costs

Deferred financing costs, incurred in connection with any credit facility and SBA-guaranteed debentures (see Note 5) are deferred and amortized over the life of the respective credit facility and SBA-guaranteed debentures.

Indemnifications

In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote.

Revenue Recognition

Investment transactions are accounted for on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized. The Company reports current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in the Consolidated Statements of Operations.

Investment Income

Interest income, including amortization of premium and accretion of discount, is recorded on the accrual basis to the extent that such amounts are collected. The Company records amortized or accreted discounts or premiums as interest income using the effective interest method or straight-line interest method, as applicable, and adjusted only for material amendments or prepayments. Dividend income, which represents dividends from equity investments and distributions from subsidiaries, if any, is recognized on an accrual basis to the extent that the Company collects such amount.

Original Issue Discount

Discounts to par on portfolio securities are accreted into income over the tenor of the instrument. Any remaining discount is accreted into income upon prepayment or redemption of the instrument. The Company then amortizes such amounts using the effective interest method as interest income over the expected life of the investment.

PIK Interest

The Company may, from time to time, hold loans in its portfolio that contain a payment-in-kind ("PIK") interest provision. PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to the Company in cash, and is recorded as interest income. Thus, the actual collection of PIK interest in cash may be deferred until the time of debt principal repayment.

PIK interest, which is a non-cash source of income at the time of recognition, is included in the Company’s taxable income. This affects the amount the Company would be required to distribute to its stockholders to maintain its tax treatment as a RIC for federal income tax purposes, even though the Company has not yet collected the cash.

Fee Income

Origination fees received are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized origination fees are recorded as investment income. The Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees, covenant waiver fees and loan amendment fees, which are recorded as investment income when earned.

19

Non-accrual loans

A loan can be left on accrual status during the period the Company is pursuing repayment of the loan. Management reviews all loans that become 90 days or more past due on principal and interest, or when there is reasonable doubt that principal or interest will be collected, for possible placement on non-accrual status. When a loan is placed on non-accrual status, unpaid interest credited to income is reversed. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date such loan is placed on non-accrual status. Interest payments received on non-accrual loans are recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid, and, in management’s judgment, future payments are likely to remain current.

Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, the Company is deemed to "control" a portfolio company if it owns more than 25% of its outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company. Such investments in portfolio companies that the Company "controls" are referred to as "Control Investments." Under the 1940 Act, the Company is deemed to be an "Affiliated Person" of a portfolio company if it owns between 5% and 25% of the portfolio company's outstanding voting securities or the Company is under common control with such portfolio company. We refer to such investments in Affiliated Persons as "Affiliated Investments." Investments which are neither Control Investments or Affiliated Investments are referred to as "Non-Controlled/Non-Affiliated investments."

Fair Value of Financial Instruments

The Company applies fair value to all of its financial instruments in accordance with ASC Topic 820—Fair Value Measurement (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity-specific measure.

The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3.

Any changes to the valuation methodology are reviewed by management and the Board to confirm that the changes are appropriate. As markets change, new products develop and the pricing for products becomes more or less transparent, the Company will continue to refine its valuation methodologies.

On December 3, 2020, the SEC adopted Rule 2a-5 under the 1940 Act (the "Valuation Rule"), which established an updated regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Pursuant to the Valuation Rule, which became effective on September 8, 2022 (the "SEC Compliance Date"), the Board has chosen to designate the Adviser as the Company's valuation designee to perform fair value determinations relating to the value of the assets for which market quotations are not readily available, subject to the Board's oversight.

20

Income Taxes

The Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for U.S. federal income tax purposes, for the tax periods ended December 31, 2021 and December 31, 2022. The Company intends to elect to be treated as a RIC under Subchapter M of the Code for the tax period ending December 31, 2023, as well as maintain such election in future taxable years. However, there is no guarantee that the Company will qualify to make such an election for any taxable year. In order to qualify and be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends for U.S. federal income tax purposes to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. As a RIC, the Company would intend to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal income taxes with respect to all income distributed to its stockholders. The Company may be subject to regular federal and state corporate income tax on any net built-in gains with respect to certain of its assets (i.e., the excess of the aggregate gains, over aggregate losses that would have been realized with respect to such assets if we had been liquidated) that the Company elects to recognize upon RIC election or when recognized over the next five taxable years.

The Company is subject to a nondeductible 4% U.S. federal excise tax on its undistributed income, unless it timely distributes (or is deemed to have timely distributed) an amount equal to the sum of (1) 98% of ordinary income for each calendar year, (2) 98.2% of the amount by which capital gains exceeds capital losses (adjusted for certain ordinary losses) for a one-year period ending on October 31 of the calendar year, and (3) any income and gains recognized, but not distributed, from the previous years. While the Company intends to distribute any income and capital gains to avoid imposition of this 4% U.S. federal excise tax, it may not be successful in avoiding entirely the imposition of this tax. In that case, the Company will be liable for the tax only on the amount by which it does not meet the foregoing distribution requirement.

The Company accounts for income taxes in conformity with ASC Topic 740 - Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense or tax benefit in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no material unrecognized net tax benefits or unrecognized net tax liabilities related to uncertain income tax positions as of and through September 30, 2023.

Distributions

Distributions to common stockholders are recorded on the record date. Subject to the discretion of and as determined by the Board, the Company will authorize and declare ordinary cash distributions based on a formula approved by the Board on a quarterly basis. The amount to be paid out as a dividend or distribution is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed to shareholders at least annually, although the Company can retain such capital gains for investment in its discretion.

The Company has adopted a dividend reinvestment plan (the “DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes and the Company declares a cash distribution, then stockholders who have not “opted out” of the DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. Shares issued under the DRIP will be issued at a price per share equal to the most recent net asset value (“NAV”) per share as determined by the Board (subject to adjustment to the extent required by Section 23 of the 1940 Act).

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company’s consolidated financial statements.

21

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. An entity may elect to adopt the amendments in ASU 2020-04 at any time after March 12, 2020 but no later than December 31, 2022. In January 2021, the FASB issued ASU. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. In December, 2022, the FASB issued a new Accounting Standards Update ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” that extends the sunset (or expiration) date of Accounting Standards Codification (ASC) Topic 848 to December 31, 2024. This gives reporting entities two additional years to apply the accounting relief provided under ASC Topic 848 for matters related to reference rate reform. The Company adopted ASU 2020-04 and 2021-01 as of June 30, 2023, and concluded that there was no impact of this guidance to the consolidated financial statements and disclosures as of September 30, 2023.

Note 3. Investments

The following tables show the composition of the Company’s investment portfolio, at amortized cost and fair value (with corresponding percentage of total portfolio investments). as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Amortized Cost				Fair Value
First lien senior secured loans	$	161,321	95.0	%	$	162,181	95.2	%
Equity	4,881		2.9	%	4,759		2.8	%
Subordinated debt	1,826		1.1	%	1,686		1.0	%
Preferred equity	1,652		1.0	%	1,652		1.0	%
Warrants	—		—	%	—		—	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

	December 31, 2022
	Amortized Cost				Fair Value
First lien senior secured loans	$	78,221	92.5	%	$	78,156	92.7	%
Equity	4,631		5.5	%	4,631		5.5	%
Subordinated debt	1,693		2.0	%	1,556		1.8	%
Warrants	—		—	%	—		—	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

The following tables show the composition of the Company’s investment portfolio by geographic region, at amortized cost and fair value (with corresponding percentage of total portfolio investments) as of September 30, 2023 and December 31, 2022. The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business:

22

	September 30, 2023
	Amortized Cost				Fair Value
Mid-Atlantic	$	41,351	24.4	%	$	41,342	24.3	%
Far West Region	33,507		19.7	%	33,547		19.7	%
Gulf Coast	31,582		18.6	%	31,730		18.6	%
Southeast	27,137		16.0	%	26,983		15.8	%
Great Lakes	18,763		11.1	%	19,056		11.2	%
Four Corners	9,487		5.6	%	9,660		5.7	%
Cascade	7,853		4.6	%	7,960		4.7	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

    

	December 31, 2022
	Amortized Cost				Fair Value
Mid-Atlantic	$	35,171	41.6	%	$	34,792	41.3	%
Gulf Coast	28,667		33.9	%	28,844		34.1	%
Southeast	20,707		24.5	%	20,707		24.6	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

The following tables show the composition of the Company’s investment portfolio by industry, at amortized cost and fair value (with corresponding percentage of total portfolio investments) as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Amortized Cost				Fair Value
Construction & Engineering	$	50,374	29.7	%	$	51,059	29.9	%
Commercial Services & Supplies	46,019		27.1	%	45,625		26.8	%
Event Management	33,507		19.7	%	33,547		19.7	%
Media	25,064		14.8	%	25,162		14.8	%
Health Care Providers & Services	7,853		4.6	%	7,960		4.7	%
Hotels, Restaurants & Leisure	3,487		2.1	%	3,500		2.1	%
IT Services	3,376		2.0	%	3,425		2.0	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

	December 31, 2022
	Amortized Cost				Fair Value
Commercial Services & Supplies	$	39,024	46.2	%	$	38,647	45.8	%
Media	25,509		30.2	%	25,684		30.5	%
Construction & Engineering	20,012		23.6	%	20,012		23.7	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

23

Note 4. Fair Value Measurements of Investments

FASB ASC 820, Fair Value Measurement (“ASC 820”), clarifies the definition of fair value as the amount that would be received in the sale of an asset or paid in the transfer of a liability in an orderly transaction between market participants at the measurement date. Where available, the Company uses quoted market prices based on the last sales price on the measurement date.

In accordance with Topic 820, 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 valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). To the extent that fair value is based on inputs that are less observable, the determination of fair value requires a significant amount of management judgment.

The three-tier hierarchy of inputs is summarized below.

Level 1 - Quoted prices are available in active markets/exchanges for identical investments as of the reporting date.

Level 2 - Pricing inputs are observable inputs including, but not limited to, prices quoted for similar assets or liabilities in active markets/exchanges or prices quoted for identical or similar assets or liabilities in markets that are not active, and fair value is determined through the use of models or other valuation methodologies.

Level 3 - Pricing inputs are unobservable for the investment and include activities where there is little, if any, market activity for the investment. The inputs into determination of fair value require significant management judgment and estimation.

The inputs used by management in estimating the fair value of Level 3 investments may include valuations and other reporting provided by representatives of the portfolio companies, original transaction prices, recent transactions for identical or similar instruments, and comparisons to fair values of comparable investments, and may include adjustments to reflect illiquidity or non-transferability. The Adviser has policies with respect to its investments, which may assist the Adviser in assessing the quality of information provided by, or on behalf of, each portfolio investment and in determining whether such information continues to be provided by a reliable source or whether further investigation is necessary. Any such investigation, as applicable, may or may not require the Adviser to forego its normal reliance on the value supplied by, or on behalf of, such portfolio investment and to independently determine the fair value of the Company’s interest in such portfolio investments, consistent with the Adviser’s valuation procedures.

The Company has engaged an independent third-party valuation provider, which performs valuation procedures to arrive at estimated valuation ranges of the investments on a quarterly basis. Investments that have been completed within the past three months are fair valued approximating cost unless there has been a material event since the completion date. If there has been a material event or material information that was not known as of the close of the transaction, the independent third-party valuation provider provides an independent valuation range. The types of valuation methodologies employed by the third-party valuation provider include discounted cash flow, recent financing and enterprise value valuation methodologies. Pursuant to the Valuation Rule, which became effective on the SEC Compliance Date, the Board has chosen to designate the Adviser as the Company's valuation designee to perform fair value determinations relating to the value of the assets for which market quotations are not readily available, subject to the Board's oversight.

The Company’s investments and borrowings are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments and borrowings are traded.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics and other factors.

24

The use of these valuation models requires significant estimation and judgment by the Adviser. While the Company believes its valuation methods are appropriate, other market participants may value identical assets differently than the Company at the measurement date. The methods used by the Company may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. The Company may also have risk associated with its concentration of investments in certain geographic regions and industries.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Accordingly, the degree of judgment exercised by the Adviser in determining fair value is greatest for securities categorized in Level 3.

The determination of what constitutes “observable” requires significant judgment by the Adviser. The Adviser considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary. Such observable data may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy where the fair value measurement falls (in its entirety) is based on the lowest level input that is significant to the fair value measurement. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment, and observability of prices and inputs may be reduced for many investments. This condition could cause the investment to be reclassified to a lower level within the fair value hierarchy.

The consolidated financial statements include portfolio investments at fair value of $170,278 and $84,343 as of September 30, 2023 and December 31, 2022, respectively. The fair value of the Company's portfolio investments was determined in good faith by the Company’s Board. Because of the inherent uncertainty of valuation, the determined values may differ significantly from the values that would have been used had a liquid market existed for the investments as of September 30, 2023 and December 31, 2022.

The following tables present fair value measurements of investments, by major class according to the fair value hierarchy as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First lien senior secured loans	$	—	$	—	$	162,181	$	162,181
Subordinated debt	—		—		1,686		1,686
Equity	—		—		4,759		4,759
Preferred equity	—		—		1,652		1,652
Warrants	—		—		—		—
Total Investments	$	—	$	—	$	170,278	$	170,278

	December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First lien senior secured loans	$	—	$	—	$	78,156	$	78,156
Subordinated debt	—		—		1,556		1,556
Equity	—		—		4,631		4,631
Warrants	—		—		—		—
Total Investments	$	—	$	—	$	84,343	$	84,343

The carrying value of the Credit Facility and SBA-guaranteed debentures approximates fair value as of September 30, 2023, and is considered Level 3.

25

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2023:

	For the nine months ended September 30, 2023
	Investments
	First Lien Senior Secured Loans		Subordinated Debt		Equity		Preferred Equity		Warrants		Total Investments
Balance as of December 31, 2022	$	78,156	$	1,556	$	4,631	$	—	$	—	$	84,343
Purchases of investments and other adjustments to cost	84,026		132		250		1,652		—		86,060
Proceeds from sales and repayments of investments	(1,215)		—		—		—		—		(1,215)
Net realized gain (loss)	—		—		—		—		—		—
Net accretion of discount on investments	290		—		—		—				290
Net change in unrealized gain (loss) on investments	924		(2)		(122)		—		—		800
Balance as of September 30, 2023	$	162,181	$	1,686	$	4,759	$	1,652	$	—	$	170,278

For the nine months ended September 30, 2023 the net change in unrealized gain (loss) on investments attributable to Level 3 investments still held on September 30, 2023 was $800 as shown on the Consolidated Statements of Operations.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2022:

	For the nine months ended September 30, 2022
	Investments
	First Lien Senior Secured Loans		Subordinated Debt		Equity		Warrants		Total Investments
Balance as of December 31, 2021	$	—	$	—	$	—	$	—	$	—
Purchases of investments and other adjustments to cost	47,115		1,652		—		—		48,767
Proceeds from sales and repayments of investments	(324)		—		—		—		(324)
Net realized gain (loss)	—		—		—		—		—
Net accretion of discount on investments	66		—		—		—		66
Net change in unrealized gain (loss) on investments	(264)		(112)		—		—		(376)
Balance as of September 30, 2022	$	46,593	$	1,540	$	—	$	—	$	48,133

For the nine months ended September 30, 2022 the net change in unrealized gain (loss) on investments attributable to Level 3 investments still held on September 30, 2022 was $(376) as shown on the Consolidated Statements of Operations.

Purchases of investments and other adjustments to costs include purchases of new investments at cost, accretion/amortization of income from discount/premium on debt securities and PIK.

Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of Level 3 as of the beginning of the period which the reclassifications occur. There were no transfers between Levels 1, 2 and 3 during the nine months ended September 30, 2023.

Significant Unobservable Inputs

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. The table below is not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

26

The tables below summarize the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of September 30, 2023 and December 31, 2022.

						Range
	Fair Value, as of September 30, 2023		Valuation Technique	Unobservable Input	Weighted Average Mean	Minimum	Maximum
Assets:
First lien senior secured loans	$	118,627	Discounted Cash Flow	Discount Rate	12.3%	10.4%	14.6%
First lien senior secured loans	43,554		Amortized Cost	Cost	N/A	N/A	N/A
Subordinated debt	1,686		Discounted Cash Flow	Discount Rate	16.5%	16.0%	17.0%
Equity	4,759		Comparable Multiples	EV/EBITDA	6.8x	6.5x	7.0x
Preferred equity	1,652		Cost	Cost	N/A	N/A	N/A
Warrants	—		Comparable Multiples	EV/EBITDA	8.3x	8.0x	8.5x
Total Level 3 Assets	$	170,278

						Range
	Fair Value, as of December 31, 2022		Valuation Technique	Unobservable Input	Weighted Average Mean	Minimum	Maximum
Assets:
First lien senior secured loans	$	78,156	Discounted Cash Flow	Discount Rate	12.8%	10.9%	14.7%
Subordinated debt	1,556		Discounted Cash Flow	Discount Rate	16.3%	16.0%	16.5%
Equity	4,631		Comparable Multiples	EV/EBITDA	8.0x	8.0x	8.0x
Warrants	—		Comparable Multiples	EV/EBITDA	8.8x	8.5x	9.0x
Total Level 3 Assets	$	84,343

The significant unobservable input used in the income approach of fair value measurement of the Company’s investments is the discount rate used to discount the estimated future cash flows received from the underlying investment, which include both future principal and interest payments. Increases (decreases) in the discount rate would result in a decrease (increase) in the fair value estimate of the investment. Included in the consideration and selection of discount rates are the following factors: risk of default, rating of the investment and comparable investments, and call provisions.

The significant unobservable inputs used in the market approach of fair value measurement of the Company’s investments are the market multiples of EBITDA or revenue of the comparable guideline public companies. The Company selects a population of public companies for each investment with similar operations and attributes of the portfolio company. Using these guideline public company data, a range of multiples of enterprise value to EBITDA or revenue is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on such multiple and generally the latest twelve months EBITDA or revenue of the portfolio company (or other meaningful measure). Increases (decreases) in the multiple will result in an increase (decrease) in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment.

27

Note 5. Debt

As a BDC, we are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to shares of our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150%, subject to receipt of certain approvals and compliance with certain disclosure requirements, immediately after each such issuance. Section 61(a) of the 1940 Act reduces the asset coverage requirements applicable to BDCs from 200% to 150% so long as the BDC meets certain disclosure requirements and obtains certain approvals. In April 2021, our Board and initial stockholder approved the reduced asset coverage ratio. The reduced asset coverage requirements permit us to increase the maximum amount of leverage that we are permitted to incur by reducing the asset coverage requirements applicable to us from 200% to 150%. As defined in the 1940 Act, asset coverage of 150% means that for every $100 of net assets we hold, we may raise $200 from borrowing and issuing senior securities as compared to $100 from borrowing and issuing senior securities for every $100 of net assets under 200% asset coverage requirement. In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase.

Credit Facilities

Subscription Facility

On February 2, 2022, the Company entered into a revolving credit agreement with Sumitomo Mitsui Banking Corporation, which was amended on June 28, 2022, December 21, 2022 and August 7, 2023 (and as may be further amended, modified or supplemented, the “Subscription Facility”). The Subscription Facility allows the Company to borrow up to $38.4 million, subject to certain restrictions, including availability under a borrowing base based upon unused capital commitments made by investors in the Company. The amount of permissible borrowings under the Subscription Facility may be increased to up to $1 billion with the consent of the lenders. The Subscription Facility matures on February 2, 2024 and bears interest at an annual rate of: (i) with respect to reference rate loans, a reference rate for the period plus a margin equal to 1.80% (the "Applicable Margin") and (ii) with respect to alternative rate loans, the greatest of (a) the administrative agent's prime rate, (b) Term SOFR with a one-month term plus the Applicable Margin and (c) the federal funds rate plus 0.50%. Subject to certain exceptions, the Subscription Facility is secured by a first lien security interest in the Company’s unfunded investor equity capital commitments. The Subscription Facility includes customary covenants, certain limitations on the incurrence of additional indebtedness and liens, and other maintenance covenants, as well as usual and customary events of default for senior secured revolving credit facilities of this nature.

As of September 30, 2023 and December 31, 2022, the Company had $23.4 million and $31.5 million, respectively, in outstanding borrowings from the Subscription Facility.

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Subscription Facility for the three and nine months ended September 30, 2023 and September 30, 2022:

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	76			178			375			182
Non-usage fee (1)	22			14			64			30
Amortization of financing costs	97			69			266			144
Weighted average stated interest rate	7.49		%	4.15		%	7.17		%	4.17		%
Weighted average outstanding balance (2)	$	4,028		$	16,924		$	6,991		$	16,926

28

(1) Non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the Subscription Facility.

(2) The Company's initial borrowing occurred on June 29, 2022.

SBA Debentures

SBIC LP is able to borrow funds from the SBA against its regulatory capital (which approximates equity capital in SBIC LP) that is paid in and is subject to customary regulatory requirements, including, but not limited to, periodic examination by the SBA. As of September 30, 2023, we funded SBIC LP with $42.0 million of regulatory capital, and have $31.0 million in SBA-guaranteed debentures outstanding. SBA debentures are non-recourse to us, and have a 10-year maturity, and may be prepaid at any time without penalty. The interest rate of SBA debentures is fixed at the time of issuance, often referred to as pooling, at a market-driven spread over 10-year U.S. Treasury Notes. SBA current regulations limit the amount that SBIC LP may borrow to a maximum of $175.0 million, which is up to twice its potential regulatory capital.

The SBA-guaranteed debentures incurred an upfront commitment fee of 1.00% on the total commitment amount and a 2.435% issuance discount on drawdowns, which are amortized over the life of the SBA-guaranteed debentures. In addition, an annual fee of 0.047% is charged on the SBA-guaranteed debentures which are amortized over the period.

The following table summarizes the Company’s SBA-guaranteed debentures as of September 30, 2023:

Issuance Date	Maturity Date	Debenture Amount		Purchase Date	Interest Rate	SBA Annual Charge
September 15, 2023	September 15, 2033	$	7,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%

The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three and nine months ended September 30, 2023:

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	84			—			84			—
Non-usage fee (1)	—			—			—			—
Amortization of financing costs	28			—			28			—
Weighted average stated interest rate	6.10		%	—		%	6.10		%	—		%
Weighted average outstanding balance (2)	$	5,391		$	—		$	1,817		$	—

(1) Non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the SBA-guaranteed debentures.

(2) The Company's initial borrowing occurred on September 15, 2023.

Repurchase Obligations

In order to finance certain investment transactions, the Company may, from time to time, enter into repurchase agreements with Macquarie US Trading LLC (“Macquarie”), whereby the Company sells to Macquarie an investment that it holds and

29

concurrently enters into an agreement to repurchase the same investment at an agreed-upon price at a future date, not to exceed 90-days from the date it was sold (the “Macquarie Transaction”).

The Company entered into a repurchase agreement on March 15, 2023 which was collateralized by the Company’s term loan to Synergi, LLC. Interest under this Repurchase Obligations was calculated as (a) the product of the funded amount of the loan and (b) the product of (i) the number of days the loan is outstanding (subject to number of minimum days per the agreement) and (ii) daily fee rate. The Company maintained effective control over the security because it is entitled and obligated to repurchase the security before its maturity. Therefore, the repurchase agreement was treated as a secured borrowing and not a sale. On June 2, 2023 the Company repurchased its obligation under the repurchase agreement. As of September 30, 2023, there was no outstanding loan and interest payable balance to Macquarie.

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Repurchase Obligation for the three and nine months ended September 30, 2023 and September 30, 2022:

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	—			—			376			—
Weighted average stated interest rate	—		%	—		%	8.67		%	—		%
Weighted average outstanding balance	$	—		$	—		$	5,801		$	—

The facilities of the Company consist of the following:

	September 30, 2023						December 31, 2022
	Aggregate Principal Amount Available		Principal Amount Outstanding		Unused Portion		Aggregate Principal Amount Available		Principal Amount Outstanding		Unused Portion
Subscription Facility	$	38,400	$	23,400	$	15,000	$	38,400	$	31,500	$	6,900
SBA-guaranteed debentures	36,960		31,000		5,960		—		—		—
Total	$	75,360	$	54,400	$	20,960	$	38,400	$	31,500	$	6,900

Note 6. Related Party Agreements and Transactions

Investment Advisory Agreement

Under the Investment Advisory Agreement, the Adviser manages the day-to-day operations of, and provides investment advisory services to the Company. The Board approved the Investment Advisory Agreement on April 26 2021 and approved its renewal on June 23, 2023. The Adviser is a registered investment adviser with the SEC. The Adviser receives fees for providing services, consisting of two components, a base management fee and an incentive fee.

Base Management Fee:

The base management fee (“Management Fee”) is payable quarterly in arrears beginning in the period during the Initial Drawdown at an annual rate of (i) prior to a Liquidity Event, 0.75%, and (ii) following a Liquidity Event, 1.0%, in each case of the average value of our gross assets (gross assets equal the total assets of the Company as set forth on the Company’s Consolidated Statements of Assets and Liabilities) at the end of the two most recently completed calendar quarters. No Management Fee is charged on committed but undrawn capital commitments.

30

We define a “Liquidity Event” as the earliest to occur of: (1) a quotation or listing of our common stock on a national securities exchange, including an initial public offering or (2) a Sale Transaction. A “Sale Transaction” means (a) the sale of all or substantially all of our capital stock or assets to, or another liquidity event with, another entity or (b) a transaction or series of transactions, including by way of merger, consolidation, recapitalization, reorganization, or sale of stock in each case for consideration of either cash and/or publicly listed securities of the acquirer. Potential acquirers could include entities that are not BDCs that are advised by the Adviser or its affiliates.

For the three and nine months ended September 30, 2023, the Company incurred Management Fee expense of $431 and $1,035, respectively. For the three and nine months ended September 30, 2022, the Company incurred Management Fee expense of $108 and $110, respectively. As of September 30, 2023 and December 31, 2022, $431 and $167, respectively, remained payable.

Incentive Fee:

The Company also pays the Adviser an incentive fee consisting of two parts: (i) an incentive fee based on pre-incentive fee net investment income (the “Income-Based Fee”), and (ii) the capital gains component of the incentive fee (the “Capital Gains Fee”) of which is described in more detail below.

The Income-Based Fee, is based on Pre-Incentive Fee Net Investment Income Returns and is determined and payable in arrears as of the end of each calendar year. “Pre-Incentive Fee Net Investment Income Returns” means, as the context requires, either the dollar value of, or percentage rate of return on the value of our net assets at the end of the immediately preceding quarter from, interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses accrued for the quarter (including the Management Fee, expenses payable under the Administration Agreement), and any interest expense or fees on any credit facilities or outstanding debt and distributions paid on any issued and outstanding preferred shares, but excluding the incentive fee.

Pre-Incentive Fee Net Investment Income Returns include, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-Incentive Net Investment Income Returns do not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Pre-Incentive Fee Net Investment Income Returns, expressed as a rate of return on the value of our net assets at the end of the immediately preceding quarter, is compared to a “hurdle rate” of return of 1.25% per quarter (5.0% annualized).

Prior to a Liquidity Event, we pay the Adviser the Income-Based Fee as follows:

•no incentive fee based on Pre-Incentive Fee Net Investment Income Returns in any calendar quarter in which our Pre-Incentive Fee Net Investment Income Returns do not exceed the hurdle rate of 1.25%;

•100% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns with respect to that portion of such Pre-Incentive Fee Net Investment Income Returns, if any, that exceeds the hurdle rate but is less than a rate of return of 1.47% (5.88% annualized). We refer to this portion of our Pre-Incentive Fee Net Investment Income Returns (which exceeds the hurdle rate but is less than 1.47%) as the “catch-up.” The “catch-up” is meant to provide the Adviser with approximately 15% of our Pre-Incentive Fee Net Investment Income Returns as if a hurdle rate did not apply if this net investment income exceeds 1.47% in any calendar quarter; and

•15% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns, if any, that exceed a rate of return of 1.47% (5.88% annualized). This reflects that once the hurdle rate is reached and the catch-up is achieved, 15% of all Pre-Incentive Fee Net Investment Income Returns thereafter are allocated to the Adviser.

Following a Liquidity Event, we will pay the Adviser the Income-Based Fee as follows:

•no incentive fee based on Pre-Incentive Fee Net Investment Income Returns in any calendar quarter in which our Pre-Incentive Fee Net Investment Income Returns do not exceed the hurdle rate of 1.25%;

31

•100% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns with respect to that portion of such Pre-Incentive Fee Net Investment Income Returns, if any, that exceeds the hurdle rate but is less than a rate of return of 1.47% (5.88% annualized). The “catch-up” is meant to provide the Adviser with approximately 17.5% of our Pre-Incentive Fee Net Investment Income Returns as if a hurdle rate did not apply if this net investment income exceeds 1.47% in any calendar quarter; and

•17.5% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns, if any, that exceed a rate of return of 1.47% (5.88% annualized). This reflects that once the hurdle rate is reached and the catch-up is achieved, 17.5% of all Pre-Incentive Fee Net Investment Income Returns thereafter are allocated to the Adviser.

For the three and nine months ended September 30, 2023, the Company incurred Income-Based Fee of $535 and $1,050, respectively. For the three and nine months ended September 30, 2022, the Company did not incur any Income-Based Fee. As of September 30, 2023 and December 31, 2022, $535 and $0, respectively, remained payable.

The second part of the incentive fee, the Capital Gains Fee, is determined and payable in arrears as of the end of each calendar year (or at the time of a Liquidity Event). The Capital Gains Fee is equal to 15% of (1) realized capital gains less (2) realized capital losses, less unrealized capital losses on a cumulative basis from inception through the day before the Liquidity Event, less the aggregate amount of any previously paid Capital Gains Fee.

Prior to a Liquidity Event, the Capital Gains Fee equals:

•15% of cumulative realized capital gains less all realized capital losses and unrealized capital depreciation on a cumulative basis from inception through the end of such calendar year (or upon a Liquidity Event), less the aggregate amount of any previously paid Capital Gains Fee as calculated in accordance with GAAP.

Following a Liquidity Event, the amount payable equals:

•17.5% of cumulative realized capital gains from inception through the end of such calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid Capital Gains Fee as calculated in accordance with GAAP.

If a Liquidity Event occurs on a date other than the first day of a fiscal year, the Capital Gains Fee will be calculated as of the day before the Liquidity Event, with such Capital Gains Fee paid to the Adviser annually following the end of the fiscal year in which the Liquidity Event occurred. Solely for purposes of calculating the Capital Gains Fee after a Liquidity Event, the Company will be deemed to have previously paid a Capital Gains Fee prior to a Liquidity Event equal to the product obtained by multiplying (a) the actual aggregate amount of previously paid Capital Gains Fee for all periods prior to a Liquidity Event by (b) the percentage obtained by dividing (x) 17.5% by (y) 15%.

Each year, the Capital Gains Fee is calculated net of the aggregate amount of any previously paid Capital Gains Fee for all prior periods. We will accrue, but will not pay, a Capital Gains Fee with respect to unrealized appreciation because a Capital Gains Fee would be owed to the Adviser if we were to sell the relevant investment and realize a capital gain. In no event will the Capital Gains Fee payable pursuant to the Investment Advisory Agreement exceed the amount permitted by the Investment Advisers Act of 1940, as amended (the “Advisers Act”), including Section 205 thereof.

For the purpose of computing the Capital Gains Fee, the calculation methodology looks through derivative financial instruments or swaps as if we owned the reference assets directly.

For the three and nine months ended September 30, 2023 and September 30, 2022, there were no Capital Gains Fees incurred.

32

Administration Agreement

Pursuant to the administration agreement between the Company and LS Administration, LLC (the “Administration Agreement”), LS Administration, LLC (the “Administrator”) furnishes the Company with office space, office services, and equipment. Under the Administration Agreement, our Administrator performs or oversees the performance of our required administrative services, which include providing assistance in accounting, legal, compliance, operations, technology, internal audit, and investor relations, and loan agency services (including any third party service providers related to the foregoing) and being responsible for the financial records that we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, our Administrator assists us in determining and publishing our net asset value, overseeing the preparation and filing of our tax returns and the printing and disseminating reports to our stockholders, assessing our internal controls under the Sarbanes-Oxley Act, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.

Payments under the Administration Agreement are equal to an amount that reimburses our Administrator for its costs and expenses. This includes an allocable portion of expenses incurred by our Administrator in performing its obligations under the Administration Agreement and our allocable portion of the compensation paid to our Chief Compliance Officer and Chief Financial Officer and their respective staffs. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party. Additionally, we ultimately bear the costs of any sub-administration agreements that our Administrator may enter into. Our Administrator reserves the right to waive all or part of any reimbursements due from us at its sole discretion.

The Administration Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, our Administrator and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with it will be entitled to indemnification from us for any damages, liabilities, costs, and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of our Administrator’s services under the Administration Agreement or otherwise as administrator for us.

For the three and nine months ended September 30, 2023, the Administrator incurred $251 and $600, respectively, in fees under the Administrative Agreement. For the three and nine months ended September 30, 2022, the Administrator incurred $145 and $157, respectively, in fees under the Administrative Agreement. These fees are included in administrative service fees in the accompanying Consolidated Statements of Operations. As of September 30, 2023 and December 31, 2022, $251 and $550, respectively, were unpaid and included in administrative services fee payable in the accompanying Consolidated Statements of Assets and Liabilities. No administrative services fee was charged to the Company prior to the Company’s commencement of operations.

