Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter Ended September 30, 2020

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission
File Number

Exact name of registrant as specified in its charter, address of principal executive
offices, telephone numbers and states or other jurisdictions of incorporation or organization

I.R.S. Employer
Identification Number

814-00832

New Mountain Finance Corporation

27-2978010

787 Seventh Avenue, 48th Floor
New York, New York 10019
Telephone: (212) 720-0300
State of Incorporation: Delaware

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

NMFC

The NASDAQ Global Select Market

5.75% Notes due 2023

NMFCL

The NASDAQ Global Select Market

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 (the "Exchange Act") during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

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 o No o

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 ý

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

Emerging growth company o

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. o

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock.


Description						Shares as of November 4, 2020
Common stock, par value $0.01 per share						96,827,342

Table of Contents

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2020

TABLE OF CONTENTS


		PAGE

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	New Mountain Finance Corporation
	Consolidated Statements of Assets and Liabilities as of September 30, 2020 (unaudited) and December 31, 2019 (unaudited)	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2020 (unaudited) and September 30, 2019 (unaudited)	4
	Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2020 (unaudited) and September 30, 2019 (unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 (unaudited) and September 30, 2019 (unaudited)	6
	Consolidated Schedule of Investments as of September 30, 2020 (unaudited)	7
	Consolidated Schedule of Investments as of December 31, 2019	28
	Notes to the Consolidated Financial Statements of New Mountain Finance Corporation (unaudited)	48
	Report of Independent Registered Public Accounting Firm	90

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	91
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	126
Item 4.	Controls and Procedures	127

PART II. OTHER INFORMATION		128

Item 1.	Legal Proceedings	128
Item 1A.	Risk Factors	128
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	133
Item 3.	Defaults Upon Senior Securities	133
Item 4.	Mine Safety Disclosures	133
Item 5.	Other Information	133
Item 6.	Exhibits	134
	Signatures	135

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

New Mountain Finance Corporation

Consolidated Statements of Assets and Liabilities

(in thousands, except shares and per share data)

(unaudited)


	September 30, 2020		December 31, 2019
Assets
Investments at fair value
Non-controlled/non-affiliated investments (cost of $2,298,918 and $2,619,408, respectively)	$	2,247,848	$	2,613,801
Non-controlled/affiliated investments (cost of $79,785 and $82,825, respectively)	55,769		73,527
Controlled investments (cost of $599,584 and $449,308, respectively)	593,006		472,952
Total investments at fair value (cost of $2,978,287 and $3,151,541, respectively)	2,896,623		3,160,280
Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively)	21,422		21,422
Cash and cash equivalents	68,664		48,574
Interest and dividend receivable	33,568		31,800
Receivable from unsettled securities sold	4,490		—
Receivable from affiliates	513		277
Other assets	7,211		3,702
Total assets	$	3,032,491	$	3,266,055
Liabilities
Borrowings
Holdings Credit Facility	$	459,163	$	661,563
Unsecured Notes	453,250		453,250
SBA-guaranteed debentures	300,000		225,000
DB Credit Facility	242,000		230,000
Convertible Notes	201,545		201,623
NMFC Credit Facility	150,500		188,500

Deferred financing costs (net of accumulated amortization of $31,939 and $28,390, respectively)	(18,222)		(17,640)
Net borrowings	1,788,236		1,942,296
Payable for unsettled securities purchased	—		1,780
Management fee payable	19,988		10,298
Incentive fee payable	13,531		7,646
Interest payable	10,141		16,484
Payable to affiliates	1,163		673
Deferred tax liability	134		912
Other liabilities	2,138		2,498
Total liabilities	1,835,331		1,982,587
Commitments and contingencies (See Note 9)
Net assets
Preferred stock, par value $0.01 per share, 2,000,000 shares authorized, none issued	—		—
Common stock, par value $0.01 per share, 200,000,000 shares authorized, and 96,827,342 and 96,827,342 shares issued and outstanding, respectively	968		968
Paid in capital in excess of par	1,287,853		1,287,853

Accumulated overdistributed earnings	(104,057)		(5,353)
Total net assets of New Mountain Finance Corporation	1,184,764		1,283,468
Non-controlling interest in New Mountain Net Lease Corporation	12,396		—
Total net assets	$	1,197,160	$	1,283,468
Total liabilities and net assets	$	3,032,491	$	3,266,055
Number of shares outstanding	96,827,342		96,827,342
Net asset value per share of New Mountain Finance Corporation	$	12.24	$	13.26

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

Table of Contents

New Mountain Finance Corporation

Consolidated Statements of Operations

(in thousands, except shares and per share data)

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Investment income
From non-controlled/non-affiliated investments:
Interest income (excluding Payment-in-kind ("PIK") interest income)	$	41,854	$	50,096	$	144,383	$	140,602
PIK interest income	2,547		1,356		6,464		3,325

Non-cash dividend income	2,274		2,239		6,898		6,282
Other income	1,497		3,599		4,085		7,694
From non-controlled/affiliated investments:
Interest income (excluding PIK interest income)	781		659		1,963		1,979
PIK interest income	217		392		(1,131)		1,109
Dividend income	687		788		2,096		2,326
Non-cash dividend income	—		309		(3,418)		901
Other income	427		342		1,002		934
From controlled investments:
Interest income (excluding PIK interest income)	2,011		720		4,581		2,323
PIK interest income	2,244		1,997		6,393		5,441
Dividend income	8,107		7,661		24,061		23,383
Non-cash dividend income	1,576		2,273		5,716		6,446
Other income	1,299		163		2,479		505
Total investment income	65,521		72,594		205,572		203,250
Expenses
Incentive fee	7,135		7,792		21,857		21,642
Management fee	12,877		12,687		39,869		35,302
Interest and other financing expenses	18,077		21,830		59,500		61,695
Administrative expenses	1,024		930		3,303		3,074
Professional fees	731		834		2,605		2,486
Other general and administrative expenses	442		492		1,383		1,302
Total expenses	40,286		44,565		128,517		125,501
Less: management and incentive fees waived (See Note 5)	(3,341)		(3,141)		(10,067)		(8,497)
Less: expenses waived and reimbursed (See Note 5)	(589)		—		(924)		(335)
Net expenses	36,356		41,424		117,526		116,669
Net investment income before income taxes	29,165		31,170		88,046		86,581
Income tax expense	123		—		116		13
Net investment income	29,042		31,170		87,930		86,568
Net realized gains (losses):
Non-controlled/non-affiliated investments	30		349		(4,431)		439
Non-controlled/affiliated investments	12		—		12		—
Controlled investments	5		6		12		14
New Mountain Net Lease Corporation	—		—		812		—
Net change in unrealized appreciation (depreciation):
Non-controlled/non-affiliated investments	21,410		(8,334)		(67,407)		4,106
Non-controlled/affiliated investments	(1,111)		(143)		(14,718)		(2,671)
Controlled investments	39,943		1,453		(8,278)		3,870
Securities purchased under collateralized agreements to resell	—		(1,332)		—		(1,332)
New Mountain Net Lease Corporation	—		—		(812)		—
Benefit for taxes	257		281		778		121
Net realized and unrealized gains (losses)	60,546		(7,720)		(94,032)		4,547
Net increase (decrease) in net assets resulting from operations	89,588		23,450		(6,102)		91,115
Less: Net increase in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation	(1,398)		—		(1,584)		—
Net increase (decrease) in net assets resulting from operations related to New Mountain Finance Corporation	$	88,190	$	23,450	$	(7,686)	$	91,115
Basic earnings (loss) per share	$	0.91	$	0.27	$	(0.08)	$	1.11
Weighted average shares of common stock outstanding - basic (See Note 11)	96,827,342		86,987,841		96,827,342		82,020,549
Diluted earnings (loss) per share	$	0.82	$	0.26	$	(0.08)	$	1.01
Weighted average shares of common stock outstanding - diluted (See Note 11)	110,084,927		100,245,426		110,084,927		97,948,225
Distributions declared and paid per share	$	0.30	$	0.34	$	0.94	$	1.02

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

Table of Contents

New Mountain Finance Corporation

Consolidated Statements of Changes in Net Assets

(in thousands, except shares and per share data)

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Increase (decrease) in net assets resulting from operations:
Net investment income	$	29,042	$	31,170	$	87,930	$	86,568
Net realized gains (losses) on investments and New Mountain Net Lease Corporation	47		355		(3,595)		453
Net change in unrealized appreciation (depreciation) of investments and New Mountain Net Lease Corporation	60,242		(7,024)		(91,215)		5,305
Net change in unrealized depreciation of securities purchased under collateralized agreements to resell	—		(1,332)		—		(1,332)
Benefit for taxes	257		281		778		121
Net increase (decrease) in net assets resulting from operations	89,588		23,450		(6,102)		91,115
Less: Net increase in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation	(1,398)		—		(1,584)		—
Net increase (decrease) in net assets resulting from operations related to New Mountain Finance Corporation	88,190		23,450		(7,686)		91,115
Capital transactions
Net proceeds from shares sold	—		94,185		—		153,482
Deferred offering costs	—		(315)		—		(544)
Distributions declared to stockholders from net investment income	(29,049)		(29,753)		(91,018)		(84,472)
Reinvestment of distributions	—		795		—		3,429


Total net (decrease) increase in net assets resulting from capital transactions	(29,049)		64,912		(91,018)		71,895
Net increase (decrease) in net assets	59,141		88,362		(98,704)		163,010
New Mountain Finance Corporation net assets at the beginning of the period	1,125,623		1,080,917		1,283,468		1,006,269
New Mountain Finance Corporation net assets at the end of the period	1,184,764		1,169,279		1,184,764		1,169,279
Non-controlling interest in New Mountain Net Lease Corporation	12,396		—		12,396		—
Net assets at the end of the period	$	1,197,160	$	1,169,279	$	1,197,160	$	1,169,279

Capital share activity
Shares sold	—		6,900,000		—		11,212,500
Shares issued from the reinvestment of distributions	—		58,393		—		249,823


Net increase in shares outstanding	—		6,958,393		—		11,462,323

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

Table of Contents

New Mountain Finance Corporation

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Nine Months Ended
	September 30, 2020		September 30, 2019
Cash flows from operating activities
Net (decrease) increase in net assets resulting from operations	$	(6,102)	$	91,115
Adjustments to reconcile net decrease (increase) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realized losses (gains) on investments and New Mountain Net Lease Corporation	3,595		(453)
Net change in unrealized depreciation (appreciation) of investments and New Mountain Net Lease Corporation	91,215		(5,305)
Net change in unrealized depreciation of securities purchased under collateralized agreements to resell	—		1,332
Amortization of purchase discount	(7,942)		(3,684)
Amortization of deferred financing costs	3,549		4,699
Amortization of premium on Convertible Notes	(78)		(83)
Non-cash investment income	(22,016)		(22,075)
(Increase) decrease in operating assets:
Proceeds from sale of non-controlling interest in New Mountain Net Lease Corporation	11,315		—
Purchase of investments and delayed draw facilities	(259,127)		(827,462)
Proceeds from sales and paydowns of investments	480,333		207,785
Cash received for purchase of undrawn portion of revolving credit or delayed draw facilities	296		195
Cash paid for purchase of drawn portion of revolving credit facilities	(13,996)		(338)
Cash paid on drawn revolvers	(43,952)		(18,574)
Cash repayments on drawn revolvers	35,251		13,684
Interest and dividend receivable	(1,768)		(7,249)
Receivable from unsettled securities sold	(4,490)		—
Receivable from affiliates	(236)		(298)
Other assets	(3,290)		(1,054)
Increase (decrease) in operating liabilities:
Management fee payable	9,690		9,971
Incentive fee payable	5,885		7,915
Payable for unsettled securities purchased	(1,780)		79,520
Payable to affiliates	490		189
Interest payable	(6,343)		(425)
Deferred tax liability	(778)		(121)
Other liabilities	400		(2,885)
Distributions related to non-controlling interest in New Mountain Net Lease Corporation	(503)		—
Net cash flows provided by (used in) operating activities	269,618		(473,601)
Cash flows from financing activities
Net proceeds from shares sold	—		153,482
Distributions paid	(91,018)		(81,043)
Offering costs paid	(203)		(606)
Proceeds from Holdings Credit Facility	16,000		222,500
Repayment of Holdings Credit Facility	(218,400)		(97,500)
Proceeds from Convertible Notes	—		86,681
Repayment of Convertible Notes	—		(155,250)
Proceeds from Unsecured Notes	—		116,500
Proceeds from SBA-guaranteed debentures	75,000		19,000
Proceeds from NMFC Credit Facility	97,000		268,500
Repayment of NMFC Credit Facility	(135,000)		(190,000)
Proceeds from DB Credit Facility	67,000		232,000
Repayment of DB Credit Facility	(55,000)		(87,000)
Proceeds from NMNLC Credit Facility	—		10,600


Deferred financing costs paid	(4,907)		(4,112)

Net cash flows (used in) provided by financing activities	(249,528)		493,752
Net increase in cash and cash equivalents	20,090		20,151
Cash and cash equivalents at the beginning of the period	48,574		49,664
Cash and cash equivalents at the end of the period	$	68,664	$	69,815
Supplemental disclosure of cash flow information
Cash interest paid	$	60,940	$	58,037
Income taxes paid	129		10


Non-cash financing activities:

Value of shares reissued from repurchase program in connection with the distribution reinvestment plan	$	—	$	3,429
Accrual for offering costs	80		49
Accrual for deferred financing costs	11		19

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Non-Controlled/Non-Affiliated Investments
Funded Debt Investments - Canada
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)**
Healthcare Services	Second lien (3)(10)	8.50% (L + 7.50%/M)	6/1/2018	6/8/2026	$	28,613	$	28,410	$	26,810
	Second lien (8)(10)	8.50% (L + 7.50%/M)	6/1/2018	6/8/2026	7,500		7,450		7,027
					36,113		35,860		33,837		2.83	%
Wolfpack IP Co.**
Software	First lien (2)(10)	7.00% (L + 6.00%/S)	6/14/2019	6/13/2025	9,091		9,016		9,091		0.76	%
Total Funded Debt Investments - Canada					$	45,204	$	44,876	$	42,928	3.59	%
Funded Debt Investments - United Arab Emirates
GEMS Menasa (Cayman) Limited**
Education	First lien (8)	6.00% (L + 5.00%/S)	7/30/2019	7/31/2026	$	22,451	$	22,353	$	21,806	1.82	%
Total Funded Debt Investments - United Arab Emirates					$	22,451	$	22,353	$	21,806	1.82	%
Funded Debt Investments - United Kingdom
Shine Acquisition Co. S.à.r.l / Boing US Holdco Inc.**
Consumer Services	Second lien (2)(10)	8.50% (L + 7.50%/M)	9/25/2017	10/3/2025	$	37,853	$	37,690	$	37,853
	Second lien (8)(10)	8.50% (L + 7.50%/M)	9/25/2017	10/3/2025	6,000		5,974		6,000
					43,853		43,664		43,853		3.66	%
Aston FinCo S.a r.l. / Aston US Finco, LLC**
Software	Second lien (8)(10)	8.40% (L + 8.25%/M)	10/8/2019	10/8/2027	34,459		34,206		34,201		2.86	%
Total Funded Debt Investments - United Kingdom					$	78,312	$	77,870	$	78,054	6.52	%
Funded Debt Investments - United States
GS Acquisitionco, Inc.
Software	First lien (2)(10)	6.75% (L + 5.75%/S)	8/7/2019	5/24/2024	$	26,707	$	26,575	$	26,707
	First lien (2)(10)	6.75% (L + 5.75%/S)	8/7/2019	5/24/2024	26,016		25,875		26,016
	First lien (5)(10)	6.75% (L + 5.75%/S)	8/7/2019	5/24/2024	22,250		22,140		22,250
	First lien (3)(10)	6.75% (L + 5.75%/S)	8/7/2019	5/24/2024	12,681		12,605		12,681
	First lien (3)(10)(11) - Drawn	6.75% (L + 5.75%/S)	8/7/2019	5/24/2024	3,839		3,815		3,839
					91,493		91,010		91,493		7.64	%
PhyNet Dermatology LLC
Healthcare Services	First lien (2)(10)	6.50% (L + 5.50%/M)	9/17/2018	8/16/2024	49,985		49,636		48,685
	First lien (3)(10)	6.50% (L + 5.50%/M)	9/17/2018	8/16/2024	27,927		27,678		27,201
					77,912		77,314		75,886		6.34	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Associations, Inc.
Business Services	First lien (2)(10)	8.00% (L + 4.00% + 3.00% PIK/Q)*	7/30/2018	7/30/2024	$	45,582	$	45,390	$	45,581
	First lien (8)(10)	8.00% (L + 4.00% + 3.00% PIK/Q)*	7/30/2018	7/30/2024	5,232		5,211		5,232
	First lien (2)(10)(11) - Drawn	8.34% (L + 4.00% + 3.00% PIK/Q)*	7/30/2018	7/30/2024	10,360		10,310		10,360
	First lien (2)(10)(11) - Drawn	7.00% (L + 6.00%/Q)	7/30/2018	7/30/2024	2,033		2,020		2,033
					63,207		62,931		63,206		5.28	%
ConnectWise, LLC
Software	First lien (2)(10)	7.00% (L + 6.00%/Q)	11/26/2019	2/28/2025	55,193		54,896		54,851		4.58	%
CentralSquare Technologies, LLC
Software	Second lien (3)(10)	7.65% (L + 7.50%/M)	8/15/2018	8/31/2026	47,838		47,345		45,049
	Second lien (8)(10)	7.65% (L + 7.50%/M)	8/15/2018	8/31/2026	7,500		7,423		7,063
					55,338		54,768		52,112		4.35	%
iCIMS, Inc.
Software	First lien (8)(10)	7.50% (L + 6.50%/S)	9/12/2018	9/12/2024	41,636		41,323		41,656
	First lien (8)(10)	7.50% (L + 6.50%/S)	6/14/2019	9/12/2024	8,667		8,598		8,671
					50,303		49,921		50,327		4.21	%
Salient CRGT Inc.
Federal Services	First lien (2)(10)	7.50% (L + 6.50%/S)	1/6/2015	2/28/2022	37,909		37,739		37,366
	First lien (8)(10)	7.50% (L + 6.50%/S)	6/6/2019	2/28/2022	12,954		12,666		12,769
					50,863		50,405		50,135		4.19	%
DCA Investment Holding, LLC
Healthcare Services	First lien (8)(10)	6.29% (L + 5.25%/S)	4/16/2019	7/2/2021	20,367		20,257		19,164
	First lien (2)(10)	6.25% (L + 5.25%/S)	7/2/2015	7/2/2021	16,961		16,936		15,958
	First lien (8)(10)	6.25% (L + 5.25%/S)	12/20/2017	7/2/2021	8,823		8,795		8,302
	First lien (2)(10)	6.25% (L + 5.25%/S)	12/20/2017	7/2/2021	4,152		4,142		3,907
	First lien (3)(10)(11) - Drawn	6.25% (L + 5.25%/S)	7/2/2015	7/2/2021	2,056		2,036		1,935
					52,359		52,166		49,266		4.12	%
Frontline Technologies Group Holdings, LLC
Software	First lien (4)(10)	6.75% (L + 5.75%/Q)	9/18/2017	9/18/2023	21,995		21,905		21,995
	First lien (2)(10)	6.75% (L + 5.75%/Q)	9/18/2017	9/18/2023	18,537		18,490		18,537
	First lien (2)(10)	6.75% (L + 5.75%/Q)	9/18/2017	9/18/2023	7,652		7,610		7,652
					48,184		48,005		48,184		4.03	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