Additionally, pursuant to a sub-administration agreement with SS&C Technologies, Inc. (“SS&C”), SS&C performs certain of the Company’s required administrative services, which include providing assistance in accounting, legal, compliance, operations, investor relations and technology, being responsible for the financial records that the Company is required to maintain and preparing reports to the Company’s stockholders and reports filed with the SEC. SS&C is also reimbursed for certain expenses it incurs on our behalf.

Our Administrator and Adviser have entered into staffing agreements with affiliates of Lafayette Square pursuant to which such Lafayette Square affiliates agree to provide our Administrator and Adviser with access to certain legal, operations, financial, compliance, accounting, internal audit (in their role of performing our Sarbanes-Oxley Act internal control assessment), clerical and administrative personnel.

33

Affiliated transactions

The Adviser’s investment allocation policy seeks to ensure allocation of investment opportunities on a fair and equitable basis over time between the Company and other funds or investment vehicles managed by the Adviser or its affiliates. It is expected that the Company may have overlapping investment strategies with such affiliated funds and/or investment vehicles, but there are prohibitions under the 1940 Act from participating in certain transactions with such affiliates without prior approval of the directors who are not interested persons, and in some cases, the prior approval of the SEC. As a result, the Company, the Adviser and certain of their affiliates applied for, and have been granted, exemptive relief by the SEC for the Company to co-invest with other funds or investment vehicles managed by the Adviser or certain of its affiliates, in a manner consistent with the requirements of the Company’s organizational documents and investment strategy as well as applicable laws and regulations and the Adviser’s fiduciary duties. As a result of such exemptive relief, there could be significant overlap in the Company’s investment portfolio and the investment portfolios of such other affiliated entities that avail themselves of such exemptive relief and that have an investment objective similar to the Company. In addition, any transaction fees (including break-up or commitment fees, but excluding transaction fees contemplated by Section 17(e) or 57(k) of the 1940 Act, as applicable, which are retained by the Adviser, to the extent permitted by applicable law) received in connection with a co-investment transaction among the Company and its affiliated entities are distributed to the participating entities (including the Company) on a pro rata basis based on the amounts they invested or committed, as the case may be, in such transaction.

Due to Affiliate

The Administrator pays for certain unaffiliated third-party expenses incurred by the Company. These expenses are not marked-up and represent the same amount the Company would have paid had the Company paid the expenses directly. After the commencement of operations these expenses are reimbursed on an ongoing basis. As of September 30, 2023 and December 31, 2022, $941 and $120, respectively, were included in the Due to Affiliate line item in the Consolidated Statements of Assets and Liabilities for reimbursable expenses, that were paid by the Administrator on behalf of the Company.

Expense Support and Conditional Reimbursement Agreement

On December 30, 2021, the Company entered into an expense support and conditional reimbursement agreement (the "Expense Support Agreement") with the Adviser. The Adviser may elect to pay certain Company expenses on the Company’s behalf (each, an “Expense Payment”); provided that no portion of the payment will be used to pay any interest expense or shareholder servicing and/or distribution fees of the Company. Any Expense Payment that the Adviser has committed to pay must be paid by the Adviser to the Company in any combination of cash or other immediately available funds no later than 45 days after such commitment was made in writing, and/or offset against amounts due from the Company to the Adviser or its affiliates.

Following any calendar quarter in which Available Operating Funds (as defined below) exceed the cumulative distributions accrued to the Company’s shareholders based on distributions declared with respect to record dates occurring in such calendar quarter (the amount of such excess being hereinafter referred to as “Excess Operating Funds”), the Company shall pay such Excess Operating Funds, or a portion thereof, to the Adviser until such time as all Expense Payments made by the Adviser to the Company within three years prior to the last business day of such calendar quarter have been reimbursed. Any payments required to be made by the Company are referred to herein as a “Reimbursement Payment.” “Available Operating Funds” means the sum of (i) the Company’s net investment company taxable income (including net short-term capital gains reduced by net long-term capital losses), (ii) the Company’s net capital gains (including the excess of net long-term capital gains over net short-term capital losses) and (iii) dividends and other distributions paid to the Company on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).

34

The Company’s obligation to make a Reimbursement Payment will automatically become a liability of the Company on the last business day of the applicable calendar quarter, except to the extent the Adviser has waived its right to receive such payment for the applicable quarter.

The following table presents a summary of Expense Payments and the related Reimbursement Payments since the Company's inception:

For the Period Ended	Expense Payments by Adviser		Reimbursement Payments to Adviser		Unreimbursed Expense Payments
June 30, 2022	$	227	$	—	$	227
September 30, 2022	225		—		225
June 30, 2023	—		(329)		(329)
September 30, 2023	—		(123)		(123)
Total	$	452	$	(452)	$	—

Pursuant to the Expense Support Agreement, Expense Payments made by the Adviser may become subject to repayment by the Company in the future (in such cases, such Expense Payment becomes a Reimbursement Payment). As of September 30, 2023 and December 31, 2022, the Company had $123.0 million and $0 million, respectively, in obligations to repay the Expense Payments to the Adviser and recorded a liability on the Consolidated Statements of Assets and Liabilities.

Note 7. Commitments and Contingencies

As of September 30, 2023 and December 31, 2022, the Company was not subject to any legal proceedings, although the Company may, from time to time, be involved in litigation arising out of operations in the normal course of business or otherwise.

The Company has and may in the future become obligated to fund commitments such as delayed draw commitments. As of September 30, 2023 and December 31, 2022, the fair value of unfunded commitments held by the Company was $(28) and $(109), respectively, as shown on the Consolidated Schedule of Investments. The Company had the following unfunded commitments to fund delayed draw loans as of the indicated dates:

	September 30, 2023		December 31, 2022
Unfunded delayed draw and revolving senior secured loans	$	14,362	$	12,995
Total unfunded commitments	$	14,362	$	12,995

Note 8. Directors Fees

As of June 27, 2022, in connection with the conversion of Lafayette Square Empire BDC, LLC to Lafayette Square USA, Inc., the independent directors receive an annual fee of $100 (prorated for any partial year). In addition, the chair of the Audit Committee receives an additional annual fee of $20 (prorated for any partial year). Prior to that, independent directors received an annual fee of $10 (prorated for any partial year). We are also authorized to pay the reasonable out-of-pocket expenses for each independent director incurred in connection with the fulfillment of his or her duties as independent directors (provided that such compensation will only be paid if the committee meeting is not held on the same day as any regular meeting of the Board).

For the fiscal year December 31, 2023, independent directors fees will be paid in the form of our common stock issued at a price per share equal to the greater of NAV or the market price at the time of payment. As of September 30, 2023, the Company had not issued any common stock to our directors as compensation for their services.

For the three and nine months ended September 30, 2023, the Company incurred $80 and $240, respectively, of directors’ fees expenses, which are included in the accounts payable and accrued expenses line item in the Consolidated Statements of Assets and Liabilities.

35

Note 9. Share Data and Distributions

Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share; for the three and nine months ended September 30, 2023 and September 30, 2022:

	For the three months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
Earnings (loss) per common share (basic and diluted):
Net increase (decrease) in net assets resulting from operations	$	3,476	$	(220)	$	6,305	$	(381)
Weighted average common shares outstanding	13,053,832		2,098,009		10,254,893		733,084
Earnings (loss) per common share (basic and diluted):	$	0.27	$	(0.10)	$	0.61	$	(0.52)

Capital Activity

The Company is authorized to issue 50,000,000 shares of preferred stock at a par value of $0.001 per share and 450,000,000 shares of common stock at a par value of $0.001 per share. The Company has entered into subscription agreements in which investors have made capital commitments to purchase shares of the Company's common stock (the “Subscription Agreements”) with several investors, providing for the private placement of the Company’s common stock. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Company’s common stock at a price per share equal to the most recent NAV per share as determined by the Board (subject to the adjustment to the extent required by Section 23 of the 1940 Act) up to the amount of their respective capital subscriptions on an as-needed basis as determined by the Company with a minimum of ten business days prior notice.

As of September 30, 2023 and December 31, 2022, the Company had closed capital commitments totaling $370.5 million and $196.6 million, respectively, for the private placement of the Company's common stock, of which $177.7 million and $73.9 million, respectively, were unfunded.

Share Issuance Date	Shares Issued	Amount
January 26, 2023	2,510,396	$	37,129
March 28, 2023	1,188,592	17,746
June 27, 2023	4,392,543	65,097
Total	8,091,531	$	119,972

36

Distributions

Distributions to common stockholders are recorded on the ex-dividend date. The Company intends to elect to be taxed as a RIC under the Code for its taxable year ending December 31, 2023, and for future taxable years. The Company will be required to distribute dividends each tax year as a RIC to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, determined without regard to any deduction for dividends paid, in order to be eligible for tax benefits allowed to a RIC under Subchapter M of the Code. The Company anticipates paying out as a distribution all or substantially all of those amounts. The amount to be paid out as a dividend is determined by the Board and is based on management’s estimate of the Company’s annual taxable income. Net realized capital gains, if any, may be distributed to stockholders or retained for reinvestment.

The Company has adopted the DRIP that provides for the automatic reinvestment of all cash distributions declared by the Board of Directors, unless a stockholder elects to “opt out” of the DRIP. As a result, if the Board of Directors declares a cash distribution, then the stockholders who have not “opted out” of the DRIP will have their cash distributions automatically reinvested in additional shares of common stock, rather than receiving the cash distribution. The Company reserves the right to use primarily newly issued shares to implement the DRIP, whether the shares are trading at a price per share at or above NAV. NAV is determined as of the latest available quarter end before such distribution. However, the Company reserves the right to purchase shares in the open market in connection with the implementation of the DRIP. In the event the price per share is trading at a discount to NAV, the Company intends to purchase shares in the open market rather than issue new shares. The following table summarizes the distributions declared on shares of the Company’s common stock and shares distributed pursuant to the DRIP to stockholders who had not opted out of the DRIP:

Date Declared	Record Date	Payment Date	Amount Per Share
April 21, 2023	April 21, 2023	May 15, 2023	$0.15
June 23, 2023	June 23, 2023	August 14, 2023	$0.15
September 29, 2023	September 29, 2023	November 13, 2023	$0.20

Note 10. Tax Matters

The Company is subject to the U.S. federal income tax rules and filing requirements. The Company is expected to have minimal or no income subject to tax and therefore no provision has been included for taxes due. The Company intends to elect to be treated, and qualify annually thereafter, as a RIC under Subchapter M of the Code. As a result, the Company generally does not expect to be subject to U.S. federal income taxes. However, there is no guarantee that the Company will qualify to make such an election for any taxable year.

The Company has not recorded a liability for any uncertain tax positions pursuant to the provisions of ASC 740, Income Taxes, as of September 30, 2023.

In the normal course of business, the Company is subject to examination by federal and certain state and local tax regulators. The Company adopted a tax year-end of December 31.

The Company's taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, the final taxable income earned in each period and carried forward for distribution in the following period may be different than this estimate.

As of September 30, 2023, the Company had a $110 short-term limited capital loss carryforward from its prior C-corporation tax year end that can be used to offset future capital gains for 5 years and expires on December 31, 2027.

For income tax purposes, distributions paid to shareholders are reported as ordinary income, return of capital, long-term capital gains, or a combination thereof. The tax character of distributions paid for the period ended September 30, 2023 was as follows (in thousands):

37

	For the nine months ended September 30, 2023		For the year ended December 31, 2022
Ordinary Income	$	5,203	$	—
Long-term Capital Gain	$	—	$	—
Return of Capital	$	—	$	—

The following table sets forth the tax cost basis and the estimated aggregate gross unrealized appreciation and depreciation from investments for federal income tax purposes (in thousands):

	September 30, 2023		December 31, 2022
Tax cost	$	169,680	$	84,545
Gross unrealized appreciation	$	993	$	177
Gross unrealized depreciation	(395)		(379)
Net unrealized investment appreciation / (depreciation) on investments	$	598	$	(202)

The Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for U.S. federal income tax purposes, for the tax periods ended December 31, 2021 and December 31, 2022.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting and tax purposes. Components of the Company’s deferred tax assets and liabilities as of December 31, 2022 are as follows:

	For the year ended December 31, 2022
Deferred tax assets:
Net operating loss carryforward	$	101
Capital loss carryforward	28
Net unrealized loss on investments	51
Organizational costs	31
Valuation allowance	(211)
Total deferred tax assets	—
Deferred tax liabilities:
Total deferred tax liabilities	—
Net deferred tax assets and liabilities	$	—

The Company’s income tax provision consists of the following as of December 31, 2022:

38

	For the year ended December 31, 2022
Current tax (expense)/benefit:
Federal	$	—
State and Local	—
Total current tax (expense)/benefit	—
Deferred tax (expense)/benefit:
Federal	175
State and Local	36
Valuation allowance	(211)
Total deferred tax (expense)/benefit	—
Total income tax (expense)/benefit	$	—

Total income tax (expense) benefit for the Company differs from the amount computed by applying the federal statutory income tax rate of 21% to net increase (decrease) in net assets from operations for the year ended December 31, 2022, as follows:

	For the year ended December 31, 2022
Income tax benefit at federal statutory rate (21%)	$	100
State and local income tax benefit (net of federal detriment)	21
Prior year net operating loss carryforward	97
Organizational costs	33
Permanent differences	(40)
Valuation allowance	(211)
Total income tax (expense)/benefits	$	—

At December 31, 2022, the Company determined a valuation allowance was required. The Company’s assessment considered, among other matters, the nature, frequency and severity of current and cumulative losses, the duration of statutory carryforward periods and the associated risk that operating loss and capital loss carryforwards are limited or are likely to expire unused, and unrealized gains and losses on investments. Through the consideration of these factors, the Company determined that it is more likely than not that the Company’s net deferred tax asset would not be realized. As a result, the Company recorded a full valuation allowance with respect to its deferred tax asset for the year ended December 31, 2022. From time to time, the Company may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance as new information becomes available. Modifications to the Company’s estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related guidance or interpretations thereof, limitations imposed on or expirations of the Company’s net operating losses and capital loss carryovers (if any) and changes in applicable tax law could result in increases or decreases in the Company’s NAV per share, which could be material.

As of December 31, 2022, the Company had a net operating loss carryforward for federal income tax purposes of $397. This net operating loss may be carried forward indefinitely but would not be useable to offset income in taxable years in which the Company qualifies as a RIC.

As of December 31, 2022, the Company had a short term capital loss carryforward of $111.

39

Note 11. Financial Highlights

Below is the schedule of financial highlights of the Company for the nine months ended September 30, 2023 and September 30, 2022:

Per Common Share Data:(1)	For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Net asset value, beginning of period	$	14.60		$	(720.91)
Net investment income (loss)	0.54			(0.01)
Net realized and unrealized gain (loss)	0.07			(0.51)
Net increase (decrease) in net assets resulting from operations	0.61			(0.52)
Initial issuance of Common Stock	—			—
Effect of offering price of subscriptions (2)	0.12			735.99
Distributions declared	(0.50)			—
Net asset value, end of period	$	14.83		$	14.56
Total return based on NAV(3)	1.58		%	(102.02)		%
Common shares outstanding, end of period	13,068,112			3,537,828
Weighted average shares outstanding	10,254,893			733,084
Net assets, end of period	$	193,744		$	51,527
Ratio/Supplemental data(4):
Ratio of net investment income (loss) to average net assets	5.21		%	(0.80)		%
Ratio of expenses to average net assets	6.96		%	9.95		%
Ratio of expenses (before management fees, incentive fees and interest and financing expenses) to average net assets	3.97		%	7.90		%
Weighted average debt outstanding(5)	$	14,609		$	16,926
Total debt outstanding	$	54,400		$	17,500
Asset coverage ratio per unit	$	4,561		$	3,944
Portfolio turnover	—		%	N/A

(1)The per share data were derived by using the weighted average shares from the date of the first issuance of shares, through September 30, 2023 and September 30, 2022.

(2)Increase (decrease) is due to the offering price of subscriptions during the period (See note 9).

(3)Total return is based upon the change in net asset value per share between the opening and ending net assets per share and the issuance of common stock in the period. Total return is not annualized.

(4)Annualized, except for organizational expenses, which are non-recurring.

(5)The Company's initial borrowing occurred on June 29, 2022.

40

Note 12. Subsequent Events

The Company's management evaluated subsequent events through the date of issuance of the consolidated financial statements. Other than the subsequent event disclosed below, there have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in, the consolidated financial statements.

On November 6, 2023, the Company closed an additional $6.6 million in capital commitments increasing the total closed commitments to $377.0 million as of the date of this Report.

On October 20, 2023, the Company repaid it's outstanding balance on the Subscription Facility in the amount of $23.4 million. As of the date of this Report, there is no outstanding balance on the Subscription Facility.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(dollar amounts in thousands, except per share data, unless otherwise indicated)

The following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. References to “we,” “us,” “our,” and the “Company,” means Lafayette Square USA, Inc., unless otherwise specified. The discussion and analysis contained in this section refers to our financial condition, results of operations and cash flows. The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. Please see “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with this discussion and analysis. Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Cautionary Statements Regarding Forward-Looking Statements” appearing elsewhere in this report.

Business Overview

The Company is an externally managed, non-diversified, closed-end investment company primarily focused on lending to middle market businesses while offering them significant managerial assistance, with the goal of creating and preserving jobs and stimulating economic growth across the United States. The Company believes that demand for capital investment and managerial assistance is particularly acute among middle market companies headquartered in overlooked places, given that business development companies primarily focus on businesses located in high income places. We believe inflationary pressures and the increasing employee benefits gap exacerbate this demand, enabling us to utilize our investment approach to select favorable risk-adjusted return opportunities.

Our investment objective is to generate favorable risk-adjusted returns, including current income and capital appreciation, principally from directly originated investments in middle market businesses that are primarily domiciled, headquartered and/or have a significant operating presence in the United States. We define middle market businesses as companies having annual revenues between $10 million and $1 billion and annual EBITDA of between $10 million and $100 million, although we may invest in larger or smaller companies. We expect to invest primarily in first and second lien loans and, to a lesser extent, in subordinated and mezzanine loans and equity and equity-like securities, including common stock, preferred stock, and warrants.

We will primarily focus our origination efforts on “non-sponsored” businesses, which we define as companies substantially owned by people rather than funds or financial institutions where we can establish a direct lending relationship without the involvement or backing of a buyout fund sponsor. We believe this focus will enable us to source investments through a less competitive lending process, allowing us to achieve favorable economic and structural terms for our investments. We intend to complement this investment strategy with robust risk management practices and rigorous ongoing portfolio monitoring. For a discussion of the risks inherent in our portfolio investments, please see the discussion under “Item 1A. Risk Factors.”

41

The Company invests in businesses that are primarily domiciled, headquartered and/or have a significant operating presence in each of the Target Regions, with a goal to invest at least 5% of its assets in each region over time. However, the Company anticipates that it could take time to invest substantially all of the capital it expects to raise in a geographically diverse manner due to general market conditions, the time necessary to identify, evaluate, structure, negotiate and close suitable investments in private middle market companies, and the potential for allocations to other affiliated investment vehicles which focus their investments on a specific region. As a result, at any point in time, we may invest a disproportionate amount in certain regions, and there can be no assurance that we will achieve geographic diversification across all ten regions.

• Cascade Region: Alaska, Idaho, Oregon and Washington

• Empire Region: New York, New Jersey, Connecticut and Pennsylvania

• Far West Region: California, Hawaii and Nevada

• Four Corners Region: Arizona, Colorado, New Mexico and Utah

• Great Lakes Region: Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin

• Gulf Coast Region: Arkansas, Louisiana, Oklahoma and Texas

• Mid-Atlantic Region: Delaware, Kentucky, Maryland, North Carolina, South Carolina, Tennessee, Virginia and West Virginia and the District of Columbia

• Northeast Region: Maine, Massachusetts, New Hampshire, Rhode Island and Vermont

• Plains Region: Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming

• Southeast Region: Alabama, Georgia, Florida, Mississippi and the territory of Puerto Rico

We were formed as a Delaware limited liability company on February 19, 2021. Prior to the Effective Date, we elected to be regulated as a BDC under the 1940 Act. For U.S. federal income tax purposes, we were taxed as a corporation for the period from February 19, 2021 (date of inception) through December 31, 2022. The Company intends to elect to be treated, and qualify annually thereafter, as a RIC under Subchapter M of the Code. As a result, the company generally does not expect to be subject to U.S. federal income taxes. However, there is no guarantee that the company will qualify to make such an election for any taxable year. Prior to the Effective Date and to our election to be regulated as a BDC, we completed a conversion under which Lafayette Square USA, Inc. (then known as Lafayette Square Empire BDC, Inc.) succeeded to the business of Lafayette Square Empire BDC, LLC, and the sole member of Lafayette Square Empire BDC, LLC became the stockholder of Lafayette Square Empire BDC, Inc. On May 16, 2022, Lafayette Square Empire BDC, Inc. filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation to change its corporate name from “Lafayette Square Empire BDC, Inc.” to “Lafayette Square USA, Inc.,” effective May 16, 2022. As a BDC, we must comply with certain regulatory requirements. When we qualify as an RIC there will be additional regulatory requirements we must comply with as well. See “Item 1. Business — Regulation as a Business Development Company” and “Item1. Business — Certain U.S. Federal Income Tax Considerations.”

We are managed by our Adviser, a Delaware limited liability company and an affiliate of Lafayette Square. The Adviser is a limited liability company that is registered as an investment adviser under the Advisers Act. The Adviser oversees the management of the Company’s activities and is responsible for making investment decisions with respect to the Company’s portfolio.

42

We generally expect to hold our investments until maturity or until such investments are refinanced by the portfolio company. From time to time, we may invest in loans with other lenders, or “club loans,” and may serve as agent in connection with any such loans. In our capacity as agent, we act as the servicer of the loan. We may also participate in loans in the broadly syndicated loan market. Our debt investments in our portfolio companies typically have principal amounts of up to $50 million, bear interest at floating rates of interest tied to a widely available risk-free rate such as the U.S. Prime Rate or SOFR, and generally are not guaranteed by the federal government or otherwise. The debt instruments in which we invest are typically not rated by any rating agency, but we believe that if they were, they would be rated below investment grade (rated lower than “Baa3” by Moody’s Investors Service, lower than “BBB–” by Fitch Ratings or lower than “BBB–” by Standard & Poor’s Ratings Services). Under the guidelines established by these rating agencies, such ratings are an indication of such debt instruments having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. Debt instruments that are rated below investment grade are sometimes referred to as “high yield bonds” or “junk bonds.”

On May 18, 2023, the SBA issued a “green light” letter inviting the Company to submit its application to obtain a license to operate a specialized small business investment company (“SSBIC”) subsidiary. An SSBIC license would provide the Company an incremental source of long-term capital by permitting it to issue up to $175 million of SBA-guaranteed debentures, subject to the SBA’s approval. These debentures have maturities of ten years and have fixed interest rates tied to the U.S. 10 Year Treasury rate, which are generally lower than comparable bank and other forms of debt. Receipt of a green light letter from the SBA does not assure an applicant that the SBA will ultimately issue an SSBIC license, and the Company has received no assurance or indication from the SBA that it will receive an SSBIC license, or of the timeframe in which it would receive a license, should one be granted.

As described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Form 10-K”), we aim to promote public welfare and community development in underserved communities by deploying at least 51% of our invested capital to borrowers (i) located in and/or with a majority of operations in low- and moderate- income1 (“LMI”) areas, Empowerment Zones, as defined in the Empowerment Zones and Enterprise Communities Act of 1993, as amended (“Empowerment Zones”), Opportunity Zones, as defined in the U.S. Tax Cut and Jobs Act of 2017 (“Opportunity Zones”), and/or areas targeted by a government entity for redevelopment or to revitalize or stabilize designated disaster areas (such areas, together with Opportunity Zones, Empowerment Zones and LMI areas, “Underserved Areas”) or (ii) that provide substantial employment to LMI individuals, meaning more than 50% of the portfolio company’s workforce, measured by W-2 forms or 1099 forms filed by workers with the Internal Revenue Service (“Substantial Employment”).

In addition to such targeted investing, we seek to improve the retention, well-being, and productivity of employees by connecting our portfolio companies with third-party service providers that deliver workplace benefits and/or advisory support ("Third-Party Solution Providers") through our services platform, “Worker Solutions” (such platform is described in more detail in our 2022 Form 10-K). This platform is consistent with the mandate that BDCs offer “significant managerial assistance” to their portfolio companies upon request, and we believe these curated services have the potential to (i) positively affect employee well-being and (ii) enhance the risk-adjusted financial returns of the portfolio companies (including by increasing employee retention, morale and productivity).

In line with the aims above, and as described in more detail in our 2022 Form 10-K, we have set 2030 goals to (1) increase employment opportunities (by helping businesses create and/or retain 100,000 LMI jobs, and 150,000 jobs overall), (2) provide significant managerial assistance to small and middle-market companies (by incentivizing at least 50% of our borrowers to adopt Worker Solutions) and (3) encourage economic growth in underserved communities (by investing at least 50% of our portfolio in borrowers who are either located in underserved communities or are substantial employers of LMI people.) In order to follow our progress towards these goals and help determine the average employee data of our portfolio companies noted in the table below, we track the locations of our portfolio companies and LMI status of their employees and we rely on feedback on certain employee data points from our portfolio companies. We cannot guarantee the accuracy of the information provided to us by our portfolio companies, and the metrics used by different portfolio companies to calculate the information that they provide to us may differ significantly as between such portfolio companies.

1 LMI is defined under applicable CRA regulation as an individual income that is less than 80 percent of the area median income (“AMI”) or a median family income that is less than 80 percent in a census tract. AMI is defined as the median family income for the metropolitan statistical area or metropolitan division, if applicable, or if the person or census tract is located outside of a metropolitan statistical area, the statewide non-metropolitan median family income. Census tracts are defined by the U.S. Government and may include LMI, Opportunity Zones and/or Empowerment Zones.

43

As of September 30, 2023, 48.7% percent of our portfolio (and 62.9% of the transactions where we were lead agent) was invested in borrowers who are either located in underserved communities or are substantial employers of LMI people, and among our portfolio companies where we receive census data, 2,081 LMI individuals were employed out of a total of 3,814 employees (with 9,363 people employed in total by all of our portfolio companies)2. In addition, with respect to engagement by our portfolio companies with our Third-Party Solution Providers, as of September 30, 2023, 42.2% of our Portfolio Companies (and 54.5% of the transactions where we were lead agent) had adopted our Third-Party Solution Providers (for a total of five Third-Party Solution Providers), with 52 workers served and a total of 2,163 workers with access to services.

Over time, we believe our portfolio companies' uptake of Third-Party Solution Providers, in combination with our capital, will contribute to an improvement in the below metrics:

Lafayette Square USA, Inc.’s  Portfolio Company Human Capital Data (As of September 30, 2023)
	Portfolio Company Average Employee Data	National Average Employee Data
Employee Turnover3	8%	4.3%
Participation in Medical Care Benefits4	35%	46.0%
Participation in Retirement Benefits5	26%	53.0%
Median Employee Income		National Median Family Income6
LMI Employee Median Income	$46,000	$92,148
Non-LMI Employee Median Income	$86,000

Key Components of Operations

Investments

Our level of investment activity may vary substantially from period to period depending on many factors, including the amount of debt available to middle market companies, the general economic environment and the competitive environment for the type of investments we make.

2 For those portfolio companies who did not agree to provide census data, job totals are based on data provided by such portfolio companies at time of transaction.

3 Turnover rates are based on Q3 2023 data, and are calculated by dividing the total terminations for the period by the average number of employees who worked during or received pay for the same period. National turnover data is based on private employee data from the September 2023 U.S. Bureau of Labor Statistics - Job Openings and Labor Turnover Survey and Current Employment Statistics Survey.

4 Medical Care Benefits are plans that provide services or payments for services rendered in the hospital or by a qualified medical care provider. Participation is calculated from the unrounded percentage of workers who participate in the plan. The national average is calculated based on data about private sector employees surveyed by the U.S. Bureau of Labor Statistics' March 2023 National Compensation Survey.

5 Retirement Benefit plans includes defined benefit pension plans and defined contribution retirement plans. Participation is calculated from the unrounded percentage of workers who participate in the plan. 1,652 employees from portfolio companies who did not provide retirement benefits data to the Company were not included in this calculation. The national average is calculated based on data about private sector employees surveyed by the U.S. Bureau of Labor Statistics' March 2023 National Compensation Survey.

6 National median income data is from the U.S. Census Bureau - 2022 American Community Survey. This is the most recent data available as of November 2023. Median family income is used to calculate individual LMI per CRA guidelines. The metric is included at the national level to serve as a similar, but not exact, comparison.

44

Revenues

We generate revenue primarily in the form of interest and fee income on debt investments we hold and capital gains, if any, on our investments. We generally expect our debt investments to have a stated term of five to eight years and typically to bear interest at a floating rate usually determined on the basis of a benchmark such as the SOFR. Interest on these debt investments are generally payable quarterly. In some instances, we may receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we may receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period. Our portfolio activity reflects the proceeds of sales of securities. We may also generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees.

Expenses

We expect our primary annual operating expenses to include advisory fees and the reimbursement of expenses under our investment advisory and management agreement between the Company and the Adviser, dated April 26, 2021 and amended and restated as of June 22, 2022 (and as may be further amended, the “Investment Advisory Agreement”) and our Administration Agreement, respectively. We also bear other expenses, which include:

•our initial organization costs and operating costs incurred prior to the filing of our election to be regulated as a BDC (in connection with our formation and the initial closing of the private offering of shares of our Common Stock);

•the costs associated with our private offering and any subsequent offerings of our securities;

•calculating individual asset values and our net asset value (including the cost and expenses of third-party valuation services);

•out-of-pocket expenses, including travel expenses, incurred by the Adviser, or members of its investment team, or payable to third parties, performing due diligence on prospective portfolio companies, dead deal or broken deal expenses and, if necessary, enforcing our rights;

•certain costs and expenses relating to distributions paid by us;

•administration fees payable under the Administration Agreement and related expenses;

•debt service and other costs of borrowings or other financing arrangements;

•the allocated costs incurred in connection with providing services to employees of portfolio companies (of the type described in Item I. “Business—Investment Strategy”) and/or managerial assistance (including any services offered to portfolio companies) to those portfolio companies that request it (whether such costs are incurred by the Adviser or Administrator or through payments to third party service providers);

•amounts payable to third parties relating to, or associated with, making or holding investments;

•transfer agent and custodial fees;

•costs of hedging;

•commissions and other compensation payable to brokers or dealers;

•federal and state registration fees;

•any stock exchange listing fees and fees payable to rating agencies;

•the cost of effecting any sales and repurchases of our Common Stock and other securities;

•U.S. federal, state and local taxes;

45

•independent director fees and expenses;

•costs of preparing consolidated financial statements and maintaining books and records, costs of preparing tax returns, costs of compliance with Sarbanes-Oxley Act, and attestation and costs of filing reports or other documents with the SEC (or other regulatory bodies) and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation or review of the foregoing;

•the costs of any reports, proxy statements or other notices to our stockholders (including printing and mailing costs), the costs of any stockholders’ meetings and the compensation of investor relations personnel responsible for the preparation of the foregoing and related matters;

•the costs of specialty and custom software expense for monitoring risk, compliance and overall investments;

•our fidelity bond;

•any necessary insurance premiums;

•extraordinary expenses (such as litigation or indemnification payments or amounts payable pursuant to any agreement to provide indemnification entered into by the Company);

•direct fees and expenses associated with independent audits, agency, consulting and legal costs; costs of winding up;

and other expenses incurred by either the Administrator or us in connection with administering our business, including payments under the Administration Agreement based upon our allocable portion of the compensation paid to our Chief Financial Officer and Chief Compliance Officer and their respective staffs, and reimbursing third-party expenses incurred by the Administrator in carrying out its administrative services including providing assistance in accounting, legal, compliance, operations, technology, internal audit, investor relations, and loan agency services (including any internal and third party service providers and/or software solutions related to the foregoing), and being responsible for the financial records that we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, our Administrator assists us in determining and publishing our net asset value, overseeing the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, our internal control assessment under the Sarbanes-Oxley Act, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others. We expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets during periods of asset growth and to increase proportionally when our asset value declines.

Leverage

The amount of leverage we use in any period depends on a number of factors, including cash on-hand available for investing, the cost of financing and general economic and market conditions. Prior to the Small Business Credit Availability Act being signed into law, a BDC generally was not permitted to incur indebtedness unless immediately after such borrowing it has an asset coverage for total borrowings of at least 200%. The Small Business Credit Availability Act, signed into law on March 23, 2018, contains a provision that grants a BDC the option, subject to certain conditions and disclosure obligations, to reduce the asset coverage requirement to 150%. In April 2021, our Board and initial stockholder approved the reduced asset coverage ratio.