NM GRC Holdco, LLC
Business Services	First lien (2)(10)	8.50% (L + 6.00% + 1.50% PIK/Q)*	2/9/2018	2/9/2024	$	38,318	$	38,201	$	35,751
	First lien (2)(10)	8.50% (L + 6.00% + 1.50% PIK/Q)*	2/9/2018	2/9/2024	10,650		10,615		9,937
					48,968		48,816		45,688		3.82	%
Brave Parent Holdings, Inc.
Software	Second lien (5)(10)	7.65% (L + 7.50%/M)	4/17/2018	4/17/2026	22,500		22,413		22,397
	Second lien (2)(10)	7.65% (L + 7.50%/M)	4/17/2018	4/17/2026	16,624		16,493		16,547
	Second lien (8)(10)	7.65% (L + 7.50%/M)	4/17/2018	4/17/2026	6,000		5,953		5,972
					45,124		44,859		44,916		3.75	%
Integro Parent Inc.
Business Services	First lien (2)(10)	6.75% (L + 5.75%/M)	10/9/2015	10/31/2022	34,617		34,520		34,617
	Second lien (8)(10)	10.25% (L + 9.25%/M)	10/9/2015	10/30/2023	10,000		9,951		10,000
					44,617		44,471		44,617		3.73	%
Quest Software US Holdings Inc.
Software	Second lien (2)(10)	8.51% (L + 8.25%/Q)	5/17/2018	5/18/2026	43,697		43,354		43,640		3.65	%
Tenawa Resource Holdings LLC (14)
Tenawa Resource Management LLC
Specialty Chemicals & Materials	First lien (3)(10)	10.50% (Base + 8.00%/Q)	5/12/2014	10/30/2024	38,700		38,656		38,700		3.23	%
CoolSys, Inc.
Industrial Services	First lien (5)	7.00% (L + 6.00%/Q)	11/20/2019	11/20/2026	22,331		22,230		22,387
	First lien (2)	7.00% (L + 6.00%/Q)	11/20/2019	11/20/2026	10,322		10,275		10,348
	First lien (3)	7.00% (L + 6.00%/Q)	11/20/2019	11/20/2026	4,184		4,163		4,194
					36,837		36,668		36,929		3.09	%
Trader Interactive, LLC
Business Services	First lien (2)(10)	7.50% (L + 6.50%/S)	6/15/2017	6/17/2024	31,687		31,555		31,687
	First lien (8)(10)	7.50% (L + 6.50%/S)	6/15/2017	6/17/2024	4,911		4,891		4,911
					36,598		36,446		36,598		3.06	%
Peraton Holding Corp. (fka MHVC Acquisition Corp.)
Federal Services	First lien (2)	6.25% (L + 5.25%/Q)	4/25/2017	4/29/2024	36,623		36,517		36,348		3.04	%
KAMC Holdings, Inc
Business Services	Second lien (2)(10)	8.26% (L + 8.00%/Q)	8/14/2019	8/13/2027	18,750		18,623		18,043
	Second lien (8)(10)	8.26% (L + 8.00%/Q)	8/14/2019	8/13/2027	18,750		18,623		18,043
					37,500		37,246		36,086		3.01	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Definitive Healthcare Holdings, LLC
Healthcare Information Technology	First lien (8)(10)	6.50% (L + 5.50%/M)	8/7/2019	7/16/2026	$	33,698	$	33,555	$	33,698
	First lien (3)(10)(11) - Drawn	6.50% (L + 5.50%/Q)	8/7/2019	7/16/2024	1,848		1,839		1,848
					35,546		35,394		35,546		2.97	%
Affinity Dental Management, Inc.
Healthcare Services	First lien (2)(10)	10.25% (P + 7.00%/S)	9/15/2017	9/15/2023	26,290		26,246		23,364
	First lien (4)(10)	10.25% (P + 7.00%/S)	9/17/2019	9/15/2023	10,619		10,619		9,437
	First lien (3)(10)(11) - Drawn	10.25% (P + 7.00%/Q)	9/15/2017	3/15/2023	1,738		1,720		1,544
					38,647		38,585		34,345		2.87	%
Finalsite Holdings, Inc.
Software	First lien (4)(10)	6.50% (L + 5.50%/Q)	9/28/2018	9/25/2024	22,050		21,932		22,050
	First lien (2)(10)	6.50% (L + 5.50%/Q)	9/28/2018	9/25/2024	10,891		10,833		10,891
					32,941		32,765		32,941		2.75	%
TDG Group Holding Company
Consumer Services	First lien (2)(10)	5.44% (L + 5.25%/Q)	5/22/2018	5/31/2024	24,670		24,589		24,493
	First lien (8)(10)	5.44% (L + 5.25%/Q)	5/22/2018	5/31/2024	4,912		4,896		4,876
	First lien (2)(10)	5.44% (L + 5.25%/Q)	5/22/2018	5/31/2024	3,295		3,284		3,272
					32,877		32,769		32,641		2.73	%
GC Waves Holdings, Inc.**
Business Services	First lien (5)(10)	6.75% (L + 5.75%/Q)	10/31/2019	10/31/2025	22,388		22,241		22,112
	First lien (2)(10)	6.75% (L + 5.75%/Q)	10/31/2019	10/31/2025	3,654		3,631		3,610
	First lien (3)(10)(11) - Drawn	6.75% (L + 5.75%/Q)	10/31/2019	10/31/2025	5,424		5,373		5,358
					31,466		31,245		31,080		2.60	%
Integral Ad Science, Inc.
Software	First lien (8)(10)	8.25% (L + 6.00% + 1.25% PIK/S)*	7/19/2018	7/19/2024	27,099		26,904		27,302
	First lien (3)(10)	8.25% (L + 6.00% + 1.25% PIK/S)*	8/27/2019	7/19/2024	3,540		3,512		3,567
					30,639		30,416		30,869		2.58	%
Kaseya Inc.
Software	First lien (8)(10)	8.09% (L + 4.00% + 3.00% PIK/S)*	5/9/2019	5/2/2025	28,011		27,789		28,291
	First lien (3)(10)(11) - Drawn	7.50% (L + 6.50%/S)	5/9/2019	5/2/2025	1,133		1,121		1,133
	First lien (3)(10)(11) - Drawn	8.06% (L + 4.00% + 3.00% PIK/S)*	5/9/2019	5/2/2025	636		630		642
					29,780		29,540		30,066		2.51	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Ansira Holdings, Inc.
Business Services	First lien (8)(10)	7.50% (L + 6.50% PIK/S)*	12/19/2016	12/20/2024	$	28,944	$	28,882	$	23,656
	First lien (3)(10)	7.50% (L + 6.50% PIK/S)*	12/19/2016	12/20/2024	7,311		7,298		5,975
					36,255		36,180		29,631		2.48	%
MRI Software LLC
Software	First lien (5)(10)	6.50% (L + 5.50%/Q)	1/31/2020	2/10/2026	22,385		22,283		22,450
	First lien (3)(10)	6.50% (L + 5.50%/Q)	1/31/2020	2/10/2026	4,345		4,324		4,357
	First lien (2)(10)	6.50% (L + 5.50%/Q)	1/31/2020	2/10/2026	1,619		1,611		1,624
					28,349		28,218		28,431		2.37	%
Keystone Acquisition Corp.
Healthcare Services	First lien (2)	6.25% (L + 5.25%/Q)	5/10/2017	5/1/2024	24,294		24,199		22,108
	Second lien (2)(10)	10.25% (L + 9.25%/Q)	5/10/2017	5/1/2025	4,500		4,470		4,495
					28,794		28,669		26,603		2.22	%
HS Purchaser, LLC / Help/Systems Holdings, Inc.
Software	Second lien (5)	9.00% (L + 8.00%/Q)	11/14/2019	11/19/2027	22,500		22,388		22,275
	Second lien (2)	9.00% (L + 8.00%/Q)	11/14/2019	11/19/2027	4,208		4,169		4,166
					26,708		26,557		26,441		2.21	%
Confluent Health, LLC
Healthcare Services	First lien (2)	5.15% (L + 5.00%/M)	6/21/2019	6/24/2026	27,156		27,040		26,138		2.18	%
Instructure, Inc. **
Software	First lien (8)(10)	8.00% (L + 7.00%/Q)	3/24/2020	3/24/2026	24,150		24,010		24,001		2.00	%
AAC Holding Corp.
Education	First lien (2)(10)	9.25% (L + 5.00% + 3.25% PIK/M)*	9/30/2015	9/30/2022	26,199		26,131		22,515		1.88	%
Astra Acquisition Corp.
Software	First lien (5)	6.50% (L + 5.50%/M)	2/26/2020	3/1/2027	22,388		22,230		22,499		1.88	%
Convey Health Solutions, Inc.
Healthcare Services	First lien (4)(10)	6.25% (L + 5.25%/Q)	9/9/2019	9/4/2026	22,275		22,056		22,275		1.86	%
Idera, Inc.
Software	Second lien (4)	10.00% (L + 9.00%/S)	6/27/2019	6/28/2027	22,500		22,349		22,162		1.85	%
Avatar Topco, Inc. (23)
EAB Global, Inc.
Education	Second lien (3)(10)	8.50% (L + 7.50%/Q)	11/17/2017	11/17/2025	13,950		13,799		13,950
	Second lien (8)(10)	8.50% (L + 7.50%/Q)	11/17/2017	11/17/2025	7,500		7,419		7,500
					21,450		21,218		21,450		1.79	%
Spring Education Group, Inc (fka SSH Group Holdings, Inc.)
Education	Second lien (2)	8.47% (L + 8.25%/Q)	7/26/2018	7/30/2026	22,603		22,560		20,908		1.75	%
MED Parentco, LP
Healthcare Services	Second lien (8)(10)	8.40% (L + 8.25%/M)	8/2/2019	8/30/2027	20,857		20,714		20,501		1.71	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Institutional Shareholder Services, Inc.
Business Services	Second lien (3)(10)	8.72% (L + 8.50%/Q)	3/5/2019	3/5/2027	$	20,372	$	20,109	$	20,372	1.70	%
YLG Holdings, Inc.
Business Services	First lien (5)(10)	7.25% (L + 6.25%/S)	11/1/2019	10/31/2025	18,275		18,195		18,351
	First lien (5)(10)(11) - Drawn	7.25% (L + 6.25%/S)	11/1/2019	10/31/2025	1,910		1,901		1,918
					20,185		20,096		20,269		1.69	%
CRCI Longhorn Holdings, Inc.
Business Services	Second lien (3)	7.40% (L + 7.25%/M)	8/2/2018	8/10/2026	14,349		14,305		13,272
	Second lien (8)	7.40% (L + 7.25%/M)	8/2/2018	8/10/2026	7,500		7,477		6,938
					21,849		21,782		20,210		1.69	%
TMK Hawk Parent, Corp.
Distribution & Logistics	First lien (2)	4.50% (L + 3.50%/M)	6/24/2019	8/28/2024	16,779		14,705		9,844
	First lien (8)	4.50% (L + 3.50%/M)	10/23/2019	8/28/2024	16,183		13,672		9,494
					32,962		28,377		19,338		1.62	%
Xactly Corporation
Software	First lien (4)(10)	8.25% (L + 7.25%/S)	7/31/2017	7/29/2022	19,047		18,958		19,047		1.59	%
DiversiTech Holdings, Inc.
Distribution & Logistics	Second lien (2)	8.50% (L + 7.50%/Q)	5/18/2017	6/2/2025	12,000		11,920		11,610
	Second lien (8)	8.50% (L + 7.50%/Q)	5/18/2017	6/2/2025	7,500		7,450		7,256
					19,500		19,370		18,866		1.58	%
Bluefin Holding, LLC
Software	Second lien (8)(10)	7.90% (L + 7.75%/M)	9/6/2019	9/6/2027	18,000		18,000		18,000		1.50	%
Bullhorn, Inc.
Software	First lien (2)(10)	6.75% (L + 5.75%/Q)	9/24/2019	9/30/2026	17,045		16,935		17,045
	First lien (3)(10)	6.75% (L + 5.75%/Q)	9/24/2019	9/30/2026	353		351		353
	First lien (3)(10)	6.75% (L + 5.75%/Q)	9/24/2019	9/30/2026	282		280		282
					17,680		17,566		17,680		1.48	%
FR Arsenal Holdings II Corp.
Business Services	First lien (2)(10)	8.25% (L + 7.25%/S)	9/29/2016	9/8/2022	18,213		18,135		17,528		1.46	%
The Kleinfelder Group, Inc.
Business Services	First lien (4)(10)	5.75% (L + 4.75%/Q)	12/18/2018	11/29/2024	17,194		17,130		17,194		1.44	%
Kele Holdco, Inc.
Distribution & Logistics	First lien (5)(10)	7.00% (L + 6.00%/M)	2/20/2020	2/20/2026	16,152		16,077		16,394		1.37	%
Hill International, Inc.**
Business Services	First lien (2)(10)	6.75% (L + 5.75%/Q)	6/21/2017	6/21/2023	15,287		15,248		15,287		1.28	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Symplr Software Intermediate Holdings, Inc. (24)
Symplr Software, Inc. (fka Caliper Software, Inc.)
Healthcare Information Technology	First lien (4)(10)	5.72% (L + 5.50%/Q)	11/30/2018	11/28/2025	$	14,738	$	14,651	$	14,738
	First lien (2)(10)	5.72% (L + 5.50%/Q)	11/30/2018	11/28/2025	481		478		481
					15,219		15,129		15,219		1.27	%
Netsmart Inc. / Netsmart Technologies, Inc.
Healthcare Information Technology	Second lien (2)	9.75% (P + 6.50%/Q)	4/18/2016	10/19/2023	15,000		14,814		15,000		1.25	%
CFS Management, LLC
Healthcare Services	First lien (2)(10)	6.75% (L + 5.75%/S)	8/6/2019	7/1/2024	11,644		11,598		11,384
	First lien (3)(10)	6.75% (L + 5.75%/S)	8/6/2019	7/1/2024	3,468		3,451		3,391
					15,112		15,049		14,775		1.23	%
Bleriot US Bidco Inc.
Federal Services	Second lien (2)	8.72% (L + 8.50%/Q)	10/24/2019	10/29/2027	15,000		14,862		14,588		1.22	%
BackOffice Associates Holdings, LLC
Business Services	First lien (2)(10)	13.50% (L + 9.50% + 3.00% PIK/Q)*	8/25/2017	8/25/2023	13,175		13,114		13,175
	First lien (3)(10)(11) - Drawn	13.50% (L + 9.50% + 3.00% PIK/Q)*	8/25/2017	8/25/2023	914		906		914
					14,089		14,020		14,089		1.18	%
Coyote Buyer, LLC
Specialty Chemicals & Materials	First lien (5)(10)	7.00% (L + 6.00%/Q)	3/13/2020	2/6/2026	14,114		14,049		14,044		1.17	%
Ministry Brands, LLC
Software	First lien (2)(10)	5.00% (L + 4.00%/Q)	12/7/2016	12/2/2022	2,910		2,904		2,883
	Second lien (8)(10)	10.25% (L + 9.25%/S)	12/7/2016	6/2/2023	7,840		7,811		7,840
	Second lien (3)(10)	10.25% (L + 9.25%/S)	12/7/2016	6/2/2023	2,160		2,152		2,160
	First lien (3)(10)(11) - Drawn	6.00% (L + 5.00%/S)	12/7/2016	12/2/2022	575		572		570
					13,485		13,439		13,453		1.12	%
Alegeus Technologies Holding Corp.
Healthcare Services	First lien (8)(10)	9.25% (L + 8.25%/Q)	9/5/2018	9/5/2024	13,444		13,395		13,290		1.11	%
Geo Parent Corporation
Business Services	First lien (2)(10)	5.40% (L + 5.25%/M)	12/13/2018	12/19/2025	12,967		12,916		12,967		1.08	%
PaySimple, Inc.
Software	First lien (2)	5.65% (L + 5.50%/M)	8/19/2019	8/23/2025	9,783		9,700		9,392
	First lien (2)	5.65% (L + 5.50%/M)	8/19/2019	8/23/2025	3,203		3,145		3,075
					12,986		12,845		12,467		1.04	%
Transcendia Holdings, Inc.
Packaging	Second lien (8)(10)	9.00% (L + 8.00%/M)	6/28/2017	5/30/2025	14,500		14,365		12,231		1.02	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

OEConnection LLC
Business Services	Second lien (2)(10)	8.40% (L + 8.25%/M)	9/25/2019	9/25/2027	$	12,044	$	11,934	$	11,863	0.99	%
CHA Holdings, Inc.
Business Services	Second lien (4)(10)	9.75% (L + 8.75%/Q)	4/3/2018	4/10/2026	7,012		6,957		7,012
	Second lien (3)(10)	9.75% (L + 8.75%/Q)	4/3/2018	4/10/2026	4,453		4,418		4,452
					11,465		11,375		11,464		0.96	%
Alert Holding Company, Inc. (15)
Appriss Holdings, Inc.
Business Services	First lien (8)(10)	5.75% (L + 5.50%/M)	5/24/2019	5/29/2026	10,971		10,891		10,971
	First lien (3)(10)(11) - Drawn	5.65% (L + 5.50%/M)	5/24/2019	5/30/2025	460		455		460
					11,431		11,346		11,431		0.95	%
Apptio, Inc.
Software	First lien (8)(10)	8.25% (L + 7.25%/S)	1/10/2019	1/10/2025	11,203		11,030		11,371		0.95	%
Castle Management Borrower LLC
Business Services	First lien (2)(10)	7.50% (L + 6.50% PIK/Q)*	5/31/2018	2/15/2024	13,731		13,689		11,109		0.93	%
Vectra Co.
Business Products	Second lien (8)(10)	7.40% (L + 7.25%/M)	2/23/2018	3/8/2026	10,788		10,758		10,672		0.89	%
Masergy Holdings, Inc.
Business Services	Second lien (2)(10)	8.50% (L + 7.50%/Q)	12/14/2016	12/16/2024	10,500		10,463		10,500		0.88	%
PPVA Black Elk (Equity) LLC
Business Services	Subordinated (3)(10)	—	5/3/2013	—	14,500		14,500		10,354		0.86	%
Quartz Holding Company
Software	Second lien (3)(10)	8.15% (L + 8.00%/M)	4/2/2019	4/2/2027	10,000		9,827		9,993		0.83	%
Stats Intermediate Holdings, LLC**
Business Services	First lien (2)	5.40% (L + 5.25%/M)	5/22/2019	7/10/2026	9,925		9,819		9,801		0.82	%
Teneo Holdings, LLC
Business Services	First lien (2)	6.25% (L + 5.25%/M)	7/15/2019	7/11/2025	9,900		9,736		9,578		0.80	%
VT Topco, Inc.
Business Services	Second lien (4)(10)	7.15% (L + 7.00%/M)	8/14/2018	7/31/2026	10,000		9,980		9,481		0.79	%
Affordable Care Holding Corp.
Healthcare Services	First lien (2)(10)	5.75% (L + 4.75%/Q)	3/18/2019	10/24/2022	9,820		9,702		9,303		0.78	%
AgKnowledge Holdings Company, Inc.
Business Services	First lien (4)(10)	5.75% (L + 4.75%/S)	11/30/2018	7/21/2023	9,284		9,255		9,284		0.78	%
Zywave, Inc.
Software	Second lien (4)(10)	10.00% (L + 9.00%/Q)	11/22/2016	11/17/2023	6,780		6,753		6,780
	Second lien (4)(10)	10.00% (L + 9.00%/Q)	12/3/2019	11/17/2023	600		596		600
					7,380		7,349		7,380		0.62	%
AG Parent Holdings, LLC
Healthcare Services	First lien (2)	5.15% (L + 5.00%/M)	7/30/2019	7/31/2026	6,940		6,910		6,836		0.57	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Recorded Future, Inc.
Software	First lien (8)(10)	7.25% (L + 6.25%/S)	8/26/2019	7/3/2025	$	6,250	$	6,224	$	6,252
	First lien (3)(10)(11) - Drawn	7.25% (L + 6.25%/S)	8/26/2019	7/3/2025	500		498		500
					6,750		6,722		6,752		0.56	%
CP VI Bella Midco, LLC
Healthcare Services	Second lien (3)	6.90% (L + 6.75%/M)	1/25/2018	12/29/2025	6,732		6,708		6,699		0.56	%
DealerSocket, Inc.
Software	First lien (2)(10)	5.75% (L + 4.75%/S)	4/16/2018	4/26/2023	6,560		6,533		6,357		0.53	%
Restaurant Technologies, Inc.
Business Services	Second lien (4)	6.65% (L + 6.50%/M)	9/24/2018	10/1/2026	6,722		6,708		6,285		0.52	%
DG Investment Intermediate Holdings 2, Inc. (aka Convergint Technologies Holdings, LLC)
Business Services	Second lien (3)	7.50% (L + 6.75%/M)	1/29/2018	2/2/2026	6,732		6,708		6,228		0.52	%
Diligent Corporation
Software	First lien (3)(10)	7.25% (L + 6.25%/S)	12/19/2018	8/4/2025	5,962		5,926		6,042		0.50	%
ADG, LLC
Healthcare Services	Second lien (3)(10)	11.00% (L + 10.00% PIK/Q)*	10/3/2016	3/28/2024	5,743		5,700		3,658		0.31	%
Sphera Solutions, Inc.
Software	First lien (2)(10)	8.00% (L + 7.00%/Q)	9/10/2019	6/14/2022	2,470		2,454		2,470		0.21	%
Education Management Corporation (13)
Education Management II LLC
Education	First lien (2)	13.00% (L + 7.50%/M)(26)	1/5/2015	7/2/2020	300		292		—
	First lien (3)	13.00% (L + 7.50%/M)(26)	1/5/2015	7/2/2020	169		165		—
	First lien (2)	9.75% (L + 6.50%/Q)(26)	1/5/2015	7/2/2020	207		201		—
	First lien (3)	9.75% (L + 6.50%/Q)(26)	1/5/2015	7/2/2020	117		113		—
	First lien (2)	11.75% (P + 8.50%/M)(26)	1/5/2015	7/2/2020	141		116		—
	First lien (3)	11.75% (P + 8.50%/M)(26)	1/5/2015	7/2/2020	79		66		—
	First lien (2)	11.75% (P + 8.50%/M)(26)	1/5/2015	7/2/2020	4		3		—
	First lien (3)	11.75% (P + 8.50%/M)(26)	1/5/2015	7/2/2020	2		2		—
					1,019		958		—		—	%
PPVA Fund, L.P.
Business Services	Collateralized Financing (26)(27)	—	11/7/2014	—	—		—		—		—	%
Total Funded Debt Investments - United States					$	2,085,054	$	2,068,916	$	2,017,244	168.51	%
Total Funded Debt Investments					$	2,231,021	$	2,214,015	$	2,160,032	180.44	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares	Cost		Fair Value		Percent of Net Assets

Equity - Hong Kong
Bach Special Limited (Bach Preference Limited)**
Education	Preferred shares (3)(10)(22)	—	9/1/2017	—	82,414	$	8,162	$	8,489	0.71	%
Total Shares - Hong Kong						$	8,162	$	8,489	0.71	%
Equity - United States
Avatar Topco, Inc.(23)
Education	Preferred shares (3)(10)	—	11/17/2017	—	35,750	$	50,641	$	51,713	4.32	%
Symplr Software Intermediate Holdings, Inc. (24)
Healthcare Information Technology	Preferred shares (4)(10)	—	11/30/2018	—	7,500	9,282		9,394
	Preferred shares (3)(10)	—	11/30/2018	—	2,586	3,200		3,239
						12,482		12,633		1.06	%
Tenawa Resource Holdings LLC (14)
QID NGL LLC
Specialty Chemicals & Materials	Preferred shares (6)(10)	—	10/30/2017	—	1,623,385	1,623		1,950
	Ordinary shares (6)(10)	—	5/12/2014	—	5,290,997	5,291		5,324
						6,914		7,274		0.61	%
Alert Holding Company, Inc. (15)
Alert Intermediate Holdings I, Inc.
Business Services	Preferred shares (3)(10)	—	5/31/2019	—	6,111	7,017		7,109		0.59	%
Ancora Acquisition LLC
Education	Preferred shares (9)(10)	—	8/12/2013	—	372	83		158		0.01	%
Education Management Corporation (13)
Education	Preferred shares (2)	—	1/5/2015	—	3,331	200		—
	Preferred shares (3)	—	1/5/2015	—	1,879	113		—
	Ordinary shares (2)	—	1/5/2015	—	2,994,065	100		—
	Ordinary shares (3)	—	1/5/2015	—	1,688,976	56		—
						469		—		—	%
Total Shares - United States						$	77,606	$	78,887	6.59	%
Total Shares						$	85,768	$	87,376	7.30	%
Warrants - United States
ASP LCG Holdings, Inc.
Education	Warrants (3)(10)	—	5/5/2014	5/5/2026	622	$	37	$	700	0.06	%
Total Warrants - United States						$	37	$	700	0.06	%
Total Funded Investments						$	2,299,820	$	2,248,108	187.80	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Unfunded Debt Investments - Canada
Wolfpack IP Co.**
Software	First lien (3)(10)(11) - Undrawn	—	6/14/2019	6/13/2025	$	909	$	(9)	$	—	—	%
Total Unfunded Debt Investments - Canada					$	909	$	(9)	$	—	—	%
Unfunded Debt Investments - United States
Kaseya Inc.
Software	First lien (3)(10)(11) - Undrawn	—	5/9/2019	5/3/2021	$	2,675	$	—	$	27
	First lien (3)(10)(11) - Undrawn	—	5/9/2019	5/2/2025	1,179		(12)		—
					3,854		(12)		27		0.00	%
CoolSys, Inc.
Industrial Services	First lien (3)(11) - Undrawn	—	11/20/2019	11/19/2021	1,400		—		4		0.00	%
MRI Software LLC
Software	First lien (3)(10)(11) - Undrawn	—	1/31/2020	2/10/2022	1,141		—		3
	First lien (3)(10)(11) - Undrawn	—	1/31/2020	2/10/2026	2,002		(10)		—
					3,143		(10)		3		0.00	%
YLG Holdings, Inc.
Business Services	First lien (5)(10)(11) - Undrawn	—	11/1/2019	4/30/2021	468		—		2
	First lien (3)(10)(11) - Undrawn	—	11/1/2019	10/31/2025	3,968		(20)		—
					4,436		(20)		2		0.00	%
Recorded Future, Inc.
Software	First lien (3)(10)(11) - Undrawn	—	8/26/2019	1/3/2021	500		(3)		—
	First lien (3)(10)(11) - Undrawn	—	8/26/2019	7/3/2025	250		(1)		—
					750		(4)		—		—	%
Definitive Healthcare Holdings, LLC
Healthcare Information Technology	First lien (3)(10)(11) - Undrawn	—	8/7/2019	7/16/2021	7,391		—		—		—	%
Associations, Inc.
Business Services	First lien (2)(10)(11) - Undrawn	—	7/30/2018	7/30/2021	153		(1)		—		—	%
AgKnowledge Holdings Company, Inc.
Business Services	First lien (3)(10)(11) - Undrawn	—	11/30/2018	7/21/2023	526		(3)		—		—	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Alert Holding Company, Inc. (15)
Appriss Holdings, Inc.
Business Services	First lien (3)(10)(11) - Undrawn	—	5/24/2019	5/30/2025	$	470	$	(5)	$	—	—	%
Kele Holdco, Inc.
Distribution & Logistics	First lien (3)(10)(11) - Undrawn	—	2/20/2020	2/20/2026	1,799		(9)		—		—	%
Wrike, Inc.
Software	First lien (3)(10)(11) - Undrawn	—	12/31/2018	12/31/2024	933		(9)		—		—	%
Xactly Corporation
Software	First lien (3)(10)(11) - Undrawn	—	7/31/2017	7/29/2022	992		(10)		—		—	%
GS Acquisitionco, Inc.
Software	First lien (3)(10)(11) - Undrawn	—	8/7/2019	5/24/2024	1,646		(10)		—		—	%
Bullhorn, Inc.
Software	First lien (3)(10)(11) - Undrawn	—	9/24/2019	10/1/2021	781		(6)		—
	First lien (3)(10)(11) - Undrawn	—	9/24/2019	9/30/2026	852		(6)		—
					1,633		(12)		—		—	%
Trader Interactive, LLC
Business Services	First lien (3)(10)(11) - Undrawn	—	6/15/2017	6/15/2023	1,673		(13)		—		—	%
Zywave, Inc.
Software	First lien (2)(10)(11) - Undrawn	—	11/22/2016	11/17/2022	2,000		(15)		—		—	%
Integral Ad Science, Inc.
Software	First lien (3)(10)(11) - Undrawn	—	7/19/2018	7/19/2023	1,807		(18)		—		—	%
Finalsite Holdings, Inc.
Software	First lien (3)(10)(11) - Undrawn	—	9/25/2018	9/25/2024	2,521		(19)		—		—	%
Bluefin Holding, LLC
Software	First lien (3)(10)(11) - Undrawn	—	9/6/2019	9/6/2024	1,515		(23)		—		—	%
iCIMS, Inc.
Software	First lien (3)(10)(11) - Undrawn	—	9/12/2018	9/12/2024	2,915		(29)		—		—	%
Integro Parent Inc.
Business Services	First lien (3)(10)(11) - Undrawn	—	6/8/2018	4/30/2022	6,743		(34)		—		—	%
Apptio, Inc.
Software	First lien (3)(10)(11) - Undrawn	—	1/10/2019	1/10/2025	2,066		(41)		—		—	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

DCA Investment Holding, LLC
Healthcare Services	First lien (3)(10)(11) - Undrawn	—	7/2/2015	7/2/2021	$	44	$	—	$	(3)	(0.00)	%
Ministry Brands, LLC
Software	First lien (3)(10)(11) - Undrawn	—	12/7/2016	12/2/2022	425		(2)		(4)		(0.00)	%
Coyote Buyer, LLC
Specialty Chemicals & Materials	First lien (3)(10)(11) - Undrawn	—	3/13/2020	2/6/2025	1,013		(5)		(5)		(0.00)	%
Instructure, Inc. **
Software	First lien (3)(10)(11) - Undrawn	—	3/24/2020	3/24/2026	2,036		(13)		(13)		(0.00)	%
DealerSocket, Inc.
Software	First lien (3)(10)(11) - Undrawn	—	4/16/2018	4/26/2023	560		(4)		(17)		(0.00)	%
ConnectWise, LLC
Software	First lien (3)(10)(11) - Undrawn	—	11/26/2019	2/28/2025	4,248		(27)		(26)		(0.00)	%
TDG Group Holding Company
Consumer Services	First lien (2)(10)(11) - Undrawn	—	5/22/2018	5/31/2024	5,044		(25)		(36)		(0.00)	%
Salient CRGT Inc.
Federal Services	First lien (3)(10)(11) - Undrawn	—	6/26/2018	11/29/2021	6,125		(490)		(88)		(0.01)	%
GC Waves Holdings, Inc.**
Business Services	First lien (3)(10)(11) - Undrawn	—	10/31/2019	10/31/2025	3,951		(30)		(49)
	First lien (3)(10)(11) - Undrawn	—	10/31/2019	11/1/2021	4,435		—		(55)
					8,386		(30)		(104)		(0.01)	%
Total Unfunded Debt Investments - United States					$	78,247	$	(893)	$	(260)	(0.03)	%
Total Unfunded Debt Investments					$	79,156	$	(902)	$	(260)	(0.03)	%
Total Non-Controlled/Non-Affiliated Investments							$	2,298,918	$	2,247,848	187.77	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Non-Controlled/Affiliated Investments (28)
Funded Debt Investments - United States
Permian Holdco 1, Inc.
Permian Holdco 2, Inc.
Permian Holdco 3, Inc.
Energy	First lien (3)(10)	14.75% (P + 6.50% + 5.00% PIK/M)*	6/14/2018	6/30/2022	$	10,902	$	10,902	$	10,539
	First lien (3)(10)	11.00% (L + 10.00% PIK/M)*	7/23/2020	10/23/2020	2,295		2,295		2,295
	First lien (3)(10)(11) - Drawn	8.75% (P + 5.50%/M)	6/14/2018	6/30/2022	17,700		17,700		15,311
	Subordinated (3)(10)	18.00% PIK/Q (26)*	12/26/2018	6/30/2022	2,417		2,417		—
	Subordinated (3)(10)	14.00% PIK/Q (26)*	10/31/2016	10/15/2021	1,708		1,708		—
	Subordinated (3)(10)	14.00% PIK/Q (26)*	10/31/2016	10/15/2021	1,025		1,025		—
					36,047		36,047		28,145		2.35	%
Sierra Hamilton Holdings Corporation
Energy	Second lien (3)(10)	15.00% PIK/Q*	9/12/2019	9/12/2023	907		891		816		0.07	%
Total Funded Debt Investments - United States					$	36,954	$	36,938	$	28,961	2.42	%
Equity - United States
NMFC Senior Loan Program I LLC**
Investment Fund	Membership interest (3)(10)	—	6/13/2014	—	—		$	23,000	$	23,000	1.92	%
Sierra Hamilton Holdings Corporation
Energy	Ordinary shares (2)(10)	—	7/31/2017	—	25,000,000		11,501		3,706
	Ordinary shares (3)(10)	—	7/31/2017	—	2,786,000		1,282		413
							12,783		4,119		0.34	%
Permian Holdco 1, Inc.
Energy	Preferred shares (3)(10)(17)(26)	—	10/31/2016	—	1,366,452		5,714		—
	Ordinary shares (3)(10)	—	10/31/2016	—	1,366,452		1,350		—
							7,064		—		—	%
Total Shares - United States							$	42,847	$	27,119	2.26	%
Total Funded Investments							$	79,785	$	56,080	4.68	%
Unfunded Debt Investments - United States
Permian Holdco 3, Inc.
Energy	First lien (3)(10)(11) - Undrawn	—	6/14/2018	6/30/2022	$	2,300	$	—	$	(311)	(0.02)	%
Total Unfunded Debt Investments - United States					$	2,300	$	—	$	(311)	(0.02)	%
Total Non-Controlled/Affiliated Investments							$	79,785	$	55,769	4.66	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Controlled Investments (29)
Funded Debt Investments - United Kingdom
Edmentum Ultimate Holdings, LLC (16)
EducationCity Limited**
Education	First lien (3)(10)(11) - Drawn	10.00%/S	1/24/2020	12/9/2021	$	3,000	$	3,000	$	3,000	0.25	%
Total Funded Debt Investments - United Kingdom					$	3,000	$	3,000	$	3,000	0.25	%
Funded Debt Investments - United States
New LT Smile Holdings, LLC (25)
Benevis Holding Corp.
Healthcare Services	First lien (2)(10)	7.32% (L + 6.32%/Q)(26)	3/15/2018	3/15/2024	$	62,572	$	62,572	$	57,484
	First lien (8)(10)	7.32% (L + 6.32%/Q)(26)	3/15/2018	3/15/2024	15,352		15,352		14,104
	First lien (3)(10)	7.32% (L + 6.32%/Q)(26)	3/29/2019	3/15/2024	7,586		7,586		6,970
	First lien (3)(10)	11.00% (L + 10.00%/Q)	8/6/2020	11/5/2020	3,457		3,457		3,457
					88,967		88,967		82,015		6.85	%
Edmentum Ultimate Holdings, LLC (16)
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
Education	First lien (2)(10)	9.50% (L + 4.50% + 4.00% PIK/Q)*	8/6/2018	6/9/2021	10,285		9,824		10,285
	First lien (3)(10)(11) - Drawn	10.00%/S	1/24/2020	12/9/2021	5,000		5,000		5,000
	Second lien (3)(10)	7.00% PIK/Q*	2/23/2018	12/9/2021	12,650		12,387		12,650
	Second lien (3)(10)(11) - Drawn	5.00% PIK/Q*	6/9/2015	12/9/2021	8,170		8,170		8,170
	Second lien (3)(10)(11) - Drawn	5.00% PIK/Q*	4/15/2020	12/9/2021	7,731		7,731		7,731
	Subordinated (3)(10)	8.50% PIK/Q*	6/9/2015	12/9/2021	5,678		5,677		5,678
	Subordinated (2)(10)	10.00% PIK/Q*	6/9/2015	12/9/2021	22,074		22,074		22,074
	Subordinated (3)(10)	10.00% PIK/Q*	6/9/2015	12/9/2021	5,430		5,430		5,430
					77,018		76,293		77,018		6.43	%
UniTek Global Services, Inc.
Business Services	First lien (2)(10)	7.50% (L + 5.50% + 1.00% PIK/S)*	6/29/2018	8/20/2024	12,448		12,448		11,139
	First lien (3)(10)	7.50% (L + 5.50% + 1.00% PIK/S)*	3/16/2020	8/20/2024	10,266		9,591		9,186
	First lien (2)(10)	7.50% (L + 5.50% + 1.00% PIK/S)*	6/29/2018	8/20/2024	2,490		2,490		2,228
	First lien (3)(10)	7.50% (L + 5.50% + 1.00% PIK/S)*	6/29/2018	8/20/2024	716		581		640
					25,920		25,110		23,193		1.94	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

NHME Holdings Corp. (21)
National HME, Inc.
Healthcare Services	Second lien (3)(10)	12.00% PIK/Q*	11/27/2018	5/27/2024	$	18,088	$	15,033	$	13,114
	Second lien (3)(10)	12.00% PIK/Q*	11/27/2018	5/27/2024	9,996		9,251		8,746
					28,084		24,284		21,860		1.83	%
Total Funded Debt Investments - United States					$	219,989	$	214,654	$	204,086	17.05	%
Total Funded Debt Investments					$	222,989	$	217,654	$	207,086	17.30	%
Equity - Canada
NM APP Canada Corp.**
Net Lease	Membership interest (7)(10)	—	9/13/2016	—	—		$	7,345	$	11,100	0.93	%
Total Shares - Canada							$	7,345	$	11,100	0.93	%
Equity - United States
NMFC Senior Loan Program III LLC**
Investment Fund	Membership interest (3)(10)	—	5/4/2018	—	—		$	120,000	$	120,000	10.02	%
NMFC Senior Loan Program II LLC**
Investment Fund	Membership interest (3)(10)	—	5/3/2016	—	—		79,400		79,400		6.63	%
NM NL Holdings, L.P.**
Net Lease	Membership interest (7)(10)	—	6/20/2018	—	—		44,070		49,589		4.14	%
UniTek Global Services, Inc.
Business Services	Preferred shares (3)(10)(20)	—	8/17/2018	—	9,948,967		9,949		8,272
	Preferred shares (3)(10)(20)	—	8/29/2019	—	5,913,138		5,913		5,425
	Preferred shares (3)(10)(19)	—	6/30/2017	—	18,099,536		18,100		12,250
	Preferred shares (2)(10)(18)(26)	—	1/13/2015	—	29,326,545		26,946		2,789
	Preferred shares (3)(10)(18)(26)	—	1/13/2015	—	8,104,462		7,447		771
	Ordinary shares (2)(10)	—	1/13/2015	—	2,096,477		1,925		—
	Ordinary shares (3)(10)	—	1/13/2015	—	1,993,749		532		—
							70,812		29,507		2.46	%
NM GLCR LP
Net Lease	Membership interest (7)(10)	—	2/1/2018	—	—		14,750		26,464		2.21	%
NM CLFX LP
Net Lease	Membership interest (7)(10)	—	10/6/2017	—	—		12,538		12,677		1.06	%
NM DRVT LLC
Net Lease	Membership interest (7)(10)	—	11/18/2016	—	—		5,152		6,980		0.58	%
NM APP US LLC
Net Lease	Membership interest (7)(10)	—	9/13/2016	—	—		5,080		6,886		0.58	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

NM YI, LLC
Net Lease	Membership interest (7)(10)	—	9/30/2019	—	—		$	6,272	$	6,175	0.52	%
Edmentum Ultimate Holdings, LLC (16)
Education	Ordinary shares (3)(10)	—	6/9/2015	—	123,968		11		2,431
	Ordinary shares (2)(10)	—	6/9/2015	—	107,143		9		2,101
							20		4,532		0.38	%
NHME Holdings Corp. (21)
Healthcare Services	Ordinary shares (3)(10)	—	11/27/2018	—	640,000		4,000		4,000		0.33	%
NM JRA LLC
Net Lease	Membership interest (7)(10)	—	8/12/2016	—	—		2,043		3,784		0.32	%
NM KRLN LLC
Net Lease	Membership interest (7)(10)	—	11/15/2016	—	—		8,227		940		0.08	%
NM GP Holdco, LLC**
Net Lease	Membership interest (7)(10)	—	6/20/2018	—	—		452		496		0.04	%
New LT Smile Holdings, LLC(25)
Healthcare Services	Ordinary shares (3)(10)	—	6/5/2020	—	68		—		—
	Ordinary shares (8)(10)	—	6/5/2020	—	136		—		—
	Ordinary shares (2)(10)	—	6/5/2020	—	556		—		—
							—		—		—	%
Total Shares - United States							$	372,816	$	351,430	29.36	%
Total Shares							$	380,161	$	362,530	30.28	%
Warrants - United States
Edmentum Ultimate Holdings, LLC (16)
Education	Warrants (3)(10)	—	2/23/2018	5/5/2026	1,141,846		$	769	$	22,390	1.87	%
NHME Holdings Corp. (21)
Healthcare Services	Warrants (3)(10)	—	11/27/2018	—	160,000		1,000		1,000		0.08	%
Total Warrants - United States							$	1,769	$	23,390	1.95	%
Total Funded Investments							$	599,584	$	593,006	49.53	%
Unfunded Debt Investments - United States
New LT Smile Holdings, LLC (25)
Benevis Holding Corp.
Healthcare Services	First lien (3)(10)(11) - Undrawn	—	8/5/2020	11/5/2020	$	10,371	$	—	$	—	—	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)


Portfolio Company, Location and Industry (1)	Type of Investment	Interest Rate (12)	Acquisition Date	Maturity / Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Edmentum Ultimate Holdings, LLC (16)
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
Education	Second lien (3)(10)(11) - Undrawn	—	4/15/2020	12/9/2021	$	2,000	$	—	$	—	—	%
Total Unfunded Debt Investments - United States					$	12,371	$	—	$	—	—	%
Total Controlled Investments							$	599,584	$	593,006	49.53	%
Total Investments							$	2,978,287	$	2,896,623	241.96	%

(1)New Mountain Finance Corporation (the “Company”) generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.

(2)Investment is pledged as collateral for the Holdings Credit Facility, a revolving credit facility among the Company as Collateral Manager, New Mountain Finance Holdings, L.L.C. (“NMF Holdings”) as the Borrower, Wells Fargo Bank, National Association as the Administrative Agent, and Collateral Custodian. See Note 7. Borrowings, for details.

(3)Investment is pledged as collateral for the NMFC Credit Facility, a revolving credit facility among the Company as the Borrower and Goldman Sachs Bank USA as the Administrative Agent and the Collateral Agent and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A. as Lenders. See Note 7. Borrowings, for details.

(4)Investment is held in New Mountain Finance SBIC, L.P.

(5)Investment is held in New Mountain Finance SBIC II, L.P.

(6)Investment is held in NMF QID NGL Holdings, Inc.

(7)Investment is held in New Mountain Net Lease Corporation.

(8)Investment is pledged as collateral for the DB Credit Facility, a revolving credit facility among New Mountain Finance DB, L.L.C as the Borrower and Deutsche Bank AG, New York Branch as the Facility Agent. See Note 7. Borrowings, for details.

(9)Investment is held in NMF Ancora Holdings, Inc.

(10)The fair value of the Company's investment is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 4. Fair Value, for details.

(11)Par Value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net of the impact of paydowns and cash paid for drawn revolvers or delayed draws.

(12)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets daily (D), weekly (W), monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of September 30, 2020.

(13)The Company holds investments in Education Management Corporation and one related entity of Education Management Corporation. The Company holds series A-1 convertible preferred stock and common stock in Education Management Corporation and holds tranche A first lien term loans and a tranche B first lien term loan in Education Management II LLC, which is an indirect subsidiary of Education Management Corporation.

(14)The Company holds investments in two related entities of Tenawa Resource Holdings LLC. The Company holds 4.77% of the common units in QID NGL LLC (which at closing represented 98.1% of the ownership in the common units in Tenawa Resource Holdings LLC), class A preferred units in QID NGL LLC and a first lien investment in Tenawa Resource Management LLC, a wholly-owned subsidiary of Tenawa Resource Holdings LLC.

(15)The Company holds investments in two wholly-owned subsidiaries of Alert Holding Company, Inc. The Company holds a first lien term loan and a first lien revolver in Appriss Holdings, Inc. and preferred equity in Alert Intermediate Holdings I, Inc. The preferred equity is entitled to receive preferential dividends at a rate of L + 10.0% per annum.

(16)The Company holds investments in Edmentum Ultimate Holdings, LLC and its related entities. The Company holds subordinated notes, ordinary equity, and warrants in Edmentum Ultimate Holdings, LLC, holds a first lien promissory note in EducationCity Limited and holds a first lien term loan, first lien promissory note, second lien revolvers and a second lien term loan in Edmentum, Inc. and Archipelago Learning, Inc., which are wholly-owned subsidiaries of Edmentum Ultimate Holdings, LLC.

(17)The Company holds preferred equity in Permian Holdco 1, Inc. that is entitled to receive cumulative preferential dividends at a rate of 12.0% per annum payable in additional shares.

(18)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 13.5% per annum payable in additional shares.

(19)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 19.0% per annum payable in additional shares.

(20)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to received cumulative preferential dividends at a rate of 20.0% per annum payable in additional shares.

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)

(21)The Company holds ordinary shares and warrants in NHME Holdings Corp., as well as second lien term loans in National HME, Inc., a wholly-owned subsidiary of NHME Holdings Corp.

(22)The Company holds preferred equity in Bach Special Limited (Bach Preference Limited) that is entitled to receive cumulative preferential dividends at a rate of 12.25% per annum payable in additional shares.

(23)The Company holds preferred equity in Avatar Topco, Inc., and holds a second lien term loan investment in EAB Global, Inc., a wholly-owned subsidiary of Avatar Topco, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of L + 11.00% per annum.

(24)The Company holds preferred equity in Symplr Intermediate Holdings, Inc. and holds a first lien term loan investment in Symplr Software Inc, Inc. (fka Caliper Software, Inc.), a wholly-owned subsidiary of Symplr Software Intermediate Holdings, Inc. The preferred equity is entitled to receive preferential dividends at a rate of L + 10.50% per annum.

(25)The Company holds common equity in New LT Smile Holdings, LLC. and holds first lien term loans in Benevis Holding Corp., a wholly-owned subsidiary of New LT Smile Holdings, LLC.

(26)Investment or a portion of the investment is on non-accrual status. See Note 3. Investments, for details.

(27)The Company holds one security purchased under a collateralized agreement to resell on its Consolidated Statement of Assets and Liabilities with a cost basis of $30,000 and a fair value of $21,422 as of September 30, 2020. See Note 2. Summary of Significant Accounting Policies, for details.

(28)Denotes investments in which the Company is an “Affiliated Person”, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), due to owning or holding the power to vote 5.0% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of September 30, 2020 and December 31, 2019, along with transactions during the nine months ended September 30, 2020 in which the issuer was a non-controlled/affiliated investment, is as follows:


Portfolio Company	Fair Value at December 31, 2019		Gross Additions (A)		Gross Redemptions (B)		Net Realized Gains (Losses)		Net Change In Unrealized Appreciation (Depreciation)		Fair Value at September 30, 2020		Interest Income		Dividend Income		Other Income
NMFC Senior Loan Program I LLC	$	23,000	$	—	$	—	$	—	$	—	$	23,000	$	—	$	2,096	$	781
Permian Holdco 1, Inc. / Permian Holdco 2, Inc. / Permian Holdco 3, Inc.	40,621		(1,172)		(1,350)		—		(10,265)		27,834		548		(3,418)		195
Sierra Hamilton Holdings Corporation	9,906		178		(696)		12		(4,453)		4,935		284		—		26
Total Non-Controlled/Affiliated Investments	$	73,527	$	(994)	$	(2,046)	$	12	$	(14,718)	$	55,769	$	832	$	(1,322)	$	1,002

(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, payment-in-kind ("PIK") interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.

(B)Gross redemptions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(in thousands, except shares)

(unaudited)

(29) Denotes investments in which the Company is in “Control”, as defined in the 1940 Act, due to owning or holding the power to vote more than 25.0% of the outstanding voting securities of the investment. Fair value as of September 30, 2020 and December 31, 2019, along with transactions during the nine months ended September 30, 2020 in which the issuer was a controlled investment, is as follows:


Portfolio Company	Fair Value at December 31, 2019		Gross Additions (A)		Gross Redemptions (B)		Net Realized Gains (Losses)		Net Change In Unrealized Appreciation (Depreciation)		Fair Value at September 30, 2020		Interest Income		Dividend Income		Other Income
Edmentum Ultimate Holdings, LLC/Edmentum Inc.	$	79,112	$	20,245	$	(127)	$	10	$	7,710	$	106,940	$	5,461	$	—	$	955
National HME, Inc./NHME Holdings Corp.	24,979		2,952		—		—		(1,071)		26,860		2,952		—		875
New LT Smile Holdings, LLC / Benevis Holdings Corp. (C)	—		67,101		(78)		—		14,992		82,015		1,385		—		311
NM APP CANADA CORP	10,774		—		—		—		326		11,100		—		705		—
NM APP US LLC	6,834		—		—		—		52		6,886		—		491		—
NM CLFX LP	12,723		—		—		—		(46)		12,677		—		1,179		—
NM DRVT LLC	6,016		—		—		—		964		6,980		—		357		—
NM JRA LLC	3,700		—		—		—		84		3,784		—		204		—
NM GLCR LP	23,800		—		—		—		2,664		26,464		—		1,388		—
NM KRLN LLC	2,379		717		—		—		(2,156)		940		—		—		—
NM NL Holdings, L.P.	48,308		—		—		—		1,281		49,589		—		3,690		—
NM GP Holdco, LLC	487		—		—		—		9		496		—		38		—
NM YI LLC	6,339		—		—		—		(164)		6,175		—		462		—
NMFC Senior Loan Program II LLC	79,400		—		—		—		—		79,400		—		6,723		—
NMFC Senior Loan Program III LLC	100,000		20,000		—		—		—		120,000		—		8,824		—
UniTek Global Services, Inc.	68,101		17,690		(168)		2		(32,923)		52,700		1,176		5,716		338
Total Controlled Investments	$	472,952	$	128,705	$	(373)	$	12	$	(8,278)	$	593,006	$	10,974	$	29,777	$	2,479

(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.

(C)Portfolio company moved into the controlled investment category from the non-controlled/non-affiliated investment category.

* All or a portion of interest contains PIK interest.

** Indicates assets that the Company deems to be “non-qualifying assets” under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70.0% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of September 30, 2020, 17.1% of the Company’s total assets are represented by investments at fair value that are considered non-qualifying assets.