Portfolio and Investment Activity

The following table summarizes our portfolio and investment activity during the three months ended September 30, 2023 and September 30, 2022, (information presented herein is at amortized cost unless otherwise indicated):

46

	For the three months ended September 30, 2023		For the three months ended September 30, 2022
Total Investments, beginning of period	$	113,666	$	40,701
New investments purchased	56,688		7,930
Net accretion of discount on investments	210		64
Net realized gains (losses) on investments	—		—
Investments sold or repaid	(884)		(186)
Total Investments, end of period	$	169,680	$	48,509
Portfolio companies, at beginning of period	11		2
Number of new portfolio companies	1		—
Portfolio companies, at end of period	12		2

As of September 30, 2023 and December 31, 2022, the Company’s investments consisted of the following:

	September 30, 2023
	Amortized Cost				Fair Value
First lien senior secured loans	$	161,321	95.1	%	$	162,181	95.2	%
Equity	4,881		2.9	%	4,759		2.8	%
Subordinated debt	1,826		1.1	%	1,686		1.0	%
Preferred equity	1,652		1.0	%	1,652		1.0	%
Warrants	—		—	%	—		—	%
Total	$	169,680	100.1	%	$	170,278	100.0	%

	December 31, 2022
	Amortized Cost				Fair Value
First lien senior secured loans	$	78,221	92.5	%	$	78,156	92.7	%
Equity	4,631		5.5	%	4,631		5.5	%
Subordinated debt	1,693		2.0	%	1,556		1.8	%
Warrants	—		—	%	—		—	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

The table below describes investments by industry composition based on fair value as of September 30, 2023 and December 31, 2022:

47

	September 30, 2023
	Amortized Cost				Fair Value
Construction & Engineering	$	50,374	29.7	%	$	51,059	29.9	%
Commercial Services & Supplies	46,019		27.1	%	45,625		26.8	%
Event Management	33,507		19.7	%	33,547		19.7	%
Media	25,064		14.8	%	25,162		14.8	%
Health Care Providers & Services	7,853		4.6	%	7,960		4.7	%
Hotels, Restaurants & Leisure	3,487		2.1	%	3,500		2.1	%
IT Services	3,376		2.0	%	3,425		2.0	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

	December 31, 2022
	Amortized Cost				Fair Value
Commercial Services & Supplies	$	39,024	46.2	%	$	38,647	45.8	%
Media	25,509		30.2	%	25,684		30.5	%
Construction & Engineering	20,012		23.6	%	20,012		23.7	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

The weighted average yields at amortized cost and fair value of our portfolio as of September 30, 2023 and December 31, 2022 were as follows:

	September 30, 2023		December 31, 2022
	Amortized Cost	Fair Value	Amortized Cost	Fair Value
First lien senior secured debt(2)	13.2%	13.2%	13.1%	13.1%
Subordinated debt	14.0%	15.5%	14.0%	15.3%
Weighted Average Yield(1)	13.2%	13.2%	13.1%	13.2%

(1) The weighted average yield of our portfolio does not represent the total return to our stockholders.

(2) Computed based on (a) the annual actual interest rate or yield earned plus amortization of fees and discounts on the performing debt and other income producing investments as of the reporting date, divided by (b) the total investments (including investments on non-accrual and non-income producing investments) at amortized cost or fair value. This calculation excludes exit fees that are receivable upon repayment of certain loan investments.

48

	September 30, 2023	December 31, 2022
Number of portfolio companies	12	5
Percentage of performing debt bearing a floating rate (1)	99.0%	98.0%
Percentage of performing debt bearing a fixed rate (1)(2)	1.0%	2.0%
Weighted average spread over SOFR or LIBOR of all accruing floating rate investments	7.4%	8.0%
Weighted average leverage (net debt/EBITDA) (3)	2.9x	2.8x
Weighted average interest coverage (3)	2.7x	2.8x

(1) Measured on a fair value basis. Excludes all equity based investments and debt investments, if any, placed on non-accrual.

(2) Includes income producing preferred stock investments, if applicable.

(3) To calculate net debt, we include debt that is both senior and pari passu to the tranche of debt owned by us but exclude debt that is legally and contractually subordinated in ranking to the debt owned by us. Weighted average net debt to EBITDA is weighted based on the fair value of our debt investments, excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk. Weighted average interest coverage is weighted based on the fair value of our performing debt investments, excluding investments where interest coverage may not be the appropriate measure of credit risk.

Ongoing monitoring and risk management of each asset is conducted by the Adviser's Portfolio Monitoring team under the supervision of the Chief Risk Officer. The Portfolio Monitoring team is separate and distinct from the Adviser's investment team, and has as its primary responsibilities to: 

•formally monitor portfolio companies post-investment on an ongoing basis;

•perform quarterly valuations of all assets in partnership with third-party valuation agent(s);

•maintain and update internal and external asset ratings;

•oversee BDC-level monitoring; and

•lead amendment, “work out,” and restructurings processes.

Portfolio Monitoring monitors the financial trends of each portfolio company to determine if it is meeting its respective business plan and to assess the appropriate course of action with respect to investments in each portfolio company. Portfolio Monitoring has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following: 

•periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements and variants from approved budgets and internal projections;

•assessment of performance relative to business plan and key operating metrics and compliance with financial covenants;

•assessment of performance relative to industry benchmarks or portfolio comparables, if any;

•attendance at and participation in board meetings and lender calls; and

•review of monthly, quarterly and annual audited financial statements and financial projections of portfolio companies.

49

As part of the monitoring process, our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser rates the credit risk of all investments on a scale of 1 to 5 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The rating system is as follows:

Investment Rating	Description
1	Involves the least amount of risk to our initial cost basis. The borrower is performing above expectations, and the trends and risk factors for this investment since the time of origination or acquisition are generally favorable which may include the performance of the portfolio company or a potential exit.
2	Involves an acceptable level of risk that is similar to the risk at the time of origination or acquisition. The borrower is generally performing as expected and the risk factors are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a rating of 2.
3	Involves a borrower performing below expectations and indicates that the loan’s risk has increased since origination or acquisition. The borrower could be out of compliance with debt covenants; however loan payments are generally not past due.
4	Involves a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination or acquisition. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due)
5	Involves a borrower performing substantially below expectations and indicates that the loan’s risk has increased substantially since origination or acquisition. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 5 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.

The following table shows the distribution of the Company’s investments on the 1 to 5 internal risk rating scale as of September 30, 2023 and December 31, 2022:

	September 30, 2023				December 31, 2022
Investment Rating	Investments at Fair Value		Percentage of Total Investments		Investments at Fair Value		Percentage of Total Investments
1	$	—	—		$	—	—
2	170,278		100.0	%	84,343		100.0	%
3	—		—		—		—
4	—		—		—		—
5	—		—		—		—
Total	$	170,278	100.0	%	$	84,343	100.0	%

Critical Accounting Policies

This discussion of our expected operating plans is based upon our expected consolidated financial statements, which will be prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these consolidated financial statements will require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. In addition to the discussion below, we will describe our critical accounting policies in the notes to our future consolidated financial statements.

50

Income taxes

The Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for U.S. federal income tax purposes, for the tax periods ended December 31, 2021 and December 31, 2022. The Company intends to elect to be treated as a RIC under Subchapter M of the Code for the tax period ending December 31, 2023, as well as maintain such election in future taxable years. However, there is no guarantee that the Company will qualify to make such an election for any taxable year. In order to qualify and be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends for U.S. federal income tax purposes to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. As a RIC, the Company would intend to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal income taxes with respect to all income distributed to its stockholders. The Company may be subject to regular federal and state corporate income tax on any net built-in gains with respect to certain of its assets (i.e., the excess of the aggregate gains, over aggregate losses that would have been realized with respect to such assets if we had been liquidated) that the Company elects to recognize upon RIC election or when recognized over the next five taxable years.

The Company is subject to a nondeductible 4% U.S. federal excise tax on its undistributed income, unless it timely distributes (or is deemed to have timely distributed) an amount equal to the sum of (1) 98% of ordinary income for each calendar year, (2) 98.2% of the amount by which capital gains exceeds capital losses (adjusted for certain ordinary losses) for a one-year period ending on October 31 of the calendar year, and (3) any income and gains recognized, but not distributed, from the previous years. While the Company intends to distribute any income and capital gains to avoid imposition of this 4% U.S. federal excise tax, it may not be successful in avoiding entirely the imposition of this tax. In that case, the Company will be liable for the tax only on the amount by which it does not meet the foregoing distribution requirement.

The Company accounts for income taxes in conformity with ASC Topic 740 - Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense or tax benefit in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no material unrecognized net tax benefits or unrecognized net tax liabilities related to uncertain income tax positions as of and through September 30, 2023.

Distributions

Distributions to common stockholders are recorded on the record date. Subject to the discretion of and as determined by the Board, the Company intends to authorize and declare ordinary cash distributions based on a formula approved by the Board on a quarterly basis. The amount to be paid out as a dividend or distribution is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually, although the Company can retain such capital gains for investment in its discretion.

The Company has adopted a DRIP that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes and the Company declares a cash distribution, then stockholders who have not “opted out” of the DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s Common Stock, rather than receiving the cash distribution. Shares issued under the DRIP will be issued at a price per share equal to the most recent NAV per share as determined by the Board (subject to adjustment to the extent required by Section 23 of the 1940 Act).

Valuation of Portfolio Investments:

Investments for which market quotations are readily available are typically valued at those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued quarterly at fair value as determined by the Advisor.

51

The valuation process is a multi-step endeavor, which includes, among other procedures, the following:

•the quarterly valuation process commences with each portfolio company or investment being initially evaluated by the investment professionals of the Advisor responsible for the monitoring of the portfolio investment;

•the Advisor’s Valuation Committee reviews the valuations provided by the independent third-party valuation firm and develops a valuation recommendation;

•the Adviser's Valuation Committee reviews each valuation recommendation to confirm they have been calculated in accordance with our valuation policy and compares such valuations to the independent valuation firms' valuation ranges to ensure the Adviser's valuations are reasonable;

•the Adviser's Valuation Committee then determines fair value marks for each of our portfolio investments; and

•the Board and Audit Committee periodically reviews the valuation process and provides oversight in accordance with the requirements of Rule 2a-5 under the 1940 Act.

The Company applies Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurement (ASC 820), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value.

The three-tier hierarchy of inputs is summarized below.

•Level 1 - Quoted prices are available in active markets/exchanges for identical investments as of the reporting date.

•Level 2 - Pricing inputs are observable inputs including, but not limited to, prices quoted for similar assets or liabilities in active markets/exchanges or prices quoted for identical or similar assets or liabilities in markets that are not active, and fair value is determined through the use of models or other valuation methodologies.

•Level 3 - Pricing inputs are unobservable for the investment and include activities where there is little, if any, market activity for the investment. The inputs into determination of fair value require significant management judgment and estimation.

The use of these valuation models requires significant estimation and judgment by the Advisor. The Advisor uses a third-party valuation firm to ensure fair values are determined on an independent basis. While the Company believes its valuation methods are appropriate, other market participants may value identical assets differently than the Company at the measurement date. The methods used by the Company may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. The Company may also have risk associated with its concentration of investments in certain geographic regions and industries.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Accordingly, the degree of judgment exercised by the Advisor in determining fair value is greatest for securities categorized in Level 3.

On December 3, 2020, the SEC adopted Rule 2a-5 under the 1940 Act (the "Valuation Rule"), which established an updated regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Pursuant to the Valuation Rule, which became effective on September 8, 2022 (the "SEC Compliance Date"), the Board has chosen to designate the Adviser as the Company's valuation designee to perform fair value determinations relating to the value of the assets for which market quotations are not readily available, subject to the Board's oversight.

52

The determination of what constitutes “observable” requires significant judgment by the Advisor. The Advisor considers observable data to be market data, which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, which may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and observability of prices and inputs may be reduced for many investments. This condition could cause the investment to be reclassified to a lower level within the fair value hierarchy.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

Investment transactions will be recorded on the trade date. We will measure net realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Revenue Recognition

Investment Income

Interest income, including amortization of premium and accretion of discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. The Company records amortized or accreted discounts or premiums as interest income using the effective interest method or straight-line interest method, as applicable, and adjusted only for material amendments or prepayments. Dividend income, which represents dividends from equity investments and distributions from subsidiaries, if any, is recognized on an accrual basis to the extent that the Company expects to collect such amount.

PIK Interest

The Company may, from time to time, hold loans in its portfolio that contain a PIK interest provision. PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to the Company in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.

Fee Income

Origination fees received are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized origination fees are recorded as investment income. The Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees, covenant waiver fees and loan amendment fees, and are recorded as investment income when earned.

Non-accrual loans

A loan can be left on accrual status during the period the Company is pursuing repayment of the loan. Management reviews all loans that become 90 days or more past due on principal and interest, or when there is reasonable doubt that principal or interest will be collected, for possible placement on non-accrual status. When a loan is placed on non-accrual status, unpaid interest credited to income is reversed. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans are recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid, and, in management’s judgment, payments are likely to remain current.

Results of Operations

The following table represents the operating results for the three and nine months ended September 30, 2023 and September 30, 2022:

53

	For the three months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
Total investment income	$	5,741	$	1,277	$	13,331	$	1,298
Net expenses	2,823		992		7,826		1,303
Net investment income (loss)	2,918		285		5,505		(5)
Net realized gains (losses) on investments	—		—		—		—
Net change in unrealized gains (losses)	558		(505)		800		(376)
Net increase (decrease) in net assets resulting from operations	$	3,476	$	(220)	$	6,305	$	(381)

Investment Income

The composition of the Company’s investment income for the three and nine months ended September 30, 2023 and September 30, 2022 was as follows:

	For the three months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
Investment income
Interest income	$	4,999	$	1,197	$	12,034	$	1,218
Fee income	18		80		28		80
Interest from cash and cash equivalents	724		—		1,269		—
Total investment income	$	5,741	$	1,277	$	13,331	$	1,298

Expenses

Expenses for the nine months ended September 30, 2023 and September 30, 2022, consisted of $332 and $22, respectively, in initial organizational costs for which we are required to reimburse Lafayette Square upon the commencement of our operations in accordance with the Administration Agreement. As of September 30, 2023, the Company has incurred $804 (since inception) of organization and offering costs.

The composition of the Company’s expenses was as follows for the three and nine months ended September 30, 2023 and September 30, 2022:

54

	For the three months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
General and administrative expenses	$	601	$	383	$	1,922	$	659
Interest and financing expenses	307		261		1,193		356
Incentive fee	535		—		1,050		—
Management fee	431		108		1,035		110
Professional fees	449		163		851		275
Administrative services fee	251		145		600		157
Organizational costs	46		—		332		22
Directors' fees	80		80		240		96
Offering expenses	—		77		151		80
Total expenses	2,700		1,217		7,374		1,755
Expense support reimbursement	123		(225)		452		(452)
Total expenses, net of expense support reimbursement	$	2,823	$	992	$	7,826	$	1,303

The increase in general and administrative expenses for the nine months ended September 30, 2023, in comparison to the nine months ended September 30, 2022, include, among other costs, insurance premiums, accounting, financial preparation and reporting services, placement agent fees due to additional commitment closes and capital draws, fund transfers and custodial fees.

During the nine months ended September 30, 2023 and 2022, we incurred interest and financing expense of $1,193 and $356, respectively, related to an increase in the average principal amount of borrowings outstanding on our Subscription Facility and the increase in the weighted average stated interest rate.

During the nine months ended September 30, 2023 and 2022, we incurred expenses related to fees paid to our independent directors of $240 and $96, respectively.

During the nine months ended September 30, 2023 and 2022, we incurred management fees of $1,035 and $110, respectively, due to the increase in the average size of our portfolio.

During the nine months ended September 30, 2023 and 2022, we incurred administrative services fee of $600 and $157, respectively, paid to the Administrator under the Administration Agreement for our allocable portion of, but not limited to (See Note 6), overhead, compensation, rent, office services and equipment.

During the nine months ended September 30, 2023 and 2022, we incurred organizational costs of $332 and $22, respectively, the increase which was due to the formation of the Company's subsidiaries, SBIC LP and SSBIC LP.

During the nine months ended September 30, 2023 and 2022, we incurred incentive fees of $1,050 and $0, respectively, due to the increase in Net Investment Income. Refer to Note 6 Investment Advisory Agreement on how the incentive fee is calculated.

During the nine months ended September 30, 2023 and 2022, we incurred professional and directors’ fees of $1,091 and $371, respectively, in connection with independent audit services, external legal services and third-party valuation services for our portfolio.

During the nine months ended September 30, 2023 and 2022, we incurred offering expenses of $151 and $80, respectively, in connection with the offering of shares of the Company's common stock, including the out-of-pocket expenses of the Adviser and its agents and affiliate, amortized over one year.

55

Financial Condition, Liquidity and Capital Resources

We generate cash primarily from the net proceeds of private offerings of our Common Stock and from cash flows from interest and fees earned from our investments and principal repayments and proceeds from sales of our investments. We use cash primarily to invest in portfolio companies, pay our expenses and distribute cash to our stockholders.

Contractual Obligations

We have entered into the Investment Advisory Agreement with our Adviser. Our Adviser agreed to serve as our investment adviser in accordance with the terms of our Investment Advisory Agreement. Payments under our Investment Advisory Agreement in each reporting period consist of the base management fee equal to a percentage of the value of our gross assets as well as an incentive fee based on our performance.

Under the Investment Advisory Agreement, the Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. The Board and our shareholders approved the Investment Advisory Agreement on April 26, 2021 and the Board renewed such approval on June 23, 2023. The Adviser is a registered investment adviser with the SEC. The Adviser receives fees for providing services, consisting of two components, a base management fee and an incentive fee.

We define a “Liquidity Event” as any of: (1) a quotation or listing of our common stock on a national securities exchange, including an initial public offering or (2) a Sale Transaction. A “Sale Transaction” means (a) the sale of all or substantially all of our capital stock or assets to, or another liquidity event with, another entity or (b) a transaction or series of transactions, including by way of merger, consolidation, recapitalization, reorganization, or sale of stock in each case for consideration of either cash and/or publicly listed securities of the acquirer. Potential acquirers could include entities that are not BDCs that are advised by the Adviser or its affiliates.

Base Management Fee

The base management fee ("Management Fee") is payable quarterly in arrears beginning in the period during its initial capital drawdown from its non-affiliated investors (the "Initial Drawdown") at an annual rate of (i) prior to a Liquidity Event, 0.75%, and (ii) following a Liquidity Event, 1.0%, in each case of the average value of our gross assets (gross assets equal the total assets of the Company as set forth on the Company’s balance sheet) at the end of the two most recently completed calendar quarters. No Management Fee is charged on committed but undrawn capital commitments.

For the three and nine months ended September 30, 2023, the Company incurred Management Fee expense of $431 and $1,035, respectively. For the three and nine months ended September 30, 2022, the Company incurred Management Fee expense of $108 and $110, respectively. As of September 30, 2023 and December 31, 2022, $431 and $167, respectively, remained payable.

Incentive Fee

The Company also pays the Adviser an incentive fee consisting of two parts: (i) an incentive fee based on pre-incentive fee net investment income (the “Income-Based Fee”), and (ii) the capital gains component of the incentive fee (the “Capital Gains Fee”). For more information regarding the Income-Based Fee and the Capital Gains Fee, see Note 6 - Related Party Agreements and Transactions.

For the three and nine months ended September 30, 2023, the Company incurred Income-Based Fee of $535 and $1,050, respectively. For the three and nine months ended September 30, 2022, the Company did not incur any Income-Based Fee. As of September 30, 2023 and December 31, 2022, $535 and $0, respectively, remained payable. For the three and nine months ended September 30, 2023 and September 30, 2022, there were no Capital Gains Fees incurred.

56

Administration Agreement

We have entered into an Administration Agreement with the Administrator pursuant to which the Administrator furnishes us with administrative services necessary to conduct our day-to-day operations. The Administrator is reimbursed for administrative expenses it incurs on our behalf in performing its obligations. Such costs are reasonably allocated to us on the basis of assets, revenues, time records or other reasonable methods. We do not reimburse our Administrator for any services for which it receives a separate fee.

If any of our contractual obligations discussed above were terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we receive under our Investment Advisory Agreement and Administration Agreement.

For the three and nine months ended September 30, 2023 and September 30, 2022, our expenses were paid by a related party of the Adviser and will be reimbursed by us. As of September 30, 2023 and December 31, 2022, the total amount owed to the affiliates of the Adviser is included in the Due to Affiliate line item in the Consolidated Statements of Assets and Liabilities.

For the three and nine months ended September 30, 2023, the Administrator incurred $251 and $600, respectively, in fees under the Administrative Agreement. For the three and nine months ended September 30, 2022, the Administrator incurred $145 and $157, respectively, in fees under the Administrative Agreement. These fees are included in administrative service fees in the accompanying Consolidated Statements of Operations. As of September 30, 2023 and December 31, 2022, $251 and $550 were unpaid and included in Administrative services fee payable in the accompanying Consolidated Statements of Assets and Liabilities.

Expense Support and Conditional Reimbursement Agreement

On December 30, 2021, we entered into an expense support and conditional reimbursement agreement (the "Expense Support Agreement") with the Adviser. The Adviser may elect to pay certain of our expenses on our behalf (each, an “Expense Payment”), so long as no portion of the payment will be used to pay any interest expense or shareholder servicing and/or distribution fees. Any Expense Payment that the Adviser has committed to pay must be paid by the Adviser to us in any combination of cash or other immediately available funds no later than 45 days after such commitment was made in writing, and/or offset against amounts due from us to the Adviser or its affiliates.

Following any calendar quarter in which Available Operating Funds (as defined below) exceed the cumulative distributions accrued to our shareholders based on distributions declared with respect to record dates occurring in such calendar quarter (the amount of such excess being hereinafter referred to as “Excess Operating Funds”), we will pay such Excess Operating Funds, or a portion thereof, to the Adviser until such time as all Expense Payments made by the Adviser to us within three years prior to the last business day of such calendar quarter have been reimbursed. Any payments required to be made by us will be referred to herein as a “Reimbursement Payment.” “Available Operating Funds” means the sum of (i) our net investment company taxable income (including net short-term capital gains reduced by net long-term capital losses), (ii) our net capital gains (including the excess of net long-term capital gains over net short-term capital losses) and (iii) dividends and other distributions paid to us on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).

Our obligation to make a Reimbursement Payment shall automatically become a liability of ours on the last business day of the applicable calendar quarter, except to the extent the Adviser has waived its right to receive such payment for the applicable quarter.

The following table presents a summary of Expense Payments and the related Reimbursement Payments since our inception:

57

For the Period Ended	Expense Payments by Adviser		Reimbursement Payments to Adviser		Unreimbursed Expense Payments
June 30, 2022	$	227	$	—	$	227
September 30, 2022	225		—		225
June 30, 2023	—		(329)		(329)
September 30, 2023	—		(123)		(123)
Total	$	452	$	(452)	$	—

Pursuant to the Expense Support Agreement, Expense Payments made by the Adviser may become subject to repayment by us in the future. As of September 30, 2023 and December 31, 2022, the Company had $123.0 million and $0 million, respectively, in obligations to repay the Expense Payments to the Adviser and recorded a liability on the Consolidated Statements of Assets and Liabilities.

Capital Resources and Borrowings

As of September 30, 2023 and December 31, 2022, we have received signed Subscription Agreements totaling approximately $456.5 million and $285.8 million, respectively. However, due to investor concentration limits agreed to with certain investors, we have only accepted approximately $370.5 million and $196.6 million, respectively.

We utilize leverage to finance at least a portion of our investments. The amount of leverage that we employ is subject to the restrictions of the 1940 Act and the supervision of our Board. At the time of any proposed borrowing, the amount of leverage we employ will also depend on our Adviser’s assessment of the market, and other factors. We are permitted, under specified conditions, to borrow money and issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, measures the ratio of total assets less total liabilities not represented by senior securities to total borrowings, is at least equal to 150% immediately after each such issuance. The application of the 150% asset coverage requirement permits us to double the maximum amount of leverage that we are permitted to incur as compared to BDCs who have not obtained the requisite approvals and made the required disclosures. In addition, while any senior securities remain outstanding, we must make provision to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage.

Subscription Facility

On February 2, 2022, we entered into a revolving credit agreement with Sumitomo Mitsui Banking Corporation, which was amended on June 28, 2022 and December 21, 2022, August 7, 2023 (and as may be further amended, modified or supplemented, the “Subscription Facility”). The Subscription Facility allows us to borrow up to $38.4 million, subject to certain restrictions, including availability under a borrowing base based upon unused capital commitments made by investors in us. The amount of permissible borrowings under the Subscription Facility may be increased to up to $1 billion with the consent of the lenders. The Subscription Facility matures on February 2, 2024 and bears interest at an annual rate of: (i) with respect to reference rate loans, a reference rate for the period plus a margin equal to 1.80% (the "Applicable Margin") and (ii) with respect to alternative rate loans, the greatest of (a) the administrative agent's prime rate, (b) Term SOFR with a one-month term plus the Applicable Margin and (c) the federal funds rate plus 0.50%. Subject to certain exceptions, the Subscription Facility is secured by a first lien security interest in the Company’s unfunded investor equity capital commitments. The Subscription Facility includes customary covenants, certain limitations on the incurrence of additional indebtedness and liens, and other maintenance covenants, as well as usual and customary events of default for senior secured revolving credit facilities of this nature.

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Subscription Facility for the three and nine months ended September 30, 2023 and September 30, 2022:

58

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	76			178			375			182
Non-usage fee (1)	22			14			64			30
Amortization of financing costs	97			69			266			144
Weighted average stated interest rate	7.49		%	4.15		%	7.17		%	4.17		%
Weighted average outstanding balance (2)	$	4,028		$	16,924		$	6,991		$	16,926

(1)    Non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the Subscription Facility.

(2)    Our initial borrowing occurred on June 29, 2022.

SBA Debentures

SBIC LP is able to borrow funds from the SBA against its regulatory capital (which approximates equity capital in SBIC LP) that is paid in and is subject to customary regulatory requirements, including, but not limited to, periodic examination by the SBA. As of September 30, 2023, we funded SBIC LP with $42.0 million of regulatory capital, and have $31.0 million in SBA-guaranteed debentures outstanding. SBA debentures are non-recourse to us, and have a 10-year maturity, and may be prepaid at any time without penalty. The interest rate of SBA debentures is fixed at the time of issuance, often referred to as pooling, at a market-driven spread over 10-year U.S. Treasury Notes. SBA current regulations limit the amount that SBIC LP may borrow to a maximum of $175.0 million, which is up to twice its potential regulatory capital.

The SBA-guaranteed debentures incurred an upfront commitment fee of 1.00% on the total commitment amount and a 2.435% issuance discount on drawdowns, which are amortized over the life of the SBA-guaranteed debentures. In addition, an annual fee of 0.047% is charged on the SBA-guaranteed debentures which are amortized over the period.

The following table summarizes the Company’s SBA-guaranteed debentures as of September 30, 2023:

Issuance Date	Maturity Date	Debenture Amount		Purchase Date	Interest Rate	SBA Annual Charge
September 15, 2023	September 15, 2033	$	7,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%

The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three and nine months ended September 30, 2023:

59

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	84			—			84			—
Non-usage fee (1)	—			—			—			—
Amortization of financing costs	28			—			28			—
Weighted average stated interest rate	6.10		%	—		%	6.10		%	—		%
Weighted average outstanding balance (2)	$	5,391		$	—		$	1,817		$	—

(1) Non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the SBA-guaranteed debentures.

(2) The Company's initial borrowing occurred on September 15, 2023.

Repurchase Obligations

In order to finance certain investment transactions, we may, from time to time, enter into repurchase agreements with Macquarie US Trading LLC (“Macquarie”), whereby we sell to Macquarie an investment that it holds and concurrently enters into an agreement to repurchase the same investment at an agreed-upon price at a future date, not to exceed 90-days from the date it was sold (the “Macquarie Transaction”).

We entered into a repurchase agreement on March 15, 2023 which was collateralized by the Company’s term loan to Synergi, LLC. Interest under this Repurchase Obligations was calculated as (a) the product of the funded amount of the loan and (b) the product of (i) the number of days the loan is outstanding (subject to number of minimum days per the agreement) and (ii) daily fee rate. The Company maintained effective control over the security because it is entitled and obligated to repurchase the security before its maturity. Therefore, the repurchase agreement was treated as a secured borrowing and not a sale. On June 2, 2023 the Company repurchased its obligation under the repurchase agreement. As of September 30, 2023, there was no outstanding loan and interest payable balance to Macquarie.

Our facilities consist of the following:

	September 30, 2023						December 31, 2022
	Aggregate Principal Amount Available		Principal Amount Outstanding		Unused Portion		Aggregate Principal Amount Available		Principal Amount Outstanding		Unused Portion
Subscription Facility	$	38,400	$	23,400	$	15,000	$	38,400	$	31,500	$	6,900
SBA-guaranteed debentures	36,960		31,000		5,960		—		—		—
Total	$	75,360	$	54,400	$	20,960	$	38,400	$	31,500	$	6,900

60

Revolving Facility

While we do not currently have a revolving credit facility, we may, in future, enter into a revolving credit facility with various lenders (a “Revolving Facility”) to complement the Subscription Facility. Proceeds of such Revolving Facility may be used for general corporate purposes, including the funding of portfolio investments. While we cannot provide any assurances regarding the terms of any Revolving Facility we may enter into, we expect a Revolving Facility to provide for a three-year revolving period and have a maturity date of up to five years from the closing date of the Revolving Facility (which could be extended in connection with an extension of the revolving period). Subject to certain exceptions, a Revolving Facility would be expected to be secured by a first lien security interest in substantially the entire portfolio of investments held by us. A Revolving Facility is expected to include customary covenants, including certain financial covenants related to asset coverage, net worth and liquidity, certain limitations on the incurrence of additional indebtedness and liens, and other maintenance covenants, as well as usual and customary events of default for senior secured revolving credit facilities of this nature. The maximum principal amount available under a Revolving Facility is expected to be based on certain advance rates multiplied by the value of our portfolio investments (subject to certain concentration limitations) net of certain other indebtedness that we may incur in accordance with the terms of the Revolving Facility.

SBA Debentures

On February 1, 2023, our wholly owned subsidiary, Lafayette Square SBIC, LP (“SBIC LP”) received a license (made effective as of January 27, 2023) from the SBA to operate as an SBIC under Section 301(c) of the Small Business Investment Act of 1958, as amended. SBIC LP has an investment strategy substantially similar to ours and makes similar types of investments in accordance with SBA regulations. SBIC LP and its general partner are consolidated for U.S. GAAP reporting purposes, and the portfolio investments held by it are included in the consolidated financial statements.

SBIC LP is able to borrow funds from the SBA against its regulatory capital (which approximates equity capital of SBIC LP) that is paid in and is subject to the issuance of a capital commitment by the SBA and is subject to customary regulatory requirements and procedures, including, but not limited to, periodic examination by the SBA. SBA debentures are non-recourse to us, have a 10-year maturity, and may be prepaid at any time without penalty. The interest rate of SBA debentures is fixed at the time of issuance, often referred to as pooling, at a market-driven spread over 10-year U.S. Treasury Notes. The March 2023 issuance of SBA debentures was at a fixed rate of 5.168%. This interest rate is currently lower than other typical market-based borrowing strategies which usually charge 3-month SOFR (4.909% as of 3/31/23) plus a meaningful interest spread.

SBA regulations currently permit SBIC LP to borrow up to $175.0 million in SBA-guaranteed debentures with at least $87.5 million in regulatory capital, subject to receiving a capital commitment from the SBA and being examined by the SBA subsequent to licensing. As of September 30, 2023, we had funded SBIC LP with $42.0 million of equity capital, and have $31.0 million in SBA-guaranteed debentures outstanding. Lafayette Square’s SBIC license allows access to 10-year financing for qualifying investments through the SBA debenture program with a permitted leverage ratio of debt-to-equity of up to two-to-one. The SBA issues a trust certificate debenture twice a year (in March and September), which establishes the fixed interest rate for this borrowing.

SBICs are designed to stimulate the flow of capital into eligible businesses. Under SBA regulations, SBIC LP is subject to regulatory requirements, including making investments in SBA eligible businesses, investing at least 25% of regulatory capital in eligible smaller businesses, as defined under the Small Business Investment Act of 1958, placing certain limitations on the financing terms of investments, prohibiting investment in certain industries and requiring capitalization thresholds that limit distributions to us, and is subject to periodic audits and examinations of their financial statements that are prepared on a basis of accounting other than GAAP (for example, fair value, as defined under ASC 820, is not required to be used for assets or liabilities for such compliance reporting). As of September 30, 2023, SBIC LP was in compliance with their regulatory requirements.

Off-Balance Sheet Arrangements

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of September 30, 2023 and December 31, 2022, we were not party to any off-balance sheet arrangements.

61

Recent Developments

On November 6, 2023, the Company closed an additional $6.6 million in capital commitments, increasing the total closed commitments to $377.0 million as of the date of this Report.

On October 20, 2023, the Company repaid it's outstanding balance on the Credit Facility in the amount of $23.4 million. As of the date of this Report, there is no outstanding balance on the Credit Facility.

On October 3, 2023, the Company invested in a senior secured first lien delayed draw term loan in Direct Digital Holdings, LLC, with a incremental delayed draw term loan funded commitment of $3.6 million, bearing an interest rate of 3M Term SOFR + CSA + 7.95%, maturing on December 3, 2026.

On October 6, 2023, the Company invested in a senior secured first lien term loan in Standard Real Estate Investments, LP, with a term loan funded commitment of $3.0 million, bearing an interest rate of 3M Term SOFR + CSA + 8.75%, maturing on October 6, 2026. In addition, the Company had an unfunded commitment of $2.0 million in a senior secured first lien delayed draw term loan maturing on October 6, 2026.