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

September 30, 2020

(unaudited)


	September 30, 2020
Investment Type	Percent of Total Investments at Fair Value
First lien	57.40	%
Second lien	23.80	%
Subordinated	1.50	%
Equity and other	17.30	%
Total investments	100.00	%


	September 30, 2020
Industry Type	Percent of Total Investments at Fair Value
Software	26.83	%
Business Services	20.78	%
Healthcare Services	15.61	%
Education	8.79	%
Investment Fund (includes investments in joint ventures)	7.68	%
Net Lease	4.32	%
Federal Services	3.49	%
Healthcare Information Technology	2.71	%
Consumer Services	2.64	%
Specialty Chemicals & Materials	2.07	%
Distribution & Logistics	1.88	%
Industrial Services	1.28	%
Energy	1.13	%
Packaging	0.42	%
Business Products	0.37	%
Total investments	100.00	%


	September 30, 2020
Interest Rate Type	Percent of Total Investments at Fair Value
Floating rates	95.14	%
Fixed rates	4.86	%
Total investments	100.00	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Non-Controlled/Non-Affiliated Investments
Funded Debt Investments - Canada
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)**
Healthcare Services	Second lien (3)	9.30% (L + 7.50%/M)	6/1/2018	6/8/2026	$	28,613	$	28,390	$	27,754
	Second lien (8)	9.30% (L + 7.50%/M)	6/1/2018	6/8/2026	7,500		7,445		7,275
					36,113		35,835		35,029		2.73	%
Wolfpack IP Co.**
Software	First lien (2)(9)	8.29% (L + 6.50%/M)	6/14/2019	6/13/2025	9,091		9,007		9,000		0.70	%
Total Funded Debt Investments - Canada					$	45,204	$	44,842	$	44,029	3.43	%
Funded Debt Investments - United Arab Emirates
GEMS Menasa (Cayman) Limited**
Education	First lien (8)	6.91% (L + 5.00%/Q)	7/30/2019	7/31/2026	$	33,405	$	33,240	$	33,488	2.61	%
Total Funded Debt Investments - United Arab Emirates					$	33,405	$	33,240	$	33,488	2.61	%
Funded Debt Investments - United Kingdom
Shine Acquisition Co. S.à.r.l / Boing US Holdco Inc.**
Consumer Services	Second lien (2)	9.24% (L + 7.50%/M)	9/25/2017	10/3/2025	$	37,853	$	37,671	$	36,717
	Second lien (8)	9.24% (L + 7.50%/M)	9/25/2017	10/3/2025	6,000		5,971		5,820
					43,853		43,642		42,537		3.32	%
Aston FinCo S.a r.l. / Aston US Finco, LLC**
Software	Second lien (8)(9)	10.26% (L + 8.25%/Q)	10/8/2019	10/8/2027	34,459		34,187		34,201		2.66	%
Total Funded Debt Investments - United Kingdom					$	78,312	$	77,829	$	76,738	5.98	%
Funded Debt Investments - United States
Benevis Holding Corp.
Healthcare Services	First lien (2)(9)	8.25% (L + 6.32%/Q)	3/15/2018	3/15/2024	$	62,731	$	62,731	$	62,323
	First lien (8)(9)	8.25% (L + 6.32%/Q)	3/15/2018	3/15/2024	15,391		15,391		15,291
	First lien (3)(9)	8.25% (L + 6.32%/Q)	3/29/2019	3/15/2024	7,743		7,743		7,693
					85,865		85,865		85,307		6.64	%
PhyNet Dermatology LLC
Healthcare Services	First lien (2)(9)	7.30% (L + 5.50%/M)	9/17/2018	8/16/2024	50,368		49,956		50,368
	First lien (3)(9)(10) - Drawn	7.30% (L + 5.50%/M)	9/17/2018	8/16/2024	28,139		28,009		28,139
					78,507		77,965		78,507		6.11	%
Kronos Incorporated
Software	Second lien (2)	10.16% (L + 8.25%/Q)	10/26/2012	11/1/2024	49,210		48,955		50,563
	Second lien (8)	10.16% (L + 8.25%/Q)	10/26/2012	11/1/2024	11,147		11,147		11,453
					60,357		60,102		62,016		4.83	%
Associations, Inc.
Business Services	First lien (2)(9)	9.09% (L + 4.00% + 3.00% PIK/Q)*	7/30/2018	7/30/2024	44,557		44,332		44,557
	First lien (8)(9)	9.09% (L + 4.00% + 3.00% PIK/Q)*	7/30/2018	7/30/2024	5,115		5,090		5,115
	First lien (3)(9)(10) - Drawn	9.06% (L + 4.00% + 3.00% PIK/Q)*	7/30/2018	7/30/2024	7,171		7,133		7,171
					56,843		56,555		56,843		4.43	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Nomad Buyer, Inc.
Healthcare Services	First lien (2)	6.74% (L + 5.00%/M)	8/3/2018	8/1/2025	$	56,439	$	54,867	$	56,298	4.39	%
GS Acquisitionco, Inc.
Software	First lien (2)(9)	7.55% (L + 5.75%/M)	8/7/2019	5/24/2024	26,894		26,738		26,725
	First lien (5)(9)	7.55% (L + 5.75%/M)	8/7/2019	5/24/2024	22,406		22,276		22,266
	First lien (3)(9)(10) - Drawn	7.55% (L + 5.75%/M)	8/7/2019	5/25/2024	3,720		3,698		3,697
	First lien (3)(9)(10) - Drawn	7.55% (L + 5.75%/M)	8/7/2019	5/25/2024	3,510		3,488		3,488
					56,530		56,200		56,176		4.38	%
iCIMS, Inc.
Software	First lien (8)(9)	8.29% (L + 6.50%/M)	9/12/2018	9/12/2024	46,636		46,229		46,636
	First lien (8)(9)	8.29% (L + 6.50%/M)	6/14/2019	9/12/2024	8,667		8,587		8,667
					55,303		54,816		55,303		4.31	%
ConnectWise, LLC
Software	First lien (2)(9)	7.94% (L + 6.00%/Q)	11/26/2019	2/28/2025	55,613		55,270		55,265		4.31	%
CentralSquare Technologies, LLC
Software	Second lien (3)	9.30% (L + 7.50%/M)	8/15/2018	8/31/2026	47,838		47,297		45,087
	Second lien (8)	9.30% (L + 7.50%/M)	8/15/2018	8/31/2026	7,500		7,415		7,069
					55,338		54,712		52,156		4.06	%
Dealer Tire, LLC
Distribution & Logistics	First lien (2)	7.30% (L + 5.50%/M)	12/4/2018	12/12/2025	51,386		50,251		51,577		4.02	%
Salient CRGT Inc.
Federal Services	First lien (2)	8.29% (L + 6.50%/M)	1/6/2015	2/28/2022	39,312		39,049		37,445
	First lien (8)	8.29% (L + 6.50%/M)	6/6/2019	2/28/2022	13,434		12,987		12,795
					52,746		52,036		50,240		3.91	%
NM GRC Holdco, LLC
Business Services	First lien (2)(9)	7.94% (L + 6.00%/Q)	2/9/2018	2/9/2024	38,346		38,206		38,346
	First lien (2)(9)(10) - Drawn	7.94% (L + 6.00%/Q)	2/9/2018	2/9/2024	10,658		10,616		10,658
					49,004		48,822		49,004		3.82	%
Frontline Technologies Group Holdings, LLC
Education	First lien (4)(9)	7.55% (L + 5.75%/M)	9/18/2017	9/18/2023	22,162		22,050		22,162
	First lien (2)(9)	7.55% (L + 5.75%/M)	9/18/2017	9/18/2023	18,677		18,619		18,677
	First lien (2)(9)	7.55% (L + 5.75%/M)	9/18/2017	9/18/2023	7,710		7,658		7,710
					48,549		48,327		48,549		3.78	%
Integro Parent Inc.
Business Services	First lien (2)(9)	7.54% (L + 5.75%/M)	10/9/2015	10/31/2022	35,024		34,892		35,024
	Second lien (8)(9)	11.04% (L + 9.25%/M)	10/9/2015	10/30/2023	10,000		9,941		10,000
					45,024		44,833		45,024		3.51	%
Brave Parent Holdings, Inc.
Software	Second lien (5)	9.43% (L + 7.50%/Q)	4/17/2018	4/17/2026	22,500		22,404		21,825
	Second lien (2)	9.43% (L + 7.50%/Q)	4/17/2018	4/17/2026	16,624		16,480		16,125
	Second lien (8)	9.43% (L + 7.50%/Q)	4/17/2018	4/17/2026	6,000		5,948		5,820
					45,124		44,832		43,770		3.41	%
Quest Software US Holdings Inc.
Software	Second lien (2)	10.18% (L + 8.25%/Q)	5/17/2018	5/18/2026	43,697		43,320		42,851		3.35	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Symplr Software Intermediate Holdings, Inc. (23)
Symplr Software, Inc. (fka Caliper Software, Inc.)
Healthcare Information Technology	First lien (2)(9)	7.94% (L + 6.00%/Q)	11/30/2018	11/28/2025	$	25,561	$	25,387	$	25,561
	First lien (4)(9)	7.94% (L + 6.00%/Q)	11/30/2018	11/28/2025	14,850		14,752		14,850
					40,411		40,139		40,411		3.15	%
Tenawa Resource Holdings LLC (13)
Tenawa Resource Management LLC
Energy	First lien (3)(9)	10.50% (Base + 8.00%/Q)	5/12/2014	10/30/2024	39,000		38,950		39,000		3.04	%
KAMC Holdings, Inc
Business Services	Second lien (2)(9)	9.91% (L + 8.00%/Q)	8/14/2019	8/13/2027	18,750		18,614		18,609
	Second lien (8)(9)	9.91% (L + 8.00%/Q)	8/14/2019	8/13/2027	18,750		18,614		18,609
					37,500		37,228		37,218		2.90	%
Trader Interactive, LLC
Business Services	First lien (2)(9)	8.30% (L + 6.50%/M)	6/15/2017	6/17/2024	31,932		31,776		31,932
	First lien (8)(9)	8.30% (L + 6.50%/M)	6/15/2017	6/17/2024	4,949		4,925		4,949
					36,881		36,701		36,881		2.87	%
Peraton Holding Corp. (fka MHVC Acquisition Corp.)
Federal Services	First lien (2)	7.05% (L + 5.25%/M)	4/25/2017	4/29/2024	36,907		36,781		36,745		2.86	%
Apptio, Inc.
Software	First lien (8)(9)	8.96% (L + 7.25%/M)	1/10/2019	1/10/2025	34,076		33,473		33,394		2.60	%
Definitive Healthcare Holdings, LLC
Healthcare Information Technology	First lien (8)(9)	8.40% (L + 5.50% + 1.00% PIK/Q)*	8/7/2019	7/16/2026	33,402		33,244		33,234		2.59	%
Finalsite Holdings, Inc.
Software	First lien (4)(9)	6.93% (L + 5.00%/Q)	9/28/2018	9/25/2024	22,219		22,081		22,219
	First lien (2)(9)	6.93% (L + 5.00%/Q)	9/28/2018	9/25/2024	10,974		10,906		10,974
					33,193		32,987		33,193		2.59	%
TDG Group Holding Company
Consumer Services	First lien (2)(9)	7.44% (L + 5.50%/Q)	5/22/2018	5/31/2024	24,860		24,763		24,860
	First lien (8)(9)	7.44% (L + 5.50%/Q)	5/22/2018	5/31/2024	4,950		4,931		4,950
	First lien (2)(9)	7.44% (L + 5.50%/Q)	5/22/2018	5/31/2024	3,321		3,307		3,321
					33,131		33,001		33,131		2.58	%
CoolSys, Inc.
Industrial Services	First lien (5)	7.80% (L + 6.00%/M)	11/20/2019	11/20/2026	22,500		22,388		22,388
	First lien (2)	7.80% (L + 6.00%/M)	11/20/2019	11/20/2026	10,400		10,348		10,348
					32,900		32,736		32,736		2.55	%
Ansira Holdings, Inc.
Business Services	First lien (8)	7.55% (L + 5.75%/M)	12/19/2016	12/20/2022	28,455		28,378		27,032
	First lien (3)(10) - Drawn	7.51% (L + 5.75%/M)	12/19/2016	12/20/2022	4,743		4,731		4,506
					33,198		33,109		31,538		2.46	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

DCA Investment Holding, LLC
Healthcare Services	First lien (2)(9)	7.19% (L + 5.25%/Q)	7/2/2015	7/2/2021	$	17,095	$	17,046	$	17,095
	First lien (3)(9)	7.19% (L + 5.25%/Q)	12/20/2017	7/2/2021	8,890		8,834		8,890
	First lien (2)(9)	7.19% (L + 5.25%/Q)	12/20/2017	7/2/2021	4,184		4,163		4,184
	First lien (3)(9)(10) - Drawn	9.00% (P + 4.25%/Q)	7/2/2015	7/2/2021	608		602		608
					30,777		30,645		30,777		2.40	%
Integral Ad Science, Inc.
Software	First lien (8)(9)	9.05% (L + 6.00% + 1.25% PIK/M)*	7/19/2018	7/19/2024	26,843		26,616		26,843
	First lien (3)(9)	9.05% (L + 6.00% + 1.25% PIK/M)*	8/27/2019	7/19/2024	3,507		3,474		3,507
					30,350		30,090		30,350		2.36	%
Conservice, LLC
Business Services	First lien (2)(9)	7.05% (L + 5.25%/M)	1/3/2019	11/29/2024	25,311		25,202		25,184
	First lien (3)(9)(10) - Drawn	7.05% (L + 5.25%/M)	1/3/2019	11/29/2024	4,418		4,398		4,396
					29,729		29,600		29,580		2.30	%
Kaseya Traverse Inc.
Software	First lien (8)(9)	8.72% (L + 5.50% + 1.00% PIK/S)*	5/9/2019	5/2/2025	27,525		27,274		27,250
	First lien (3)(9)(10) - Drawn	8.45% (L + 6.50%/Q)	5/9/2019	5/2/2025	1,321		1,308		1,308
	First lien (3)(9)(10) - Drawn	8.69% (L + 5.50% + 1.00% PIK/S)*	5/9/2019	5/2/2025	430		426		426
					29,276		29,008		28,984		2.26	%
Clarkson Eyecare, LLC
Healthcare Services	First lien (2)	8.05% (L + 6.25%/M)	8/21/2019	4/2/2021	17,300		17,149		17,300
	First lien (2)	8.05% (L + 6.25%/M)	9/11/2019	4/2/2021	11,533		11,433		11,533
					28,833		28,582		28,833		2.25	%
Keystone Acquisition Corp.
Healthcare Services	First lien (2)	7.19% (L + 5.25%/Q)	5/10/2017	5/1/2024	24,482		24,369		23,992
	Second lien (2)	11.19% (L + 9.25%/Q)	5/10/2017	5/1/2025	4,500		4,465		4,399
					28,982		28,834		28,391		2.21	%
Sovos Brands Intermediate, Inc.
Food & Beverage	First lien (2)	6.80% (L + 5.00%/M)	11/16/2018	11/20/2025	27,957		27,834		27,957		2.18	%
Affinity Dental Management, Inc.
Healthcare Services	First lien (4)(9)	8.07% (L + 6.00%/S)	9/17/2019	9/15/2023	10,945		10,945		10,945
	First lien (2)(9)	8.01% (L + 6.00%/S)	9/15/2017	9/15/2023	11,316		11,288		11,316
	First lien (3)(9)	8.00% (L + 6.00%/S)	9/15/2017	9/15/2023	5,224		5,194		5,224
					27,485		27,427		27,485		2.14	%
Confluent Health, LLC
Healthcare Services	First lien (2)	6.80% (L + 5.00%/M)	6/21/2019	6/24/2026	27,363		27,233		27,363		2.13	%
TMK Hawk Parent, Corp.
Distribution & Logistics	First lien (2)	5.30% (L + 3.50%/M)	6/24/2019	8/28/2024	16,908		14,483		13,865
	First lien (8)	5.30% (L + 3.50%/M)	10/23/2019	8/28/2024	16,308		13,388		13,373
					33,216		27,871		27,238		2.12	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

HS Purchaser, LLC / Help/Systems Holdings, Inc.
Software	Second lien (5)	9.80% (L + 8.00%/M)	11/14/2019	11/19/2027	$	22,500	$	22,380	$	22,388
	Second lien (2)	9.80% (L + 8.00%/M)	11/14/2019	11/19/2027	4,208		4,166		4,187
					26,708		26,546		26,575		2.07	%
GC Waves Holdings, Inc.**
Business Services	First lien (5)(9)	7.55% (L + 5.75%/M)	10/31/2019	10/31/2025	22,500		22,335		22,331
	First lien (2)(9)	7.55% (L + 5.75%/M)	10/31/2019	10/31/2025	3,673		3,646		3,645
					26,173		25,981		25,976		2.02	%
Spring Education Group, Inc (fka SSH Group Holdings, Inc.)
Education	Second lien (2)	10.19% (L + 8.25%/Q)	7/26/2018	7/30/2026	24,533		24,476		24,488		1.91	%
AAC Holding Corp.
Education	First lien (2)(9)	9.95% (L + 8.25%/M)	9/30/2015	9/30/2022	24,956		24,866		23,110		1.80	%
Idera, Inc.
Software	Second lien (4)	10.80% (L + 9.00%/M)	6/27/2019	6/28/2027	22,500		22,338		22,612		1.76	%
Convey Health Solutions, Inc.
Healthcare Services	First lien (4)(9)	6.94% (L + 5.25%/M)	9/9/2019	9/4/2026	22,444		22,200		22,191		1.73	%
Avatar Topco, Inc. (22)
EAB Global, Inc.
Education	Second lien (3)	9.49% (L + 7.50%/S)	11/17/2017	11/17/2025	13,950		13,782		13,950
	Second lien (8)	9.49% (L + 7.50%/S)	11/17/2017	11/17/2025	7,500		7,410		7,500
					21,450		21,192		21,450		1.67	%
CRCI Longhorn Holdings, Inc.
Business Services	Second lien (3)	8.99% (L + 7.25%/M)	8/2/2018	8/10/2026	14,349		14,301		14,062
	Second lien (8)	8.99% (L + 7.25%/M)	8/2/2018	8/10/2026	7,500		7,475		7,350
					21,849		21,776		21,412		1.67	%
National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)
Healthcare Services	Second lien (2)	10.30% (L + 8.50%/M)	2/5/2019	3/8/2027	21,051		20,609		20,999		1.64	%
MED Parentco, LP
Healthcare Services	Second lien (8)	10.05% (L + 8.25%/M)	8/2/2019	8/30/2027	20,857		20,703		20,753		1.62	%
Institutional Shareholder Services, Inc.
Business Services	Second lien (3)	10.44% (L + 8.50%/Q)	3/5/2019	3/5/2027	20,372		20,087		19,557		1.52	%
DiversiTech Holdings, Inc.
Distribution & Logistics	Second lien (2)	9.44% (L + 7.50%/Q)	5/18/2017	6/2/2025	12,000		11,909		11,760
	Second lien (8)	9.44% (L + 7.50%/Q)	5/18/2017	6/2/2025	7,500		7,443		7,350
					19,500		19,352		19,110		1.49	%
Xactly Corporation
Software	First lien (4)(9)	9.05% (L + 7.25%/M)	7/31/2017	7/29/2022	19,047		18,925		19,047		1.48	%
FR Arsenal Holdings II Corp.
Business Services	First lien (2)(9)	9.19% (L + 7.25%/Q)	9/29/2016	9/8/2022	18,355		18,249		18,355		1.43	%
YLG Holdings, Inc.
Business Services	First lien (5)	7.66% (L + 5.75%/Q)	11/1/2019	10/31/2025	18,413		18,323		18,321		1.43	%
Geo Parent Corporation
Business Services	First lien (2)	7.05% (L + 5.25%/M)	12/13/2018	12/19/2025	18,364		18,282		18,318		1.43	%
Bluefin Holding, LLC
Software	Second lien (8)(9)	9.64% (L + 7.75%/Q)	9/6/2019	9/6/2027	18,000		18,000		18,000		1.40	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Bullhorn, Inc.
Software	First lien (2)(9)	7.44% (L + 5.50%/Q)	9/24/2019	10/1/2025	$	17,174	$	17,049	$	17,045
	First lien (3)(9)(10) - Drawn	7.46% (L + 5.50%/Q)	9/24/2019	10/1/2025	284		282		282
					17,458		17,331		17,327		1.35	%
The Kleinfelder Group, Inc.
Business Services	First lien (4)(9)	6.37% (L + 4.75%/W)	12/18/2018	11/29/2024	17,325		17,251		17,325		1.35	%
TIBCO Software Inc.
Software	Subordinated (3)	11.38%/S	11/24/2014	12/1/2021	15,000		14,844		15,554		1.21	%
Hill International, Inc.**
Business Services	First lien (2)(9)	7.55% (L + 5.75%/M)	6/21/2017	6/21/2023	15,405		15,356		15,405		1.20	%
Bleriot US Bidco Inc.
Federal Services	Second lien (2)	10.44% (L + 8.50%/Q)	10/24/2019	10/29/2027	15,000		14,852		14,981		1.17	%
Netsmart Inc. / Netsmart Technologies, Inc.
Healthcare Information Technology	Second lien (2)	9.30% (L + 7.50%/M)	4/18/2016	10/19/2023	15,000		14,774		14,925		1.16	%
Pathway Vet Alliance LLC
Consumer Services	First lien (4)(9)(10) - Drawn	6.30% (L + 4.50%/M)	11/14/2019	12/20/2024	3,670		3,652		3,652
	First lien (3)(9)(10) - Drawn	6.30% (L + 4.50%/M)	11/14/2019	12/20/2024	1,223		1,217		1,217
	Second lien (4)(9)(10) - Drawn	10.30% (L + 8.50%/M)	11/14/2019	12/19/2025	7,547		7,490		7,490
	Second lien (3)(9)(10) - Drawn	10.30% (L + 8.50%/M)	11/14/2019	12/19/2025	2,516		2,497		2,497
					14,956		14,856		14,856		1.16	%
Diligent Corporation
Software	First lien (2)(9)	7.56% (L + 5.50%/S)	10/30/2019	4/14/2022	6,842		6,777		6,842
	First lien (2)(9)	7.56% (L + 5.50%/S)	10/30/2019	4/14/2022	140		139		140
	First lien (3)(9)(10) - Drawn	7.54% (L + 5.50%/S)	12/19/2018	4/14/2022	7,431		7,391		7,431
					14,413		14,307		14,413		1.12	%
Alegeus Technologies Holding Corp.
Healthcare Services	First lien (8)(9)	8.28% (L + 6.25%/Q)	9/5/2018	9/5/2024	13,444		13,388		13,444		1.05	%
JAMF Holdings, Inc.
Software	First lien (8)(9)	8.91% (L + 7.00%/Q)	11/13/2017	11/11/2022	8,757		8,702		8,757
	First lien (2)(9)	8.91% (L + 7.00%/Q)	11/8/2019	11/11/2022	4,582		4,549		4,582
					13,339		13,251		13,339		1.04	%
BackOffice Associates Holdings, LLC
Business Services	First lien (2)(9)	12.70% (L + 7.50% + 3.00% PIK/S)*	8/25/2017	8/25/2023	13,047		12,973		12,425
	First lien (3)(9)(10) - Drawn	12.68% (L + 7.50% + 3.00% PIK/Q)*	8/25/2017	8/25/2023	894		886		851
					13,941		13,859		13,276		1.03	%
Castle Management Borrower LLC
Business Services	First lien (2)(9)	8.16% (L + 6.25%/Q)	5/31/2018	2/15/2024	13,217		13,166		13,217		1.03	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Ministry Brands, LLC
Software	First lien (2)(9)	5.85% (L + 4.00%/M)	12/7/2016	12/2/2022	$	2,932	$	2,924	$	2,932
	Second lien (8)(9)	11.08% (L + 9.25%/M)	12/7/2016	6/2/2023	7,840		7,804		7,840
	Second lien (3)(9)	11.08% (L + 9.25%/M)	12/7/2016	6/2/2023	2,160		2,150		2,160
	First lien (3)(9)(10) - Drawn	6.95% (L + 5.00%/Q)	12/7/2016	12/2/2022	200		199		200
					13,132		13,077		13,132		1.02	%
Transcendia Holdings, Inc.
Packaging	Second lien (8)(9)	9.80% (L + 8.00%/M)	6/28/2017	5/30/2025	14,500		14,348		12,476		0.97	%
OEConnection LLC
Business Services	Second lien (2)(9)	10.04% (L + 8.25%/M)	9/25/2019	9/25/2027	12,044		11,926		11,924		0.93	%
CFS Management, LLC
Healthcare Services	First lien (2)(9)	7.95% (L + 5.75%/S)	8/6/2019	7/1/2024	11,733		11,678		11,674		0.91	%
CHA Holdings, Inc.
Business Services	Second lien (4)	10.69% (L + 8.75%/Q)	4/3/2018	4/10/2026	7,012		6,952		7,082
	Second lien (3)	10.69% (L + 8.75%/Q)	4/3/2018	4/10/2026	4,453		4,415		4,497
					11,465		11,367		11,579		0.90	%
Alert Holding Company, Inc. (14)
Appriss Holdings, Inc.
Business Services	First lien (8)	7.44% (L + 5.50%/Q)	5/24/2019	5/29/2026	11,054		10,965		10,888		0.86	%
PaySimple, Inc.
Software	First lien (2)	7.30% (L + 5.50%/M)	8/19/2019	8/25/2025	9,857		9,763		9,808
	First lien (3)(10) - Drawn	7.31% (L + 5.50%/M)	8/19/2019	8/25/2025	934		916		930
					10,791		10,679		10,738		0.84	%
Vectra Co.
Business Products	Second lien (8)	9.05% (L + 7.25%/M)	2/23/2018	3/8/2026	10,788		10,754		10,518		0.82	%
NorthStar Financial Services Group, LLC
Software	Second lien (5)	9.30% (L + 7.50%/M)	5/23/2018	5/25/2026	10,607		10,585		10,501		0.82	%
PPVA Black Elk (Equity) LLC
Business Services	Subordinated (3)(9)	—	5/3/2013	—	14,500		14,500		10,354		0.81	%
Masergy Holdings, Inc.
Business Services	Second lien (2)	9.46% (L + 7.50%/Q)	12/14/2016	12/16/2024	10,500		10,458		10,264		0.80	%
VT Topco, Inc.
Business Services	Second lien (4)	8.94% (L + 7.00%/Q)	8/14/2018	7/31/2026	10,000		9,978		10,025		0.78	%
Quartz Holding Company
Software	Second lien (3)	9.71% (L + 8.00%/M)	4/2/2019	4/2/2027	10,000		9,813		9,975		0.78	%
AG Parent Holdings, LLC
Healthcare Services	First lien (2)	6.91% (L + 5.00%/Q)	7/30/2019	7/31/2026	10,000		9,952		9,925		0.77	%
Stats Intermediate Holdings, LLC**
Business Services	First lien (2)	7.30% (L + 5.25%/S)	5/22/2019	7/10/2026	10,000		9,881		9,775		0.76	%
Affordable Care Holding Corp.
Healthcare Services	First lien (2)	6.59% (L + 4.75%/M)	3/18/2019	10/24/2022	9,897		9,738		9,649		0.75	%
Teneo Holdings, LLC
Business Services	First lien (2)	6.99% (L + 5.25%/M)	7/15/2019	7/11/2025	9,975		9,788		9,476		0.74	%
AgKnowledge Holdings Company, Inc.
Business Services	First lien (4)	6.55% (L + 4.75%/M)	11/30/2018	7/21/2023	9,355		9,318		9,332		0.73	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Wrike, Inc.
Software	First lien (8)(9)	8.55% (L + 6.75%/M)	12/31/2018	12/31/2024	$	9,067	$	8,988	$	9,067	0.71	%
WD Wolverine Holdings, LLC
Healthcare Services	First lien (2)	7.30% (L + 5.50%/M)	2/22/2017	8/16/2022	9,014		8,859		9,014		0.70	%
Amerijet Holdings, Inc.
Distribution & Logistics	First lien (4)(9)	9.80% (L + 8.00%/M)	7/15/2016	7/15/2021	7,674		7,653		7,674
	First lien (4)(9)	9.80% (L + 8.00%/M)	7/15/2016	7/15/2021	1,279		1,276		1,279
					8,953		8,929		8,953		0.70	%
Zywave, Inc.
Software	Second lien (4)(9)	10.95% (L + 9.00%/Q)	11/22/2016	11/17/2023	6,980		6,946		6,980
	Second lien (4)(9)	10.84% (L + 9.00%/M)	12/3/2019	11/17/2023	600		596		600
	First lien (3)(9)(10) - Drawn	6.80% (L + 5.00%/M)	11/22/2016	11/17/2022	670		665		670
					8,250		8,207		8,250		0.64	%
DealerSocket, Inc.
Software	First lien (2)	6.66% (L + 4.75%/Q)	4/16/2018	4/26/2023	6,610		6,576		6,544
	First lien (3)(10) - Drawn	7.05% (L + 5.25%/M)	4/16/2018	4/26/2023	168		167		166
					6,778		6,743		6,710		0.52	%
Restaurant Technologies, Inc.
Business Services	Second lien (4)	8.30% (L + 6.50%/M)	9/24/2018	10/1/2026	6,722		6,707		6,705		0.52	%
CP VI Bella Midco, LLC
Healthcare Services	Second lien (3)	8.55% (L + 6.75%/M)	1/25/2018	12/29/2025	6,732		6,705		6,657		0.52	%
DG Investment Intermediate Holdings 2, Inc. (aka Convergint Technologies Holdings, LLC)
Business Services	Second lien (3)	8.55% (L + 6.75%/M)	1/29/2018	2/2/2026	6,732		6,705		6,530		0.51	%
Recorded Future, Inc.
Software	First lien (8)(9)	8.55% (L + 6.75%/M)	8/26/2019	7/3/2025	6,250		6,220		6,219		0.48	%
Solera LLC / Solera Finance, Inc.
Software	Subordinated (3)	10.50%/S	2/29/2016	3/1/2024	5,000		4,844		5,316		0.41	%
ADG, LLC
Healthcare Services	Second lien (3)(9)	11.92% (L + 10.00%/S)	10/3/2016	3/28/2024	5,264		5,215		4,213		0.33	%
Sphera Solutions, Inc.
Software	First lien (2)(9)	9.00% (L + 7.00%/Q)	9/10/2019	6/14/2022	2,489		2,466		2,464		0.19	%
First American Payment Systems, L.P.
Business Services	First lien (2)	6.81% (L + 4.75%/Q)	1/3/2017	1/5/2024	2,034		2,021		2,020		0.16	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Education Management Corporation (12)
Education Management II LLC
Education	First lien (2)	10.25% (P + 5.50%/Q)(24)	1/5/2015	7/2/2020	$	208	$	202	$	2
	First lien (3)	10.25% (P + 5.50%/Q)(24)	1/5/2015	7/2/2020	117		114		1
	First lien (2)	14.00% (P + 8.50%/M)(24)	1/5/2015	7/2/2020	300		292		—
	First lien (3)	14.00% (P + 8.50%/M)(24)	1/5/2015	7/2/2020	169		165		—
	First lien (2)	13.25% (P + 8.50%/M)(24)	1/5/2015	7/2/2020	142		117		—
	First lien (2)	13.25% (P + 8.50%/M)(24)	1/5/2015	7/2/2020	4		3		—
	First lien (3)	13.25% (P + 8.50%/M)(24)	1/5/2015	7/2/2020	80		66		—
	First lien (3)	13.25% (P + 8.50%/M)(24)	1/5/2015	7/2/2020	2		2		—
					1,022		961		3		—	%
PPVA Fund, L.P.
Business Services	Collateralized Financing (24)(25)	—	11/7/2014	—	—		—		—		—	%
Total Funded Debt Investments - United States					$	2,408,610	$	2,385,761	$	2,375,987	185.12	%
Total Funded Debt Investments					$	2,565,531	$	2,541,672	$	2,530,242	197.14	%
Equity - Hong Kong
Bach Special Limited (Bach Preference Limited)**
Education	Preferred shares (3)(9)(21)	—	9/1/2017	—	75,184		$	7,439	$	7,518	0.59	%
Total Shares - Hong Kong							$	7,439	$	7,518	0.59	%
Equity - United States
Avatar Topco, Inc.
Education	Preferred shares (3)(9)(22)	—	11/17/2017	—	35,750		$	46,093	$	47,165	3.67	%
Symplr Software Intermediate Holdings, Inc.(23)
Healthcare Information Technology	Preferred shares (4)(9)	—	11/30/2018	—	7,500		8,502		8,571
	Preferred shares (3)(9)	—	11/30/2018	—	2,586		2,931		2,955
							11,433		11,526		0.90	%
Tenawa Resource Holdings LLC (13)
QID NGL LLC	Ordinary shares (6)(9)	—	5/12/2014	—	5,290,997		5,291		8,445
Energy	Preferred shares (6)(9)	—	10/30/2017	—	1,623,385		1,623		2,727
							6,914		11,172		0.87	%
Alert Holding Company, Inc. (14)
Alert Intermediate Holdings I, Inc.
Business Services	Preferred shares (3)(9)	—	5/31/2019	—	6,111		6,459		6,452		0.50	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Education Management Corporation(12)
Education	Preferred shares (2)	—	1/5/2015	—	3,331		$	200	$	—
	Preferred shares (3)	—	1/5/2015	—	1,879		113		—
	Ordinary shares (2)	—	1/5/2015	—	2,994,065		100		—
	Ordinary shares (3)	—	1/5/2015	—	1,688,976		56		—
							469		—		—	%
Total Shares - United States							$	71,368	$	76,315	5.94	%
Total Shares							$	78,807	$	83,833	6.53	%
Warrants - United States
ASP LCG Holdings, Inc.
Education	Warrants (3)(9)	—	5/5/2014	5/5/2026	622		$	37	$	898	0.07	%
Total Warrants - United States							$	37	$	898	0.07	%
Total Funded Investments							$	2,620,516	$	2,614,973	203.74	%
Unfunded Debt Investments - Canada
Wolfpack IP Co.**
Software	First lien (3)(9)(10) - Undrawn	—	6/14/2019	6/13/2025	$	909	$	(9)	$	(9)	(0.00)	%
Total Unfunded Debt Investments - Canada					$	909	$	(9)	$	(9)	(0.00)	%
Unfunded Debt Investments - United States
NM GRC Holdco, LLC
Business Services	First lien (2)(9)(10) - Undrawn	—	2/9/2018	2/9/2020	$	771	$	(2)	$	—	—	%
Ministry Brands, LLC
Software	First lien (3)(9)(10) - Undrawn	—	12/7/2016	12/2/2022	800		(4)		—		—	%
Wrike, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	12/31/2018	12/31/2024	933		(9)		—		—	%
Xactly Corporation
Software	First lien (3)(9)(10) - Undrawn	—	7/31/2017	7/29/2022	992		(10)		—		—	%
Zywave, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	11/22/2016	11/17/2022	1,330		(10)		—		—	%
JAMF Holdings, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	11/13/2017	11/11/2022	1,086		(10)		—		—	%
Trader Interactive, LLC
Business Services	First lien (3)(9)(10) - Undrawn	—	6/15/2017	6/15/2023	1,673		(13)		—		—	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

DCA Investment Holding, LLC
Healthcare Services	First lien (3)(9)(10) - Undrawn	—	4/16/2019	4/16/2021	$	20,426	$	—	$	—
	First lien (3)(9)(10) - Undrawn	—	7/2/2015	7/2/2021	1,492		(15)		—
					21,918		(15)		—		—	%
Affinity Dental Management, Inc.
Healthcare Services	First lien (3)(9)(10) - Undrawn	—	9/15/2017	3/15/2023	1,738		(17)		—		—	%
Integral Ad Science, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	7/19/2018	7/19/2023	1,807		(18)		—		—	%
Finalsite Holdings, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	9/25/2018	9/25/2024	2,521		(19)		—		—	%
TDG Group Holding Company
Consumer Services	First lien (3)(9)(10) - Undrawn	—	5/22/2018	5/31/2024	5,044		(25)		—		—	%
iCIMS, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	9/12/2018	9/12/2024	2,915		(29)		—		—	%
Associations, Inc.
Business Services	First lien (3)(9)(10) - Undrawn	—	7/30/2018	7/30/2021	3,161		(20)		—
	First lien (3)(9)(10) - Undrawn	—	7/30/2018	7/30/2024	2,033		(13)		—
					5,194		(33)		—		—	%
Integro Parent Inc.
Business Services	First lien (3)(9)(10) - Undrawn	—	6/8/2018	4/30/2022	6,743		(34)		—		—	%
Diligent Corporation
Software	First lien (3)(9)(10) - Undrawn	—	12/19/2018	12/19/2020	5,977		(37)		—		—	%
PhyNet Dermatology LLC
Healthcare Services	First lien (3)(9)(10) - Undrawn	—	9/17/2018	8/16/2020	17,077		(85)		—		—	%
AgKnowledge Holdings Company, Inc.
Business Services	First lien (3)(10) - Undrawn	—	11/30/2018	7/21/2023	526		(3)		(1)		(0.00)	%
DealerSocket, Inc.
Software	First lien (3)(10) - Undrawn	—	4/16/2018	4/26/2023	392		(3)		(4)		(0.00)	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Recorded Future, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	8/26/2019	1/3/2021	$	500	$	(3)	$	(3)
	First lien (3)(9)(10) - Undrawn	—	8/26/2019	7/3/2025	750		(4)		(4)
					1,250		(7)		(7)		(0.00)	%
PaySimple, Inc.
Software	First lien (3)(10) - Undrawn	—	8/19/2019	8/24/2020	2,289		—		(11)		(0.00)	%
Alert Holding Company, Inc. (14)
Appriss Holdings, Inc.
Business Services	First lien (3)(10) - Undrawn	—	5/24/2019	5/30/2025	930		(9)		(14)		(0.00)	%
Bullhorn, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	9/24/2019	10/1/2021	1,135		(9)		(9)
	First lien (3)(9)(10) - Undrawn	—	9/24/2019	10/1/2025	852		(6)		(6)
					1,987		(15)		(15)		(0.00)	%
Bluefin Holding, LLC
Software	First lien (3)(10) - Undrawn	—	9/6/2019	9/6/2024	1,515		(23)		(15)		(0.00)	%
CFS Management, LLC
Healthcare Services	First lien (3)(9)(10) - Undrawn	—	8/6/2019	7/1/2024	3,468		(17)		(17)		(0.00)	%
Conservice, LLC
Business Services	First lien (3)(9)(10) - Undrawn	—	1/3/2019	11/29/2024	1,360		(7)		(7)
	First lien (3)(9)(10) - Undrawn	—	1/3/2019	6/30/2020	2,283		—		(11)
					3,643		(7)		(18)		(0.00)	%
ConnectWise, LLC
Software	First lien (3)(9)(10) - Undrawn	—	11/26/2019	2/28/2025	4,248		(27)		(27)		(0.00)	%
CoolSys, Inc.
Industrial Services	First lien (3)(10) - Undrawn	—	11/20/2019	11/19/2021	5,600		—		(28)		(0.00)	%
YLG Holdings, Inc.
Business Services	First lien (5)(10) - Undrawn	—	11/1/2019	4/30/2021	2,381		—		(12)
	First lien (3)(10) - Undrawn	—	11/1/2019	10/31/2025	3,968		(20)		(20)
					6,349		(20)		(32)		(0.00)	%
Kaseya Traverse Inc.
Software	First lien (3)(9)(10) - Undrawn	—	5/9/2019	5/3/2021	2,873		—		(29)
	First lien (3)(9)(10) - Undrawn	—	5/9/2019	5/2/2025	991		(10)		(10)
					3,864		(10)		(39)		(0.00)	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Apptio, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	1/10/2019	1/10/2025	$	2,066	$	(41)	$	(41)	(0.00)	%
Definitive Healthcare Holdings, LLC
Healthcare Information Technology	First lien (3)(9)(10) - Undrawn	—	8/7/2019	7/16/2021	7,391		—		(37)
	First lien (3)(9)(10) - Undrawn	—	8/7/2019	7/16/2024	1,848		(9)		(9)
					9,239		(9)		(46)		(0.01)	%
Pathway Vet Alliance LLC
Consumer Services	First lien (4)(9)(10) - Undrawn	—	11/14/2019	10/11/2021	3,821		—		(19)
	First lien (3)(9)(10) - Undrawn	—	11/14/2019	10/11/2021	1,274		—		(6)
	Second lien (4)(9)(10) - Undrawn	—	11/14/2019	10/11/2021	7,453		—		(56)
	Second lien (3)(9)(10) - Undrawn	—	11/14/2019	10/11/2021	2,484		—		(19)
					15,032		—		(100)		(0.01)	%
GC Waves Holdings, Inc.**
Business Services	First lien (3)(9)(10) - Undrawn	—	10/31/2019	11/1/2021	9,877		—		(74)
	First lien (3)(9)(10) - Undrawn	—	10/31/2019	10/31/2025	3,951		(30)		(30)
					13,828		(30)		(104)		(0.01)	%
Ansira Holdings, Inc.
Business Services	First lien (3)(10) - Undrawn	—	12/19/2016	4/16/2020	2,437		(6)		(122)		(0.01)	%
GS Acquisitionco, Inc.
Software	First lien (3)(9)(10) - Undrawn	—	8/7/2019	8/2/2021	35,103		—		(219)
	First lien (3)(9)(10) - Undrawn	—	8/7/2019	5/25/2024	1,975		(12)		(12)
					37,078		(12)		(231)		(0.02)	%
Salient CRGT Inc.
Federal Services	First lien (3)(10) - Undrawn	—	6/26/2018	11/29/2021	6,125		(490)		(291)		(0.03)	%
Total Unfunded Debt Investments - United States					$	200,385	$	(1,099)	$	(1,163)	(0.09)	%
Total Unfunded Debt Investments					$	201,294	$	(1,108)	$	(1,172)	(0.09)	%
Total Non-Controlled/Non-Affiliated Investments							$	2,619,408	$	2,613,801	203.65	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Non-Controlled/Affiliated Investments(26)
Funded Debt Investments - United States
Permian Holdco 1, Inc.
Permian Holdco 2, Inc.
Permian Holdco 3, Inc.
Energy	First lien (3)(9)	14.28% (L + 7.50% + 5.00% PIK/Q)*	6/14/2018	6/30/2022	$	10,523	$	10,523	$	10,523
	First lien (3)(9)(10) - Drawn	8.24% (L + 6.50%/M)	6/14/2018	6/30/2022	17,750		17,750		17,750
	Subordinated (3)(9)	18.00% PIK/Q*	12/26/2018	6/30/2022	2,876		2,876		2,732
	Subordinated (3)(9)	14.00% PIK/Q*	10/31/2016	10/15/2021	2,642		2,642		2,246
	Subordinated (3)(9)	14.00% PIK/Q*	10/31/2016	10/15/2021	1,361		1,361		1,157
					35,152		35,152		34,408		2.68	%
Sierra Hamilton Holdings Corporation
Energy	Second lien (3)(9)	15.00% PIK/Q*	9/12/2019	9/12/2023	1,442		1,410		1,406		0.11	%
Total Funded Debt Investments - United States					$	36,594	$	36,562	$	35,814	2.79	%
Equity - United States
NMFC Senior Loan Program I LLC**
Investment Fund	Membership interest (3)(9)	—	6/13/2014	—	—		$	23,000	$	23,000	1.80	%
Sierra Hamilton Holdings Corporation
Energy	Ordinary shares (2)(9)	—	7/31/2017	—	25,000,000		11,501		7,648
	Ordinary shares (3)(9)	—	7/31/2017	—	2,786,000		1,281		852
							12,782		8,500		0.66	%
Permian Holdco 1, Inc.
Energy	Preferred shares (3)(9)(16)(24)	—	10/31/2016	—	1,987,848		9,131		6,013
	Ordinary shares (3)(9)	—	10/31/2016	—	1,366,452		1,350		200
							10,481		6,213		0.48	%
Total Shares - United States							$	46,263	$	37,713	2.94	%
Total Funded Investments							$	82,825	$	73,527	5.73	%
Unfunded Debt Investments - United States
Permian Holdco 3, Inc.
Energy	First lien (3)(9)(10) - Undrawn	—	6/14/2018	6/30/2022	$	2,250	$	—	$	—	—	%
Total Unfunded Debt Investments - United States					$	2,250	$	—	$	—	—	%
Total Non-Controlled/Affiliated Investments							$	82,825	$	73,527	5.73	%

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

Table of Contents

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Controlled Investments(27)
Funded Debt Investments - United States
Edmentum Ultimate Holdings, LLC (15)
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
Education	First lien (2)	10.43% (L + 4.50% + 4.00% PIK/Q)*	8/6/2018	6/9/2021	$	10,112	$	9,173	$	10,112
	Second lien (3)(9)	7.00% PIK/Q*	2/23/2018	12/9/2021	11,999		11,579		11,999
	Second lien (3)(9)(10) - Drawn	5.00% PIK/Q*	6/9/2015	12/9/2021	7,586		7,586		7,586
	Subordinated (3)(9)	8.50% PIK/Q*	6/9/2015	12/9/2021	5,326		5,324		5,326
	Subordinated (2)(9)	10.00% PIK/Q*	6/9/2015	12/9/2021	20,476		20,476		19,333
	Subordinated (3)(9)	10.00% PIK/Q*	6/9/2015	12/9/2021	5,037		5,037		4,756
					60,536		59,175		59,112		4.61	%
NHME Holdings Corp. (20)
National HME, Inc.
Healthcare Services	Second lien (3)(9)	12.00% PIK/Q*	11/27/2018	5/27/2024	16,532		13,054		11,985
	Second lien (3)(9)	12.00% PIK/Q*	11/27/2018	5/27/2024	9,136		8,279		7,994
					25,668		21,333		19,979		1.56	%
UniTek Global Services, Inc.
Business Services	First lien (2)(9)	8.41% (L + 5.50% + 1.00% PIK/Q)*	6/29/2018	8/20/2024	12,448		12,448		11,068
	First lien (2)(9)	8.41% (L + 5.50% + 1.00% PIK/Q)*	6/29/2018	8/20/2024	2,490		2,490		2,214
					14,938		14,938		13,282		1.03	%
Total Funded Debt Investments - United States					$	101,142	$	95,446	$	92,373	7.20	%
Equity - Canada
NM APP Canada Corp.**
Net Lease	Membership interest (7)(9)	—	9/13/2016	—	—		$	7,345	$	10,774	0.84	%
Total Shares - Canada							$	7,345	$	10,774	0.84	%
Equity - United States
NMFC Senior Loan Program III LLC**
Investment Fund	Membership interest (3)(9)	—	5/4/2018	—	—		$	100,000	$	100,000	7.80	%
NMFC Senior Loan Program II LLC**
Investment Fund	Membership interest (3)(9)	—	5/3/2016	—	—		79,400		79,400		6.20	%

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

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New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares	Cost		Fair Value		Percent of Net Assets

UniTek Global Services, Inc.
Business Services	Preferred shares (3)(9)(19)	—	8/29/2019	—	3,492,227	3,492		3,347
	Preferred shares (3)(9)(19)	—	8/17/2018	—	8,594,292	8,594		7,979
	Preferred shares (3)(9)(18)	—	6/30/2017	—	15,747,272	15,747		13,909
	Preferred shares (2)(9)(17)	—	1/13/2015	—	28,369,088	25,989		22,766
	Preferred shares (3)(9)(17)	—	1/13/2015	—	7,839,866	7,182		6,292
	Ordinary shares (2)(9)	—	1/13/2015	—	2,096,477	1,925		270
	Ordinary shares (3)(9)	—	1/13/2015	—	1,993,749	532		256
						63,461		54,819		4.27	%
NM NL Holdings, L.P.**
Net Lease	Membership interest (7)(9)	—	6/20/2018	—	—	44,070		48,308		3.76	%
NM GLCR LP
Net Lease	Membership interest (7)(9)	—	2/1/2018	—	—	14,750		23,800		1.85	%
NM CLFX LP
Net Lease	Membership interest (7)(9)	—	10/6/2017	—	—	12,538		12,723		0.99	%
NM APP US LLC
Net Lease	Membership interest (7)(9)	—	9/13/2016	—	—	5,080		6,834		0.53	%
NM YI, LLC
Net Lease	Membership interest (7)(9)	—	9/30/2019	—	—	6,272		6,339		0.49	%
NM DRVT LLC
Net Lease	Membership interest (7)(9)	—	11/18/2016	—	—	5,152		6,016		0.46	%
NHME Holdings Corp.(20)
Healthcare Services	Ordinary shares (3)(9)	—	11/27/2018	—	640,000	4,000		4,000		0.31	%
NM JRA LLC
Net Lease	Membership interest (7)(9)	—	8/12/2016	—	—	2,043		3,700		0.29	%
Edmentum Ultimate Holdings, LLC (15)
Education	Ordinary shares (3)(9)	—	6/9/2015	—	123,968	11		1,806
	Ordinary shares (2)(9)	—	6/9/2015	—	107,143	9		1,561
						20		3,367		0.26	%
NM KRLN LLC
Net Lease	Membership interest (7)(9)	—	11/15/2016	—	—	7,510		2,379		0.19	%
NM GP Holdco, LLC**
Net Lease	Membership interest (7)(9)	—	6/20/2018	—	—	452		487		0.04	%
Total Shares - United States						$	344,748	$	352,172	27.44	%
Total Shares						$	352,093	$	362,946	28.28	%

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

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New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company, Location and Industry(1)	Type of Investment	Interest Rate (11)	Acquisition Date	Maturity/Expiration Date	Principal Amount, Par Value or Shares		Cost		Fair Value		Percent of Net Assets

Warrants - United States
Edmentum Ultimate Holdings, LLC(15)
Education	Warrants (3)(9)	—	2/23/2018	5/5/2026	1,141,846		$	769	$	16,633	1.29	%
NHME Holdings Corp.(20)
Healthcare Services	Warrants (3)(9)	—	11/27/2018	—	160,000		1,000		1,000		0.08	%
Total Warrants - United States							$	1,769	$	17,633	1.37	%
Total Funded Investments							$	449,308	$	472,952	36.85	%
Unfunded Debt Investments - United States
Edmentum Ultimate Holdings, LLC (15)
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
Education	Second lien (3)(9)(10) - Undrawn	—	6/9/2015	12/9/2021	$	298	$	—	$	—	—	%
Total Unfunded Debt Investments - United States					$	298	$	—	$	—	—	%
Total Controlled Investments							$	449,308	$	472,952	36.85	%
Total Investments							$	3,151,541	$	3,160,280	246.23	%

(1)New Mountain Finance Corporation (the "Company") generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). These investments are generally subject to certain limitations on resale, and may be deemed to be "restricted securities" under the Securities Act.