In addition, as of October 30, 2023, we had an investment backlog and pipeline of approximately $89 million and $444 million, respectively. Investment backlog includes transactions approved by our investment adviser’s investment committee and/or for which a formal mandate, letter of intent or a term sheet have been issued, and therefore we believe have a strong likelihood of closing. Investment pipeline includes transactions where initial due diligence has begun and/or analysis is in process, but no formal mandate, letter of intent or term sheets have been issued. The consummation of any of the investments in this backlog and pipeline depends upon, among other things, one or more of the following: satisfactory completion of our due diligence investigation of the prospective portfolio company, our acceptance of the terms and structure of such investment and the negotiation, execution, and delivery of satisfactory transaction documentation. In addition, we may sell all or a portion of these investments and certain of these investments may result in the repayment of existing investments. We cannot assure you that we will make any of these investments or that we will sell all or any portion of these investments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, most significantly changes in interest rates. Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we expect to fund a portion of our investments with borrowings, our net investment income is expected to be affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

The following table estimates the potential changes in net cash flow generated from interest income, should interest rates increase or decrease by 100, 200 or 300 basis points. These hypothetical interest income calculations are based on a model of the settled debt investments in our portfolio, held as of September 30, 2023, and are only adjusted for assumed changes in the underlying base interest rates and the impact of that change on interest income. As of September 30, 2023, approximately 98.97% of investments at fair value (excluding investments on non-accrual, unfunded debt investments and non-bearing equity investments) represent floating-rate investments with a LIBOR or SOFR floor (including investments bearing a prime interest rate contracts) and approximately 1.03% of investments at fair value represent fixed-rate investments. Additionally, our senior secured revolving credit facility is also subject to a floating interest rate and currently paid on a floating SOFR rates. Interest expense is calculated based on outstanding secured borrowings as of September 30, 2023 and based on the terms of our Subscription Facility. Interest expense on our Subscription Facility is calculated using the stated interest rate as of September 30, 2023, adjusted for the hypothetical changes in rates, as shown below. We continue to finance a portion of our investments with borrowings and the interest rates paid on our borrowings may impact significantly our net interest income.

We regularly measure exposure to interest rate risk. We assess interest rate risk and manage interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.

62

Based on our Consolidated Statements of Assets and Liabilities as of September 30, 2023, the following table shows the annual impact on net investment income of base rate changes in interest rates for our settled debt investments (considering interest rate floors for variable rate instruments), and outstanding secured borrowings assuming no changes in our investment and borrowing structure:

	September 30, 2023
Basis point increase (decrease)	Interest Income		Interest Expense		Net Interest Income
Up 300 basis points	$	4,889	$	(1,632)	$	3,257
Up 200 basis points	$	3,259	$	(1,088)	$	2,171
Up 100 basis points	$	1,630	$	(544)	$	1,086
Down 100 basis points	$	(1,630)	$	544	$	(1,086)
Down 200 basis points	$	(3,259)	$	1,088	$	(2,171)
Down 300 basis points	$	(4,889)	$	1,632	$	(3,257)

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of September 30, 2023, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness and design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective at a reasonable assurance level in timely alerting management, including the Chief Executive Officer and Chief Financial Officer, of material information about us required to be included in periodic SEC filings. However, in evaluation of the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is a process designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published consolidated financial statements.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions recorded necessary to permit the preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles. Our policies and procedures also provide reasonable assurance that receipts and expenditures are being made only in accordance with authorizations of management and our directors, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2023. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework issued in 2013. Based on the assessment, management believes that, as of September 30, 2023, our internal control over financial reporting is effective based on those criteria.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, since our most recently completed fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

63

PART II

Item 1. Legal Proceedings

Neither we nor our Adviser or Administrator is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding that would affect our business threatened against us, or against our Adviser or Administrator. 

From time to time, we, our Adviser or Administrator may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Item 1A (Risk Factors) in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in our Form 10-Q for the fiscal quarter ended June 30, 2023. The risks described in our Annual Report on Form 10-K and Form 10-Q are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. There have been no material changes known to us during the three months ended September 30, 2023, to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022 and our Form 10-Q for the quarter ended June 30, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

All sales of unregistered securities during the nine months ended September 30, 2023 were reported in our current reports on Form 8-K filed with the SEC.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the quarter ended September 30, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

64

Item 6. Exhibits

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2023 (and are numbered in accordance with Item 601 of Regulation S-K).

(a)(1) and (2) Consolidated Financial Statements and Schedules

No.	Description
3.1	Certificate of Incorporation of the Registrant(1)
3.2	Amendment to Certificate of Incorporation(2)
3.3	Form of Amended and Restated Bylaws*
3.4	Amendment to Bylaws(2)
4.1	Description of the Registrant's Securities (filed as Exhibit 4.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2021 filed on March 25, 2022 and incorporated herein by reference).
10.1	Form of Investment Advisory Agreement(1)
10.2	Form of Administration Agreement(1)
10.3	Form of Custody Agreement(1)
10.4	Form of Indemnification Agreement(1)
10.5	Dividend Reinvestment Plan(1)
10.6	Form of Subscription Agreement(1)
10.7	Revolving Credit Agreement, dated as of February 2, 2022, by and among Lafayette Square USA, Inc., as Borrower, Sumitomo Mitsui Banking Corporation ("SMBC"), as Administrative Agent and the letter of credit issuer, and the other lenders named therein (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on February 3, 2022 and incorporated herein by reference).
10.8	First Amendment to Revolving Credit Agreement, dated as of June 28, 2022, among the Registrant, the other Borrowers and SMBC (filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2022 filed on August 10, 2022 and incorporated herein by reference).
10.9	Second Amendment to Revolving Credit Agreement and Waiver, dated as of December 21, 2022, among the Registrant, the other Borrowers and SMBC.*
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

(1) Previously filed as part of the Registrant's Registration Statement on Form 10 (File No. 000-56289) filed on May 28, 2021 and incorporated herein by reference.

(2) Previously filed as part of Registrant's Current Report on Form 8-K filed on June 12, 2023 and incorporated herein by reference.

*Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Lafayette Square USA, Inc.
Date: November 8, 2023	By: /s/ Damien Dwin
	Name: Damien Dwin
	Title: President and Chief Executive Officer
Date: November 8, 2023	By: /s/ Seren Tahiroglu
	Name: Seren Tahiroglu
	Title: Chief Financial Officer

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Of Periodic Report Pursuant to Rule 13a-14(a) and 15d-14(a)

I, Damien Dwin, Chief Executive Officer, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Lafayette Square USA, Inc. (the “Registrant”);

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2023	By:	/s/ Damien Dwin
		Damien Dwin
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Of Periodic Report Pursuant to Rule 13a-14(a) and 15d-14(a)

I, Seren Tahiroglu, Chief Financial Officer, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Lafayette Square USA, Inc. (the “Registrant”);

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2023	By:	/s/ Seren Tahiroglu
		Seren Tahiroglu
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report of Lafayette Square USA, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023 (the “Report”), I, Damien Dwin, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)    The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2023	By:	/s/ Damien Dwin
		Damien Dwin
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report of Lafayette Square USA, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023 (the “Report”), I, Seren Tahiroglu, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)    The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2023	By:	/s/ Seren Tahiroglu
		Seren Tahiroglu
		Chief Financial Officer
		(Principal Financial Officer)

XML

Cover - shares	9 Months Ended
	Sep. 30, 2023	Nov. 08, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Securities Act File Number	814-01427
Entity Registrant Name	LAFAYETTE SQUARE USA, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	87-2807075
Entity Address, Address Line One	175 SW 7th St
Entity Address, Address Line Two	Unit 1911
Entity Address, City or Town	Miami
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33130
City Area Code	786
Local Phone Number	753-7096
Title of 12(g) Security	Common Stock, par value $0.001 per share
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		13,068,112
Entity Central Key	0001849089
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3

XML

Consolidated Statements of Assets and Liabilities - USD ($) $ in Thousands	Sep. 30, 2023		Dec. 31, 2022
Assets
Investments, at fair value	$ 170,278	[1],[2],[3],[4]	$ 84,343	[5],[6],[7],[8]
Cash and cash equivalents	82,219		20,687
Deferred financing costs	1,240		306
Deferred offering costs	0		151
Interest receivable	707		90
Other assets	115		0
Total assets	254,559		105,577
Liabilities
Amount outstanding	31,000		0
Secured borrowings (see Note 5)	23,400		31,500
Distributions payable	2,614		0
Accounts payable and accrued expenses	1,495		1,135
Due to affiliate	941		120
Incentive fee payable (see Note 6)	535		0
Management fee payable (see Note 6)	431		167
Administrative services fee payable (see Note 6)	251		550
Interest and financing payable	148		323
Total liabilities	60,815		33,795
Commitments and Contingencies (See Note 7)
Net assets
Preferred stock, par value $0.001 per share (50,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022)	0		0
Common stock, par value $0.001 per share (450,000,000 shares authorized, 13,068,112 and 4,916,554 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)	13		5
Paid-in capital in excess of par	193,462		72,610
Distributable earnings (losses)	269		(833)
Total net assets	193,744		71,782
Total liabilities and net assets	$ 254,559		$ 105,577
Net asset value per common share (in dollar per share)	$ 14.83		$ 14.60
Non-controlled/Non-affiliate Investments
Assets
Investments, at fair value	$ 143,295	[1],[2],[3],[4]	$ 63,636	[5],[6],[7],[8]
Non-controlled/Affiliate Investments
Assets
Investments, at fair value	$ 26,983		$ 20,707

[1] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[2] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[3] Percentage is based on net assets of $193,744 as of September 30, 2023.

[4] Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".

[5] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[6] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[7] Percentage is based on net assets of $71,782 as of December 31, 2022.

[8] Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".

XML

Consolidated Statements of Assets and Liabilities (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023		Dec. 31, 2022
Amortized Cost	$ 169,680	[1],[2],[3],[4]	$ 84,545	[5],[6],[7],[8]
Accounts Payable, Related Party, Type [Extensible Enumeration]	Affiliated Entity [Member]		Affiliated Entity [Member]
Preferred stock par value (in dollar per shares)	$ 0.001		$ 0.001
Preferred stock shares authorized (in shares)	50,000,000		50,000,000
Preferred stock shares issued (in shares)	0		0
Preferred stock shares outstanding (in shares)	0		0
Common stock par value (in dollar per shares)	$ 0.001		$ 0.001
Common stock shares authorized (in shares)	450,000,000		450,000,000
Common stock shares issued (in shares)	13,068,112		4,916,554
Common stock shares outstanding (in shares)	13,068,112		4,916,554
Non-controlled/Non-affiliate Investments
Amortized Cost	$ 142,543	[1],[2],[3],[4]	$ 63,838	[5],[6],[7],[8]
Non-controlled/Affiliate Investments
Amortized Cost	$ 27,137		$ 20,707

[1] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[2] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[3] Percentage is based on net assets of $193,744 as of September 30, 2023.

[4] Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".

[5] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[6] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[7] Percentage is based on net assets of $71,782 as of December 31, 2022.

[8] Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".

XML

Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Investment Income:
Interest from cash and cash equivalents	$ 724,000	$ 0	$ 1,269,000	$ 0
Total investment income	5,741,000	1,277,000	13,331,000	1,298,000
Expenses:
General and administrative expenses	601,000	383,000	1,922,000	659,000
Interest and financing expenses (see Note 5)	307,000	261,000	1,193,000	356,000
Management fee (see Note 6)	431,000	108,000	1,035,000	110,000
Administrative services fee (see Note 6)	251,000	145,000	600,000	157,000
Organizational costs (See Note 2)	46,000	0	332,000	22,000
Incentive fee (see Note 6)	535,000	0	1,050,000	0
Professional fees	449,000	163,000	851,000	275,000
Directors' fees	80,000	80,000	240,000	96,000
Offering expenses	0	77,000	151,000	80,000
Total expenses, before expense support reimbursement	2,700,000	1,217,000	7,374,000	1,755,000
Expense support reimbursement (see Note 6)	123,000	(225,000)	452,000	(452,000)
Total expenses, including expenses support reimbursement	2,823,000	992,000	7,826,000	1,303,000
Net investment income (loss)	2,918,000	285,000	5,505,000	(5,000)
Net change in unrealized gains (losses) on investments:
Total net change in unrealized gains (losses) on investments	558,000	(505,000)	800,000	(376,000)
Net increase (decrease) in net assets resulting from operations	$ 3,476,000	$ (220,000)	$ 6,305,000	$ (381,000)
Weighted average common shares outstanding, basic (in shares)	13,053,832	2,098,009	10,254,893	733,084
Weighted average common shares outstanding, diluted (in shares)	13,053,832	2,098,009	10,254,893	733,084
Net investment income (loss) per common share (basic) (in dollar per share)	$ 0.22	$ 0.14	$ 0.54	$ (0.01)
Net investment income (loss) per common share (diluted) (in dollar per share)	0.22	0.14	0.54	(0.01)
Earnings (loss) per common share basic (in dollar per share)	0.27	(0.10)	0.61	(0.52)
Earnings (loss) per common share diluted (in dollar per share)	$ 0.27	$ (0.10)	$ 0.61	$ (0.52)
Non-controlled/Non-affiliate Investments
Investment Income:
Cash	$ 4,139,000	$ 1,197,000	$ 9,784,000	$ 1,218,000
Fee income	18,000	80,000	28,000	80,000
Net change in unrealized gains (losses) on investments:
Net change in unrealized gains (losses) on investments in non-controlled/non-affiliated investments	767,000	(505,000)	954,000	(376,000)
Non-controlled/Affiliate Investments
Investment Income:
Cash	860,000		2,250,000	0
Fee income	0		0	0
Interest from cash and cash equivalents	724,000	0	1,269,000	0
Net change in unrealized gains (losses) on investments:
Net change in unrealized gains (losses) on investments in non-controlled/non-affiliated investments	$ (209,000)		$ (154,000)	$ 0

XML

Consolidated Statements of Changes in Net Assets - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022		Sep. 30, 2023	Sep. 30, 2022
Investment Company, Net Assets [Roll Forward]
Beginning balance (in shares)				4,916,554
Beginning balance	$ 192,442	$ 25,541		$ 71,782	$ (504)
Issuance of common stock (in shares)				8,091,531
Issuance of common stock	0	26,206		$ 119,972	52,412
Reinvestment of stockholder distributions	440			888	0
Net increase in net assets from capital transactions	440			120,860
Net increase (decrease) in net assets resulting from operations:
Net investment income (loss)	2,918	285		5,505	(5)
Net realized gain (loss)	0
Net change in unrealized gain (losses)	558	(505)		800	(376)
Total increase (decrease)	3,476	$ 25,986		6,305	$ 52,031
Distributable earnings	(2,614)			(5,203)
Total distributions to stockholders	(2,614)			(5,203)
Total increase (decrease) in net assets	$ 1,302			$ 121,962
Ending balance (in shares)	13,068,112	3,537,828		13,068,112	3,537,828
Ending balance	$ 193,744	$ 51,527		$ 193,744	$ 51,527
Common Stock
Investment Company, Net Assets [Roll Forward]
Beginning balance (in shares)	13,038,253	1,747,783		4,916,554	700
Beginning balance	$ 13	$ 2	[1]	$ 5	$ 0	[1]
Issuance of common stock (in shares)	0	1,790,045		8,091,531	3,537,128
Issuance of common stock	$ 0	$ 2	[1]	$ 8	$ 4	[1]
Reinvestment of stockholder distributions (in shares)	29,859			60,027
Net increase in net assets from capital transactions (in shares)	29,859			8,151,558
Net increase in net assets from capital transactions	$ 0			$ 8
Net increase (decrease) in net assets resulting from operations:
Total increase (decrease) (in shares)	0	1,790,045		0	3,537,128
Total increase (decrease)	$ 0	$ 2	[1]	$ 0	$ 4	[1]
Total increase (decrease) in net assets (in shares)	29,859			8,151,558
Total increase (decrease) in net assets	$ 0			$ 8
Ending balance (in shares)	13,068,112	3,537,828		13,068,112	3,537,828
Ending balance	$ 13	$ 4	[1]	$ 13	$ 4	[1]
Paid in Capital Excess of Par
Investment Company, Net Assets [Roll Forward]
Beginning balance	193,022	26,215		72,610	11
Issuance of common stock	0	26,204		119,964	52,408
Reinvestment of stockholder distributions	440			888
Net increase in net assets from capital transactions	440			120,852
Net increase (decrease) in net assets resulting from operations:
Total increase (decrease)	0	26,204		0	52,408
Total increase (decrease) in net assets	440			120,852
Ending balance	193,462	52,419		193,462	52,419
Distributable Earnings (Losses)
Investment Company, Net Assets [Roll Forward]
Beginning balance	(593)	(676)		(833)	(515)
Net increase (decrease) in net assets resulting from operations:
Net investment income (loss)	2,918	285		5,505	(5)
Net change in unrealized gain (losses)	558	(505)		800	(376)
Total increase (decrease)	3,476	(220)		6,305	(381)
Distributable earnings	(2,614)			(5,203)
Total distributions to stockholders	(2,614)			(5,203)
Total increase (decrease) in net assets	862			1,102
Ending balance	$ 269	$ (896)		$ 269	$ (896)

[1] Less than $1 as of December 31, 2021.

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$ 6,305	$ (381)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net change in unrealized (gain) loss on investments	(800)	376
Purchases of investments	(86,060)	(48,767)
Net accretion of discount on investments	(290)	(66)
Proceeds from sales and repayments of investments	1,215	324
Amortization of deferred financing costs	294	144
Changes in operating assets and liabilities:
Interest receivable	(617)	(18)
Deferred offering costs	151	43
Other assets	(115)	1
Accounts payable and accrued expenses	360	0
Management fee payable	264	0
Incentive fee payable	535	0
Administrative services fee payable	(299)	145
Interest and financing payable	(175)	20
Due to affiliate	821	322
Net cash provided by (used in) operating activities	(78,411)	(47,857)
Cash flows from financing activities
Proceeds from issuance of shares of common stock	119,972	52,412
Distributions paid	(1,701)	0
Proceeds from secured borrowings	77,448	37,500
Repayments of secured borrowings	(85,548)	(20,000)
Proceeds from SBA-guaranteed debentures	31,000	0
Deferred financing costs paid	(1,228)	(470)
Net cash provided by (used in) financing activities	139,943	69,442
Net increase (decrease) in cash and cash equivalents	61,532	21,585
Cash and cash equivalents at beginning of period	20,687	8
Cash and cash equivalents at end of period	82,219	21,593
Supplemental information:
Interest expense paid	644	175
Shares issued from dividend reinvestment plan	888	0
Accrual for deferred financing costs	$ 1,240	$ 306

XML

Consolidated Schedule of Investments - USD ($) $ in Thousands		Sep. 30, 2023		Dec. 31, 2022		Dec. 31, 2021
Amortized Cost		$ 169,680	[1],[2],[3],[4]	$ 84,545	[5],[6],[7],[8]
Fair Value		$ 170,278	[1],[2],[3],[4]	$ 84,343	[5],[6],[7],[8]
Percentages of Net Assets		87.80%	[1],[2],[3],[4]	117.50%	[5],[6],[7],[8]
Commercial Services & Supplies
Amortized Cost		$ 46,019		$ 39,024
Fair Value		45,625		38,647
Construction & Engineering
Amortized Cost		50,374		20,012
Fair Value		51,059		20,012
Event Management
Amortized Cost		33,507
Fair Value		33,547
Health Care Providers & Services
Amortized Cost		7,853
Fair Value		7,960
Hotels, Restaurants & Leisure
Amortized Cost		3,487
Fair Value		3,500
IT Services
Amortized Cost		3,376
Fair Value		3,425
Media
Amortized Cost		25,064		25,509
Fair Value		25,162		25,684
Non-controlled/Non-affiliate Investments
Amortized Cost		142,543	[1],[2],[3],[4]	63,838	[5],[6],[7],[8]
Fair Value		$ 143,295	[1],[2],[3],[4]	$ 63,636	[5],[6],[7],[8]
Percentages of Net Assets		73.80%	[1],[2],[3],[4]	88.70%	[5],[6],[7],[8]
Non-controlled/Non-affiliate Investments | Commercial Services & Supplies
Amortized Cost		$ 18,882	[1],[2],[3],[4]	$ 18,317	[5],[6],[7],[8]
Fair Value		$ 18,642	[1],[2],[3],[4]	$ 17,940	[5],[6],[7],[8]
Percentages of Net Assets		9.60%	[1],[2],[3],[4]	25.00%	[5],[6],[7],[8]
Non-controlled/Non-affiliate Investments | Construction & Engineering
Amortized Cost		$ 50,374	[1],[2],[3],[4]	$ 20,012	[5],[6],[7],[8]
Fair Value		$ 51,059	[1],[2],[3],[4]	$ 20,012	[5],[6],[7],[8]
Percentages of Net Assets		26.20%	[1],[2],[3],[4]	27.90%	[5],[6],[7],[8]
Non-controlled/Non-affiliate Investments | Event Management
Amortized Cost	[1],[2],[3],[4]	$ 33,507
Fair Value	[1],[2],[3],[4]	$ 33,547
Percentages of Net Assets	[1],[2],[3],[4]	17.40%
Non-controlled/Non-affiliate Investments | Media
Amortized Cost		$ 25,064	[1],[2],[3],[4]	$ 25,509	[5],[6],[7],[8]
Fair Value		$ 25,162	[1],[2],[3],[4]	$ 25,684	[5],[6],[7],[8]
Percentages of Net Assets		12.90%	[1],[2],[3],[4]	35.80%	[5],[6],[7],[8]
Non-controlled/affiliated investments
Amortized Cost		$ 27,137	[1],[2],[3],[4],[9]	$ 20,707	[5],[6],[7],[8]
Fair Value		$ 26,983	[1],[2],[3],[4],[9]	$ 20,707	[5],[6],[7],[8]	$ 0
Percentages of Net Assets		14.00%	[1],[2],[3],[4],[9]	28.80%	[5],[6],[7],[8]
Non-controlled/affiliated investments | Commercial Services & Supplies
Amortized Cost		$ 27,137	[1],[2],[3],[4],[9]	$ 20,707	[5],[6],[7],[8]
Fair Value		$ 26,983	[1],[2],[3],[4],[9]	$ 20,707	[5],[6],[7],[8]
Percentages of Net Assets		14.00%	[1],[2],[3],[4],[9]	28.80%	[5],[6],[7],[8]
Non-controlled/affiliated investments | Health Care Providers & Services
Amortized Cost	[1],[2],[3],[4]	$ 7,853
Fair Value	[1],[2],[3],[4]	$ 7,960
Percentages of Net Assets	[1],[2],[3],[4]	4.10%
Non-controlled/affiliated investments | Hotels, Restaurants & Leisure
Amortized Cost	[1],[2],[3],[4]	$ 3,487
Fair Value	[1],[2],[3],[4]	$ 3,500
Percentages of Net Assets	[1],[2],[3],[4]	1.80%
Non-controlled/affiliated investments | IT Services
Amortized Cost	[1],[2],[3],[4]	$ 3,376
Fair Value	[1],[2],[3],[4]	$ 3,425
Percentages of Net Assets	[1],[2],[3],[4]	1.80%
Investment, Identifier [Axis]: Aetius Holdings, LLC, First lien senior secured loan
Reference Rate and Spread	[10],[11]	7.00%
Interest Rate	[10],[11]	12.51%
Par Amount/Shares (in shares)	[10],[11],[12]	3,500,000
Amortized Cost	[10],[11]	$ 3,487
Fair Value	[10],[11]	$ 3,500
Percentages of Net Assets	[10],[11]	1.80%
Investment, Identifier [Axis]: Dance Nation Holdings , First lien senior secured loan 1
Reference Rate and Spread	[10],[11]	6.50%
Interest Rate	[10],[11]	12.15%
Par Amount/Shares (in shares)	[10],[11],[12]	32,217,000
Amortized Cost	[10],[11]	$ 31,895
Fair Value	[10],[11]	$ 31,895
Percentages of Net Assets	[10],[11]	16.50%
Investment, Identifier [Axis]: Dance Nation Holdings , First lien senior secured loan 2
Reference Rate and Spread	[10],[11],[13]	6.50%
Interest Rate	[10],[11],[13]	12.15%
Par Amount/Shares (in shares)	[10],[11],[12],[13]	0
Amortized Cost	[10],[11],[13]	$ (40)
Fair Value	[10],[11],[13]	$ 0
Percentages of Net Assets	[10],[11],[13]	0.00%
Investment, Identifier [Axis]: Dance Nation Topco LLC , Preferred Equity
Par Amount/Shares (in shares)	[12]	1,652,200
Amortized Cost		$ 1,652
Fair Value		$ 1,652
Percentages of Net Assets		0.90%
Investment, Identifier [Axis]: Dartpoints Operating Company, LLC
Reference Rate and Spread	[10],[11],[14]	9.39%
Interest Rate	[10],[11],[14]	14.74%
Par Amount/Shares (in shares)	[10],[11],[12],[14]	3,425,000
Amortized Cost	[10],[11],[14]	$ 3,376
Fair Value	[10],[11],[14]	$ 3,425
Percentages of Net Assets	[10],[11],[14]	1.80%
Investment, Identifier [Axis]: Direct Digital Holdings, LLC, , First lien senior secured loan 1
Reference Rate and Spread		7.95%	[10],[11]	8.45%	[15],[16],[17]
Interest Rate		13.52%	[10],[11]	12.86%	[15],[16],[17]
Par Amount/Shares (in shares)		4,155,000	[10],[11],[12]	4,234,000	[15],[16],[17],[18]
Amortized Cost		$ 4,123	[10],[11]	$ 4,191	[15],[16],[17]
Fair Value		$ 4,150	[10],[11]	$ 4,234	[15],[16],[17]
Percentages of Net Assets		2.10%	[10],[11]	5.90%	[15],[16],[17]
Investment, Identifier [Axis]: Direct Digital Holdings, LLC, , First lien senior secured loan 2
Reference Rate and Spread		7.95%	[10],[11]	8.45%	[15],[16],[17]
Interest Rate		13.52%	[10],[11]	13.18%	[15],[16],[17]
Par Amount/Shares (in shares)		21,038,000	[10],[11],[12]	21,450,000	[15],[16],[17],[18]
Amortized Cost		$ 20,941	[10],[11]	$ 21,318	[15],[16],[17]
Fair Value		$ 21,012	[10],[11]	$ 21,450	[15],[16],[17]
Percentages of Net Assets		10.80%	[10],[11]	29.90%	[15],[16],[17]
Investment, Identifier [Axis]: GK9 Global Companies, LLC, , First lien senior secured loan 1
Reference Rate and Spread		8.95%	[9],[10],[11]	9.50%	[15],[16],[17]
Interest Rate		14.60%	[9],[10],[11]	14.34%	[15],[16],[17]
Par Amount/Shares (in shares)		18,973,000	[9],[10],[11],[12]	16,272,000	[15],[16],[17],[18]
Amortized Cost		$ 18,842	[9],[10],[11]	$ 16,112	[15],[16],[17]
Fair Value		$ 18,831	[9],[10],[11]	$ 16,112	[15],[16],[17]
Percentages of Net Assets		9.70%	[9],[10],[11]	22.40%	[15],[16],[17]
Investment, Identifier [Axis]: GK9 Global Companies, LLC, , First lien senior secured loan 2
Reference Rate and Spread		8.95%	[9],[10],[11],[13]	9.50%	[15],[16],[17],[19]
Interest Rate		14.60%	[9],[10],[11],[13]	14.34%	[15],[16],[17],[19]
Par Amount/Shares (in shares)		3,433,000	[9],[10],[11],[12],[13]	0	[15],[16],[17],[18],[19]
Amortized Cost		$ 3,414	[9],[10],[11],[13]	$ (36)	[15],[16],[17],[19]
Fair Value		$ 3,393	[9],[10],[11],[13]	$ (36)	[15],[16],[17],[19]
Percentages of Net Assets		1.80%	[9],[10],[11],[13]	(0.10%)	[15],[16],[17],[19]
Investment, Identifier [Axis]: H.W. Lochner, Inc., First lien senior secured loan
Reference Rate and Spread	[10],[11]	6.75%
Interest Rate	[10],[11]	12.17%
Par Amount/Shares (in shares)	[10],[11],[12]	8,159,000
Amortized Cost	[10],[11]	$ 7,934
Fair Value	[10],[11]	$ 8,159
Percentages of Net Assets	[10],[11]	4.20%
Investment, Identifier [Axis]: IVM GK9 Holdings LLC
Fair Value		$ 26,983		$ 20,707		$ 0
Investment, Identifier [Axis]: IVM GK9 Holdings LLC, , Equity
Par Amount/Shares (in shares)	[16],[18]			4,750
Amortized Cost	[16]			$ 4,631
Fair Value	[16]			$ 4,631
Percentages of Net Assets	[16]			6.50%
Investment, Identifier [Axis]: IVM GK9 Holdings LLC, LLC, , Equity
Par Amount/Shares (in shares)	[9],[12]	14,364
Amortized Cost	[9]	$ 4,881
Fair Value	[9]	$ 4,759
Percentages of Net Assets	[9]	2.50%
Investment, Identifier [Axis]: Rotolo Consultants, Inc.
Amortized Cost	[5],[6],[7],[8]			$ 3,158
Fair Value	[5],[6],[7],[8]			$ 3,160
Percentages of Net Assets	[5],[6],[7],[8]			4.40%
Investment, Identifier [Axis]: Rotolo Consultants, Inc., , First lien senior secured loan
Reference Rate and Spread		7.00%	[10],[11]	7.50%	[15],[16],[17]
Interest Rate		12.68%	[10],[11]	12.23%	[15],[16],[17]
Par Amount/Shares (in shares)		3,183,000	[10],[11],[12]	3,209,000	[15],[16],[17],[18]
Amortized Cost		$ 3,142	[10],[11]	$ 3,158	[15],[16],[17]
Fair Value		$ 3,143	[10],[11]	$ 3,160	[15],[16],[17]
Percentages of Net Assets		1.60%	[10],[11]	4.40%	[15],[16],[17]
Investment, Identifier [Axis]: SYNERGI, LLC, , First lien senior secured loan 1
Reference Rate and Spread		7.00%	[10],[11]	7.50%	[15],[16],[17]
Interest Rate		12.65%	[10],[11]	12.34%	[15],[16],[17]
Par Amount/Shares (in shares)		22,343,000	[10],[11],[12]	20,000	[15],[16],[17],[18]
Amortized Cost		$ 22,156	[10],[11]	$ 20,049	[15],[16],[17]
Fair Value		$ 22,343	[10],[11]	$ 20,049	[15],[16],[17]
Percentages of Net Assets		11.50%	[10],[11]	27.90%	[15],[16],[17]
Investment, Identifier [Axis]: SYNERGI, LLC, , First lien senior secured loan 2
Reference Rate and Spread		7.00%	[10],[11],[13]	7.50%	[15],[16],[17],[19]
Interest Rate		12.65%	[10],[11],[13]	12.34%	[15],[16],[17],[19]
Par Amount/Shares (in shares)		0	[10],[11],[12],[13]	0	[15],[16],[17],[18],[19]
Amortized Cost		$ (32)	[10],[11],[13]	$ (37)	[15],[16],[17],[19]
Fair Value		$ 0	[10],[11],[13]	$ (37)	[15],[16],[17],[19]
Percentages of Net Assets		0.00%	[10],[11],[13]	(0.10%)	[15],[16],[17],[19]
Investment, Identifier [Axis]: Salt Dental Collective LLC
Reference Rate and Spread	[10],[11]	7.50%
Interest Rate	[10],[11]	12.92%
Par Amount/Shares (in shares)	[10],[11],[12]	7,960,000
Amortized Cost	[10],[11]	$ 7,853
Fair Value	[10],[11]	$ 7,960
Percentages of Net Assets	[10],[11]	4.10%
Investment, Identifier [Axis]: TCFIII Owl Buyer LLC, First lien senior secured loan 1
Reference Rate and Spread	[10],[11]	5.50%
Interest Rate	[10],[11]	10.93%
Par Amount/Shares (in shares)	[10],[11],[12]	10,925,000
Amortized Cost	[10],[11]	$ 10,829
Fair Value	[10],[11]	$ 10,897
Percentages of Net Assets	[10],[11]	5.60%
Investment, Identifier [Axis]: Trilon Group, LLC, First lien senior secured loan 1
Reference Rate and Spread	[10],[11]	6.25%
Interest Rate	[10],[11]	11.77%
Par Amount/Shares (in shares)	[10],[11],[12]	6,078,000
Amortized Cost	[10],[11]	$ 5,979
Fair Value	[10],[11]	$ 6,078
Percentages of Net Assets	[10],[11]	3.10%
Investment, Identifier [Axis]: Trilon Group, LLC, First lien senior secured loan 2
Reference Rate and Spread	[10],[11],[13]	6.25%
Interest Rate	[10],[11],[13]	11.67%
Par Amount/Shares (in shares)	[10],[11],[12],[13]	3,582,000
Amortized Cost	[10],[11],[13]	$ 3,516
Fair Value	[10],[11],[13]	$ 3,582
Percentages of Net Assets	[10],[11],[13]	1.80%
Investment, Identifier [Axis]: Trilon Group, LLC, First lien senior secured loan 3
Reference Rate and Spread	[10],[11],[13]	6.25%
Interest Rate	[10],[11],[13]	11.80%
Par Amount/Shares (in shares)	[10],[11],[12],[13]	0
Amortized Cost	[10],[11],[13]	$ (8)
Fair Value	[10],[11],[13]	$ 0
Percentages of Net Assets	[10],[11],[13]	0.00%
Investment, Identifier [Axis]: ZWR Holdings, Inc.
Amortized Cost	[5],[6],[7],[8]			$ 15,159
Fair Value	[5],[6],[7],[8]			$ 14,780
Percentages of Net Assets	[5],[6],[7],[8]			20.60%
Investment, Identifier [Axis]: ZWR Holdings, Inc., , Subordinated debt
Reference Rate and Spread		10.00%		10.00%	[16]
Interest Rate		14.00%		14.00%	[16]
PIK interest rate		14.00%		14.00%	[16]
Par Amount/Shares (in shares)		1,826,000	[12]	1,694,000	[16],[18]
Amortized Cost		$ 1,826		$ 1,693	[16]
Fair Value		$ 1,686		$ 1,556	[16]
Percentages of Net Assets		0.90%		2.20%	[16]
Investment, Identifier [Axis]: ZWR Holdings, Inc., , Warrants
Par Amount/Shares (in shares)		24,953	[12]	24,953	[16],[18]
Fair Value		$ 0		$ 0	[16]
Percentages of Net Assets		0.00%		0.00%	[16]
Investment, Identifier [Axis]: Zero Waste Recycling LLC., First lien senior secured loan 1
Reference Rate and Spread	[15],[16],[17],[19]			6.45%
Interest Rate	[15],[16],[17],[19]			11.13%
Par Amount/Shares (in shares)	[15],[16],[17],[18],[19]			3,442,000
Amortized Cost	[15],[16],[17],[19]			$ 3,422
Fair Value	[15],[16],[17],[19]			$ 3,334
Percentages of Net Assets	[15],[16],[17],[19]			4.60%
Investment, Identifier [Axis]: Zero Waste Recycling LLC., First lien senior secured loan 2
Reference Rate and Spread	[15],[16],[17]			6.45%
Interest Rate	[15],[16],[17]			11.18%
Par Amount/Shares (in shares)	[15],[16],[17],[18]			10,105,000
Amortized Cost	[15],[16],[17]			$ 10,044
Fair Value	[15],[16],[17]			$ 9,890
Percentages of Net Assets	[15],[16],[17]			13.80%
Investment, Identifier [Axis]: Zero Waste Recycling LLC., First lien senior secured loan 1
Reference Rate and Spread	[10],[11],[13]	6.45%
Interest Rate	[10],[11],[13]	12.13%
Par Amount/Shares (in shares)	[10],[11],[12],[13]	3,954,000
Amortized Cost	[10],[11],[13]	$ 3,948
Fair Value	[10],[11],[13]	$ 3,897
Percentages of Net Assets	[10],[11],[13]	2.00%
Investment, Identifier [Axis]: Zero Waste Recycling LLC., First lien senior secured loan 2
Reference Rate and Spread	[10],[11]	6.45%
Interest Rate	[10],[11]	12.13%
Par Amount/Shares (in shares)	[10],[11],[12]	10,028,000
Amortized Cost	[10],[11]	$ 9,966
Fair Value	[10],[11]	$ 9,916
Percentages of Net Assets	[10],[11]	5.10%

[1] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[2] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[3] Percentage is based on net assets of $193,744 as of September 30, 2023.

[4] Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".

[5] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[6] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[7] Percentage is based on net assets of $71,782 as of December 31, 2022.

[8] Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".

[9] Under the 1940 Act, the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of September 30, 2023, the Company did not “control” any of these portfolio companies. Under the 1940 Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owned 5% or more of the portfolio company’s outstanding voting securities. As of September 30, 2023, the Company’s non-controlled/affiliated investments were as follows:

[10] Loan includes interest rate floor feature.

[11] Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to the Secured Overnight Financing Rate ("SOFR" or "S") or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of September 30, 2023. As of September 30, 2023, the reference rates for our variable rate loans were the 90-day SOFR at 5.27% and 30-day SOFR at 5.32%.

[12] The total funded par amount is presented for debt investments, while the number of shares or units owned is presented for equity investments.

[13] Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may earn unused commitment fees. Negative cost and fair value, if any, results from unamortized fees, which are capitalized to the cost of the investment. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. See below for more information on the Company’s unfunded commitments as of September 30, 2023:

[14] The Company categorized its unitranche loan as First Lien Senior Secured Loan. The First Lien Senior Secured Loan is comprised of two components: a first out tranche (“First Out”) and last out tranche (“Last Out”). The Company syndicates the First Out tranche and retains the Last Out tranche. The First Out and Last Out tranches have the same maturity date. Interest disclosed reflects the contractual rate of First Lien Senior Secured Loan. The First Out tranche has priority as to the Last Out tranche with respect to payments of principal, interest and any amounts due thereunder. The Company may be entitled to receive additional interest as a result of the Agreement Among Lenders (“AAL”) entered into with the First Out lender. In exchange for the higher interest rate, the Last Out portion is at a greater risk of loss.

[15] Loan includes interest rate floor feature.

[16] Unless otherwise indicated, all investments are "restricted securities" as defined in the Securities Act of 1933.

[17] Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR, SOFR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2022. As of December 31, 2022, the reference rates for our variable rate loans were the 90-day LIBOR at 4.77% and SOFR at 4.30%.

[18] The total funded par amount is presented for debt investments, while the number of shares or units owned is presented for equity investments.

[19] Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may earn unused commitment fees. Negative cost and fair value, if any, results from unamortized fees, which are capitalized to the cost of the investment. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. See below for more information on the Company’s unfunded commitments as of December 31, 2022:

XML

Consolidated Schedule of Investments (Parenthetical) - USD ($) $ in Thousands		9 Months Ended			12 Months Ended
		Sep. 30, 2023		Sep. 30, 2022	Dec. 31, 2022		Dec. 31, 2021
Total net assets		$ 193,744		$ 51,527	$ 71,782		$ (504)
Unfunded Commitment		14,362			12,995
Fair Value		170,278	[1],[2],[3],[4]		84,343	[5],[6],[7],[8]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[5],[6],[7],[8]	84,343
Fair value, ending balance		$ 170,278	[1],[2],[3],[4]		$ 84,343	[5],[6],[7],[8]
Investment, Identifier [Axis]: Aetius Holdings, LLC, First lien senior secured loan
Reference Rate and Spread	[9],[10]	7.00%
Fair Value	[9],[10]	$ 3,500
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10]	$ 3,500
Investment, Identifier [Axis]: Dance Nation Holdings , First lien senior secured loan 1
Reference Rate and Spread	[9],[10]	6.50%
Fair Value	[9],[10]	$ 31,895
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10]	$ 31,895
Investment, Identifier [Axis]: Dance Nation Holdings , First lien senior secured loan 2
Reference Rate and Spread	[9],[10],[11]	6.50%
Fair Value	[9],[10],[11]	$ 0
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10],[11]	0
Investment, Identifier [Axis]: Dance Nation Topco LLC , Preferred Equity
Fair Value		1,652
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance		$ 1,652
Investment, Identifier [Axis]: Dartpoints Operating Company, LLC
Reference Rate and Spread	[9],[10],[12]	9.39%
Fair Value	[9],[10],[12]	$ 3,425
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10],[12]	$ 3,425
Investment, Identifier [Axis]: Direct Digital Holdings, LLC, , First lien senior secured loan 1
Reference Rate and Spread		7.95%	[9],[10]		8.45%	[13],[14],[15]
Fair Value		$ 4,150	[9],[10]		$ 4,234	[13],[14],[15]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[13],[14],[15]	4,234
Fair value, ending balance		$ 4,150	[9],[10]		$ 4,234	[13],[14],[15]
Investment, Identifier [Axis]: Direct Digital Holdings, LLC, , First lien senior secured loan 2
Reference Rate and Spread		7.95%	[9],[10]		8.45%	[13],[14],[15]
Fair Value		$ 21,012	[9],[10]		$ 21,450	[13],[14],[15]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[13],[14],[15]	21,450
Fair value, ending balance		$ 21,012	[9],[10]		$ 21,450	[13],[14],[15]
Investment, Identifier [Axis]: GK9 Global Companies, LLC, , First lien senior secured loan 1
Reference Rate and Spread		8.95%	[9],[10],[16]		9.50%	[13],[14],[15]
Fair Value		$ 18,831	[9],[10],[16]		$ 16,112	[13],[14],[15]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[13],[14],[15]	16,112
Fair value, ending balance		$ 18,831	[9],[10],[16]		$ 16,112	[13],[14],[15]
Investment, Identifier [Axis]: GK9 Global Companies, LLC, , First lien senior secured loan 2
Reference Rate and Spread		8.95%	[9],[10],[11],[16]		9.50%	[13],[14],[15],[17]
Fair Value		$ 3,393	[9],[10],[11],[16]		$ (36)	[13],[14],[15],[17]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[13],[14],[15],[17]	(36)
Fair value, ending balance		$ 3,393	[9],[10],[11],[16]		(36)	[13],[14],[15],[17]
Investment, Identifier [Axis]: H.W. Lochner, Inc., First lien senior secured loan
Reference Rate and Spread	[9],[10]	6.75%
Fair Value	[9],[10]	$ 8,159
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10]	8,159
Investment, Identifier [Axis]: IVM GK9 Holdings LLC
Fair Value		26,983			20,707		0
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance		20,707		0	0
Gross Additions		6,663			20,707
Gross Reductions		(233)			0
Change in Unrealized Gains (Losses)		(154)			0
Fair value, ending balance		26,983			20,707
Investment Income		2,250			600
Investment, Identifier [Axis]: IVM GK9 Holdings LLC, , Equity
Fair Value	[14]				4,631
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[14]	4,631
Fair value, ending balance	[14]				4,631
Investment, Identifier [Axis]: IVM GK9 Holdings LLC, LLC, , Equity
Fair Value	[16]	4,759
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[16]	4,759
Investment, Identifier [Axis]: Rotolo Consultants, Inc.
Fair Value	[5],[6],[7],[8]				3,160
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[5],[6],[7],[8]	$ 3,160
Fair value, ending balance	[5],[6],[7],[8]				$ 3,160
Investment, Identifier [Axis]: Rotolo Consultants, Inc., , First lien senior secured loan
Reference Rate and Spread		7.00%	[9],[10]		7.50%	[13],[14],[15]
Fair Value		$ 3,143	[9],[10]		$ 3,160	[13],[14],[15]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[13],[14],[15]	3,160
Fair value, ending balance		$ 3,143	[9],[10]		$ 3,160	[13],[14],[15]
Investment, Identifier [Axis]: SYNERGI, LLC, , First lien senior secured loan 1
Reference Rate and Spread		7.00%	[9],[10]		7.50%	[13],[14],[15]
Fair Value		$ 22,343	[9],[10]		$ 20,049	[13],[14],[15]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[13],[14],[15]	20,049
Fair value, ending balance		$ 22,343	[9],[10]		$ 20,049	[13],[14],[15]
Investment, Identifier [Axis]: SYNERGI, LLC, , First lien senior secured loan 2
Reference Rate and Spread		7.00%	[9],[10],[11]		7.50%	[13],[14],[15],[17]
Fair Value		$ 0	[9],[10],[11]		$ (37)	[13],[14],[15],[17]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[13],[14],[15],[17]	(37)
Fair value, ending balance		$ 0	[9],[10],[11]		(37)	[13],[14],[15],[17]
Investment, Identifier [Axis]: Salt Dental Collective LLC
Reference Rate and Spread	[9],[10]	7.50%
Fair Value	[9],[10]	$ 7,960
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10]	$ 7,960
Investment, Identifier [Axis]: TCFIII Owl Buyer LLC, First lien senior secured loan 1
Reference Rate and Spread	[9],[10]	5.50%
Fair Value	[9],[10]	$ 10,897
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10]	$ 10,897
Investment, Identifier [Axis]: Trilon Group, LLC, First lien senior secured loan 1
Reference Rate and Spread	[9],[10]	6.25%
Fair Value	[9],[10]	$ 6,078
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10]	$ 6,078
Investment, Identifier [Axis]: Trilon Group, LLC, First lien senior secured loan 2
Reference Rate and Spread	[9],[10],[11]	6.25%
Fair Value	[9],[10],[11]	$ 3,582
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10],[11]	$ 3,582
Investment, Identifier [Axis]: Trilon Group, LLC, First lien senior secured loan 3
Reference Rate and Spread	[9],[10],[11]	6.25%
Fair Value	[9],[10],[11]	$ 0
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10],[11]	0
Investment, Identifier [Axis]: Unfunded Delayed Draw and Revolving Senior Secured Loans
Unfunded Commitment		14,362			12,995
Investment, Identifier [Axis]: ZWR Holdings, Inc.
Fair Value	[5],[6],[7],[8]				14,780
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[5],[6],[7],[8]	$ 14,780
Fair value, ending balance	[5],[6],[7],[8]				$ 14,780
Investment, Identifier [Axis]: ZWR Holdings, Inc., , Subordinated debt
Reference Rate and Spread		10.00%			10.00%	[14]
Fair Value		$ 1,686			$ 1,556	[14]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[14]	1,556
Fair value, ending balance		1,686			1,556	[14]
Investment, Identifier [Axis]: ZWR Holdings, Inc., , Warrants
Fair Value		0			0	[14]
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[14]	0
Fair value, ending balance		0			$ 0	[14]
Investment, Identifier [Axis]: Zero Waste Recycling LLC., First lien senior secured loan 1
Reference Rate and Spread	[13],[14],[15],[17]				6.45%
Fair Value	[13],[14],[15],[17]				$ 3,334
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[13],[14],[15],[17]	3,334
Fair value, ending balance	[13],[14],[15],[17]				$ 3,334
Investment, Identifier [Axis]: Zero Waste Recycling LLC., First lien senior secured loan 2
Reference Rate and Spread	[13],[14],[15]				6.45%
Fair Value	[13],[14],[15]				$ 9,890
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance	[13],[14],[15]	$ 9,890
Fair value, ending balance	[13],[14],[15]				9,890
Investment, Identifier [Axis]: Zero Waste Recycling LLC., First lien senior secured loan 1
Reference Rate and Spread	[9],[10],[11]	6.45%
Fair Value	[9],[10],[11]	$ 3,897
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10],[11]	$ 3,897
Investment, Identifier [Axis]: Zero Waste Recycling LLC., First lien senior secured loan 2
Reference Rate and Spread	[9],[10]	6.45%
Fair Value	[9],[10]	$ 9,916
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance	[9],[10]	9,916
Non-controlled/affiliated investments
Fair Value		26,983	[1],[2],[3],[4],[16]		20,707	[5],[6],[7],[8]	$ 0
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance		20,707	[5],[6],[7],[8]	$ 0	0
Gross Additions		6,663			20,707
Gross Reductions		(233)			0
Change in Unrealized Gains (Losses)		(154)			0
Fair value, ending balance		26,983	[1],[2],[3],[4],[16]		20,707	[5],[6],[7],[8]
Investment Income		2,250			600
Line of Credit
Unfunded Commitment		14,362			12,995
Fair Value		(28)			(109)
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance		(109)
Fair value, ending balance		$ (28)			$ (109)
Delayed Draw Term Loan | Zero Waste Recycling LLC. First Lien Debt | Line of Credit
Unused Fee Rate		0.50%
Unfunded Commitment		$ 1,141
Fair Value		(13)
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance		$ (13)
Delayed Draw Term Loan | GK9 Global Companies, LLC | Line of Credit
Unused Fee Rate		0.50%			0.50%
Unfunded Commitment		$ 1,940			$ 7,563
Fair Value		(15)			(36)
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance		(36)
Fair value, ending balance		$ (15)			$ (36)
Delayed Draw Term Loan | Trillion Group , LLC | Line of Credit
Unused Fee Rate		1.00%
Unfunded Commitment		$ 3,000
Fair Value		0
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance		0
Delayed Draw Term Loan | ZWR Holdings, Inc. | Line of Credit
Unused Fee Rate					0.50%
Unfunded Commitment					$ 1,682
Fair Value					(36)
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance		$ (36)
Fair value, ending balance					$ (36)
Revolving Credit Facility | Synergi, LLC | Line of Credit
Unused Fee Rate		0.50%			0.50%
Unfunded Commitment		$ 3,750			$ 3,750
Fair Value		0			(37)
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, beginning balance		(37)
Fair value, ending balance		$ 0			$ (37)
Revolving Credit Facility | Dance Nation Holdings LLC | Line of Credit
Unused Fee Rate		0.50%
Unfunded Commitment		$ 4,131
Fair Value		0
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance		$ 0
Revolving Credit Facility | Trillion Group , LLC | Line of Credit
Unused Fee Rate		0.50%
Unfunded Commitment		$ 400
Fair Value		0
Investments in and Advances to Affiliates, at Fair Value [Roll Forward]
Fair value, ending balance		$ 0
90 Days London Interbank Offered Rate (LIBOR)
Reference Rate and Spread					4.77%
90 Days Secured Overnight Financing Rate (SOFR)
Reference Rate and Spread		5.27%			4.30%
30 Days Secured Overnight Financing Rate (SOFR)
Reference Rate and Spread		5.32%

[1] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[2] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[3] Percentage is based on net assets of $193,744 as of September 30, 2023.

[4] Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".

[5] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[6] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[7] Percentage is based on net assets of $71,782 as of December 31, 2022.

[8] Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".

[9] Loan includes interest rate floor feature.

[10] Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to the Secured Overnight Financing Rate ("SOFR" or "S") or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of September 30, 2023. As of September 30, 2023, the reference rates for our variable rate loans were the 90-day SOFR at 5.27% and 30-day SOFR at 5.32%.

[11] Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may earn unused commitment fees. Negative cost and fair value, if any, results from unamortized fees, which are capitalized to the cost of the investment. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. See below for more information on the Company’s unfunded commitments as of September 30, 2023:

[12] The Company categorized its unitranche loan as First Lien Senior Secured Loan. The First Lien Senior Secured Loan is comprised of two components: a first out tranche (“First Out”) and last out tranche (“Last Out”). The Company syndicates the First Out tranche and retains the Last Out tranche. The First Out and Last Out tranches have the same maturity date. Interest disclosed reflects the contractual rate of First Lien Senior Secured Loan. The First Out tranche has priority as to the Last Out tranche with respect to payments of principal, interest and any amounts due thereunder. The Company may be entitled to receive additional interest as a result of the Agreement Among Lenders (“AAL”) entered into with the First Out lender. In exchange for the higher interest rate, the Last Out portion is at a greater risk of loss.

[13] Loan includes interest rate floor feature.

[14] Unless otherwise indicated, all investments are "restricted securities" as defined in the Securities Act of 1933.

[15] Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR, SOFR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2022. As of December 31, 2022, the reference rates for our variable rate loans were the 90-day LIBOR at 4.77% and SOFR at 4.30%.

[16] Under the 1940 Act, the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of September 30, 2023, the Company did not “control” any of these portfolio companies. Under the 1940 Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owned 5% or more of the portfolio company’s outstanding voting securities. As of September 30, 2023, the Company’s non-controlled/affiliated investments were as follows:

[17] Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may earn unused commitment fees. Negative cost and fair value, if any, results from unamortized fees, which are capitalized to the cost of the investment. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. See below for more information on the Company’s unfunded commitments as of December 31, 2022:

XML

Organization

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Lafayette Square USA, Inc. (the “Company,” which term refers to either Lafayette Square USA, Inc. or Lafayette Square USA, Inc. together with its consolidated subsidiaries, as the context may require) is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). On May 16, 2022, Lafayette Square Empire BDC, Inc. filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation to change its corporate name from “Lafayette Square Empire BDC, Inc.” to “Lafayette Square USA, Inc.,” effective May 16, 2022. In addition, for U.S. federal income tax purposes, the Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for the tax periods ending December 31, 2021 and December 31, 2022. The Company intends to elect to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) for the tax period ending December 31, 2023, as well as maintain such election in future taxable years. However, there is no guarantee that the Company will qualify to make such an election for any taxable year.

The Company is externally managed by LS BDC Adviser, LLC (the “Adviser”) pursuant to an investment advisory and management agreement between the Company and the Adviser, dated August 7, 2023 (and as may be amended, the “Investment Advisory Agreement”). The Adviser is a subsidiary of Lafayette Square Holding Company, LLC (together with its controlled subsidiaries, including the Adviser and LS Administration, LLC, “Lafayette Square”).

The Company invests in businesses that are primarily domiciled, headquartered and/or have a significant operating presence in each of the ten regions below, with a goal to invest at least 5% of its assets in each region over time. However, the Company anticipates that it could take time to invest substantially all of the capital it expects to raise in a geographically diverse manner due to general market conditions, the time necessary to identify, evaluate, structure, negotiate and close suitable investments in private middle market companies, and the potential for allocations to other affiliated investment vehicles which focus their investments on a specific region. As a result, at any point in time, the Company may have a disproportionate amount of investments in certain regions, and there can be no assurance that the Company will achieve geographic diversification across all ten regions.

• Cascade Region: Alaska, Idaho, Oregon and Washington

• Empire Region: New York, New Jersey, Connecticut and Pennsylvania

• Far West Region: California, Hawaii and Nevada

• Four Corners Region: Arizona, Colorado, New Mexico and Utah

• Great Lakes Region: Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin

• Gulf Coast Region: Arkansas, Louisiana, Oklahoma and Texas

• Mid-Atlantic Region: Delaware, Kentucky, Maryland, North Carolina, South Carolina, Tennessee, Virginia and West Virginia and the District of Columbia

• Northeast Region: Maine, Massachusetts, New Hampshire, Rhode Island and Vermont

• Plains Region: Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming

• Southeast Region: Alabama, Georgia, Florida, Mississippi and the territory of Puerto Rico

The Company’s investment objective is to generate favorable risk-adjusted returns, including current income and capital appreciation, from directly originated investments in middle market companies.

The Company invests primarily in first and second lien loans and, to a lesser extent, in subordinated and mezzanine loans and equity and equity-like securities, including common stock, preferred stock and warrants. The Company defines middle market companies as those with annual revenues between $10 million and $1 billion, and annual earnings before interest, taxes, depreciation, and amortization (“EBITDA”) of between $10 million and $100 million, although the Company may invest in larger or smaller companies. The Company also may purchase interests in loans, corporate bonds or other instruments through secondary market transactions.

The Company formed two wholly owned subsidiaries, LS BDC Holdings, LLC and LS BDC Holdings (DN), LLC , both Delaware limited liability companies, to hold certain equity or equity-like investments in portfolio companies. Additionally, the Company has formed a wholly owned subsidiary, Lafayette Square SBIC, LP (“SBIC LP”), a small business investment company (“SBIC”) licensed by the U.S. Small Business Administration (the "SBA"), to invest in eligible “small businesses” as defined by the SBA. SBIC LP received its SBIC license on February 1, 2023 (made effective as of January 27, 2023). SBA regulations currently permit SBIC LP to borrow up to $175.0 million in SBA-guaranteed debentures with at least $87.5 million in regulatory capital (as defined in the SBA regulations). The Company consolidates its wholly owned subsidiaries in these consolidated financial statements from the date of each subsidiary’s formation. All significant intercompany transactions and balances have been eliminated in such consolidation.

XML

Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

The following is a summary of significant accounting policies consistently followed by the Company in the preparation of its consolidated financial statements. The Company is an investment company and accordingly applies specific accounting and financial reporting requirements under Accounting Standards Codification, as issued by the Financial Accounting Standards Board (“ASC”) Topic 946—Financial Services—Investment Companies (“Topic 946”). The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and pursuant to Articles 6, 10 and 12 of Regulation S-X.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company deposits its cash in a financial institution and, at times, such deposits may exceed the Federal Deposit Insurance Corporation insurance limits. As of September 30, 2023 and December 31, 2022, the Company held $82,219 and $20,687 in cash and cash equivalents, respectively, of which no cash was restricted. Of the total cash and cash equivalents balance, $82,219 and $20,682 were held in an interest bearing account with U.S. Bank National Association as of September 30, 2023 and December 31, 2022, respectively. For the three and nine months ended September 30, 2023 the Company earned $724 and $1,269, respectively, in interest on cash and cash equivalents balances, and the balance is included under Interest from cash and cash equivalents in Consolidated Statements of Operations. No interest was earned on cash balances for the three and nine months ended September 30, 2022.

Organization and Offering Costs

Organization costs consist of costs incurred to establish the Company and enable it to do business legally. Organization costs are expensed as incurred. Offering costs consist of costs incurred in connection with the offering of the common stock of the Company.

The Company’s initial organizational costs incurred were expensed, and initial offering costs are being amortized over one year.

The Company may incur organization and offering expenses of up to $1 million in connection with the formation of the Company and the offering of shares of its common stock, including the out-of-pocket expenses of the Adviser and its agents and affiliates. The Company reimburses the Adviser for the organization and offering costs it incurs on the Company’s behalf. If actual organization and offering costs incurred exceed $1 million, the Adviser or its affiliates will bear the excess costs. As of September 30, 2023, the Company has incurred $804 (since inception) of organization and offering costs.

Deferred Financing Costs

Deferred financing costs, incurred in connection with any credit facility and SBA-guaranteed debentures (see Note 5) are deferred and amortized over the life of the respective credit facility and SBA-guaranteed debentures.

Indemnifications

In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote.

Revenue Recognition

Investment transactions are accounted for on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized. The Company reports current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in the Consolidated Statements of Operations.

Investment Income

Interest income, including amortization of premium and accretion of discount, is recorded on the accrual basis to the extent that such amounts are collected. The Company records amortized or accreted discounts or premiums as interest income using the effective interest method or straight-line interest method, as applicable, and adjusted only for material amendments or prepayments. Dividend income, which represents dividends from equity investments and distributions from subsidiaries, if any, is recognized on an accrual basis to the extent that the Company collects such amount.

Original Issue Discount

Discounts to par on portfolio securities are accreted into income over the tenor of the instrument. Any remaining discount is accreted into income upon prepayment or redemption of the instrument. The Company then amortizes such amounts using the effective interest method as interest income over the expected life of the investment.

PIK Interest

The Company may, from time to time, hold loans in its portfolio that contain a payment-in-kind ("PIK") interest provision. PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to the Company in cash, and is recorded as interest income. Thus, the actual collection of PIK interest in cash may be deferred until the time of debt principal repayment.

PIK interest, which is a non-cash source of income at the time of recognition, is included in the Company’s taxable income. This affects the amount the Company would be required to distribute to its stockholders to maintain its tax treatment as a RIC for federal income tax purposes, even though the Company has not yet collected the cash.

Fee Income

Origination fees received are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized origination fees are recorded as investment income. The Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees, covenant waiver fees and loan amendment fees, which are recorded as investment income when earned.

Non-accrual loans

A loan can be left on accrual status during the period the Company is pursuing repayment of the loan. Management reviews all loans that become 90 days or more past due on principal and interest, or when there is reasonable doubt that principal or interest will be collected, for possible placement on non-accrual status. When a loan is placed on non-accrual status, unpaid interest credited to income is reversed. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date such loan is placed on non-accrual status. Interest payments received on non-accrual loans are recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid, and, in management’s judgment, future payments are likely to remain current.

Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, the Company is deemed to "control" a portfolio company if it owns more than 25% of its outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company. Such investments in portfolio companies that the Company "controls" are referred to as "Control Investments." Under the 1940 Act, the Company is deemed to be an "Affiliated Person" of a portfolio company if it owns between 5% and 25% of the portfolio company's outstanding voting securities or the Company is under common control with such portfolio company. We refer to such investments in Affiliated Persons as "Affiliated Investments." Investments which are neither Control Investments or Affiliated Investments are referred to as "Non-Controlled/Non-Affiliated investments."

Fair Value of Financial Instruments

The Company applies fair value to all of its financial instruments in accordance with ASC Topic 820—Fair Value Measurement (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity-specific measure.

The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3.

Any changes to the valuation methodology are reviewed by management and the Board to confirm that the changes are appropriate. As markets change, new products develop and the pricing for products becomes more or less transparent, the Company will continue to refine its valuation methodologies.

On December 3, 2020, the SEC adopted Rule 2a-5 under the 1940 Act (the "Valuation Rule"), which established an updated regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Pursuant to the Valuation Rule, which became effective on September 8, 2022 (the "SEC Compliance Date"), the Board has chosen to designate the Adviser as the Company's valuation designee to perform fair value determinations relating to the value of the assets for which market quotations are not readily available, subject to the Board's oversight.

Income Taxes

The Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for U.S. federal income tax purposes, for the tax periods ended December 31, 2021 and December 31, 2022. The Company intends to elect to be treated as a RIC under Subchapter M of the Code for the tax period ending December 31, 2023, as well as maintain such election in future taxable years. However, there is no guarantee that the Company will qualify to make such an election for any taxable year. In order to qualify and be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends for U.S. federal income tax purposes to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. As a RIC, the Company would intend to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal income taxes with respect to all income distributed to its stockholders. The Company may be subject to regular federal and state corporate income tax on any net built-in gains with respect to certain of its assets (i.e., the excess of the aggregate gains, over aggregate losses that would have been realized with respect to such assets if we had been liquidated) that the Company elects to recognize upon RIC election or when recognized over the next five taxable years.

The Company is subject to a nondeductible 4% U.S. federal excise tax on its undistributed income, unless it timely distributes (or is deemed to have timely distributed) an amount equal to the sum of (1) 98% of ordinary income for each calendar year, (2) 98.2% of the amount by which capital gains exceeds capital losses (adjusted for certain ordinary losses) for a one-year period ending on October 31 of the calendar year, and (3) any income and gains recognized, but not distributed, from the previous years. While the Company intends to distribute any income and capital gains to avoid imposition of this 4% U.S. federal excise tax, it may not be successful in avoiding entirely the imposition of this tax. In that case, the Company will be liable for the tax only on the amount by which it does not meet the foregoing distribution requirement.

The Company accounts for income taxes in conformity with ASC Topic 740 - Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense or tax benefit in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no material unrecognized net tax benefits or unrecognized net tax liabilities related to uncertain income tax positions as of and through September 30, 2023.

Distributions

Distributions to common stockholders are recorded on the record date. Subject to the discretion of and as determined by the Board, the Company will authorize and declare ordinary cash distributions based on a formula approved by the Board on a quarterly basis. The amount to be paid out as a dividend or distribution is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed to shareholders at least annually, although the Company can retain such capital gains for investment in its discretion.

The Company has adopted a dividend reinvestment plan (the “DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes and the Company declares a cash distribution, then stockholders who have not “opted out” of the DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. Shares issued under the DRIP will be issued at a price per share equal to the most recent net asset value (“NAV”) per share as determined by the Board (subject to adjustment to the extent required by Section 23 of the 1940 Act).

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. An entity may elect to adopt the amendments in ASU 2020-04 at any time after March 12, 2020 but no later than December 31, 2022. In January 2021, the FASB issued ASU. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. In December, 2022, the FASB issued a new Accounting Standards Update ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” that extends the sunset (or expiration) date of Accounting Standards Codification (ASC) Topic 848 to December 31, 2024. This gives reporting entities two additional years to apply the accounting relief provided under ASC Topic 848 for matters related to reference rate reform. The Company adopted ASU 2020-04 and 2021-01 as of June 30, 2023, and concluded that there was no impact of this guidance to the consolidated financial statements and disclosures as of September 30, 2023

XML

Investments

9 Months Ended

Sep. 30, 2023

Schedule of Investments [Abstract]

Investments

Investments

The following tables show the composition of the Company’s investment portfolio, at amortized cost and fair value (with corresponding percentage of total portfolio investments). as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Amortized Cost				Fair Value
First lien senior secured loans	$	161,321	95.0	%	$	162,181	95.2	%
Equity	4,881		2.9	%	4,759		2.8	%
Subordinated debt	1,826		1.1	%	1,686		1.0	%
Preferred equity	1,652		1.0	%	1,652		1.0	%
Warrants	—		—	%	—		—	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

	December 31, 2022
	Amortized Cost				Fair Value
First lien senior secured loans	$	78,221	92.5	%	$	78,156	92.7	%
Equity	4,631		5.5	%	4,631		5.5	%
Subordinated debt	1,693		2.0	%	1,556		1.8	%
Warrants	—		—	%	—		—	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

The following tables show the composition of the Company’s investment portfolio by geographic region, at amortized cost and fair value (with corresponding percentage of total portfolio investments) as of September 30, 2023 and December 31, 2022. The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business:

	September 30, 2023
	Amortized Cost				Fair Value
Mid-Atlantic	$	41,351	24.4	%	$	41,342	24.3	%
Far West Region	33,507		19.7	%	33,547		19.7	%
Gulf Coast	31,582		18.6	%	31,730		18.6	%
Southeast	27,137		16.0	%	26,983		15.8	%
Great Lakes	18,763		11.1	%	19,056		11.2	%
Four Corners	9,487		5.6	%	9,660		5.7	%
Cascade	7,853		4.6	%	7,960		4.7	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

    

	December 31, 2022
	Amortized Cost				Fair Value
Mid-Atlantic	$	35,171	41.6	%	$	34,792	41.3	%
Gulf Coast	28,667		33.9	%	28,844		34.1	%
Southeast	20,707		24.5	%	20,707		24.6	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

The following tables show the composition of the Company’s investment portfolio by industry, at amortized cost and fair value (with corresponding percentage of total portfolio investments) as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Amortized Cost				Fair Value
Construction & Engineering	$	50,374	29.7	%	$	51,059	29.9	%
Commercial Services & Supplies	46,019		27.1	%	45,625		26.8	%
Event Management	33,507		19.7	%	33,547		19.7	%
Media	25,064		14.8	%	25,162		14.8	%
Health Care Providers & Services	7,853		4.6	%	7,960		4.7	%
Hotels, Restaurants & Leisure	3,487		2.1	%	3,500		2.1	%
IT Services	3,376		2.0	%	3,425		2.0	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

	December 31, 2022
	Amortized Cost				Fair Value
Commercial Services & Supplies	$	39,024	46.2	%	$	38,647	45.8	%
Media	25,509		30.2	%	25,684		30.5	%
Construction & Engineering	20,012		23.6	%	20,012		23.7	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

XML

Fair Value Measurements of Investments

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements of Investments

Fair Value Measurements of Investments

FASB ASC 820, Fair Value Measurement (“ASC 820”), clarifies the definition of fair value as the amount that would be received in the sale of an asset or paid in the transfer of a liability in an orderly transaction between market participants at the measurement date. Where available, the Company uses quoted market prices based on the last sales price on the measurement date.