(2)Investment is pledged as collateral for the Holdings Credit Facility, a revolving credit facility among the Company, as the Collateral Manager, New Mountain Finance Holdings, L.L.C. ("NMF Holdings") as the Borrower and Wells Fargo Bank, National Association as the Administrative Agent and Collateral Custodian. See Note 7. Borrowings, for details.

(4)Investment is held in New Mountain Finance SBIC, L.P.

(5)Investment is held in New Mountain Finance SBIC II, L.P.

(6)Investment is held in NMF QID NGL Holdings, Inc.

(7)Investment is held in New Mountain Net Lease Corporation.

(9)The fair value of the Company's investment is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 4. Fair Value, for details.

(10)Par value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net of the impact of paydowns and cash paid for drawn revolvers or delayed draws.

(11)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets daily (D), weekly (W), monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of December 31, 2019.

(12)The Company holds investments in Education Management Corporation and one related entity of Education Management Corporation. The Company holds series A-1 convertible preferred stock and common stock in Education Management Corporation and holds tranche A first lien term loans and a tranche B first lien term loan in Education Management II LLC, which is an indirect subsidiary of Education Management Corporation.

(13)The Company holds investments in two related entities of Tenawa Resource Holdings LLC. The Company holds 4.77% of the common units in QID NGL LLC (which at closing represented 98.1% of the ownership in the common units in Tenawa Resource Holdings LLC), class A preferred units in QID NGL LLC and a first lien investment in Tenawa Resource Management LLC, a wholly-owned subsidiary of Tenawa Resource Holdings LLC.

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

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New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)

(14)The Company holds investments in two wholly-owned subsidiaries of Alert Holding Company, Inc. The Company holds a first lien term loan and a first lien revolver in Appriss Holdings, Inc. and preferred equity in Alert Intermediate Holdings I, Inc. The preferred equity is entitled to receive preferential dividends at a rate of L + 10.0% per annum.

(15)The Company holds investments in Edmentum Ultimate Holdings, LLC and its related entities. The Company holds subordinated notes, ordinary equity and warrants in Edmentum Ultimate Holdings, LLC and holds a first lien term loan, second lien revolver and a second lien term loan in Edmentum, Inc. and Archipelago Learning, Inc., which are wholly-owned subsidiaries of Edmentum Ultimate Holdings, LLC.

(16)The Company holds preferred equity in Permian Holdco 1, Inc. that is entitled to receive cumulative preferential dividends at a rate of 12.0% per annum payable in additional shares.

(17)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 13.5% per annum payable in additional shares.

(18)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 19.0% per annum payable in additional shares.

(19)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to received cumulative preferential dividends at a rate of 20.0% per annum payable in additional shares.

(20)The Company holds ordinary shares and warrants in NHME Holdings Corp., as well as second lien term loans in National HME, Inc., a wholly-owned subsidiary of NHME Holdings Corp.

(21)The Company holds preferred equity in Bach Special Limited (Bach Preference Limited) that is entitled to receive cumulative preferential dividends at a rate of 12.25% per annum payable in additional shares.

(22)The Company holds preferred equity in Avatar Topco, Inc. and holds a second lien term loan investment in EAB Global, Inc., a wholly-owned subsidiary of Avatar Topco, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of L + 11.00% per annum.

(23)The Company holds preferred equity in Symplr Software Intermediate Holdings, Inc. and holds a first lien term loan investment in Symplr Software, Inc. (fka Caliper Software, Inc.), a wholly-owned subsidiary of Symplr Software Intermediate Holdings, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of L + 10.50% per annum.

(24)Investment or a portion of the investment is on non-accrual status. See Note 3. Investments, for details.

(25)The Company holds one security purchased under a collateralized agreement to resell on its Consolidated Statement of Assets and Liabilities with a cost basis of $30,000 and a fair value of $21,422 as of December 31, 2019. See Note 2. Summary of Significant Accounting Policies, for details.

(26)Denotes investments in which the Company is an “Affiliated Person”, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), due to owning or holding the power to vote 5.0% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of December 31, 2019 and December 31, 2018 along with transactions during the year ended December 31, 2019 in which the issuer was a non-controlled/affiliated investment is as follows:


Portfolio Company	Fair Value at December 31, 2018		Gross Additions (A)		Gross Redemptions (B)		Net Realized Gains (Losses)		Net Change In Unrealized Appreciation (Depreciation)		Fair Value at December 31, 2019		Interest Income		Dividend Income		Other Income
NMFC Senior Loan Program I LLC	$	23,000	$	—	$	—	$	—	$	—	$	23,000	$	—	$	3,073	$	1,142
Permian Holdco 1, Inc. / Permian Holdco 2, Inc. / Permian Holdco 3, Inc.	41,966		3,077		(100)		—		(4,322)		40,621		4,101		1,219		49
Sierra Hamilton Holdings Corporation	12,527		1,410		—		—		(4,031)		9,906		65		—		45
Total Non-Controlled/Affiliated Investments	$	77,493	$	4,487	$	(100)	$	—	$	(8,353)	$	73,527	$	4,166	$	4,292	$	1,236

(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, payment-in-kind (“PIK”) interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement at fair value of an existing portfolio company into this category from a different category.

(B)Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.

(27) Denotes investments in which the Company is in “Control”, as defined in the 1940 Act, due to owning or holding the power to vote more than 25.0% of the outstanding voting securities of the investment. Fair value as of December 31, 2019 and December 31, 2018 along with transactions during the year ended December 31, 2019 in which the issuer was a controlled investment, is as follows:

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

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New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


Portfolio Company	Fair Value at December 31, 2018		Gross Additions (A)		Gross Redemptions (B)		Net Realized Gains (Losses)		Net Change In Unrealized Appreciation (Depreciation)		Fair Value at December 31, 2019		Interest Income		Dividend Income		Other Income
Edmentum Ultimate Holdings, LLC/Edmentum Inc.	$	45,011	$	14,850	$	(3,129)	$	18	$	22,380	$	79,112	$	5,781	$	—	$	17
National HME, Inc./NHME Holdings Corp.	22,722		3,501		—		—		(1,244)		24,979		3,501		—		—
NM APP Canada, Corp.	9,727		—		—		—		1,047		10,774		—		920		—
NM APP US LLC	5,912		—		—		—		922		6,834		—		527		—
NM CLFX LP	12,770		—		—		—		(47)		12,723		—		1,550		—
NM DRVT LLC	5,619		—		—		—		397		6,016		—		565		—
NM JRA LLC	2,537		—		—		—		1,163		3,700		—		252		—
NM GLCR LP	20,343		—		—		—		3,457		23,800		—		1,761		—
NM KRLN LLC	4,205		—		—		—		(1,826)		2,379		—		832		—
NM NL Holdings, L.P.	33,392		11,492		—		—		3,424		48,308		—		3,692		—
NM GP Holdco, LLC	311		145		—		—		31		487		—		36		—
NM YI, LLC	—		6,272		—		—		67		6,339		—		240		—
NMFC Senior Loan Program II LLC	79,400		—		—		—		—		79,400		—		11,116		—
NMFC Senior Loan Program III LLC	78,400		21,600		—		—		—		100,000		—		10,520		—
UniTek Global Services, Inc.	82,788		12,225		(151)		—		(26,761)		68,101		1,246		8,918		600
Total Controlled Investments	$	403,137	$	70,085	$	(3,280)	$	18	$	3,010	$	472,952	$	10,528	$	40,929	$	617

* All or a portion of interest contains PIK interest.

** Indicates assets that the Company deems to be “non-qualifying assets” under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70.0% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of December 31, 2019, 14.5% of the Company’s total investments were non-qualifying assets.

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

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New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

December 31, 2019

(in thousands, except shares)


	December 31, 2019
Investment Type	Percent of Total Investments at Fair Value
First lien	57.01	%
Second lien	24.96	%
Subordinated	2.11	%
Equity and other	15.92	%
Total investments	100.00	%


	December 31, 2019
Industry Type	Percent of Total Investments at Fair Value
Software	24.22	%
Business Services	20.58	%
Healthcare Services	17.45	%
Education	9.04	%
Investment Funds (includes investments in joint ventures)	6.40	%
Net Lease	3.84	%
Distribution & Logistics	3.38	%
Federal Services	3.22	%
Energy	3.19	%
Healthcare Information Technology	3.17	%
Consumer Services	2.86	%
Industrial Services	1.03	%
Food & Beverage	0.89	%
Packaging	0.40	%
Business Products	0.33	%
Total investments	100.00	%


	December 31, 2019
Interest Rate Type	Percent of Total Investments at Fair Value
Floating rates	94.44	%
Fixed rates	5.56	%
Total investments	100.00	%

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

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Notes to the Consolidated Financial Statements of

New Mountain Finance Corporation

September 30, 2020

(in thousands, except share data)

(unaudited)

Note 1. Formation and Business Purpose

New Mountain Finance Corporation (“NMFC” or the “Company”) is a Delaware corporation that was originally incorporated on June 29, 2010 and completed its initial public offering ("IPO") on May 19, 2011. NMFC is a closed-end, non-diversified 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”). NMFC has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). NMFC is also registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Since NMFC’s IPO, and through September 30, 2020, NMFC raised approximately $893,183 in net proceeds from additional offerings of its common stock.

New Mountain Finance Advisers BDC, L.L.C. (the “Investment Adviser”) is a wholly-owned subsidiary of New Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its affiliates, "New Mountain Capital") whose ultimate owners include Steven B. Klinsky and related and other vehicles. New Mountain Capital is a firm with a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, public equity and credit investment vehicles. The Investment Adviser manages the Company's day-to-day operations and provides it with investment advisory and management services. The Investment Adviser also manages other funds that may have investment mandates that are similar, in whole or in part, to the Company's. New Mountain Finance Administration, L.L.C. (the "Administrator”), a wholly-owned subsidiary of New Mountain Capital, provides the administrative services necessary to conduct the Company's day-to-day operations.

The Company has established the following wholly-owned direct and indirect subsidiaries:

•New Mountain Finance Holdings, L.L.C. ("NMF Holdings" or the "Predecessor Operating Company") and New Mountain Finance DB, L.L.C. ("NMFDB"), whose assets are used to secure NMF Holdings’ credit facility and NMFDB’s credit facility, respectively;

•New Mountain Finance SBIC, L.P. ("SBIC I") and New Mountain Finance SBIC II, L.P. ("SBIC II"), who have received licenses from the United States ("U.S.") Small Business Administration ("SBA") to operate as small business investment companies ("SBICs") under Section 301(c) of the Small Business Investment Act of 1958, as amended (the "1958 Act"), and their general partners, New Mountain Finance SBIC G.P., L.L.C. ("SBIC I GP"), and New Mountain Finance SBIC II G.P., L.L.C. ("SBIC II GP"), respectively;

•NMF Ancora Holdings Inc. ("NMF Ancora"), NMF QID Holdings, Inc. ("NMF QID") and NMF YP Holdings Inc. ("NMF YP"), which serve as tax blocker corporations by holding equity or equity-like investments in portfolio companies organized as limited liability companies (or other forms of pass-through entities); the Company consolidates its tax blocker corporations for accounting purposes but the tax blocker corporations are not consolidated for U.S. federal income tax purposes and may incur U.S. federal income tax expense as a result of their ownership of the portfolio companies; and

•New Mountain Finance Servicing, L.L.C. ("NMF Servicing"), which serves as the administrative agent on certain investment transactions.

New Mountain Net Lease Corporation ("NMNLC") is a majority-owned consolidated subsidiary of the Company, which acquires commercial real estate properties that are subject to ‘‘triple net’’ leases has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a real estate investment trust, or REIT, within the meaning of Section 856(a) of the Code.

The Company’s investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. The first lien debt may include traditional first lien senior secured loans or unitranche loans. Unitranche loans combine characteristics of traditional first lien senior secured loans as well as second lien and subordinated loans. Unitranche loans will expose the Company to the risks associated with second lien and subordinated loans to the extent the Company invests in the “last out” tranche. In some cases, the Company’s investments may also include equity interests. The Company's primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after

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capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. Similar to the Company, SBIC I's and SBIC II's investment objectives are to generate current income and capital appreciation under the investment criteria used by the Company. However, SBIC I and SBIC II investments must be in SBA-eligible small businesses. The Company’s portfolio may be concentrated in a limited number of industries. As of September 30, 2020, the Company’s top five industry concentrations were software, business services, healthcare services, education and investment funds (which includes the Company's investments in its joint ventures).

Note 2. Summary of Significant Accounting Policies

Basis of accounting—The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, (“ASC 946”). NMFC consolidates its wholly-owned direct and indirect subsidiaries: NMF Holdings, NMFDB, NMF Servicing, SBIC I, SBIC I GP, SBIC II, SBIC II GP, NMF Ancora, NMF QID and NMF YP and its majority-owned consolidated subsidiary: NMNLC. For majority-owned consolidated subsidiaries, the third-party equity interest is referred to as non-controlling interest. The net income attributable to non-controlling interests for such subsidiaries is presented as “Net increase (decrease) in net assets resulting from operations related to non-controlling interest” in the Company’s Consolidated Statements of Operations. The portion of shareholders' equity that is attributable to non-controlling interests for such subsidiaries is presented as “Non-controlling interest”, a component of total equity, on the Company’s Consolidated Statements of Assets and Liabilities.

The Company’s consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of operations and financial condition for all periods presented. All intercompany transactions have been eliminated. Revenues are recognized when earned and expenses when incurred. The financial results of the Company’s portfolio investments are not consolidated in the financial statements.

The Company’s interim consolidated financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 6 or 10 of Regulation S-X. Accordingly, the Company’s interim consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial statements for the interim period, have been included. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending December 31, 2020.

Investments—The Company applies fair value accounting in accordance with GAAP. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are reflected on the Company’s Consolidated Statements of Assets and Liabilities at fair value, with changes in unrealized gains and losses resulting from changes in fair value reflected in the Company’s Consolidated Statements of Operations as “Net change in unrealized appreciation (depreciation) of investments” and realizations on portfolio investments reflected in the Company’s Consolidated Statements of Operations as “Net realized gains (losses) on investments”.

The Company values its assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, the Company’s board of directors is ultimately and solely responsible for determining the fair value of the portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where its portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. The Company’s quarterly valuation procedures are set forth in more detail below:

(1)Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.

(2)Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.

a.Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment’s par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and

b.For investments other than bonds, the Company looks at the number of quotes readily available and performs the following procedures:

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i.Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. The Company will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, the Company will use one or more of the methodologies outlined below to determine fair value.

ii.Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment’s par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).

(3)Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:

a.Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;

b.Preliminary valuation conclusions will then be documented and discussed with the Company’s senior management;

c.If an investment falls into (3) above for four consecutive quarters and if the investment’s par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which the Company does not have a readily available market quotation will be reviewed by an independent valuation firm engaged by the Company’s board of directors; and

d.When deemed appropriate by the Company’s management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.

For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.

The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period and the fluctuations could be material.

See Note 3. Investments, for further discussion relating to investments.

New Mountain Net Lease Corporation

NMNLC was formed to acquire commercial real estate properties that are subject to "triple net" leases. NMNLC's investments are disclosed on the Company's Consolidated Schedule of Investments as of September 30, 2020.

On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11,315. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11,315 and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.

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Below is certain summarized property information for NMNLC as of September 30, 2020:

Lease

Total

Fair Value as of

Portfolio Company

Tenant

Expiration Date

Location

Square Feet

September 30, 2020

NM NL Holdings LP / NM GP Holdco LLC

Various

50,085

NM GLCR LP

Arctic Glacier U.S.A.

2/28/2038

214

26,464

NM CLFX LP

Victor Equipment Company

8/31/2033

423

12,677

NM APP Canada, Corp.

A.P. Plasman, Inc.

9/30/2031

Canada

436

11,100

NM DRVT LLC

FMH Conveyors, LLC

10/31/2031

195

6,980

NM APP US LLC

Plasman Corp, LLC / A-Brite LP

9/30/2033

AL / OH

261

6,886

NM YI, LLC

Young Innovations, Inc.

10/31/2039

IL / MO

212

6,175

NM JRA LLC

J.R. Automation Technologies, LLC

1/31/2031

3,784

NM KRLN LLC

None

N/A

940

125,091

Collateralized agreements or repurchase financings—The Company follows the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral (“ASC 860”), when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of September 30, 2020 and December 31, 2019, the Company held one collateralized agreement to resell with a cost basis of $30,000 and $30,000, respectively, and a fair value of $21,422 and $21,422, respectively. The collateralized agreement to resell is on non-accrual. The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from the Company at the par value of the collateralized agreement. The private hedge fund has breached its agreement to repurchase the collateral under the collateralized agreement. The default by the private hedge fund did not release the collateral to the Company, and therefore, the Company does not have full rights and title to the collateral. A claim has been filed with the Cayman Islands joint official liquidators to resolve this matter. The joint official liquidators have recognized the Company’s contractual rights under the collateralized agreement. The Company continues to exercise its rights under the collateralized agreement and continues to monitor the liquidation process of the private hedge fund. The fair value of the collateralized agreement to resell is reflective of the increased risk of the position.

Cash and cash equivalents—Cash and cash equivalents include cash and short-term, highly liquid investments. The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and so near maturity that there is insignificant risk of changes in value. These securities have original maturities of three months or less. The Company did not hold any cash equivalents as of September 30, 2020 and December 31, 2019.

Revenue recognition

Sales and paydowns of investments: Realized gains and losses on investments are determined on the specific identification method.

Interest and dividend income: Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. The Company has loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer. For the three and nine months ended September 30, 2020, the Company recognized PIK and non-cash interest from investments of $5,008 and $11,726, respectively, and PIK and non-cash dividends from investments of $3,850 and $9,196, respectively. For the three and nine months ended September 30, 2019, the Company recognized PIK and non-cash interest from investments of $3,745 and $9,875, respectively, and PIK and non-cash dividends from investments of $4,821 and $13,629, respectively.

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Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible.

Non-accrual income: Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment of the ultimate collectibility. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.

Other income: Other income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees, management fees from a non-controlled/affiliated investment and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. Other income may also include fees from bridge loans. The Company may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received by the Company for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.

Interest and other financing expenses—Interest and other financing fees are recorded on an accrual basis by the Company. See Note 7. Borrowings, for details.

Deferred financing costs—The deferred financing costs of the Company consist of capitalized expenses related to the origination and amending of the Company’s borrowings. The Company amortizes these costs into expense over the stated life of the related borrowing. See Note 7. Borrowings, for details.

Deferred offering costs—The Company's deferred offering costs consist of fees and expenses incurred in connection with equity offerings and the filing of shelf registration statements. Upon the issuance of shares, offering costs are charged as a direct reduction to net assets. Deferred offering costs are included in other assets on the Company's Consolidated Statements of Assets and Liabilities.

Income taxes—The Company has elected to be treated, and intends to comply with the requirements to qualify annually, as a RIC under Subchapter M of the Code. As a RIC, the Company is not subject to U.S. federal income tax on the portion of taxable income and gains timely distributed to its stockholders.

To continue to qualify and be subject to tax as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing at least 90.0% of its investment company taxable income, as defined by the Code. Since U.S. federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes.

Differences between taxable income and the results of operations for financial reporting purposes may be permanent or temporary in nature. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for U.S. federal income tax purposes.

For U.S. federal income tax purposes, distributions paid to stockholders of the Company are reported as ordinary income, return of capital, long term capital gains or a combination thereof.

The Company will be subject to a 4.0% nondeductible U.S. federal excise tax on certain undistributed income unless the Company distributes, in a timely manner as required by the Code, an amount at least equal to the sum of (1) 98.0% of its respective net ordinary income earned for the calendar year and (2) 98.2% of its respective capital gain net income for the one-year period ending October 31 in the calendar year.

Certain consolidated subsidiaries of the Company are subject to U.S. federal and state income taxes. These taxable entities are not consolidated for U.S. federal income tax purposes and may generate income tax liabilities or assets from permanent and temporary differences in the recognition of items for financial reporting and U.S. federal income tax purposes.

For the three and nine months ended September 30, 2020, the Company recognized a total income tax benefit of approximately $134 and $662, respectively, for the Company’s consolidated subsidiaries. For the three and nine months ended September 30, 2020, the Company recorded current income tax expense of approximately $123 and $116, respectively, and deferred income tax benefit of approximately $257 and $778, respectively. For the three and nine months ended September 30, 2019, the Company recognized a total income tax benefit of approximately $281 and $108, respectively, for the Company’s

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consolidated subsidiaries. For the three and nine months ended September 30, 2019, the Company recorded current income tax expense of approximately $0 and $13, respectively, and deferred income tax benefit of approximately $281 and $121, respectively.