In accordance with Topic 820, 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 valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). To the extent that fair value is based on inputs that are less observable, the determination of fair value requires a significant amount of management judgment.

The three-tier hierarchy of inputs is summarized below.

Level 1 - Quoted prices are available in active markets/exchanges for identical investments as of the reporting date.

Level 2 - Pricing inputs are observable inputs including, but not limited to, prices quoted for similar assets or liabilities in active markets/exchanges or prices quoted for identical or similar assets or liabilities in markets that are not active, and fair value is determined through the use of models or other valuation methodologies.

Level 3 - Pricing inputs are unobservable for the investment and include activities where there is little, if any, market activity for the investment. The inputs into determination of fair value require significant management judgment and estimation.

The inputs used by management in estimating the fair value of Level 3 investments may include valuations and other reporting provided by representatives of the portfolio companies, original transaction prices, recent transactions for identical or similar instruments, and comparisons to fair values of comparable investments, and may include adjustments to reflect illiquidity or non-transferability. The Adviser has policies with respect to its investments, which may assist the Adviser in assessing the quality of information provided by, or on behalf of, each portfolio investment and in determining whether such information continues to be provided by a reliable source or whether further investigation is necessary. Any such investigation, as applicable, may or may not require the Adviser to forego its normal reliance on the value supplied by, or on behalf of, such portfolio investment and to independently determine the fair value of the Company’s interest in such portfolio investments, consistent with the Adviser’s valuation procedures.

The Company has engaged an independent third-party valuation provider, which performs valuation procedures to arrive at estimated valuation ranges of the investments on a quarterly basis. Investments that have been completed within the past three months are fair valued approximating cost unless there has been a material event since the completion date. If there has been a material event or material information that was not known as of the close of the transaction, the independent third-party valuation provider provides an independent valuation range. The types of valuation methodologies employed by the third-party valuation provider include discounted cash flow, recent financing and enterprise value valuation methodologies. Pursuant to the Valuation Rule, which became effective on the SEC Compliance Date, the Board has chosen to designate the Adviser as the Company's valuation designee to perform fair value determinations relating to the value of the assets for which market quotations are not readily available, subject to the Board's oversight.

The Company’s investments and borrowings are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments and borrowings are traded.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics and other factors.

The use of these valuation models requires significant estimation and judgment by the Adviser. While the Company believes its valuation methods are appropriate, other market participants may value identical assets differently than the Company at the measurement date. The methods used by the Company may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. The Company may also have risk associated with its concentration of investments in certain geographic regions and industries.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Accordingly, the degree of judgment exercised by the Adviser in determining fair value is greatest for securities categorized in Level 3.

The determination of what constitutes “observable” requires significant judgment by the Adviser. The Adviser considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary. Such observable data may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy where the fair value measurement falls (in its entirety) is based on the lowest level input that is significant to the fair value measurement. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment, and observability of prices and inputs may be reduced for many investments. This condition could cause the investment to be reclassified to a lower level within the fair value hierarchy.

The consolidated financial statements include portfolio investments at fair value of $170,278 and $84,343 as of September 30, 2023 and December 31, 2022, respectively. The fair value of the Company's portfolio investments was determined in good faith by the Company’s Board. Because of the inherent uncertainty of valuation, the determined values may differ significantly from the values that would have been used had a liquid market existed for the investments as of September 30, 2023 and December 31, 2022.

The following tables present fair value measurements of investments, by major class according to the fair value hierarchy as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First lien senior secured loans	$	—	$	—	$	162,181	$	162,181
Subordinated debt	—		—		1,686		1,686
Equity	—		—		4,759		4,759
Preferred equity	—		—		1,652		1,652
Warrants	—		—		—		—
Total Investments	$	—	$	—	$	170,278	$	170,278

	December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First lien senior secured loans	$	—	$	—	$	78,156	$	78,156
Subordinated debt	—		—		1,556		1,556
Equity	—		—		4,631		4,631
Warrants	—		—		—		—
Total Investments	$	—	$	—	$	84,343	$	84,343

The carrying value of the Credit Facility and SBA-guaranteed debentures approximates fair value as of September 30, 2023, and is considered Level 3.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2023:

	For the nine months ended September 30, 2023
	Investments
	First Lien Senior Secured Loans		Subordinated Debt		Equity		Preferred Equity		Warrants		Total Investments
Balance as of December 31, 2022	$	78,156	$	1,556	$	4,631	$	—	$	—	$	84,343
Purchases of investments and other adjustments to cost	84,026		132		250		1,652		—		86,060
Proceeds from sales and repayments of investments	(1,215)		—		—		—		—		(1,215)
Net realized gain (loss)	—		—		—		—		—		—
Net accretion of discount on investments	290		—		—		—				290
Net change in unrealized gain (loss) on investments	924		(2)		(122)		—		—		800
Balance as of September 30, 2023	$	162,181	$	1,686	$	4,759	$	1,652	$	—	$	170,278

For the nine months ended September 30, 2023 the net change in unrealized gain (loss) on investments attributable to Level 3 investments still held on September 30, 2023 was $800 as shown on the Consolidated Statements of Operations.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2022:

	For the nine months ended September 30, 2022
	Investments
	First Lien Senior Secured Loans		Subordinated Debt		Equity		Warrants		Total Investments
Balance as of December 31, 2021	$	—	$	—	$	—	$	—	$	—
Purchases of investments and other adjustments to cost	47,115		1,652		—		—		48,767
Proceeds from sales and repayments of investments	(324)		—		—		—		(324)
Net realized gain (loss)	—		—		—		—		—
Net accretion of discount on investments	66		—		—		—		66
Net change in unrealized gain (loss) on investments	(264)		(112)		—		—		(376)
Balance as of September 30, 2022	$	46,593	$	1,540	$	—	$	—	$	48,133

For the nine months ended September 30, 2022 the net change in unrealized gain (loss) on investments attributable to Level 3 investments still held on September 30, 2022 was $(376) as shown on the Consolidated Statements of Operations.

Purchases of investments and other adjustments to costs include purchases of new investments at cost, accretion/amortization of income from discount/premium on debt securities and PIK.

Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of Level 3 as of the beginning of the period which the reclassifications occur. There were no transfers between Levels 1, 2 and 3 during the nine months ended September 30, 2023.

Significant Unobservable Inputs

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. The table below is not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

The tables below summarize the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of September 30, 2023 and December 31, 2022.

						Range
	Fair Value, as of September 30, 2023		Valuation Technique	Unobservable Input	Weighted Average Mean	Minimum	Maximum
Assets:
First lien senior secured loans	$	118,627	Discounted Cash Flow	Discount Rate	12.3%	10.4%	14.6%
First lien senior secured loans	43,554		Amortized Cost	Cost	N/A	N/A	N/A
Subordinated debt	1,686		Discounted Cash Flow	Discount Rate	16.5%	16.0%	17.0%
Equity	4,759		Comparable Multiples	EV/EBITDA	6.8x	6.5x	7.0x
Preferred equity	1,652		Cost	Cost	N/A	N/A	N/A
Warrants	—		Comparable Multiples	EV/EBITDA	8.3x	8.0x	8.5x
Total Level 3 Assets	$	170,278

						Range
	Fair Value, as of December 31, 2022		Valuation Technique	Unobservable Input	Weighted Average Mean	Minimum	Maximum
Assets:
First lien senior secured loans	$	78,156	Discounted Cash Flow	Discount Rate	12.8%	10.9%	14.7%
Subordinated debt	1,556		Discounted Cash Flow	Discount Rate	16.3%	16.0%	16.5%
Equity	4,631		Comparable Multiples	EV/EBITDA	8.0x	8.0x	8.0x
Warrants	—		Comparable Multiples	EV/EBITDA	8.8x	8.5x	9.0x
Total Level 3 Assets	$	84,343

The significant unobservable input used in the income approach of fair value measurement of the Company’s investments is the discount rate used to discount the estimated future cash flows received from the underlying investment, which include both future principal and interest payments. Increases (decreases) in the discount rate would result in a decrease (increase) in the fair value estimate of the investment. Included in the consideration and selection of discount rates are the following factors: risk of default, rating of the investment and comparable investments, and call provisions.

The significant unobservable inputs used in the market approach of fair value measurement of the Company’s investments are the market multiples of EBITDA or revenue of the comparable guideline public companies. The Company selects a population of public companies for each investment with similar operations and attributes of the portfolio company. Using these guideline public company data, a range of multiples of enterprise value to EBITDA or revenue is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on such multiple and generally the latest twelve months EBITDA or revenue of the portfolio company (or other meaningful measure). Increases (decreases) in the multiple will result in an increase (decrease) in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment.

XML

Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

As a BDC, we are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to shares of our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150%, subject to receipt of certain approvals and compliance with certain disclosure requirements, immediately after each such issuance. Section 61(a) of the 1940 Act reduces the asset coverage requirements applicable to BDCs from 200% to 150% so long as the BDC meets certain disclosure requirements and obtains certain approvals. In April 2021, our Board and initial stockholder approved the reduced asset coverage ratio. The reduced asset coverage requirements permit us to increase the maximum amount of leverage that we are permitted to incur by reducing the asset coverage requirements applicable to us from 200% to 150%. As defined in the 1940 Act, asset coverage of 150% means that for every $100 of net assets we hold, we may raise $200 from borrowing and issuing senior securities as compared to $100 from borrowing and issuing senior securities for every $100 of net assets under 200% asset coverage requirement. In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase.

Credit Facilities

Subscription Facility

On February 2, 2022, the Company entered into a revolving credit agreement with Sumitomo Mitsui Banking Corporation, which was amended on June 28, 2022, December 21, 2022 and August 7, 2023 (and as may be further amended, modified or supplemented, the “Subscription Facility”). The Subscription Facility allows the Company to borrow up to $38.4 million, subject to certain restrictions, including availability under a borrowing base based upon unused capital commitments made by investors in the Company. The amount of permissible borrowings under the Subscription Facility may be increased to up to $1 billion with the consent of the lenders. The Subscription Facility matures on February 2, 2024 and bears interest at an annual rate of: (i) with respect to reference rate loans, a reference rate for the period plus a margin equal to 1.80% (the "Applicable Margin") and (ii) with respect to alternative rate loans, the greatest of (a) the administrative agent's prime rate, (b) Term SOFR with a one-month term plus the Applicable Margin and (c) the federal funds rate plus 0.50%. Subject to certain exceptions, the Subscription Facility is secured by a first lien security interest in the Company’s unfunded investor equity capital commitments. The Subscription Facility includes customary covenants, certain limitations on the incurrence of additional indebtedness and liens, and other maintenance covenants, as well as usual and customary events of default for senior secured revolving credit facilities of this nature.

As of September 30, 2023 and December 31, 2022, the Company had $23.4 million and $31.5 million, respectively, in outstanding borrowings from the Subscription Facility.

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Subscription Facility for the three and nine months ended September 30, 2023 and September 30, 2022:

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	76			178			375			182
Non-usage fee (1)	22			14			64			30
Amortization of financing costs	97			69			266			144
Weighted average stated interest rate	7.49		%	4.15		%	7.17		%	4.17		%
Weighted average outstanding balance (2)	$	4,028		$	16,924		$	6,991		$	16,926

(1) Non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the Subscription Facility.

(2) The Company's initial borrowing occurred on June 29, 2022.

SBA Debentures

SBIC LP is able to borrow funds from the SBA against its regulatory capital (which approximates equity capital in SBIC LP) that is paid in and is subject to customary regulatory requirements, including, but not limited to, periodic examination by the SBA. As of September 30, 2023, we funded SBIC LP with $42.0 million of regulatory capital, and have $31.0 million in SBA-guaranteed debentures outstanding. SBA debentures are non-recourse to us, and have a 10-year maturity, and may be prepaid at any time without penalty. The interest rate of SBA debentures is fixed at the time of issuance, often referred to as pooling, at a market-driven spread over 10-year U.S. Treasury Notes. SBA current regulations limit the amount that SBIC LP may borrow to a maximum of $175.0 million, which is up to twice its potential regulatory capital.

The SBA-guaranteed debentures incurred an upfront commitment fee of 1.00% on the total commitment amount and a 2.435% issuance discount on drawdowns, which are amortized over the life of the SBA-guaranteed debentures. In addition, an annual fee of 0.047% is charged on the SBA-guaranteed debentures which are amortized over the period.

The following table summarizes the Company’s SBA-guaranteed debentures as of September 30, 2023:

Issuance Date	Maturity Date	Debenture Amount		Purchase Date	Interest Rate	SBA Annual Charge
September 15, 2023	September 15, 2033	$	7,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%

The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three and nine months ended September 30, 2023:

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	84			—			84			—
Non-usage fee (1)	—			—			—			—
Amortization of financing costs	28			—			28			—
Weighted average stated interest rate	6.10		%	—		%	6.10		%	—		%
Weighted average outstanding balance (2)	$	5,391		$	—		$	1,817		$	—

(1) Non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the SBA-guaranteed debentures.

(2) The Company's initial borrowing occurred on September 15, 2023.

Repurchase Obligations

In order to finance certain investment transactions, the Company may, from time to time, enter into repurchase agreements with Macquarie US Trading LLC (“Macquarie”), whereby the Company sells to Macquarie an investment that it holds and

concurrently enters into an agreement to repurchase the same investment at an agreed-upon price at a future date, not to exceed 90-days from the date it was sold (the “Macquarie Transaction”).

The Company entered into a repurchase agreement on March 15, 2023 which was collateralized by the Company’s term loan to Synergi, LLC. Interest under this Repurchase Obligations was calculated as (a) the product of the funded amount of the loan and (b) the product of (i) the number of days the loan is outstanding (subject to number of minimum days per the agreement) and (ii) daily fee rate. The Company maintained effective control over the security because it is entitled and obligated to repurchase the security before its maturity. Therefore, the repurchase agreement was treated as a secured borrowing and not a sale. On June 2, 2023 the Company repurchased its obligation under the repurchase agreement. As of September 30, 2023, there was no outstanding loan and interest payable balance to Macquarie.

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Repurchase Obligation for the three and nine months ended September 30, 2023 and September 30, 2022:

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	—			—			376			—
Weighted average stated interest rate	—		%	—		%	8.67		%	—		%
Weighted average outstanding balance	$	—		$	—		$	5,801		$	—

The facilities of the Company consist of the following:

	September 30, 2023						December 31, 2022
	Aggregate Principal Amount Available		Principal Amount Outstanding		Unused Portion		Aggregate Principal Amount Available		Principal Amount Outstanding		Unused Portion
Subscription Facility	$	38,400	$	23,400	$	15,000	$	38,400	$	31,500	$	6,900
SBA-guaranteed debentures	36,960		31,000		5,960		—		—		—
Total	$	75,360	$	54,400	$	20,960	$	38,400	$	31,500	$	6,900

XML

Related Party Agreements and Transactions

9 Months Ended

Sep. 30, 2023

Related Party Transactions [Abstract]

Related Party Agreements and Transactions

Related Party Agreements and Transactions

Investment Advisory Agreement

Under the Investment Advisory Agreement, the Adviser manages the day-to-day operations of, and provides investment advisory services to the Company. The Board approved the Investment Advisory Agreement on April 26 2021 and approved its renewal on June 23, 2023. The Adviser is a registered investment adviser with the SEC. The Adviser receives fees for providing services, consisting of two components, a base management fee and an incentive fee.

Base Management Fee:

The base management fee (“Management Fee”) is payable quarterly in arrears beginning in the period during the Initial Drawdown at an annual rate of (i) prior to a Liquidity Event, 0.75%, and (ii) following a Liquidity Event, 1.0%, in each case of the average value of our gross assets (gross assets equal the total assets of the Company as set forth on the Company’s Consolidated Statements of Assets and Liabilities) at the end of the two most recently completed calendar quarters. No Management Fee is charged on committed but undrawn capital commitments.

We define a “Liquidity Event” as the earliest to occur of: (1) a quotation or listing of our common stock on a national securities exchange, including an initial public offering or (2) a Sale Transaction. A “Sale Transaction” means (a) the sale of all or substantially all of our capital stock or assets to, or another liquidity event with, another entity or (b) a transaction or series of transactions, including by way of merger, consolidation, recapitalization, reorganization, or sale of stock in each case for consideration of either cash and/or publicly listed securities of the acquirer. Potential acquirers could include entities that are not BDCs that are advised by the Adviser or its affiliates.

For the three and nine months ended September 30, 2023, the Company incurred Management Fee expense of $431 and $1,035, respectively. For the three and nine months ended September 30, 2022, the Company incurred Management Fee expense of $108 and $110, respectively. As of September 30, 2023 and December 31, 2022, $431 and $167, respectively, remained payable.

Incentive Fee:

The Company also pays the Adviser an incentive fee consisting of two parts: (i) an incentive fee based on pre-incentive fee net investment income (the “Income-Based Fee”), and (ii) the capital gains component of the incentive fee (the “Capital Gains Fee”) of which is described in more detail below.

The Income-Based Fee, is based on Pre-Incentive Fee Net Investment Income Returns and is determined and payable in arrears as of the end of each calendar year. “Pre-Incentive Fee Net Investment Income Returns” means, as the context requires, either the dollar value of, or percentage rate of return on the value of our net assets at the end of the immediately preceding quarter from, interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses accrued for the quarter (including the Management Fee, expenses payable under the Administration Agreement), and any interest expense or fees on any credit facilities or outstanding debt and distributions paid on any issued and outstanding preferred shares, but excluding the incentive fee.

Pre-Incentive Fee Net Investment Income Returns include, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-Incentive Net Investment Income Returns do not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Pre-Incentive Fee Net Investment Income Returns, expressed as a rate of return on the value of our net assets at the end of the immediately preceding quarter, is compared to a “hurdle rate” of return of 1.25% per quarter (5.0% annualized).

Prior to a Liquidity Event, we pay the Adviser the Income-Based Fee as follows:

•no incentive fee based on Pre-Incentive Fee Net Investment Income Returns in any calendar quarter in which our Pre-Incentive Fee Net Investment Income Returns do not exceed the hurdle rate of 1.25%;

•100% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns with respect to that portion of such Pre-Incentive Fee Net Investment Income Returns, if any, that exceeds the hurdle rate but is less than a rate of return of 1.47% (5.88% annualized). We refer to this portion of our Pre-Incentive Fee Net Investment Income Returns (which exceeds the hurdle rate but is less than 1.47%) as the “catch-up.” The “catch-up” is meant to provide the Adviser with approximately 15% of our Pre-Incentive Fee Net Investment Income Returns as if a hurdle rate did not apply if this net investment income exceeds 1.47% in any calendar quarter; and

•15% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns, if any, that exceed a rate of return of 1.47% (5.88% annualized). This reflects that once the hurdle rate is reached and the catch-up is achieved, 15% of all Pre-Incentive Fee Net Investment Income Returns thereafter are allocated to the Adviser.

Following a Liquidity Event, we will pay the Adviser the Income-Based Fee as follows:

•no incentive fee based on Pre-Incentive Fee Net Investment Income Returns in any calendar quarter in which our Pre-Incentive Fee Net Investment Income Returns do not exceed the hurdle rate of 1.25%;

•100% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns with respect to that portion of such Pre-Incentive Fee Net Investment Income Returns, if any, that exceeds the hurdle rate but is less than a rate of return of 1.47% (5.88% annualized). The “catch-up” is meant to provide the Adviser with approximately 17.5% of our Pre-Incentive Fee Net Investment Income Returns as if a hurdle rate did not apply if this net investment income exceeds 1.47% in any calendar quarter; and

•17.5% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns, if any, that exceed a rate of return of 1.47% (5.88% annualized). This reflects that once the hurdle rate is reached and the catch-up is achieved, 17.5% of all Pre-Incentive Fee Net Investment Income Returns thereafter are allocated to the Adviser.

For the three and nine months ended September 30, 2023, the Company incurred Income-Based Fee of $535 and $1,050, respectively. For the three and nine months ended September 30, 2022, the Company did not incur any Income-Based Fee. As of September 30, 2023 and December 31, 2022, $535 and $0, respectively, remained payable.

The second part of the incentive fee, the Capital Gains Fee, is determined and payable in arrears as of the end of each calendar year (or at the time of a Liquidity Event). The Capital Gains Fee is equal to 15% of (1) realized capital gains less (2) realized capital losses, less unrealized capital losses on a cumulative basis from inception through the day before the Liquidity Event, less the aggregate amount of any previously paid Capital Gains Fee.

Prior to a Liquidity Event, the Capital Gains Fee equals:

•15% of cumulative realized capital gains less all realized capital losses and unrealized capital depreciation on a cumulative basis from inception through the end of such calendar year (or upon a Liquidity Event), less the aggregate amount of any previously paid Capital Gains Fee as calculated in accordance with GAAP.

Following a Liquidity Event, the amount payable equals:

•17.5% of cumulative realized capital gains from inception through the end of such calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid Capital Gains Fee as calculated in accordance with GAAP.

If a Liquidity Event occurs on a date other than the first day of a fiscal year, the Capital Gains Fee will be calculated as of the day before the Liquidity Event, with such Capital Gains Fee paid to the Adviser annually following the end of the fiscal year in which the Liquidity Event occurred. Solely for purposes of calculating the Capital Gains Fee after a Liquidity Event, the Company will be deemed to have previously paid a Capital Gains Fee prior to a Liquidity Event equal to the product obtained by multiplying (a) the actual aggregate amount of previously paid Capital Gains Fee for all periods prior to a Liquidity Event by (b) the percentage obtained by dividing (x) 17.5% by (y) 15%.

Each year, the Capital Gains Fee is calculated net of the aggregate amount of any previously paid Capital Gains Fee for all prior periods. We will accrue, but will not pay, a Capital Gains Fee with respect to unrealized appreciation because a Capital Gains Fee would be owed to the Adviser if we were to sell the relevant investment and realize a capital gain. In no event will the Capital Gains Fee payable pursuant to the Investment Advisory Agreement exceed the amount permitted by the Investment Advisers Act of 1940, as amended (the “Advisers Act”), including Section 205 thereof.

For the purpose of computing the Capital Gains Fee, the calculation methodology looks through derivative financial instruments or swaps as if we owned the reference assets directly.

For the three and nine months ended September 30, 2023 and September 30, 2022, there were no Capital Gains Fees incurred.

Administration Agreement

Pursuant to the administration agreement between the Company and LS Administration, LLC (the “Administration Agreement”), LS Administration, LLC (the “Administrator”) furnishes the Company with office space, office services, and equipment. Under the Administration Agreement, our Administrator performs or oversees the performance of our required administrative services, which include providing assistance in accounting, legal, compliance, operations, technology, internal audit, and investor relations, and loan agency services (including any third party service providers related to the foregoing) and being responsible for the financial records that we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, our Administrator assists us in determining and publishing our net asset value, overseeing the preparation and filing of our tax returns and the printing and disseminating reports to our stockholders, assessing our internal controls under the Sarbanes-Oxley Act, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.

Payments under the Administration Agreement are equal to an amount that reimburses our Administrator for its costs and expenses. This includes an allocable portion of expenses incurred by our Administrator in performing its obligations under the Administration Agreement and our allocable portion of the compensation paid to our Chief Compliance Officer and Chief Financial Officer and their respective staffs. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party. Additionally, we ultimately bear the costs of any sub-administration agreements that our Administrator may enter into. Our Administrator reserves the right to waive all or part of any reimbursements due from us at its sole discretion.

The Administration Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, our Administrator and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with it will be entitled to indemnification from us for any damages, liabilities, costs, and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of our Administrator’s services under the Administration Agreement or otherwise as administrator for us.

For the three and nine months ended September 30, 2023, the Administrator incurred $251 and $600, respectively, in fees under the Administrative Agreement. For the three and nine months ended September 30, 2022, the Administrator incurred $145 and $157, respectively, in fees under the Administrative Agreement. These fees are included in administrative service fees in the accompanying Consolidated Statements of Operations. As of September 30, 2023 and December 31, 2022, $251 and $550, respectively, were unpaid and included in administrative services fee payable in the accompanying Consolidated Statements of Assets and Liabilities. No administrative services fee was charged to the Company prior to the Company’s commencement of operations.

Additionally, pursuant to a sub-administration agreement with SS&C Technologies, Inc. (“SS&C”), SS&C performs certain of the Company’s required administrative services, which include providing assistance in accounting, legal, compliance, operations, investor relations and technology, being responsible for the financial records that the Company is required to maintain and preparing reports to the Company’s stockholders and reports filed with the SEC. SS&C is also reimbursed for certain expenses it incurs on our behalf.

Our Administrator and Adviser have entered into staffing agreements with affiliates of Lafayette Square pursuant to which such Lafayette Square affiliates agree to provide our Administrator and Adviser with access to certain legal, operations, financial, compliance, accounting, internal audit (in their role of performing our Sarbanes-Oxley Act internal control assessment), clerical and administrative personnel.

Affiliated transactions

The Adviser’s investment allocation policy seeks to ensure allocation of investment opportunities on a fair and equitable basis over time between the Company and other funds or investment vehicles managed by the Adviser or its affiliates. It is expected that the Company may have overlapping investment strategies with such affiliated funds and/or investment vehicles, but there are prohibitions under the 1940 Act from participating in certain transactions with such affiliates without prior approval of the directors who are not interested persons, and in some cases, the prior approval of the SEC. As a result, the Company, the Adviser and certain of their affiliates applied for, and have been granted, exemptive relief by the SEC for the Company to co-invest with other funds or investment vehicles managed by the Adviser or certain of its affiliates, in a manner consistent with the requirements of the Company’s organizational documents and investment strategy as well as applicable laws and regulations and the Adviser’s fiduciary duties. As a result of such exemptive relief, there could be significant overlap in the Company’s investment portfolio and the investment portfolios of such other affiliated entities that avail themselves of such exemptive relief and that have an investment objective similar to the Company. In addition, any transaction fees (including break-up or commitment fees, but excluding transaction fees contemplated by Section 17(e) or 57(k) of the 1940 Act, as applicable, which are retained by the Adviser, to the extent permitted by applicable law) received in connection with a co-investment transaction among the Company and its affiliated entities are distributed to the participating entities (including the Company) on a pro rata basis based on the amounts they invested or committed, as the case may be, in such transaction.

Due to Affiliate

The Administrator pays for certain unaffiliated third-party expenses incurred by the Company. These expenses are not marked-up and represent the same amount the Company would have paid had the Company paid the expenses directly. After the commencement of operations these expenses are reimbursed on an ongoing basis. As of September 30, 2023 and December 31, 2022, $941 and $120, respectively, were included in the Due to Affiliate line item in the Consolidated Statements of Assets and Liabilities for reimbursable expenses, that were paid by the Administrator on behalf of the Company.

Expense Support and Conditional Reimbursement Agreement

On December 30, 2021, the Company entered into an expense support and conditional reimbursement agreement (the "Expense Support Agreement") with the Adviser. The Adviser may elect to pay certain Company expenses on the Company’s behalf (each, an “Expense Payment”); provided that no portion of the payment will be used to pay any interest expense or shareholder servicing and/or distribution fees of the Company. Any Expense Payment that the Adviser has committed to pay must be paid by the Adviser to the Company in any combination of cash or other immediately available funds no later than 45 days after such commitment was made in writing, and/or offset against amounts due from the Company to the Adviser or its affiliates.

Following any calendar quarter in which Available Operating Funds (as defined below) exceed the cumulative distributions accrued to the Company’s shareholders based on distributions declared with respect to record dates occurring in such calendar quarter (the amount of such excess being hereinafter referred to as “Excess Operating Funds”), the Company shall pay such Excess Operating Funds, or a portion thereof, to the Adviser until such time as all Expense Payments made by the Adviser to the Company within three years prior to the last business day of such calendar quarter have been reimbursed. Any payments required to be made by the Company are referred to herein as a “Reimbursement Payment.” “Available Operating Funds” means the sum of (i) the Company’s net investment company taxable income (including net short-term capital gains reduced by net long-term capital losses), (ii) the Company’s net capital gains (including the excess of net long-term capital gains over net short-term capital losses) and (iii) dividends and other distributions paid to the Company on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).

The Company’s obligation to make a Reimbursement Payment will automatically become a liability of the Company on the last business day of the applicable calendar quarter, except to the extent the Adviser has waived its right to receive such payment for the applicable quarter.

The following table presents a summary of Expense Payments and the related Reimbursement Payments since the Company's inception:

For the Period Ended	Expense Payments by Adviser		Reimbursement Payments to Adviser		Unreimbursed Expense Payments
June 30, 2022	$	227	$	—	$	227
September 30, 2022	225		—		225
June 30, 2023	—		(329)		(329)
September 30, 2023	—		(123)		(123)
Total	$	452	$	(452)	$	—

Pursuant to the Expense Support Agreement, Expense Payments made by the Adviser may become subject to repayment by the Company in the future (in such cases, such Expense Payment becomes a Reimbursement Payment). As of September 30, 2023 and December 31, 2022, the Company had $123.0 million and $0 million, respectively, in obligations to repay the Expense Payments to the Adviser and recorded a liability on the Consolidated Statements of Assets and Liabilities.

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

As of September 30, 2023 and December 31, 2022, the Company was not subject to any legal proceedings, although the Company may, from time to time, be involved in litigation arising out of operations in the normal course of business or otherwise.

The Company has and may in the future become obligated to fund commitments such as delayed draw commitments. As of September 30, 2023 and December 31, 2022, the fair value of unfunded commitments held by the Company was $(28) and $(109), respectively, as shown on the Consolidated Schedule of Investments. The Company had the following unfunded commitments to fund delayed draw loans as of the indicated dates:

	September 30, 2023		December 31, 2022
Unfunded delayed draw and revolving senior secured loans	$	14,362	$	12,995
Total unfunded commitments	$	14,362	$	12,995

XML

Directors Fees

9 Months Ended

Sep. 30, 2023

Other Income and Expenses [Abstract]

Directors Fees

Directors Fees

As of June 27, 2022, in connection with the conversion of Lafayette Square Empire BDC, LLC to Lafayette Square USA, Inc., the independent directors receive an annual fee of $100 (prorated for any partial year). In addition, the chair of the Audit Committee receives an additional annual fee of $20 (prorated for any partial year). Prior to that, independent directors received an annual fee of $10 (prorated for any partial year). We are also authorized to pay the reasonable out-of-pocket expenses for each independent director incurred in connection with the fulfillment of his or her duties as independent directors (provided that such compensation will only be paid if the committee meeting is not held on the same day as any regular meeting of the Board).

For the fiscal year December 31, 2023, independent directors fees will be paid in the form of our common stock issued at a price per share equal to the greater of NAV or the market price at the time of payment. As of September 30, 2023, the Company had not issued any common stock to our directors as compensation for their services.

For the three and nine months ended September 30, 2023, the Company incurred $80 and $240, respectively, of directors’ fees expenses, which are included in the accounts payable and accrued expenses line item in the Consolidated Statements of Assets and Liabilities.

XML

Share Data and Distributions

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Share Data and Distributions

Share Data and Distributions

Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share; for the three and nine months ended September 30, 2023 and September 30, 2022:

	For the three months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
Earnings (loss) per common share (basic and diluted):
Net increase (decrease) in net assets resulting from operations	$	3,476	$	(220)	$	6,305	$	(381)
Weighted average common shares outstanding	13,053,832		2,098,009		10,254,893		733,084
Earnings (loss) per common share (basic and diluted):	$	0.27	$	(0.10)	$	0.61	$	(0.52)

Capital Activity

The Company is authorized to issue 50,000,000 shares of preferred stock at a par value of $0.001 per share and 450,000,000 shares of common stock at a par value of $0.001 per share. The Company has entered into subscription agreements in which investors have made capital commitments to purchase shares of the Company's common stock (the “Subscription Agreements”) with several investors, providing for the private placement of the Company’s common stock. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Company’s common stock at a price per share equal to the most recent NAV per share as determined by the Board (subject to the adjustment to the extent required by Section 23 of the 1940 Act) up to the amount of their respective capital subscriptions on an as-needed basis as determined by the Company with a minimum of ten business days prior notice.

As of September 30, 2023 and December 31, 2022, the Company had closed capital commitments totaling $370.5 million and $196.6 million, respectively, for the private placement of the Company's common stock, of which $177.7 million and $73.9 million, respectively, were unfunded.

Share Issuance Date	Shares Issued	Amount
January 26, 2023	2,510,396	$	37,129
March 28, 2023	1,188,592	17,746
June 27, 2023	4,392,543	65,097
Total	8,091,531	$	119,972

Distributions

Distributions to common stockholders are recorded on the ex-dividend date. The Company intends to elect to be taxed as a RIC under the Code for its taxable year ending December 31, 2023, and for future taxable years. The Company will be required to distribute dividends each tax year as a RIC to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, determined without regard to any deduction for dividends paid, in order to be eligible for tax benefits allowed to a RIC under Subchapter M of the Code. The Company anticipates paying out as a distribution all or substantially all of those amounts. The amount to be paid out as a dividend is determined by the Board and is based on management’s estimate of the Company’s annual taxable income. Net realized capital gains, if any, may be distributed to stockholders or retained for reinvestment.

The Company has adopted the DRIP that provides for the automatic reinvestment of all cash distributions declared by the Board of Directors, unless a stockholder elects to “opt out” of the DRIP. As a result, if the Board of Directors declares a cash distribution, then the stockholders who have not “opted out” of the DRIP will have their cash distributions automatically reinvested in additional shares of common stock, rather than receiving the cash distribution. The Company reserves the right to use primarily newly issued shares to implement the DRIP, whether the shares are trading at a price per share at or above NAV. NAV is determined as of the latest available quarter end before such distribution. However, the Company reserves the right to purchase shares in the open market in connection with the implementation of the DRIP. In the event the price per share is trading at a discount to NAV, the Company intends to purchase shares in the open market rather than issue new shares. The following table summarizes the distributions declared on shares of the Company’s common stock and shares distributed pursuant to the DRIP to stockholders who had not opted out of the DRIP:

Date Declared	Record Date	Payment Date	Amount Per Share
April 21, 2023	April 21, 2023	May 15, 2023	$0.15
June 23, 2023	June 23, 2023	August 14, 2023	$0.15
September 29, 2023	September 29, 2023	November 13, 2023	$0.20

XML

Tax Matters

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Tax Matters

Tax Matters

The Company is subject to the U.S. federal income tax rules and filing requirements. The Company is expected to have minimal or no income subject to tax and therefore no provision has been included for taxes due. The Company intends to elect to be treated, and qualify annually thereafter, as a RIC under Subchapter M of the Code. As a result, the Company generally does not expect to be subject to U.S. federal income taxes. However, there is no guarantee that the Company will qualify to make such an election for any taxable year.

The Company has not recorded a liability for any uncertain tax positions pursuant to the provisions of ASC 740, Income Taxes, as of September 30, 2023.

In the normal course of business, the Company is subject to examination by federal and certain state and local tax regulators. The Company adopted a tax year-end of December 31.

The Company's taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, the final taxable income earned in each period and carried forward for distribution in the following period may be different than this estimate.

As of September 30, 2023, the Company had a $110 short-term limited capital loss carryforward from its prior C-corporation tax year end that can be used to offset future capital gains for 5 years and expires on December 31, 2027.

For income tax purposes, distributions paid to shareholders are reported as ordinary income, return of capital, long-term capital gains, or a combination thereof. The tax character of distributions paid for the period ended September 30, 2023 was as follows (in thousands):

	For the nine months ended September 30, 2023		For the year ended December 31, 2022
Ordinary Income	$	5,203	$	—
Long-term Capital Gain	$	—	$	—
Return of Capital	$	—	$	—

The following table sets forth the tax cost basis and the estimated aggregate gross unrealized appreciation and depreciation from investments for federal income tax purposes (in thousands):

	September 30, 2023		December 31, 2022
Tax cost	$	169,680	$	84,545
Gross unrealized appreciation	$	993	$	177
Gross unrealized depreciation	(395)		(379)
Net unrealized investment appreciation / (depreciation) on investments	$	598	$	(202)

The Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for U.S. federal income tax purposes, for the tax periods ended December 31, 2021 and December 31, 2022.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting and tax purposes. Components of the Company’s deferred tax assets and liabilities as of December 31, 2022 are as follows:

	For the year ended December 31, 2022
Deferred tax assets:
Net operating loss carryforward	$	101
Capital loss carryforward	28
Net unrealized loss on investments	51
Organizational costs	31
Valuation allowance	(211)
Total deferred tax assets	—
Deferred tax liabilities:
Total deferred tax liabilities	—
Net deferred tax assets and liabilities	$	—

The Company’s income tax provision consists of the following as of December 31, 2022:

	For the year ended December 31, 2022
Current tax (expense)/benefit:
Federal	$	—
State and Local	—
Total current tax (expense)/benefit	—
Deferred tax (expense)/benefit:
Federal	175
State and Local	36
Valuation allowance	(211)
Total deferred tax (expense)/benefit	—
Total income tax (expense)/benefit	$	—

Total income tax (expense) benefit for the Company differs from the amount computed by applying the federal statutory income tax rate of 21% to net increase (decrease) in net assets from operations for the year ended December 31, 2022, as follows:

	For the year ended December 31, 2022
Income tax benefit at federal statutory rate (21%)	$	100
State and local income tax benefit (net of federal detriment)	21
Prior year net operating loss carryforward	97
Organizational costs	33
Permanent differences	(40)
Valuation allowance	(211)
Total income tax (expense)/benefits	$	—

At December 31, 2022, the Company determined a valuation allowance was required. The Company’s assessment considered, among other matters, the nature, frequency and severity of current and cumulative losses, the duration of statutory carryforward periods and the associated risk that operating loss and capital loss carryforwards are limited or are likely to expire unused, and unrealized gains and losses on investments. Through the consideration of these factors, the Company determined that it is more likely than not that the Company’s net deferred tax asset would not be realized. As a result, the Company recorded a full valuation allowance with respect to its deferred tax asset for the year ended December 31, 2022. From time to time, the Company may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance as new information becomes available. Modifications to the Company’s estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related guidance or interpretations thereof, limitations imposed on or expirations of the Company’s net operating losses and capital loss carryovers (if any) and changes in applicable tax law could result in increases or decreases in the Company’s NAV per share, which could be material.

As of December 31, 2022, the Company had a net operating loss carryforward for federal income tax purposes of $397. This net operating loss may be carried forward indefinitely but would not be useable to offset income in taxable years in which the Company qualifies as a RIC.

As of December 31, 2022, the Company had a short term capital loss carryforward of $111.

XML

Financial Highlights

9 Months Ended

Sep. 30, 2023

Investment Company [Abstract]

Financial Highlights

Financial Highlights

Below is the schedule of financial highlights of the Company for the nine months ended September 30, 2023 and September 30, 2022:

Per Common Share Data:(1)	For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Net asset value, beginning of period	$	14.60		$	(720.91)
Net investment income (loss)	0.54			(0.01)
Net realized and unrealized gain (loss)	0.07			(0.51)
Net increase (decrease) in net assets resulting from operations	0.61			(0.52)
Initial issuance of Common Stock	—			—
Effect of offering price of subscriptions (2)	0.12			735.99
Distributions declared	(0.50)			—
Net asset value, end of period	$	14.83		$	14.56
Total return based on NAV(3)	1.58		%	(102.02)		%
Common shares outstanding, end of period	13,068,112			3,537,828
Weighted average shares outstanding	10,254,893			733,084
Net assets, end of period	$	193,744		$	51,527
Ratio/Supplemental data(4):
Ratio of net investment income (loss) to average net assets	5.21		%	(0.80)		%
Ratio of expenses to average net assets	6.96		%	9.95		%
Ratio of expenses (before management fees, incentive fees and interest and financing expenses) to average net assets	3.97		%	7.90		%
Weighted average debt outstanding(5)	$	14,609		$	16,926
Total debt outstanding	$	54,400		$	17,500
Asset coverage ratio per unit	$	4,561		$	3,944
Portfolio turnover	—		%	N/A

(1)The per share data were derived by using the weighted average shares from the date of the first issuance of shares, through September 30, 2023 and September 30, 2022.

(2)Increase (decrease) is due to the offering price of subscriptions during the period (See note 9).

(3)Total return is based upon the change in net asset value per share between the opening and ending net assets per share and the issuance of common stock in the period. Total return is not annualized.

(4)Annualized, except for organizational expenses, which are non-recurring.

(5)The Company's initial borrowing occurred on June 29, 2022.

XML

Subsequent Events

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

The Company's management evaluated subsequent events through the date of issuance of the consolidated financial statements. Other than the subsequent event disclosed below, there have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in, the consolidated financial statements.

On November 6, 2023, the Company closed an additional $6.6 million in capital commitments increasing the total closed commitments to $377.0 million as of the date of this Report.

On October 20, 2023, the Company repaid it's outstanding balance on the Subscription Facility in the amount of $23.4 million. As of the date of this Report, there is no outstanding balance on the Subscription Facility.

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net increase (decrease) in net assets resulting from operations	$ 3,476	$ (220)	$ 6,305	$ (381)

XML

Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

XML

N-2 - $ / shares

9 Months Ended

Sep. 30, 2023

Dec. 31, 2022

Sep. 30, 2022

Dec. 31, 2021

Cover [Abstract]

Entity Central Index Key

0001849089

Amendment Flag

false

Securities Act File Number

814-01427

Document Type

10-Q

Entity Registrant Name

LAFAYETTE SQUARE USA, INC.

Entity Address, Address Line One

175 SW 7th St

Entity Address, Address Line Two

Unit 1911

Entity Address, City or Town

Miami

Entity Address, State or Province

FL

Entity Address, Postal Zip Code

33130

City Area Code

786

Local Phone Number

753-7096

Entity Emerging Growth Company

true

Entity Ex Transition Period

true

Other Annual Expenses [Abstract]

Management Fee not based on Net Assets, Note [Text Block]

Directors Fees

As of June 27, 2022, in connection with the conversion of Lafayette Square Empire BDC, LLC to Lafayette Square USA, Inc., the independent directors receive an annual fee of $100 (prorated for any partial year). In addition, the chair of the Audit Committee receives an additional annual fee of $20 (prorated for any partial year). Prior to that, independent directors received an annual fee of $10 (prorated for any partial year). We are also authorized to pay the reasonable out-of-pocket expenses for each independent director incurred in connection with the fulfillment of his or her duties as independent directors (provided that such compensation will only be paid if the committee meeting is not held on the same day as any regular meeting of the Board).

For the fiscal year December 31, 2023, independent directors fees will be paid in the form of our common stock issued at a price per share equal to the greater of NAV or the market price at the time of payment. As of September 30, 2023, the Company had not issued any common stock to our directors as compensation for their services.

For the three and nine months ended September 30, 2023, the Company incurred $80 and $240, respectively, of directors’ fees expenses, which are included in the accounts payable and accrued expenses line item in the Consolidated Statements of Assets and Liabilities.

Financial Highlights [Abstract]

Senior Securities Coverage per Unit

$ 4,561

$ 3,944

General Description of Registrant [Abstract]

NAV Per Share

$ 14.83

$ 14.60

$ 14.56

$ (720.91)

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Basis of Accounting, Policy

The following is a summary of significant accounting policies consistently followed by the Company in the preparation of its consolidated financial statements. The Company is an investment company and accordingly applies specific accounting and financial reporting requirements under Accounting Standards Codification, as issued by the Financial Accounting Standards Board (“ASC”) Topic 946—Financial Services—Investment Companies (“Topic 946”). The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and pursuant to Articles 6, 10 and 12 of Regulation S-X.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash EquivalentsThe Company deposits its cash in a financial institution and, at times, such deposits may exceed the Federal Deposit Insurance Corporation insurance limits.

Organization and Offering Costs

Organization and Offering Costs

Organization costs consist of costs incurred to establish the Company and enable it to do business legally. Organization costs are expensed as incurred. Offering costs consist of costs incurred in connection with the offering of the common stock of the Company.

The Company’s initial organizational costs incurred were expensed, and initial offering costs are being amortized over one year.

The Company may incur organization and offering expenses of up to $1 million in connection with the formation of the Company and the offering of shares of its common stock, including the out-of-pocket expenses of the Adviser and its agents and affiliates. The Company reimburses the Adviser for the organization and offering costs it incurs on the Company’s behalf. If actual organization and offering costs incurred exceed $1 million, the Adviser or its affiliates will bear the excess costs. As of September 30, 2023, the Company has incurred $804 (since inception) of organization and offering costs.

Deferred Financing Costs

Deferred Financing Costs

Deferred financing costs, incurred in connection with any credit facility and SBA-guaranteed debentures (see Note 5) are deferred and amortized over the life of the respective credit facility and SBA-guaranteed debentures.

Indemnifications

Indemnifications

In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote.

Revenue Recognition

Revenue Recognition

Investment transactions are accounted for on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized. The Company reports current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in the Consolidated Statements of Operations.

Investment Income

Interest income, including amortization of premium and accretion of discount, is recorded on the accrual basis to the extent that such amounts are collected. The Company records amortized or accreted discounts or premiums as interest income using the effective interest method or straight-line interest method, as applicable, and adjusted only for material amendments or prepayments. Dividend income, which represents dividends from equity investments and distributions from subsidiaries, if any, is recognized on an accrual basis to the extent that the Company collects such amount.

Original Issue Discount

Discounts to par on portfolio securities are accreted into income over the tenor of the instrument. Any remaining discount is accreted into income upon prepayment or redemption of the instrument. The Company then amortizes such amounts using the effective interest method as interest income over the expected life of the investment.

PIK Interest

The Company may, from time to time, hold loans in its portfolio that contain a payment-in-kind ("PIK") interest provision. PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to the Company in cash, and is recorded as interest income. Thus, the actual collection of PIK interest in cash may be deferred until the time of debt principal repayment.

PIK interest, which is a non-cash source of income at the time of recognition, is included in the Company’s taxable income. This affects the amount the Company would be required to distribute to its stockholders to maintain its tax treatment as a RIC for federal income tax purposes, even though the Company has not yet collected the cash.

Fee Income

Origination fees received are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized origination fees are recorded as investment income. The Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees, covenant waiver fees and loan amendment fees, which are recorded as investment income when earned.

Non-accrual loans

A loan can be left on accrual status during the period the Company is pursuing repayment of the loan. Management reviews all loans that become 90 days or more past due on principal and interest, or when there is reasonable doubt that principal or interest will be collected, for possible placement on non-accrual status. When a loan is placed on non-accrual status, unpaid interest credited to income is reversed. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date such loan is placed on non-accrual status. Interest payments received on non-accrual loans are recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid, and, in management’s judgment, future payments are likely to remain current.

Investment Classification

Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, the Company is deemed to "control" a portfolio company if it owns more than 25% of its outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company. Such investments in portfolio companies that the Company "controls" are referred to as "Control Investments." Under the 1940 Act, the Company is deemed to be an "Affiliated Person" of a portfolio company if it owns between 5% and 25% of the portfolio company's outstanding voting securities or the Company is under common control with such portfolio company. We refer to such investments in Affiliated Persons as "Affiliated Investments." Investments which are neither Control Investments or Affiliated Investments are referred to as "Non-Controlled/Non-Affiliated investments."

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company applies fair value to all of its financial instruments in accordance with ASC Topic 820—Fair Value Measurement (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity-specific measure.

The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3.

Any changes to the valuation methodology are reviewed by management and the Board to confirm that the changes are appropriate. As markets change, new products develop and the pricing for products becomes more or less transparent, the Company will continue to refine its valuation methodologies.

On December 3, 2020, the SEC adopted Rule 2a-5 under the 1940 Act (the "Valuation Rule"), which established an updated regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Pursuant to the Valuation Rule, which became effective on September 8, 2022 (the "SEC Compliance Date"), the Board has chosen to designate the Adviser as the Company's valuation designee to perform fair value determinations relating to the value of the assets for which market quotations are not readily available, subject to the Board's oversight.

Income Taxes

Income Taxes

The Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for U.S. federal income tax purposes, for the tax periods ended December 31, 2021 and December 31, 2022. The Company intends to elect to be treated as a RIC under Subchapter M of the Code for the tax period ending December 31, 2023, as well as maintain such election in future taxable years. However, there is no guarantee that the Company will qualify to make such an election for any taxable year. In order to qualify and be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends for U.S. federal income tax purposes to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. As a RIC, the Company would intend to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal income taxes with respect to all income distributed to its stockholders. The Company may be subject to regular federal and state corporate income tax on any net built-in gains with respect to certain of its assets (i.e., the excess of the aggregate gains, over aggregate losses that would have been realized with respect to such assets if we had been liquidated) that the Company elects to recognize upon RIC election or when recognized over the next five taxable years.

The Company is subject to a nondeductible 4% U.S. federal excise tax on its undistributed income, unless it timely distributes (or is deemed to have timely distributed) an amount equal to the sum of (1) 98% of ordinary income for each calendar year, (2) 98.2% of the amount by which capital gains exceeds capital losses (adjusted for certain ordinary losses) for a one-year period ending on October 31 of the calendar year, and (3) any income and gains recognized, but not distributed, from the previous years. While the Company intends to distribute any income and capital gains to avoid imposition of this 4% U.S. federal excise tax, it may not be successful in avoiding entirely the imposition of this tax. In that case, the Company will be liable for the tax only on the amount by which it does not meet the foregoing distribution requirement.

The Company accounts for income taxes in conformity with ASC Topic 740 - Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense or tax benefit in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no material unrecognized net tax benefits or unrecognized net tax liabilities related to uncertain income tax positions as of and through September 30, 2023.

Distributions

Distributions

Distributions to common stockholders are recorded on the record date. Subject to the discretion of and as determined by the Board, the Company will authorize and declare ordinary cash distributions based on a formula approved by the Board on a quarterly basis. The amount to be paid out as a dividend or distribution is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed to shareholders at least annually, although the Company can retain such capital gains for investment in its discretion.

The Company has adopted a dividend reinvestment plan (the “DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes and the Company declares a cash distribution, then stockholders who have not “opted out” of the DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. Shares issued under the DRIP will be issued at a price per share equal to the most recent net asset value (“NAV”) per share as determined by the Board (subject to adjustment to the extent required by Section 23 of the 1940 Act).

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. An entity may elect to adopt the amendments in ASU 2020-04 at any time after March 12, 2020 but no later than December 31, 2022. In January 2021, the FASB issued ASU. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. In December, 2022, the FASB issued a new Accounting Standards Update ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” that extends the sunset (or expiration) date of Accounting Standards Codification (ASC) Topic 848 to December 31, 2024. This gives reporting entities two additional years to apply the accounting relief provided under ASC Topic 848 for matters related to reference rate reform. The Company adopted ASU 2020-04 and 2021-01 as of June 30, 2023, and concluded that there was no impact of this guidance to the consolidated financial statements and disclosures as of September 30, 2023

XML

Investments (Tables)

9 Months Ended

Sep. 30, 2023

Schedule of Investments [Abstract]

Schedule of Investments

The following tables show the composition of the Company’s investment portfolio, at amortized cost and fair value (with corresponding percentage of total portfolio investments). as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Amortized Cost				Fair Value
First lien senior secured loans	$	161,321	95.0	%	$	162,181	95.2	%
Equity	4,881		2.9	%	4,759		2.8	%
Subordinated debt	1,826		1.1	%	1,686		1.0	%
Preferred equity	1,652		1.0	%	1,652		1.0	%
Warrants	—		—	%	—		—	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

	December 31, 2022
	Amortized Cost				Fair Value
First lien senior secured loans	$	78,221	92.5	%	$	78,156	92.7	%
Equity	4,631		5.5	%	4,631		5.5	%
Subordinated debt	1,693		2.0	%	1,556		1.8	%
Warrants	—		—	%	—		—	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

The following tables show the composition of the Company’s investment portfolio by geographic region, at amortized cost and fair value (with corresponding percentage of total portfolio investments) as of September 30, 2023 and December 31, 2022. The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business:

	September 30, 2023
	Amortized Cost				Fair Value
Mid-Atlantic	$	41,351	24.4	%	$	41,342	24.3	%
Far West Region	33,507		19.7	%	33,547		19.7	%
Gulf Coast	31,582		18.6	%	31,730		18.6	%
Southeast	27,137		16.0	%	26,983		15.8	%
Great Lakes	18,763		11.1	%	19,056		11.2	%
Four Corners	9,487		5.6	%	9,660		5.7	%
Cascade	7,853		4.6	%	7,960		4.7	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

    

	December 31, 2022
	Amortized Cost				Fair Value
Mid-Atlantic	$	35,171	41.6	%	$	34,792	41.3	%
Gulf Coast	28,667		33.9	%	28,844		34.1	%
Southeast	20,707		24.5	%	20,707		24.6	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

The following tables show the composition of the Company’s investment portfolio by industry, at amortized cost and fair value (with corresponding percentage of total portfolio investments) as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Amortized Cost				Fair Value
Construction & Engineering	$	50,374	29.7	%	$	51,059	29.9	%
Commercial Services & Supplies	46,019		27.1	%	45,625		26.8	%
Event Management	33,507		19.7	%	33,547		19.7	%
Media	25,064		14.8	%	25,162		14.8	%
Health Care Providers & Services	7,853		4.6	%	7,960		4.7	%
Hotels, Restaurants & Leisure	3,487		2.1	%	3,500		2.1	%
IT Services	3,376		2.0	%	3,425		2.0	%
Total	$	169,680	100.0	%	$	170,278	100.0	%

	December 31, 2022
	Amortized Cost				Fair Value
Commercial Services & Supplies	$	39,024	46.2	%	$	38,647	45.8	%
Media	25,509		30.2	%	25,684		30.5	%
Construction & Engineering	20,012		23.6	%	20,012		23.7	%
Total	$	84,545	100.0	%	$	84,343	100.0	%

XML

Fair Value Measurements of Investments (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements of Investments, by Major Class

The following tables present fair value measurements of investments, by major class according to the fair value hierarchy as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First lien senior secured loans	$	—	$	—	$	162,181	$	162,181
Subordinated debt	—		—		1,686		1,686
Equity	—		—		4,759		4,759
Preferred equity	—		—		1,652		1,652
Warrants	—		—		—		—
Total Investments	$	—	$	—	$	170,278	$	170,278

	December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First lien senior secured loans	$	—	$	—	$	78,156	$	78,156
Subordinated debt	—		—		1,556		1,556
Equity	—		—		4,631		4,631
Warrants	—		—		—		—
Total Investments	$	—	$	—	$	84,343	$	84,343

Schedule of Investment Measured on Recurring Basis, Unobservable Input Reconciliation

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2023:

	For the nine months ended September 30, 2023
	Investments
	First Lien Senior Secured Loans		Subordinated Debt		Equity		Preferred Equity		Warrants		Total Investments
Balance as of December 31, 2022	$	78,156	$	1,556	$	4,631	$	—	$	—	$	84,343
Purchases of investments and other adjustments to cost	84,026		132		250		1,652		—		86,060
Proceeds from sales and repayments of investments	(1,215)		—		—		—		—		(1,215)
Net realized gain (loss)	—		—		—		—		—		—
Net accretion of discount on investments	290		—		—		—				290
Net change in unrealized gain (loss) on investments	924		(2)		(122)		—		—		800
Balance as of September 30, 2023	$	162,181	$	1,686	$	4,759	$	1,652	$	—	$	170,278

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2022:

	For the nine months ended September 30, 2022
	Investments
	First Lien Senior Secured Loans		Subordinated Debt		Equity		Warrants		Total Investments
Balance as of December 31, 2021	$	—	$	—	$	—	$	—	$	—
Purchases of investments and other adjustments to cost	47,115		1,652		—		—		48,767
Proceeds from sales and repayments of investments	(324)		—		—		—		(324)
Net realized gain (loss)	—		—		—		—		—
Net accretion of discount on investments	66		—		—		—		66
Net change in unrealized gain (loss) on investments	(264)		(112)		—		—		(376)
Balance as of September 30, 2022	$	46,593	$	1,540	$	—	$	—	$	48,133

Schedule of Fair Value Measurement Inputs and Valuation Techniques

The tables below summarize the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of September 30, 2023 and December 31, 2022.

						Range
	Fair Value, as of September 30, 2023		Valuation Technique	Unobservable Input	Weighted Average Mean	Minimum	Maximum
Assets:
First lien senior secured loans	$	118,627	Discounted Cash Flow	Discount Rate	12.3%	10.4%	14.6%
First lien senior secured loans	43,554		Amortized Cost	Cost	N/A	N/A	N/A
Subordinated debt	1,686		Discounted Cash Flow	Discount Rate	16.5%	16.0%	17.0%
Equity	4,759		Comparable Multiples	EV/EBITDA	6.8x	6.5x	7.0x
Preferred equity	1,652		Cost	Cost	N/A	N/A	N/A
Warrants	—		Comparable Multiples	EV/EBITDA	8.3x	8.0x	8.5x
Total Level 3 Assets	$	170,278

						Range
	Fair Value, as of December 31, 2022		Valuation Technique	Unobservable Input	Weighted Average Mean	Minimum	Maximum
Assets:
First lien senior secured loans	$	78,156	Discounted Cash Flow	Discount Rate	12.8%	10.9%	14.7%
Subordinated debt	1,556		Discounted Cash Flow	Discount Rate	16.3%	16.0%	16.5%
Equity	4,631		Comparable Multiples	EV/EBITDA	8.0x	8.0x	8.0x
Warrants	—		Comparable Multiples	EV/EBITDA	8.8x	8.5x	9.0x
Total Level 3 Assets	$	84,343

XML

Debt (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Long-Term Debt Instruments

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Subscription Facility for the three and nine months ended September 30, 2023 and September 30, 2022:

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	76			178			375			182
Non-usage fee (1)	22			14			64			30
Amortization of financing costs	97			69			266			144
Weighted average stated interest rate	7.49		%	4.15		%	7.17		%	4.17		%
Weighted average outstanding balance (2)	$	4,028		$	16,924		$	6,991		$	16,926

(1) Non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the Subscription Facility.

(2) The Company's initial borrowing occurred on June 29, 2022.

The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three and nine months ended September 30, 2023:

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	84			—			84			—
Non-usage fee (1)	—			—			—			—
Amortization of financing costs	28			—			28			—
Weighted average stated interest rate	6.10		%	—		%	6.10		%	—		%
Weighted average outstanding balance (2)	$	5,391		$	—		$	1,817		$	—

(1) Non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the SBA-guaranteed debentures.

(2) The Company's initial borrowing occurred on September 15, 2023.

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Repurchase Obligation for the three and nine months ended September 30, 2023 and September 30, 2022:

	For the three months ended September 30, 2023			For the three months ended September 30, 2022			For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Interest expense	—			—			376			—
Weighted average stated interest rate	—		%	—		%	8.67		%	—		%
Weighted average outstanding balance	$	—		$	—		$	5,801		$	—

Schedule of Line of Credit Facilities

The following table summarizes the Company’s SBA-guaranteed debentures as of September 30, 2023:

Issuance Date	Maturity Date	Debenture Amount		Purchase Date	Interest Rate	SBA Annual Charge
September 15, 2023	September 15, 2033	$	7,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%
September 15, 2023	September 15, 2033	$	6,000	September 15, 2033	6.04%	0.05%

The facilities of the Company consist of the following:

	September 30, 2023						December 31, 2022
	Aggregate Principal Amount Available		Principal Amount Outstanding		Unused Portion		Aggregate Principal Amount Available		Principal Amount Outstanding		Unused Portion
Subscription Facility	$	38,400	$	23,400	$	15,000	$	38,400	$	31,500	$	6,900
SBA-guaranteed debentures	36,960		31,000		5,960		—		—		—
Total	$	75,360	$	54,400	$	20,960	$	38,400	$	31,500	$	6,900

XML

Related Party Agreements and Transactions (Tables)

9 Months Ended

Sep. 30, 2023

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The following table presents a summary of Expense Payments and the related Reimbursement Payments since the Company's inception:

For the Period Ended	Expense Payments by Adviser		Reimbursement Payments to Adviser		Unreimbursed Expense Payments
June 30, 2022	$	227	$	—	$	227
September 30, 2022	225		—		225
June 30, 2023	—		(329)		(329)
September 30, 2023	—		(123)		(123)
Total	$	452	$	(452)	$	—

XML

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Unfunded Commitments

The Company had the following unfunded commitments to fund delayed draw loans as of the indicated dates:

	September 30, 2023		December 31, 2022
Unfunded delayed draw and revolving senior secured loans	$	14,362	$	12,995
Total unfunded commitments	$	14,362	$	12,995

XML

Share Data and Distributions (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Schedule of Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share; for the three and nine months ended September 30, 2023 and September 30, 2022:

	For the three months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
Earnings (loss) per common share (basic and diluted):
Net increase (decrease) in net assets resulting from operations	$	3,476	$	(220)	$	6,305	$	(381)
Weighted average common shares outstanding	13,053,832		2,098,009		10,254,893		733,084
Earnings (loss) per common share (basic and diluted):	$	0.27	$	(0.10)	$	0.61	$	(0.52)

Schedule of Share Issuances

Share Issuance Date	Shares Issued	Amount
January 26, 2023	2,510,396	$	37,129
March 28, 2023	1,188,592	17,746
June 27, 2023	4,392,543	65,097
Total	8,091,531	$	119,972

Schedule of Dividends Declared

The following table summarizes the distributions declared on shares of the Company’s common stock and shares distributed pursuant to the DRIP to stockholders who had not opted out of the DRIP:

Date Declared	Record Date	Payment Date	Amount Per Share
April 21, 2023	April 21, 2023	May 15, 2023	$0.15
June 23, 2023	June 23, 2023	August 14, 2023	$0.15
September 29, 2023	September 29, 2023	November 13, 2023	$0.20

XML

Tax Matters (Tables)

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Schedule of Tax Character Of Distributions Paid to Shareholders

The tax character of distributions paid for the period ended September 30, 2023 was as follows (in thousands):

	For the nine months ended September 30, 2023		For the year ended December 31, 2022
Ordinary Income	$	5,203	$	—
Long-term Capital Gain	$	—	$	—
Return of Capital	$	—	$	—

Schedule of Accumulated Gains (Losses) as Calculated on Tax Basis

The following table sets forth the tax cost basis and the estimated aggregate gross unrealized appreciation and depreciation from investments for federal income tax purposes (in thousands):

	September 30, 2023		December 31, 2022
Tax cost	$	169,680	$	84,545
Gross unrealized appreciation	$	993	$	177
Gross unrealized depreciation	(395)		(379)
Net unrealized investment appreciation / (depreciation) on investments	$	598	$	(202)

Schedule of Deferred Tax Assets and Liabilities

Components of the Company’s deferred tax assets and liabilities as of December 31, 2022 are as follows:

	For the year ended December 31, 2022
Deferred tax assets:
Net operating loss carryforward	$	101
Capital loss carryforward	28
Net unrealized loss on investments	51
Organizational costs	31
Valuation allowance	(211)
Total deferred tax assets	—
Deferred tax liabilities:
Total deferred tax liabilities	—
Net deferred tax assets and liabilities	$	—

Schedule of Components of Income Tax Provision

The Company’s income tax provision consists of the following as of December 31, 2022:

	For the year ended December 31, 2022
Current tax (expense)/benefit:
Federal	$	—
State and Local	—
Total current tax (expense)/benefit	—
Deferred tax (expense)/benefit:
Federal	175
State and Local	36
Valuation allowance	(211)
Total deferred tax (expense)/benefit	—
Total income tax (expense)/benefit	$	—

Schedule of Effective Income Tax Rate Reconciliation

Total income tax (expense) benefit for the Company differs from the amount computed by applying the federal statutory income tax rate of 21% to net increase (decrease) in net assets from operations for the year ended December 31, 2022, as follows:

	For the year ended December 31, 2022
Income tax benefit at federal statutory rate (21%)	$	100
State and local income tax benefit (net of federal detriment)	21
Prior year net operating loss carryforward	97
Organizational costs	33
Permanent differences	(40)
Valuation allowance	(211)
Total income tax (expense)/benefits	$	—

XML

Financial Highlights (Tables)

9 Months Ended

Sep. 30, 2023

Investment Company [Abstract]

Schedule of Financial Highlights

Below is the schedule of financial highlights of the Company for the nine months ended September 30, 2023 and September 30, 2022:

Per Common Share Data:(1)	For the nine months ended September 30, 2023			For the nine months ended September 30, 2022
Net asset value, beginning of period	$	14.60		$	(720.91)
Net investment income (loss)	0.54			(0.01)
Net realized and unrealized gain (loss)	0.07			(0.51)
Net increase (decrease) in net assets resulting from operations	0.61			(0.52)
Initial issuance of Common Stock	—			—
Effect of offering price of subscriptions (2)	0.12			735.99
Distributions declared	(0.50)			—
Net asset value, end of period	$	14.83		$	14.56
Total return based on NAV(3)	1.58		%	(102.02)		%
Common shares outstanding, end of period	13,068,112			3,537,828
Weighted average shares outstanding	10,254,893			733,084
Net assets, end of period	$	193,744		$	51,527
Ratio/Supplemental data(4):
Ratio of net investment income (loss) to average net assets	5.21		%	(0.80)		%
Ratio of expenses to average net assets	6.96		%	9.95		%
Ratio of expenses (before management fees, incentive fees and interest and financing expenses) to average net assets	3.97		%	7.90		%
Weighted average debt outstanding(5)	$	14,609		$	16,926
Total debt outstanding	$	54,400		$	17,500
Asset coverage ratio per unit	$	4,561		$	3,944
Portfolio turnover	—		%	N/A

(1)The per share data were derived by using the weighted average shares from the date of the first issuance of shares, through September 30, 2023 and September 30, 2022.