As of September 30, 2020 and December 31, 2019, the Company had $134 and $912, respectively, of deferred tax liabilities primarily relating to deferred taxes attributable to certain differences between the computation of income for U.S. federal income tax purposes as compared to GAAP.

Based on its analysis, the Company has determined that there were no uncertain income tax positions that do not meet the more likely than not threshold as defined by Accounting Standards Codification Topic 740 ("ASC 740") through December 31, 2019. The 2017 through 2019 tax years remain subject to examination by the U.S. federal, state, and local tax authorities.

Distributions—Distributions to common stockholders of the Company are recorded on the record date as set by the Company's board of directors. The Company intends to make distributions to its stockholders that will be sufficient to enable the Company to maintain its status as a RIC. The Company intends to distribute approximately all of its net investment income (see Note 5. Agreements) on a quarterly basis and substantially all of its taxable income on an annual basis, except that the Company may retain certain net capital gains for reinvestment.

The Company has adopted a dividend reinvestment plan that provides for reinvestment of any distributions declared on behalf of its stockholders, unless a stockholder elects to receive cash.

The Company applies the following in implementing the dividend reinvestment plan. If the price at which newly issued shares are to be credited to stockholders’ accounts is equal to or greater than 110.0% of the last determined net asset value of the shares, the Company will use only newly issued shares to implement its dividend reinvestment plan. Under such circumstances, the number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of the Company’s common stock on the Nasdaq Global Select Market LLC (the “NASDAQ”) on the distribution payment date. Market price per share on that date will be the closing price for such shares on the NASDAQ or, if no sale is reported for such day, the average of their electronically reported bid and ask prices.

If the price at which newly issued shares are to be credited to stockholders’ accounts is less than 110.0% of the last determined net asset value of the shares, the Company will either issue new shares or instruct the plan administrator to purchase shares in the open market to satisfy the additional shares required. Shares purchased in open market transactions by the plan administrator will be allocated to a stockholder based on the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market. The number of shares of the Company’s common stock to be outstanding after giving effect to payment of the distribution cannot be established until the value per share at which additional shares will be issued has been determined and elections of the Company’s stockholders have been tabulated.

Share repurchase program—On February 4, 2016, the Company's board of directors authorized a program for the purpose of repurchasing up to $50,000 worth of the Company's common stock (the "Repurchase Program"). Under the Repurchase Program, the Company was permitted, but was not obligated, to repurchase its outstanding common stock in the open market from time to time provided that it complied with the Company's code of ethics and the guidelines specified in Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including certain price, market volume and timing constraints. In addition, any repurchases were conducted in accordance with the 1940 Act. On December 31, 2019, the Company's board of directors extended the Company's Repurchase Program and the Company expects the Repurchase Program to be in place until the earlier of December 31, 2020 or until $50,000 of its outstanding shares of common stock have been repurchased. During the three and nine months ended September 30, 2020 and September 30, 2019, the Company did not repurchase any shares of the Company's common stock. The Company previously repurchased $2,948 of its common stock under the Repurchase Program.

Earnings per share—The Company’s earnings per share (“EPS”) amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Basic EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock outstanding during the period of computation. Diluted EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock assuming all potential shares had been issued, and its related net impact to net assets accounted for, and the additional shares of common stock were dilutive. Diluted EPS reflects the potential dilution, using the as-if-converted method for convertible debt, which could occur if all potentially dilutive securities were exercised.

Foreign securities—The accounting records of the Company are maintained in U.S. dollars. Investment securities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are

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translated into U.S. dollars based on the rate of exchange of such currencies on the respective dates of the transactions. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with “Net change in unrealized appreciation (depreciation)” and “Net realized gains (losses)” in the Company’s Consolidated Statements of Operations.

Investments denominated in foreign currencies may be negatively affected by movements in the rate of exchange between the U.S. dollar and such foreign currencies. This movement is beyond the control of the Company and cannot be predicted.

Use of estimates—The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Company’s consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Changes in the economic environment, financial markets, and other metrics used in determining these estimates could cause actual results to differ from the estimates used, and the differences could be material.

Dividend income recorded related to distributions received from flow-through investments is an accounting estimate based on the most recent estimate of the tax treatment of the distribution.

Note 3. Investments

At September 30, 2020, the Company’s investments consisted of the following:

Investment Cost and Fair Value by Type


	Cost		Fair Value
First lien	$	1,708,860	$	1,662,653
Second lien	706,014		689,319
Subordinated	52,831		43,536
Equity and other	510,582		501,115
Total investments	$	2,978,287	$	2,896,623

Investment Cost and Fair Value by Industry


	Cost		Fair Value
Software	$	776,502	$	777,207
Business Services	665,117		601,907
Healthcare Services	478,119		452,284
Education	232,694		254,679
Investment Fund (includes investments in joint ventures)	222,400		222,400
Net Lease	105,929		125,091
Federal Services	101,294		100,983
Healthcare Information Technology	77,819		78,398
Consumer Services	76,408		76,458
Specialty Chemicals & Materials	59,614		60,013
Distribution & Logistics	63,815		54,598
Industrial Services	36,668		36,933
Energy	56,785		32,769
Packaging	14,365		12,231
Business Products	10,758		10,672
Total investments	$	2,978,287	$	2,896,623

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At December 31, 2019, the Company’s investments consisted of the following:

Investment Cost and Fair Value by Type


	Cost		Fair Value
First lien	$	1,803,747	$	1,801,615
Second lien	796,921		788,868
Subordinated	71,904		66,774
Equity and other	478,969		503,023
Total investments	$	3,151,541	$	3,160,280

Investment Cost and Fair Value by Industry


	Cost		Fair Value
Software	$	764,875	$	765,499
Business Services	667,493		650,384
Healthcare Services	552,499		551,471
Education	267,064		285,781
Investment Funds (includes investments in joint ventures)	202,400		202,400
Net Lease	105,212		121,360
Distribution & Logistics	106,403		106,878
Federal Services	103,179		101,675
Energy	105,689		100,699
Healthcare Information Technology	99,581		100,050
Consumer Services	91,474		90,424
Industrial Services	32,736		32,708
Food & Beverage	27,834		27,957
Packaging	14,348		12,476
Business Products	10,754		10,518
Total investments	$	3,151,541	$	3,160,280

During the second quarter of 2020, the Company placed a portion of its first lien positions in Benevis Holding Corp. on non-accrual status due to its ongoing restructuring, which included the filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas on August 3, 2020. As of September 30, 2020, the Company's investments in Benevis Holding Corp., which were placed on non-accrual status, had an aggregate cost basis of $42,755, an aggregate fair value of $39,279, and total unearned interest income of $800 and $1,615 for the three and nine months then ended.

During the second quarter of 2020, the Company placed its subordinated position in Permian Holdco 3, Inc. on non-accrual status. The Company's subordinated positions in Permian Holdco 2, Inc. and preferred shares in Permian Holdco 1, Inc. remain on non-accrual status due to its ongoing restructuring, which included the filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on July 19, 2020. As of September 30, 2020, the Company's investments in Permian Holdco 1, Inc., Permian Holdco 2, Inc. and Permian Holdco 3, Inc., which were placed on non-accrual status, had an aggregate cost basis of $10,864 and an aggregate fair value of $0. During the three months ended March 31, 2020, the Company reversed $3,418 of previously recorded PIK dividends related to its investment in Permian Holdco 1, Inc. as the Company believes these PIK dividends will ultimately not be collectible. During the three months ended June 30, 2020, the Company reversed $1,998 of previously recorded PIK interest related to its investments in Permian Holdco 2, Inc. and Permian Holdco 3, Inc. as the Company believes this PIK interest will ultimately not be collectible.

During the first quarter of 2020, the Company placed its junior preferred shares in UniTek Global Services, Inc. on non-accrual status. As of September 30, 2020, the Company's investments in UniTek Global Services, Inc., which were placed on non-accrual status, had an aggregate cost basis of $34,393, an aggregate fair value of $3,560 and total unearned dividend income of $1,306 and $2,569 for the three and nine months then ended.

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During the first quarter of 2018, the Company placed its first lien positions in Education Management II LLC ("EDMC") on non-accrual status as EDMC announced its intention to wind down and liquidate the business. As of September 30, 2020, the Company's investment in EDMC, which was placed on non-accrual status, represented an aggregate cost basis of $958, an aggregate fair value of $0 and total unearned interest income of $0 and $43 for the three and nine months then ended.

As of September 30, 2020, the Company had unfunded commitments on revolving credit facilities and bridge facilities of $64,512 and $0, respectively. As of September 30, 2020, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of $29,315. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments as of September 30, 2020.

As of December 31, 2019, the Company had unfunded commitments on revolving credit facilities and bridge facilities of $66,061 and $0, respectively. As of December 31, 2019, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of $137,781. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments as of December 31, 2019.

PPVA Black Elk (Equity) LLC

On May 3, 2013, the Company entered into a collateralized securities purchase and put agreement (the “SPP Agreement”) with a private hedge fund. Under the SPP Agreement, the Company purchased twenty million Class E Preferred Units of Black Elk Energy Offshore Operations, LLC (“Black Elk”) for $20,000 with a corresponding obligation of the private hedge fund, PPVA Black Elk (Equity) LLC, to repurchase the preferred units for $20,000 plus other amounts due under the SPP Agreement. The majority owner of Black Elk was the private hedge fund. In August 2014, the Company received a payment of $20,540, the full amount due under the SPP Agreement.

In August 2017, a trustee (the “Trustee”) for Black Elk informed the Company that the Trustee intended to assert a fraudulent conveyance claim (the “Claim”) against the Company and one of its affiliates seeking the return of the $20,540 repayment. Black Elk filed a Chapter 11 bankruptcy petition pursuant to the United States Bankruptcy Code in August 2015. The Trustee alleged that individuals affiliated with the private hedge fund conspired with Black Elk and others to improperly use proceeds from the sale of certain Black Elk assets to repay, in August 2014, the private hedge fund’s obligation to the Company under the SPP Agreement. The Company was unaware of these claims at the time the repayment was received. The private hedge fund is currently in liquidation under the laws of the Cayman Islands.

On December 22, 2017, the Company settled the Trustee’s $20,540 Claim for $16,000 and filed a claim with the Cayman Islands joint official liquidators of the private hedge fund for $16,000 that is owed to the Company under the SPP Agreement. The SPP Agreement was restored and is in effect since repayment has not been made. The Company continues to exercise its rights under the SPP Agreement and continues to monitor the liquidation process of the private hedge fund. During the year ended December 31, 2018, the Company received a $1,500 payment from its insurance carrier in respect to the settlement. As of September 30, 2020 and December 31, 2019, the SPP Agreement has a cost basis of $14,500 and $14,500, respectively, and a fair value of $10,354 and $10,354, respectively, which is reflective of the higher inherent risk in this transaction.

NMFC Senior Loan Program I LLC

NMFC Senior Loan Program I LLC (“SLP I”) was formed as a Delaware limited liability company on May 27, 2014 and commenced operations on June 10, 2014. SLP I is a portfolio company held by the Company. SLP I is structured as a private investment fund, in which all of the investors are "qualified purchasers", as such term is defined in Section 2(a)(51) of the 1940 Act. Transfer of interests in SLP I are subject to restrictions and, as a result, interests are not readily marketable. SLP I operates under a limited liability company agreement (the “SLP I Agreement”) and will continue in existence until August 31, 2022, subject to earlier termination pursuant to certain terms of the SLP I Agreement. The term may be extended pursuant to certain terms of the SLP I Agreement. SLP I's re-investment period ended on August 31, 2020. SLP I invests in senior secured loans issued by companies within the Company’s core industry verticals. These investments are typically broadly syndicated first lien loans.

SLP I is capitalized with $93,000 of capital commitments and debt from a revolving credit facility and is managed by the Company. The Company’s capital commitment is $23,000, representing less than 25.0% ownership, with third party investors representing the remaining capital commitments. As of September 30, 2020, SLP I had total investments with an aggregate fair value of approximately $292,851, debt outstanding of $220,067 and capital that had been called and funded of $93,000. As of December 31, 2019, SLP I had total investments with an aggregate fair value of approximately $313,702, debt outstanding of $227,367 and capital that had been called and funded of $93,000. The Company’s investment in SLP I is disclosed on the Company’s Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.

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The Company, as an investment adviser registered under the Advisers Act, acts as the collateral manager to SLP I and is entitled to receive a management fee for its investment management services provided to SLP I. As a result, SLP I is classified as an affiliate of the Company. No management fee is charged on the Company's investment in SLP I in connection with the administrative services provided to SLP I. For the three and nine months ended September 30, 2020, the Company earned approximately $254 and $781, respectively, in management fees related to SLP I, which is included in other income. For the three and nine months ended September 30, 2019, the Company earned approximately $291 and $865, respectively, in management fees related to SLP I, which is included in other income. As of September 30, 2020 and December 31, 2019, approximately $513 and $277, respectively, of management fees related to SLP I was included in receivable from affiliates. For the three and nine months ended September 30, 2020, the Company earned approximately $687 and $2,096, respectively, of dividend income related to SLP I, which is included in dividend income. For the three and nine months ended September 30, 2019, the Company earned approximately $788 and $2,326, respectively, of dividend income related to SLP I, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $772 and $747, respectively, of dividend income related to SLP I was included in interest and dividend receivable.

NMFC Senior Loan Program II LLC

NMFC Senior Loan Program II LLC ("SLP II") was formed as a Delaware limited liability company on March 9, 2016 and commenced operations on April 12, 2016. SLP II is structured as a private joint venture investment fund between the Company and SkyKnight Income, LLC (“SkyKnight”) and operates under a limited liability company agreement (the "SLP II Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within the Company's core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP II, which has equal representation from the Company and SkyKnight. SLP II's investment period ended on April 12, 2020 and SLP II will continue in existence until April 12, 2022. The term may be extended for up to one year pursuant to certain terms of the SLP II Agreement.

SLP II is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP II to call down on capital commitments requires approval by the board of managers of SLP II. As of September 30, 2020, the Company and SkyKnight have committed and contributed $79,400 and $20,600, respectively, of equity to SLP II. The Company’s investment in SLP II is disclosed on the Company’s Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.

On April 12, 2016, SLP II entered into its revolving credit facility with Wells Fargo Bank, National Association, which matures on April 12, 2022 and bears interest at a rate of the London Interbank Offered Rate ("LIBOR") plus 1.60% per annum. As of September 30, 2020 and December 31, 2019, SLP II had total investments with an aggregate fair value of approximately $286,413 and $339,985, respectively, and debt outstanding under its credit facility of $204,470 and $246,870, respectively. As of September 30, 2020 and December 31, 2019, none of SLP II's investments were on non-accrual. Additionally, as of September 30, 2020 and December 31, 2019, SLP II had unfunded commitments in the form of delayed draws of $194 and $3,155, respectively. Below is a summary of SLP II's portfolio, along with a listing of the individual investments in SLP II's portfolio as of September 30, 2020 and December 31, 2019:


	September 30, 2020			December 31, 2019
First lien investments (1)	$	300,199		$	351,160
Weighted average interest rate on first lien investments (2)	5.11		%	6.29		%
Number of portfolio companies in SLP II	34			37
Largest portfolio company investment (1)	$	17,322		$	17,456
Total of five largest portfolio company investments (1)	$	78,225		$	78,932

(1)Reflects principal amount or par value of investment.

(2)Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.

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The following table is a listing of the individual investments in SLP II's portfolio as of September 30, 2020:


Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Funded Investments - First lien:
Access CIG, LLC	Business Services	3.91% (L + 3.75%)	2/27/2025	$	4,625	$	4,609	$	4,532
ADG, LLC	Healthcare Services	6.25 % (L + 2.50% + 2.75% PIK)	9/28/2023	16,412		16,335		14,876
Advisor Group Holdings, Inc.	Consumer Services	5.15% (L + 5.00%)	7/31/2026	4,962		4,920		4,815
Bearcat Buyer, Inc.	Healthcare Services	5.25% (L + 4.25%)	7/9/2026	90		89		90
Bearcat Buyer, Inc.	Healthcare Services	5.25% (L + 4.25%)	7/9/2026	1,368		1,363		1,368
Bleriot US Bidco Inc.	Federal Services	4.97% (L + 4.75%)	10/31/2026	1,345		1,332		1,335
Bleriot US Bidco Inc.	Federal Services	4.97% (L + 4.75%)	10/30/2026	8,605		8,528		8,546
Brave Parent Holdings, Inc.	Software	4.15% (L + 4.00%)	4/18/2025	3,662		3,652		3,622
CentralSquare Technologies, LLC	Software	3.90% (L + 3.75%)	8/29/2025	14,737		14,710		13,286
CHA Holdings, Inc.	Business Services	5.50% (L + 4.50%)	4/10/2025	2,031		2,023		1,899
CHA Holdings, Inc.	Business Services	5.50% (L + 4.50%)	4/10/2025	10,615		10,582		9,925
CommerceHub, Inc.	Software	3.65% (L + 3.50%)	5/21/2025	2,444		2,435		2,389
Dealer Tire, LLC	Distribution & Logistics	4.40% (L + 4.25%)	12/12/2025	7,444		7,427		7,295
Drilling Info Holdings, Inc.	Business Services	4.40% (L + 4.25%)	7/30/2025	14,646		14,598		14,139
Edgewood Partners Holdings LLC	Business Services	5.25% (L + 4.25%)	9/6/2024	7,375		7,320		7,117
eResearchTechnology, Inc.	Healthcare Services	5.50% (L + 4.50%)	2/4/2027	3,137		3,108		3,129
Fastlane Parent Company, Inc.	Distribution & Logistics	4.65% (L + 4.50%)	2/4/2026	3,447		3,392		3,328
Greenway Health, LLC	Software	4.75% (L + 3.75%)	2/16/2024	14,512		14,474		12,989
Help/Systems Holdings, Inc.	Software	5.75% (L + 4.75%)	11/19/2026	4,422		4,382		4,362
Institutional Shareholder Services Inc.	Business Services	4.72% (L + 4.50%)	3/5/2026	13,790		13,678		13,376
Keystone Acquisition Corp.	Healthcare Services	6.25% (L + 5.25%)	5/1/2024	5,238		5,208		4,767
LSCS Holdings, Inc.	Healthcare Services	4.47% (L + 4.25%)	3/17/2025	1,870		1,868		1,776
LSCS Holdings, Inc.	Healthcare Services	4.47% (L + 4.25%)	3/17/2025	7,243		7,236		6,881
Market Track, LLC	Business Services	5.25% (L + 4.25%)	6/5/2024	11,610		11,577		11,432
Medical Solutions Holdings, Inc.	Healthcare Services	5.50% (L + 4.50%)	6/14/2024	2,774		2,766		2,684
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	2,078		2,074		2,059
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	873		871		865
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	12,066		12,039		11,955
Peraton Corp. (fka MHVC Acquisition Corp.)	Federal Services	6.25% (L + 5.25%)	4/29/2024	10,159		10,130		10,083
Premise Health Holding Corp.	Healthcare Services	3.72% (L + 3.50%)	7/10/2025	1,362		1,357		1,318
Project Accelerate Parent, LLC	Business Services	5.25% (L + 4.25%)	1/2/2025	12,450		12,409		11,329
PSC Industrial Holdings Corp.	Industrial Services	4.98% (L + 3.75%)	10/11/2024	3,036		3,017		2,892
Quest Software US Holdings Inc.	Software	4.51% (L + 4.25%)	5/16/2025	14,737		14,685		14,467
Salient CRGT Inc.	Federal Services	7.50% (L + 6.50%)	2/28/2022	12,665		12,625		12,484
Wirepath LLC	Distribution & Logistics	4.22% (L + 4.00%)	8/5/2024	14,700		14,700		13,524
WP CityMD Bidco LLC	Healthcare Services	5.54% (L + 4.50%)	8/13/2026	5,432		5,384		5,413
Wrench Group LLC	Consumer Services	4.22% (L + 4.00%)	4/30/2026	5,935		5,883		5,816
YI, LLC	Healthcare Services	5.00% (L + 4.00%)	11/7/2024	14,687		14,679		12,851
Zelis Cost Management Buyer, Inc.	Healthcare Information Technology	4.90% (L + 4.75%)	9/30/2026	4,099		4,062		4,077
Zywave, Inc.	Software	6.00% (L + 5.00%)	11/17/2022	16,844		16,810		16,844
Zywave, Inc.	Software	6.00% (L + 5.00%)	11/17/2022	478		474		478



Total Funded Investments				$	300,005	$	298,811	$	286,413
Unfunded Investments - First lien:
Bearcat Buyer, Inc.	Healthcare Services	—	7/9/2021	$	194	$	(1)	$	—





Total Unfunded Investments				$	194	$	(1)	$	—
Total Investments				$	300,199	$	298,810	$	286,413

(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of September 30, 2020.

(2)Represents the fair value in accordance with Accounting Standards Codification Topic 820, Fair Value Measurement and Disclosures (“ASC 820”). The Company's board of directors does not determine the fair value of the investments held by SLP II.