(2)Increase (decrease) is due to the offering price of subscriptions during the period (See note 9).

(3)Total return is based upon the change in net asset value per share between the opening and ending net assets per share and the issuance of common stock in the period. Total return is not annualized.

(4)Annualized, except for organizational expenses, which are non-recurring.

(5)The Company's initial borrowing occurred on June 29, 2022.

XML

Organization (Details) $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($) subsidiary region	Jan. 27, 2023 USD ($)
Schedule of Investments [Line Items]
Number of regions | region	10
Number of wholly owned subsidiaries formed | subsidiary	2
SBA Debentures | SBIC LP
Schedule of Investments [Line Items]
SBIC available long-term capital	$ 175.0	$ 175.0
SBA Debenture Regulatory Capital | SBIC LP
Schedule of Investments [Line Items]
SBIC available long-term capital		$ 87.5
Minimum
Schedule of Investments [Line Items]
Investment goal as a percentage of assets in each region	5.00%
Minimum | Middle Market Companies
Schedule of Investments [Line Items]
Investments, annual revenues	$ 10.0
Investment annual EBITDA	10.0
Maximum | Middle Market Companies
Schedule of Investments [Line Items]
Investments, annual revenues	1,000.0
Investment annual EBITDA	$ 100.0

XML

Significant Accounting Policies (Details) - USD ($)	3 Months Ended		9 Months Ended		17 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Dec. 31, 2022
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 82,219,000		$ 82,219,000		$ 82,219,000	$ 20,687,000
Interest from cash and cash equivalents	724,000	$ 0	1,269,000	$ 0
Offering costs, threshold amount for reimbursement, value	1,000,000		1,000,000		1,000,000
Deferred offering costs since inception					804,000
Interest-Bearing Deposits
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 82,219,000		$ 82,219,000		$ 82,219,000	$ 20,682,000

XML

Investments (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2023		Dec. 31, 2022
Schedule of Investments [Line Items]
Amortized Cost	$ 169,680	[1],[2],[3],[4]	$ 84,545	[5],[6],[7],[8]
Fair Value	170,278	[1],[2],[3],[4]	84,343	[5],[6],[7],[8]
Commercial Services & Supplies
Schedule of Investments [Line Items]
Amortized Cost	46,019		39,024
Fair Value	45,625		38,647
Event Management
Schedule of Investments [Line Items]
Amortized Cost	33,507
Fair Value	33,547
Media
Schedule of Investments [Line Items]
Amortized Cost	25,064		25,509
Fair Value	25,162		25,684
Construction & Engineering
Schedule of Investments [Line Items]
Amortized Cost	50,374		20,012
Fair Value	51,059		20,012
Hotels, Restaurants & Leisure
Schedule of Investments [Line Items]
Amortized Cost	3,487
Fair Value	3,500
Health Care Providers & Services
Schedule of Investments [Line Items]
Amortized Cost	7,853
Fair Value	7,960
IT Services
Schedule of Investments [Line Items]
Amortized Cost	3,376
Fair Value	3,425
Mid-Atlantic
Schedule of Investments [Line Items]
Amortized Cost	41,351		35,171
Fair Value	41,342		34,792
Far West Region
Schedule of Investments [Line Items]
Amortized Cost	33,507
Fair Value	33,547
Gulf Coast
Schedule of Investments [Line Items]
Amortized Cost	31,582		28,667
Fair Value	31,730		28,844
Southeast
Schedule of Investments [Line Items]
Amortized Cost	27,137		20,707
Fair Value	26,983		$ 20,707
Great Lakes
Schedule of Investments [Line Items]
Amortized Cost	18,763
Fair Value	19,056
Four Corners
Schedule of Investments [Line Items]
Amortized Cost	9,487
Fair Value	9,660
Cascade
Schedule of Investments [Line Items]
Amortized Cost	7,853
Fair Value	$ 7,960
Amortized Cost | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	100.00%		100.00%
Amortized Cost | Investment Type Concentration Risk | Commercial Services & Supplies
Schedule of Investments [Line Items]
Concentration risk, percentage	27.10%		46.20%
Amortized Cost | Investment Type Concentration Risk | Event Management
Schedule of Investments [Line Items]
Concentration risk, percentage	19.70%
Amortized Cost | Investment Type Concentration Risk | Media
Schedule of Investments [Line Items]
Concentration risk, percentage	14.80%		30.20%
Amortized Cost | Investment Type Concentration Risk | Construction & Engineering
Schedule of Investments [Line Items]
Concentration risk, percentage	29.70%		23.60%
Amortized Cost | Investment Type Concentration Risk | Hotels, Restaurants & Leisure
Schedule of Investments [Line Items]
Concentration risk, percentage	2.10%
Amortized Cost | Investment Type Concentration Risk | Health Care Providers & Services
Schedule of Investments [Line Items]
Concentration risk, percentage	4.60%
Amortized Cost | Investment Type Concentration Risk | IT Services
Schedule of Investments [Line Items]
Concentration risk, percentage	2.00%
Amortized Cost | Geographic Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	100.00%		100.00%
Amortized Cost | Geographic Concentration Risk | Mid-Atlantic
Schedule of Investments [Line Items]
Concentration risk, percentage	24.40%		41.60%
Amortized Cost | Geographic Concentration Risk | Far West Region
Schedule of Investments [Line Items]
Concentration risk, percentage	19.70%
Amortized Cost | Geographic Concentration Risk | Gulf Coast
Schedule of Investments [Line Items]
Concentration risk, percentage	18.60%		33.90%
Amortized Cost | Geographic Concentration Risk | Southeast
Schedule of Investments [Line Items]
Concentration risk, percentage	16.00%		24.50%
Amortized Cost | Geographic Concentration Risk | Great Lakes
Schedule of Investments [Line Items]
Concentration risk, percentage	11.10%
Amortized Cost | Geographic Concentration Risk | Four Corners
Schedule of Investments [Line Items]
Concentration risk, percentage	5.60%
Amortized Cost | Geographic Concentration Risk | Cascade
Schedule of Investments [Line Items]
Concentration risk, percentage	4.60%
Fair Value | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	100.00%		100.00%
Fair Value | Investment Type Concentration Risk | Commercial Services & Supplies
Schedule of Investments [Line Items]
Concentration risk, percentage	26.80%		45.80%
Fair Value | Investment Type Concentration Risk | Event Management
Schedule of Investments [Line Items]
Concentration risk, percentage	19.70%
Fair Value | Investment Type Concentration Risk | Media
Schedule of Investments [Line Items]
Concentration risk, percentage	14.80%		30.50%
Fair Value | Investment Type Concentration Risk | Construction & Engineering
Schedule of Investments [Line Items]
Concentration risk, percentage	29.90%		23.70%
Fair Value | Investment Type Concentration Risk | Hotels, Restaurants & Leisure
Schedule of Investments [Line Items]
Concentration risk, percentage	2.10%
Fair Value | Investment Type Concentration Risk | Health Care Providers & Services
Schedule of Investments [Line Items]
Concentration risk, percentage	4.70%
Fair Value | Investment Type Concentration Risk | IT Services
Schedule of Investments [Line Items]
Concentration risk, percentage	2.00%
Fair Value | Geographic Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	100.00%		100.00%
Fair Value | Geographic Concentration Risk | Mid-Atlantic
Schedule of Investments [Line Items]
Concentration risk, percentage	24.30%		41.30%
Fair Value | Geographic Concentration Risk | Far West Region
Schedule of Investments [Line Items]
Concentration risk, percentage	19.70%
Fair Value | Geographic Concentration Risk | Gulf Coast
Schedule of Investments [Line Items]
Concentration risk, percentage	18.60%		34.10%
Fair Value | Geographic Concentration Risk | Southeast
Schedule of Investments [Line Items]
Concentration risk, percentage	15.80%		24.60%
Fair Value | Geographic Concentration Risk | Great Lakes
Schedule of Investments [Line Items]
Concentration risk, percentage	11.20%
Fair Value | Geographic Concentration Risk | Four Corners
Schedule of Investments [Line Items]
Concentration risk, percentage	5.70%
Fair Value | Geographic Concentration Risk | Cascade
Schedule of Investments [Line Items]
Concentration risk, percentage	4.70%
First lien senior secured loans
Schedule of Investments [Line Items]
Amortized Cost	$ 161,321		$ 78,221
Fair Value	$ 162,181		$ 78,156
First lien senior secured loans | Amortized Cost | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	95.00%		92.50%
First lien senior secured loans | Fair Value | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	95.20%		92.70%
Equity
Schedule of Investments [Line Items]
Amortized Cost	$ 4,881		$ 4,631
Fair Value	$ 4,759		$ 4,631
Equity | Amortized Cost | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	2.90%		5.50%
Equity | Fair Value | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	2.80%		5.50%
Subordinated debt
Schedule of Investments [Line Items]
Amortized Cost	$ 1,826		$ 1,693
Fair Value	$ 1,686		$ 1,556
Subordinated debt | Amortized Cost | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	1.10%		2.00%
Subordinated debt | Fair Value | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	1.00%		1.80%
Preferred equity
Schedule of Investments [Line Items]
Amortized Cost	$ 1,652
Fair Value	$ 1,652
Preferred equity | Amortized Cost | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	1.00%
Preferred equity | Fair Value | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	1.00%
Warrants
Schedule of Investments [Line Items]
Amortized Cost	$ 0		$ 0
Fair Value	$ 0		$ 0
Warrants | Amortized Cost | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	0.00%		0.00%
Warrants | Fair Value | Investment Type Concentration Risk
Schedule of Investments [Line Items]
Concentration risk, percentage	0.00%		0.00%

[1] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[2] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[3] Percentage is based on net assets of $193,744 as of September 30, 2023.

[4] Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".

[5] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[6] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[7] Percentage is based on net assets of $71,782 as of December 31, 2022.

[8] Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".

XML

Fair Value Measurements of Investments - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023		Sep. 30, 2022	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 170,278	[1],[2],[3],[4]		$ 84,343	[5],[6],[7],[8]
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	170,278			$ 84,343
Level 3 | Debt And Equity Securities Unrealized Gain (Loss)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net change in unrealized gain (loss)	$ 800		$ (376)

[1] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[2] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[3] Percentage is based on net assets of $193,744 as of September 30, 2023.

[4] Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".

[5] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[6] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[7] Percentage is based on net assets of $71,782 as of December 31, 2022.

[8] Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".

XML

Fair Value Measurements of Investments - Schedule of Fair Value Measurements of Investments, by Major Class (Details) - USD ($) $ in Thousands	Sep. 30, 2023		Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 170,278	[1],[2],[3],[4]	$ 84,343	[5],[6],[7],[8]
First lien senior secured loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	162,181		78,156
Subordinated debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,686		1,556
Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,759		4,631
Preferred equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,652
Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 1 | First lien senior secured loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 1 | Subordinated debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 1 | Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 1 | Preferred equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0
Level 1 | Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 2 | First lien senior secured loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 2 | Subordinated debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 2 | Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 2 | Preferred equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0
Level 2 | Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	170,278		84,343
Level 3 | First lien senior secured loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	162,181		78,156
Level 3 | Subordinated debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,686		1,556
Level 3 | Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,759		4,631
Level 3 | Preferred equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,652
Level 3 | Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 0		$ 0

[1] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[2] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[3] Percentage is based on net assets of $193,744 as of September 30, 2023.

[4] Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".

[5] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[6] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[7] Percentage is based on net assets of $71,782 as of December 31, 2022.

[8] Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".

XML

Fair Value Measurements of Investments - Schedule of Investment Measured on Recurring Basis, Unobservable Input Reconciliation (Details) - Level 3 - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 84,343	$ 0
Purchases of investments and other adjustments to cost	86,060	48,767
Proceeds from sales and repayments of investments	(1,215)	(324)
Net accretion of discount on investments	290	66
Ending balance	170,278	48,133
Debt And Equity Securities Realized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	0	0
Debt And Equity Securities Unrealized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	800	(376)
First lien senior secured loans
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	78,156	0
Purchases of investments and other adjustments to cost	84,026	47,115
Proceeds from sales and repayments of investments	(1,215)	(324)
Net accretion of discount on investments	290	66
Ending balance	162,181	46,593
First lien senior secured loans | Debt And Equity Securities Realized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	0	0
First lien senior secured loans | Debt And Equity Securities Unrealized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	924	(264)
Subordinated debt
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	1,556	0
Purchases of investments and other adjustments to cost	132	1,652
Proceeds from sales and repayments of investments	0	0
Net accretion of discount on investments	0	0
Ending balance	1,686	1,540
Subordinated debt | Debt And Equity Securities Realized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	0	0
Subordinated debt | Debt And Equity Securities Unrealized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	(2)	(112)
Equity
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	4,631	0
Purchases of investments and other adjustments to cost	250	0
Proceeds from sales and repayments of investments	0	0
Net accretion of discount on investments	0	0
Ending balance	4,759	0
Equity | Debt And Equity Securities Realized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	0	0
Equity | Debt And Equity Securities Unrealized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	(122)	0
Preferred equity
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	0
Purchases of investments and other adjustments to cost	1,652
Proceeds from sales and repayments of investments	0
Net accretion of discount on investments	0
Ending balance	1,652
Preferred equity | Debt And Equity Securities Realized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	0
Preferred equity | Debt And Equity Securities Unrealized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	0
Warrants
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	0	0
Purchases of investments and other adjustments to cost	0	0
Proceeds from sales and repayments of investments	0	0
Net accretion of discount on investments		0
Ending balance	0	0
Warrants | Debt And Equity Securities Realized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	0	0
Warrants | Debt And Equity Securities Unrealized Gain (Loss)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net realized gain (loss) and net change in unrealized gain (loss) on investments	$ 0	$ 0

XML

Fair Value Measurements of Investments - Schedule of Fair Value Measurement Inputs and Valuation Techniques (Details) $ in Thousands	Sep. 30, 2023 USD ($)		Dec. 31, 2022 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 170,278	[1],[2],[3],[4]	$ 84,343	[5],[6],[7],[8]
First lien senior secured loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	162,181		78,156
Subordinated debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,686		1,556
Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,759		4,631
Preferred equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,652
Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	170,278		84,343
Level 3 | First lien senior secured loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	162,181		78,156
Level 3 | First lien senior secured loans | Discount Rate | Discounted Cash Flow
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 118,627		$ 78,156
Level 3 | First lien senior secured loans | Discount Rate | Discounted Cash Flow | Weighted Average Mean
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	0.123		0.128
Level 3 | First lien senior secured loans | Discount Rate | Discounted Cash Flow | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	0.104		0.109
Level 3 | First lien senior secured loans | Discount Rate | Discounted Cash Flow | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	0.146		0.147
Level 3 | First lien senior secured loans | Cost | Amortized Cost
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 43,554
Level 3 | Subordinated debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,686		$ 1,556
Level 3 | Subordinated debt | Discount Rate | Discounted Cash Flow
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 1,686		$ 1,556
Level 3 | Subordinated debt | Discount Rate | Discounted Cash Flow | Weighted Average Mean
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	0.165		0.163
Level 3 | Subordinated debt | Discount Rate | Discounted Cash Flow | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	0.160		0.160
Level 3 | Subordinated debt | Discount Rate | Discounted Cash Flow | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	0.170		0.165
Level 3 | Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 4,759		$ 4,631
Level 3 | Equity | EV/EBITDA | Comparable Multiples
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 4,759		$ 4,631
Level 3 | Equity | EV/EBITDA | Comparable Multiples | Weighted Average Mean
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	6.8		8
Level 3 | Equity | EV/EBITDA | Comparable Multiples | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	6.5		8
Level 3 | Equity | EV/EBITDA | Comparable Multiples | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	7		8
Level 3 | Preferred equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 1,652
Level 3 | Preferred equity | Cost | Cost
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,652
Level 3 | Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0		$ 0
Level 3 | Warrants | EV/EBITDA | Comparable Multiples
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 0		$ 0
Level 3 | Warrants | EV/EBITDA | Comparable Multiples | Weighted Average Mean
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	8.3		8.8
Level 3 | Warrants | EV/EBITDA | Comparable Multiples | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	8		8.5
Level 3 | Warrants | EV/EBITDA | Comparable Multiples | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment owned, fair value, measurement input	8.5		9

[1] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[2] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[3] Percentage is based on net assets of $193,744 as of September 30, 2023.

[4] Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".

[5] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[6] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[7] Percentage is based on net assets of $71,782 as of December 31, 2022.

[8] Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".

XML

Debt - Narrative (Details) - USD ($)		9 Months Ended
	Feb. 02, 2022	Sep. 30, 2023	Feb. 02, 2024	Jan. 27, 2023	Dec. 31, 2022	Sep. 30, 2022	Apr. 30, 2021	Mar. 31, 2021
Line of Credit Facility [Line Items]
Asset coverage ratio		150.00%					150.00%	200.00%
Asset coverage ratio of 150% borrowing increase amount		$ 200
Asset coverage ratio of 200% borrowing increase amount		100
Total debt outstanding		54,400,000				$ 17,500,000
Amount outstanding		31,000,000			$ 0
Lafayette Square | SBIC LP
Line of Credit Facility [Line Items]
Committed capital		42,000,000
SBA Debentures | SBIC LP
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity		175,000,000		$ 175,000,000
Amount outstanding		$ 31,000,000.0
Debt instrument, term		10 years
Commitment fee percentage		1.00%
Discount percentage		2.435%
Annual fee percentage		0.047%
Revolving Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity		$ 75,360,000			38,400,000
Total debt outstanding		54,400,000			31,500,000
Revolving Credit Facility | Subscription Facility | Line of Credit
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	$ 38,400,000	38,400,000			38,400,000
Total debt outstanding		23,400,000			31,500,000
Revolving Credit Facility | Subscription Facility | Line of Credit | Forecast
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity			$ 1,000,000,000
Revolving Credit Facility | Subscription Facility | Line of Credit | Margin Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.80%
Revolving Credit Facility | Subscription Facility | Line of Credit | Federal Fund Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.50%
Revolving Credit Facility | SBA Debentures | Line of Credit
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity		36,960,000			0
Total debt outstanding		$ 31,000,000			$ 0
Revolving Credit Facility | Repurchase Obligation | Line of Credit
Line of Credit Facility [Line Items]
Reverse repurchase agreement, maximum period for repurchase		90 days

XML

Debt - Schedule of Long-Term Debt Instruments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Subscription Facility
Line of Credit Facility [Line Items]
Interest expense	$ 76	$ 178	$ 375	$ 182
Non-usage fee	22	14	64	30
Amortization of deferred financing costs	$ 97	$ 69	$ 266	$ 144
Weighted average stated interest rate	7.49%	4.15%	7.17%	4.17%
Weighted average outstanding balance	$ 4,028	$ 16,924	$ 6,991	$ 16,926
Repurchase Obligation
Line of Credit Facility [Line Items]
Interest expense	$ 0	$ 0	$ 376	$ 0
Weighted average stated interest rate	0.00%	0.00%	8.67%	0.00%
Weighted average outstanding balance	$ 0	$ 0	$ 5,801	$ 0

XML

Debt - Guaranteed Debentures (Details) - SBIC LP	Sep. 15, 2023 USD ($) Rate
SBA Debenture One
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity | $	$ 7,000,000
Interest rate | Rate	6.04%
SBA Annual Charge	0.05%
SBA Debenture Two
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity | $	$ 6,000,000
Interest rate | Rate	6.04%
SBA Annual Charge	0.05%
SBA Debenture Three
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity | $	$ 6,000,000
Interest rate | Rate	6.04%
SBA Annual Charge	0.05%
SBA Debenture Four
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity | $	$ 6,000,000
Interest rate | Rate	6.04%
SBA Annual Charge	0.05%
SBA Debenture Five
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity | $	$ 6,000,000
Interest rate | Rate	6.04%
SBA Annual Charge	0.05%

XML

Debt - Schedule of Interest Expense and Amortization of Financing Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
SBA Debentures
Line of Credit Facility [Line Items]
Interest expense	$ 84	$ 0	$ 84	$ 0
Non-usage fee	0	0	0	0
Amortization of deferred financing costs	$ 28	$ 0	$ 28	$ 0
Weighted average stated interest rate	6.10%	0.00%	6.10%	0.00%
Weighted average outstanding balance	$ 5,391	$ 0	$ 1,817	$ 0
Repurchase Obligation
Line of Credit Facility [Line Items]
Interest expense	$ 0	$ 0	$ 376	$ 0
Weighted average stated interest rate	0.00%	0.00%	8.67%	0.00%
Weighted average outstanding balance	$ 0	$ 0	$ 5,801	$ 0

XML

Debt - Schedule of Line of Credit Facilities (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Feb. 02, 2022
Line of Credit Facility [Line Items]
Principal Amount Outstanding	$ 54,400,000		$ 17,500,000
Revolving Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Aggregate Principal Amount Available	75,360,000	$ 38,400,000
Principal Amount Outstanding	54,400,000	31,500,000
Unused Portion	20,960,000	6,900,000
Revolving Credit Facility | Subscription Facility | Line of Credit
Line of Credit Facility [Line Items]
Aggregate Principal Amount Available	38,400,000	38,400,000		$ 38,400,000
Principal Amount Outstanding	23,400,000	31,500,000
Unused Portion	15,000,000	6,900,000
Revolving Credit Facility | SBA Debentures | Line of Credit
Line of Credit Facility [Line Items]
Aggregate Principal Amount Available	36,960,000	0
Principal Amount Outstanding	31,000,000	0
Unused Portion	$ 5,960,000	$ 0

XML

Related Party Agreements and Transactions - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) component calendarQuarter	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) component calendarQuarter	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Related Party Transaction [Line Items]
Management fee	$ 431	$ 108	$ 1,035	$ 110
Management fee payable	431		431		$ 167
Incentive fee	535	0	1,050	0
Incentive fee payable	535		535		0
Administrative fee	251	145	600	157
Due to affiliate	941		941		120
Unreimbursed expense payments liability	123,000		123,000		0
Related Party
Related Party Transaction [Line Items]
Incentive fee	535		1,050
Incentive fee payable	535		535		0
Due to affiliate	$ 941		$ 941		120
Investment Advisory Agreement | Related Party
Related Party Transaction [Line Items]
Adviser fees, number of components | component	2		2
Base management fee annual rate, number of most recently completed calendar quarters | calendarQuarter	2		2
Management fee	$ 431	108	$ 1,035	110
Management fee payable	$ 431		$ 431		167
Advisor incentive fee, number of parts | component	2		2
Investment Advisory Agreement | Related Party | Minimum
Related Party Transaction [Line Items]
Management and service fees, incentive rate			0.75%
Investment Advisory Agreement | Related Party | Maximum
Related Party Transaction [Line Items]
Management and service fees, incentive rate			1.00%
Pre-Incentive Fee Net Investment Income Quarterly Returns | Related Party
Related Party Transaction [Line Items]
Management and service fees, incentive rate			1.25%
Pre-Incentive Fee Net Investment Income Annual Returns | Related Party
Related Party Transaction [Line Items]
Management and service fees, incentive rate			5.00%
Investment Advisory Agreement Pre Liquidity Event Incentive Rate Pre Incentive Fee Payment Percentage | Related Party
Related Party Transaction [Line Items]
Management and service fees, incentive rate			100.00%
Investment Advisory Agreement Pre Liquidity Event Incentive Rate Quarterly Threshold Percentage | Related Party
Related Party Transaction [Line Items]
Management and service fees, incentive rate			1.47%
Investment Advisory Agreement Pre Liquidity Event Incentive Rate Annualized Threshold Percentage | Related Party
Related Party Transaction [Line Items]
Management and service fees, incentive rate			5.88%
Investment Advisory Agreement Pre Liquidity Event Incentive Rate Pre Incentive Fee Net Investment Income Exceeds Catch Up Threshold | Related Party
Related Party Transaction [Line Items]
Management and service fees, incentive rate			15.00%
Investment Advisory Agreement Pre Liquidity Event Incentive Rate Pre Incentive Fee Net Investment Income Exceeds Catch Up Maximum Threshold | Related Party
Related Party Transaction [Line Items]
Management and service fees, incentive rate			17.50%
Investment Advisory Agreement Incentive Rate Pre Liquidity Event Incentive Fee Capital Gains | Related Party
Related Party Transaction [Line Items]
Management and service fees, incentive rate			15.00%
Investment Advisory Agreement Incentive Rate Pre Liquidity Event Incentive Fee Capital Gains | Related Party
Related Party Transaction [Line Items]
Management and service fees, incentive rate			17.50%
Administration Agreement | Related Party
Related Party Transaction [Line Items]
Number of days written notice			60 days
Administrative fee	$ 251	$ 145	$ 600	$ 157
Administrative fee payable	$ 251		$ 251		$ 550
Expense Support And Conditional Reimbursement Agreement | Related Party
Related Party Transaction [Line Items]
Payment term, expense payments			45 days
Excess operating funds Payments, expense payments period			3 years

XML

Related Party Disclosures - Expense Payments and Related Reimbursement Payments (Details) - USD ($) $ in Thousands	1 Months Ended				3 Months Ended		9 Months Ended		13 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022	Jun. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023
Related Party Transactions [Abstract]
Expense Payments by Adviser	$ 0	$ 0	$ 225	$ 227					$ 452
Reimbursement Payments to Adviser	(123)	(329)	0	0	$ (123)	$ 225	$ (452)	$ 452	(452)
Unreimbursed Expense Payments	$ (123)	$ (329)	$ 225	$ 227					$ 0

XML

Commitment and Contingencies - Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2023		Dec. 31, 2022
Other Commitments [Line Items]
Fair Value	$ 170,278	[1],[2],[3],[4]	$ 84,343	[5],[6],[7],[8]
Line of Credit
Other Commitments [Line Items]
Fair Value	$ (28)		$ (109)

[1] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[2] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[3] Percentage is based on net assets of $193,744 as of September 30, 2023.

[4] Unless otherwise indicated, all investments are considered Level 3 investments. The fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Value Measurement".

[5] All investments are denominated in U.S. dollars unless otherwise noted. The prior year table has been modified to confirm to the current year.

[6] All investments were qualifying assets as defined under Section 55(a) of the Investment Company Act of 1940.

[7] Percentage is based on net assets of $71,782 as of December 31, 2022.

[8] Unless otherwise indicated, all investments are considered Level 3 investments and the fair value of the investment was determined using significant unobservable inputs. See Note 4 "Fair Market Measurement".

XML

Commitments and Contingencies - Schedule of Unfunded Commitments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Other Commitments [Line Items]
Unfunded Commitment	$ 14,362	$ 12,995
Investment, Identifier [Axis]: Unfunded Delayed Draw and Revolving Senior Secured Loans
Other Commitments [Line Items]
Unfunded Commitment	$ 14,362	$ 12,995

XML

Directors Fees (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 27, 2022
Schedule of Investments [Line Items]
Directors' fees	$ 80	$ 80	$ 240	$ 96
Independent Director
Schedule of Investments [Line Items]
Directors' fees authorized					$ 100
Audit Committee
Schedule of Investments [Line Items]
Directors' fees authorized					20
Director
Schedule of Investments [Line Items]
Directors' fees authorized					$ 10

XML

Share Data and Distributions - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings (loss) per common share (basic and diluted):
Net increase (decrease) in net assets resulting from operations	$ 3,476	$ (220)	$ 6,305	$ (381)
Weighted average common shares outstanding, basic (in shares)	13,053,832	2,098,009	10,254,893	733,084
Weighted average common shares outstanding, diluted (in shares)	13,053,832	2,098,009	10,254,893	733,084
Earnings (loss) per common share basic (in dollar per share)	$ 0.27	$ (0.10)	$ 0.61	$ (0.52)
Earnings (loss) per common share diluted (in dollar per share)	$ 0.27	$ (0.10)	$ 0.61	$ (0.52)

XML

Share Data and Distributions - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Subsidiary, Sale of Stock [Line Items]
Preferred stock shares authorized (in shares)		50,000,000	50,000,000
Preferred stock par value (in dollar per shares)		$ 0.001	$ 0.001
Common stock shares authorized (in shares)		450,000,000	450,000,000
Common stock par value (in dollar per shares)		$ 0.001	$ 0.001
Common Stock | Private Placement
Subsidiary, Sale of Stock [Line Items]
Committed capital		$ 370.5	$ 196.6
Unfunded capital commitments	$ 73.9	$ 177.7

XML

Share Data and Distributions - Schedule of Share Issuance (Details) - USD ($) $ in Thousands				3 Months Ended		9 Months Ended
	Jun. 27, 2023	Mar. 28, 2023	Jan. 26, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Equity [Abstract]
Shares issued (in shares)	4,392,543	1,188,592	2,510,396			8,091,531
Shares issued, value	$ 65,097	$ 17,746	$ 37,129	$ 0	$ 26,206	$ 119,972	$ 52,412

XML

Share Data and Distributions - Schedule of Dividends Declared (Details) - $ / shares	Sep. 29, 2023	Jun. 23, 2023	Apr. 21, 2023
Equity [Abstract]
Dividends payable, amount per share (in dollar per share)	$ 0.20	$ 0.15	$ 0.15
Dividends declared (in dollar per share)	$ 0.20	$ 0.15	$ 0.15

XML

Tax Matters- Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Short term capital loss carryforward	$ 110	$ 111
Capital gains offset expiration period	5 years
Net operating loss carryforward for federal income tax		$ 397

XML

Tax Matters - Schedule of Tax Character Of Distributions Paid to Shareholders (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Ordinary Income	$ 5,203	$ 0
Long-term Capital Gain	0	0
Return of Capital	$ 0	$ 0

XML

Tax Matters - Schedule of Accumulated Gains (Losses) as Calculated on Tax Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Tax cost	$ 169,680	$ 84,545
Gross unrealized appreciation	993	177
Gross unrealized depreciation	(395)	(379)
Net unrealized investment appreciation / (depreciation) on investments	$ 598	$ (202)

XML

Tax Matters - Schedule of Deferred Tax Assets and Liabilities (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Deferred tax assets:
Net operating loss carryforward	$ 101
Capital loss carryforward	28
Net unrealized loss on investments	51
Organizational costs	31
Valuation allowance	(211)
Total deferred tax assets	0
Deferred tax liabilities:
Total deferred tax liabilities	0
Net deferred tax assets and liabilities	$ 0

XML

Tax Matters - Schedule of Components of Income Tax (Expense) Benefit (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Current tax (expense)/benefit:
Federal	$ 0
State and Local	0
Total current tax (expense)/benefit	0
Deferred tax (expense)/benefit:
Federal	175
State and Local	36
Valuation allowance	(211)
Total deferred tax (expense)/benefit	0
Total income tax (expense)/benefit	$ 0

XML

Tax Matters- Schedule of Effective Income Tax Rate Reconciliation (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Income Tax Disclosure [Abstract]
Income tax benefit at federal statutory rate (21%)	$ 100
State and local income tax benefit (net of federal detriment)	21
Prior year net operating loss carryforward	97
Organizational costs	33
Permanent differences	(40)
Valuation allowance	(211)
Total income tax (expense)/benefit	$ 0

XML

Financial Highlights (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Investment Company, Financial Highlights [Roll Forward]
Net asset value, beginning of period (in dollar per share)			$ 14.60	$ (720.91)
Net investment income (loss) (in dollar per share)			0.54	(0.01)
Net realized and unrealized gain (loss) (in dollar per share)			0.07	(0.51)
Net increase (decrease) in net assets resulting from operations (in dollar per share)			0.61	(0.52)
Initial issuance of Common Stock (in dollar per share)			0	0
Effect of offering price of subscriptions (in dollar per share)			0.12	735.99
Distributions declared (in dollar per share)			(0.50)	0
Net asset value, end of period (in dollar per share)	$ 14.83	$ 14.56	$ 14.83	$ 14.56
Total return based on NAV			1.58%	(102.02%)
Common shares outstanding, end of period (in shares)	13,068,112	3,537,828	13,068,112	3,537,828		4,916,554
Weighted average common shares outstanding, basic (in shares)	13,053,832	2,098,009	10,254,893	733,084
Weighted average common shares outstanding, diluted (in shares)	13,053,832	2,098,009	10,254,893	733,084
Net assets, end of period	$ 193,744	$ 51,527	$ 193,744	$ 51,527	$ 192,442	$ 71,782	$ 25,541	$ (504)
Ratio/Supplemental data:
Ratio of net investment income (loss) to average net assets			5.21%	(0.80%)
Ratio of expenses to average net assets			6.96%	9.95%
Ratio of expenses (before management fees, incentive fees and interest and financing expenses) to average net assets			3.97%	7.90%
Weighted average debt outstanding			$ 14,609	$ 16,926
Total debt outstanding	$ 54,400	$ 17,500	$ 54,400	$ 17,500
Asset coverage ratio per unit (in dollar per share)	$ 4,561	$ 3,944	$ 4,561	$ 3,944
Portfolio turnover			0.00%

XML

Subsequent Events (Details) - USD ($)	Nov. 10, 2023	Nov. 06, 2023	Oct. 20, 2023	Nov. 08, 2023	Sep. 30, 2023	Dec. 31, 2022
Subsequent Event [Line Items]
Amount outstanding					$ 31,000,000	$ 0
Subsequent Event
Subsequent Event [Line Items]
Additional capital commitments obtained		$ 6,600,000
Committed capital	$ 377,000,000
Subsequent Event | Revolving Credit Facility | Subscription Facility | Line of Credit
Subsequent Event [Line Items]
Repayments of line of credit			$ 23,400,000
Amount outstanding				$ 0