Table of Contents

The following table is a listing of the individual investments in SLP II's portfolio as of December 31, 2019:


Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Funded Investments - First lien
Access CIG, LLC	Business Services	5.44% (L + 3.75%)	2/27/2025	$	9,833	$	9,794	$	9,841
ADG, LLC	Healthcare Services	7.17% (L + 4.75% + 0.50% PIK)	9/28/2023	16,074		15,980		15,813
Advisor Group Holdings, Inc.	Consumer Services	6.80% (L + 5.00%)	7/31/2026	5,000		4,952		4,972
Bearcat Buyer, Inc.	Healthcare Services	6.19% (L + 4.25%)	7/9/2026	1,379		1,372		1,372
Bearcat Buyer, Inc.	Healthcare Services	6.19% (L + 4.25%)	7/9/2026	90		90		90
Bleriot US Bidco Inc.	Federal Services	6.69% (L + 4.75%)	10/30/2026	8,649		8,563		8,746
Brave Parent Holdings, Inc.	Software	5.93% (L + 4.00%)	4/18/2025	15,267		15,222		15,045
CentralSquare Technologies, LLC	Software	5.55% (L + 3.75%)	8/29/2025	14,850		14,819		14,231
CHA Holdings, Inc.	Business Services	6.44% (L + 4.50%)	4/10/2025	10,697		10,658		10,683
CHA Holdings, Inc.	Business Services	6.44% (L + 4.50%)	4/10/2025	2,047		2,037		2,044
CommerceHub, Inc.	Software	5.30% (L + 3.50%)	5/21/2025	2,463		2,453		2,432
Drilling Info Holdings, Inc.	Business Services	6.05% (L + 4.25%)	7/30/2025	14,758		14,703		14,696
Edgewood Partners Holdings LLC	Business Services	6.05% (L + 4.25%)	9/6/2024	7,432		7,367		7,413
Explorer Holdings, Inc.	Healthcare Services	6.26% (L + 4.50%)	11/20/2026	3,145		3,113		3,171
Fastlane Parent Company, Inc.	Distribution & Logistics	6.44% (L + 4.50%)	2/4/2026	3,474		3,411		3,448
Greenway Health, LLC	Software	5.69% (L + 3.75%)	2/16/2024	14,625		14,578		13,053
Help/Systems Holdings, Inc.	Software	6.55% (L + 4.75%)	11/19/2026	4,444		4,400		4,428
Idera, Inc.	Software	6.30% (L + 4.50%)	6/28/2024	4,446		4,417		4,449
Institutional Shareholder Services Inc.	Business Services	6.44% (L + 4.50%)	3/5/2026	13,895		13,769		13,687
Keystone Acquisition Corp.	Healthcare Services	7.19% (L + 5.25%)	5/1/2024	5,278		5,243		5,173
LSCS Holdings, Inc.	Healthcare Services	6.31% (L + 4.25%)	3/17/2025	7,298		7,290		7,225
LSCS Holdings, Inc.	Healthcare Services	6.31% (L + 4.25%)	3/17/2025	1,884		1,882		1,865
Market Track, LLC	Business Services	6.18% (L + 4.25%)	6/5/2024	11,700		11,660		10,530
MediaOcean, LLC	Software	5.80% (L + 4.00%)	8/18/2025	7,392		7,372		7,410
Medical Solutions Holdings, Inc.	Healthcare Services	6.30% (L + 4.50%)	6/14/2024	2,795		2,786		2,791
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	12,160		12,124		12,160
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	2,095		2,089		2,095
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	880		877		880
NorthStar Financial Services Group, LLC	Software	5.30% (L + 3.50%)	5/25/2025	5,885		5,861		5,789
Peraton Corp. (fka MHVC Acquisition Corp.)	Federal Services	7.05% (L + 5.25%)	4/29/2024	10,237		10,203		10,193
Premise Health Holding Corp.	Healthcare Services	5.44% (L + 3.50%)	7/10/2025	1,372		1,367		1,358
Project Accelerate Parent, LLC	Business Services	5.99% (L + 4.25%)	1/2/2025	13,545		13,494		13,511
PSC Industrial Holdings Corp.	Industrial Services	5.49% (L + 3.75%)	10/11/2024	7,305		7,252		7,269
Quest Software US Holdings Inc.	Software	6.18% (L + 4.25%)	5/16/2025	14,850		14,790		14,739
Salient CRGT Inc.	Federal Services	8.29% (L + 6.50%)	2/28/2022	13,134		13,071		12,510
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)	Education	6.19% (L + 4.25%)	7/30/2025	716		715		721
Wirepath LLC	Distribution & Logistics	5.94% (L + 4.00%)	8/5/2024	14,813		14,813		12,886
WP CityMD Bidco LLC	Healthcare Services	6.44% (L + 4.50%)	8/13/2026	15,000		14,855		15,038
Wrench Group LLC	Consumer Services	6.19% (L + 4.25%)	4/30/2026	4,478		4,435		4,488
YI, LLC	Healthcare Services	5.94% (L + 4.00%)	11/7/2024	14,801		14,791		13,839
Zelis Cost Management Buyer, Inc.	Healthcare I.T.	6.55% (L + 4.75%)	9/30/2026	10,363		10,261		10,427
Zywave, Inc.	Software	6.93% (L + 5.00%)	11/17/2022	16,975		16,930		16,975
Zywave, Inc.	Software	6.84% (L + 5.00%)	11/17/2022	481		477		481
Total Funded Investments				$	348,005	$	346,336	$	339,967
Unfunded Investments - First lien
Bearcat Buyer, Inc.	Healthcare Services	—	7/9/2021	$	194	$	(1)	$	(1)
Bleriot US Bidco Inc.	Federal Services	—	10/31/2020	1,351		(14)		15
Premise Health Holding Corp.	Healthcare Services	—	7/10/2020	110		—		—
Wrench Group LLC	Consumer Services	—	4/30/2021	1,500		—		4
Total Unfunded Investments				$	3,155	$	(15)	$	18
Total Investments				$	351,160	$	346,321	$	339,985

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(2)Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP II.

Below is certain summarized financial information for SLP II as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and September 30, 2019:


Selected Balance Sheet Information:	September 30, 2020		December 31, 2019
Investments at fair value (cost of $298,810 and $346,321, respectively)	$	286,413	$	339,985
Cash and other assets	8,838		8,159
Total assets	$	295,251	$	348,144

Credit facility	$	204,470	$	246,870
Deferred financing costs	(758)		(1,408)
Distribution payable	2,550		3,250
Payable for unsettled securities purchased	—		3,113
Other liabilities	1,201		2,367
Total liabilities	207,463		254,192

Members' capital	$	87,788	$	93,952
Total liabilities and members' capital	$	295,251	$	348,144


Selected Statement of Operations	Three Months Ended				Nine Months Ended
Information:	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Interest income	$	4,174	$	6,013	$	14,153	$	18,581
Other income	—		31		70		89
Total investment income	4,174		6,044		14,223		18,670

Interest and other financing expenses	1,190		2,745		4,696		8,484
Other expenses	98		129		360		408
Total expenses	1,288		2,874		5,056		8,892
Less: expenses waived and reimbursed	—		—		—		(20)
Net expenses	1,288		2,874		5,056		8,872
Net investment income	2,886		3,170		9,167		9,798

Net realized gains (losses) on investments	3		116		(803)		377
Net change in unrealized appreciation (depreciation) of investments	6,988		(2,371)		(6,061)		(1,311)
Net increase in members' capital	$	9,877	$	915	$	2,303	$	8,864

For the three and nine months ended September 30, 2020, the Company earned approximately $2,025 and $6,723, respectively, of dividend income related to SLP II, which is included in dividend income. For the three and nine months ended September 30, 2019, the Company earned approximately $2,581 and $8,536, respectively, of dividend income related to SLP II, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $2,025 and $2,581, respectively, of dividend income related to SLP II was included in interest and dividend receivable.

The Company has determined that SLP II is an investment company under ASC 946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company other than a wholly-owned investment company subsidiary. Furthermore, Accounting Standards Codification Topic 810, Consolidation ("ASC 810"), concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate SLP II.

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NMFC Senior Loan Program III LLC

SLP III was formed as a Delaware limited liability company and commenced operations on April 25, 2018. SLP III is structured as a private joint venture investment fund between the Company and SkyKnight Income II, LLC (“SkyKnight II”) and operates under a limited liability company agreement (the "SLP III Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within the Company's core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP III, which has equal representation from the Company and SkyKnight II. SLP III has a five year investment period and will continue in existence until April 25, 2025. The investment period may be extended for up to one year pursuant to certain terms of the SLP III Agreement.

SLP III is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III. As of September 30, 2020, the Company and SkyKnight II have committed and contributed $120,000 and $30,000, respectively, of equity to SLP III. The Company’s investment in SLP III is disclosed on the Company’s Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.

On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A., which matures on May 2, 2023 and bears interest at a rate of LIBOR plus 1.70% per annum. Effective February 13, 2020, SLP III's revolving credit facility has a maximum borrowing capacity of $450,000. As of September 30, 2020 and December 31, 2019, SLP III had total investments with an aggregate fair value of approximately $526,230 and $475,198, respectively, and debt outstanding under its credit facility of $395,200 and $355,400, respectively. As of September 30, 2020 and December 31, 2019, none of SLP III's investments were on non-accrual. Additionally, as of September 30, 2020 and December 31, 2019, SLP III had unfunded commitments in the form of delayed draws of $8,775 and $10,608, respectively. Below is a summary of SLP III's portfolio, along with a listing of the individual investments in SLP III's portfolio as of September 30, 2020 and December 31, 2019:


	September 30, 2020			December 31, 2019
First lien investments (1)	$	554,145		$	493,787
Weighted average interest rate on first lien investments (2)	4.63		%	5.95		%
Number of portfolio companies in SLP III	58			49
Largest portfolio company investment (1)	$	23,787		$	23,947
Total of five largest portfolio company investments (1)	$	99,403		$	99,906

(1)Reflects principal amount or par value of investment.

(2)Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.

Table of Contents

The following table is a listing of the individual investments in SLP III's portfolio as of September 30, 2020:


Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Funded Investments - First lien
Access CIG, LLC	Business Services	3.91% (L + 3.75%)	2/27/2025	$	870	$	870	$	852
Advisor Group Holdings, Inc.	Consumer Services	5.15% (L + 5.00%)	7/31/2026	4,963		4,920		4,815
Affordable Care Holding Corp.	Healthcare Services	5.75% (L + 4.75%)	10/24/2022	5,917		5,858		5,605
AG Parent Holdings, LLC	Healthcare Services	5.15% (L + 5.00%)	7/31/2026	12,406		12,353		12,220
Ascensus Specialties LLC	Business Services	4.91% (L + 4.75%)	9/24/2026	9,925		9,881		9,578
Aston FinCo S.a.r.l. / Aston US Finco, LLC	Software	4.40% (L + 4.25%)	10/9/2026	5,970		5,917		5,895
Astra Acquisition Corp.	Software	6.50% (L + 5.50%)	3/1/2027	11,519		11,438		11,577
BCPE Empire Holdings, Inc.	Distribution & Logistics	4.15% (L + 4.00%)	6/11/2026	9,098		9,021		8,916
BCPE Empire Holdings, Inc.	Distribution & Logistics	4.15% (L + 4.00%)	6/11/2026	1,430		1,421		1,401
Bearcat Buyer, Inc.	Healthcare Services	5.25% (L + 4.25%)	7/9/2026	19,703		19,619		19,703
Bearcat Buyer, Inc.	Healthcare Services	5.25% (L + 4.25%)	7/9/2026	1,292		1,287		1,292
Bleriot US Bidco Inc.	Federal Services	4.97% (L + 4.75%)	10/31/2026	4,303		4,264		4,273
Bleriot US Bidco Inc.	Federal Services	4.97% (L + 4.75%)	10/31/2026	672		666		668
Bluefin Holding, LLC	Software	4.15% (L + 4.00%)	9/4/2026	9,925		9,795		9,925
Bracket Intermediate Holding Corp.	Healthcare Services	4.55% (L + 4.25%)	9/5/2025	14,700		14,645		14,443
Brave Parent Holdings, Inc.	Software	4.15% (L + 4.00%)	4/18/2025	11,246		11,217		11,123
CentralSquare Technologies, LLC	Software	3.90% (L + 3.75%)	8/29/2025	14,738		14,710		13,286
Certara Holdco, Inc.	Healthcare I.T.	3.72% (L + 3.50%)	8/15/2024	1,249		1,252		1,236
CHA Holdings, Inc.	Business Services	5.50% (L + 4.50%)	4/10/2025	980		980		916
CommerceHub, Inc.	Software	3.65% (L + 3.50%)	5/21/2025	14,663		14,611		14,333
Covenant Surgical Partners, Inc.	Healthcare Services	4.16% (L + 4.00%)	7/1/2026	9,900		9,816		9,133
CRCI Longhorn Holdings, Inc.	Business Services	3.64% (L + 3.50%)	8/8/2025	14,700		14,646		14,228
Dealer Tire, LLC	Distribution & Logistics	4.40% (L + 4.25%)	12/12/2025	9,925		9,902		9,727
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)	Healthcare Services	4.75% (L + 3.75%)	6/6/2025	14,673		14,647		13,921
Drilling Info Holdings, Inc.	Business Services	4.40% (L + 4.25%)	7/30/2025	18,624		18,555		17,980
Edgewood Partners Holdings LLC	Business Services	5.25% (L + 4.25%)	9/6/2024	7,375		7,320		7,117
eResearchTechnology, Inc.	Healthcare Services	5.50% (L + 4.50%)	2/4/2027	3,921		3,885		3,912
EyeCare Partners, LLC	Healthcare Services	3.90% (L + 3.75%)	2/18/2027	12,101		12,087		11,448
Fastlane Parent Company, Inc.	Distribution & Logistics	4.65% (L + 4.50%)	2/4/2026	3,448		3,392		3,328
Greenway Health, LLC	Software	4.75% (L + 3.75%)	2/16/2024	14,557		14,565		13,029
Heartland Dental, LLC	Healthcare Services	3.65% (L + 3.50%)	4/30/2025	18,588		18,522		17,199
Help/Systems Holdings, Inc.	Software	5.75% (L + 4.75%)	11/19/2026	18,486		18,311		18,232
Idera, Inc.	Software	5.00% (L + 4.00%)	6/28/2024	5,529		5,509		5,467
Institutional Shareholder Services Inc.	Business Services	4.72% (L + 4.50%)	3/5/2026	985		977		955
Kestra Advisor Services Holdings A, Inc.	Business Services	4.40% (L + 4.25%)	6/3/2026	9,405		9,338		9,240
LSCS Holdings, Inc.	Healthcare Services	4.47% (L + 4.25%)	3/17/2025	2,634		2,618		2,502
LSCS Holdings, Inc.	Healthcare Services	4.47% (L + 4.25%)	3/17/2025	680		676		646
Market Track, LLC	Business Services	5.25% (L + 4.25%)	6/5/2024	4,741		4,737		4,668
MED ParentCo, LP	Healthcare Services	4.40% (L + 4.25%)	8/31/2026	10,298		10,214		9,818
MED ParentCo, LP	Healthcare Services	4.40% (L + 4.25%)	8/31/2026	1,807		1,792		1,723
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	4,514		4,502		4,472
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	873		871		865
National Intergovernmental Purchasing Alliance Company	Business Services	3.97% (L + 3.75%)	5/23/2025	8,724		8,720		8,571
National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)	Healthcare Services	4.40% (L + 4.25%)	3/9/2026	8,901		8,901		8,823
National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)	Healthcare Services	4.40% (L + 4.25%)	3/9/2026	406		406		403
Navex Topco, Inc.	Software	3.40% (L + 3.25%)	9/5/2025	18,255		18,118		17,844
Navicure, Inc.	Healthcare Services	4.75% (L + 4.00%)	10/22/2026	4,118		4,107		4,035
Netsmart Technologies, Inc.	Healthcare I.T.	6.00% (P + 2.75%)	4/19/2023	10,250		10,250		10,250
Newport Group Holdings II, Inc.	Business Services	3.72% (L + 3.50%)	9/12/2025	4,900		4,882		4,722
Orion Advisor Solutions, Inc.	Business Services	5.00% (L + 4.00%)	9/24/2027	5,250		5,198		5,219
Outcomes Group Holdings, Inc.	Healthcare Services	3.47% (L + 3.25%)	10/24/2025	3,409		3,402		3,341
Pelican Products, Inc.	Business Products	4.50% (L + 3.50%)	5/1/2025	4,888		4,879		4,688

Table of Contents


Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Peraton Corp. (fka MHVC Acquisition Corp.)	Federal Services	6.25% (L + 5.25%)	4/29/2024	15,312		15,262		15,197
Premise Health Holding Corp.	Healthcare Services	3.72% (L + 3.50%)	7/10/2025	13,619		13,569		13,177
Project Accelerate Parent, LLC	Business Services	5.25% (L + 4.25%)	1/2/2025	9,848		9,809		8,962
Quest Software US Holdings Inc.	Software	4.51% (L + 4.25%)	5/16/2025	14,737		14,685		14,467
Ryan Specialty Group, LLC	Business Services	4.00% (L + 3.25%)	9/1/2027	3,500		3,448		3,483
Sierra Enterprises, LLC	Food & Beverage	5.00% (L + 4.00%)	11/11/2024	2,437		2,435		2,255
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)	Education	4.47% (L + 4.25%)	7/30/2025	12,214		12,193		11,580
TIBCO Software Inc.	Software	3.90% (L + 3.75%)	6/30/2026	7,673		7,655		7,500
Unitek Acquisition, Inc.	Business Services	7.50% (L + 5.50% + 1.00% PIK)	8/20/2024	3,325		2,700		2,975
Unitek Acquisition, Inc.	Business Services	7.50% (L + 5.50% + 1.00% PIK)	8/20/2024	665		540		595
Wirepath LLC	Distribution & Logistics	4.22% (L + 4.00%)	8/5/2024	17,170		17,171		15,798
WP CityMD Bidco LLC	Healthcare Services	5.50% (L + 4.50%)	8/13/2026	19,918		19,744		19,852
VT Topco, Inc.	Business Services	3.40% (L + 3.25%)	8/1/2025	2,802		2,802		2,676
YI, LLC	Healthcare Services	5.00% (L + 4.00%)	11/7/2024	9,716		9,710		8,501
Total Funded Investments				$	545,370	$	542,193	$	526,581

Unfunded Investments - First lien
BCPE Empire Holdings, Inc.	Distribution & Logistics	—	6/11/2021	369		(4)		(7)
Bearcat Buyer, Inc.	Healthcare Services	—	7/9/2021	2,792		(14)		—
Covenant Surgical Partners, Inc.	Healthcare Services	—	7/1/2021	2,000		(20)		(155)
EyeCare Partners, LLC	Healthcare Services	—	2/18/2022	2,838		—		(153)
MED ParentCo, LP	Healthcare Services	—	8/27/2021	776		(8)		(36)
Total Unfunded Investments				$	8,775	$	(46)	$	(351)
Total Investments				$	554,145	$	542,147	$	526,230

(2)Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP III.

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The following table is a listing of the individual investments in SLP III's portfolio as of December 31, 2019:


Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Funded Investments - First lien
Access CIG, LLC	Business Services	5.44% (L + 3.75%)	2/27/2025	$	1,204	$	1,204	$	1,205
Advisor Group Holdings, Inc.	Consumer Services	6.80% (L + 5.00%)	7/31/2026	5,000		4,952		4,972
Affordable Care Holding Corp.	Healthcare Services	6.59% (L + 4.75%)	10/24/2022	5,963		5,884		5,814
AG Parent Holdings, LLC	Healthcare Services	6.91% (L + 5.00%)	7/31/2026	12,500		12,440		12,406
Aston FinCo S.a r.l. / Aston US Finco, LLC	Software	6.26% (L + 4.25%)	10/9/2026	6,000		5,941		5,970
Ascensus Specialties LLC	Business Services	6.44% (L + 4.75%)	9/24/2026	10,000		9,951		9,975
BCPE Empire Holdings, Inc.	Distribution & Logistics	5.80% (L + 4.00%)	6/11/2026	9,167		9,080		9,224
BCPE Empire Holdings, Inc.	Distribution & Logistics	5.80% (L + 4.00%)	6/11/2026	229		243		231
Bearcat Buyer, Inc.	Healthcare Services	6.19% (L + 4.25%)	7/9/2026	19,853		19,759		19,753
Bearcat Buyer, Inc.	Healthcare Services	6.19% (L + 4.25%)	7/9/2026	1,302		1,296		1,296
Bleriot US Bidco Inc.	Federal Services	6.69% (L + 4.75%)	10/30/2026	4,324		4,281		4,373
Bluefin Holding, LLC	Software	6.14% (L + 4.25%)	9/4/2026	10,000		9,855		9,900
Bracket Intermediate Holding Corp.	Healthcare Services	6.35% (L + 4.25%)	9/5/2025	14,813		14,750		14,775
Brave Parent Holdings, Inc.	Software	5.93% (L + 4.00%)	4/18/2025	14,775		14,732		14,560
CentralSquare Technologies, LLC	Software	5.55% (L + 3.75%)	8/29/2025	14,850		14,819		14,231
Certara Holdco, Inc.	Healthcare I.T.	5.44% (L + 3.50%)	8/15/2024	1,262		1,266		1,262
CHA Holdings, Inc.	Business Services	6.44% (L + 4.50%)	4/10/2025	987		987		986
CommerceHub, Inc.	Software	5.30% (L + 3.50%)	5/21/2025	14,775		14,716		14,590
Covenant Surgical Partners, Inc.	Healthcare Services	5.69% (L + 4.00%)	7/1/2026	9,975		9,881		9,913
CRCI Longhorn Holdings, Inc.	Business Services	5.19% (L + 3.50%)	8/8/2025	14,813		14,751		14,414
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)	Healthcare Services	5.55% (L + 3.75%)	6/6/2025	14,786		14,755		14,737
Drilling Info Holdings, Inc.	Business Services	6.05% (L + 4.25%)	7/30/2025	18,766		18,688		18,688
Edgewood Partners Holdings LLC	Business Services	6.05% (L + 4.25%)	9/6/2024	7,432		7,367		7,413
Explorer Holdings, Inc.	Healthcare Services	6.25% (L + 4.50%)	11/20/2026	3,931		3,892		3,964
Fastlane Parent Company, Inc.	Distribution & Logistics	6.44% (L + 4.50%)	2/4/2026	3,474		3,411		3,448
Greenway Health, LLC	Software	5.69% (L + 3.75%)	2/16/2024	14,670		14,679		13,093
Heartland Dental, LLC	Healthcare Services	5.55% (L + 3.75%)	4/30/2025	18,317		18,243		18,248
Help/Systems Holdings, Inc.	Software	6.55% (L + 4.75%)	11/19/2026	5,556		5,500		5,535
Idera, Inc.	Software	6.30% (L + 4.50%)	6/28/2024	5,572		5,548		5,576
Institutional Shareholder Services Inc.	Business Services	6.44% (L + 4.50%)	3/5/2026	993		983		978
Kestra Advisor Services Holdings A, Inc.	Business Services	6.20% (L + 4.25%)	6/3/2026	9,476		9,402		9,477
LSCS Holdings, Inc.	Healthcare Services	6.31% (L + 4.25%)	3/17/2025	2,654		2,634		2,627
LSCS Holdings, Inc.	Healthcare Services	6.31% (L + 4.25%)	3/17/2025	685		680		678
Market Track, LLC	Business Services	6.18% (L + 4.25%)	6/5/2024	4,778		4,773		4,300
MED ParentCo, LP	Healthcare Services	6.05% (L + 4.25%)	8/31/2026	10,376		10,282		10,402
MED ParentCo, LP	Healthcare Services	6.05% (L + 4.25%)	8/31/2026	553		549		554
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	4,549		4,534		4,549
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	880		877		880
National Intergovernmental Purchasing Alliance Company	Business Services	5.69% (L + 3.75%)	5/23/2025	8,790		8,786		8,790
Navex Topco, Inc.	Software	5.05% (L + 3.25%)	9/5/2025	18,394		18,237		18,448
Netsmart Technologies, Inc.	Healthcare I.T.	5.55% (L + 3.75%)	4/19/2023	10,330		10,330		10,308
Newport Group Holdings II, Inc.	Business Services	5.65% (L + 3.75%)	9/12/2025	4,938		4,917		4,950
NorthStar Financial Services Group, LLC	Software	5.30% (L + 3.50%)	5/25/2025	11,770		11,723		11,579
Outcomes Group Holdings, Inc.	Healthcare Services	5.41% (L + 3.50%)	10/24/2025	6,435		6,421		6,344
Pelican Products, Inc.	Business Products	5.24% (L + 3.50%)	5/1/2025	4,925		4,915		4,531
Peraton Corp. (fka MHVC Acquisition Corp.)	Federal Services	7.05% (L + 5.25%)	4/29/2024	15,430		15,371		15,363
Premise Health Holding Corp.	Healthcare Services	5.44% (L + 3.50%)	7/10/2025	13,723		13,666		13,580
Project Accelerate Parent, LLC	Business Services	5.99% (L + 4.25%)	1/2/2025	9,924		9,878		9,899
Quest Software US Holdings Inc.	Software	6.18% (L + 4.25%)	5/16/2025	14,850		14,790		14,739
Sierra Enterprises, LLC	Food & Beverage	5.80% (L + 4.00%)	11/11/2024	2,456		2,454		2,447
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)	Education	6.19% (L + 4.25%)	7/30/2025	14,812		14,782		14,905
Wirepath LLC	Distribution & Logistics	5.94% (L + 4.00%)	8/5/2024	17,302		17,302		15,053
WP CityMD Bidco LLC	Healthcare Services	6.44% (L + 4.50%)	8/13/2026	20,069		19,875		20,119

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Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
YI, LLC	Healthcare Services	5.94% (L + 4.00%)	11/7/2024	$	9,791	9,784		9,155
Total Funded Investments				$	483,179	$	480,816	$	475,207
Unfunded Investments - First lien
BCPE Empire Holdings, Inc.	Distribution & Logistics	—	6/11/2021	$	1,580	$	(16)	$	10
Bearcat Buyer, Inc.	Healthcare Services	—	7/9/2021	2,792		(14)		(14)
Bleriot US Bidco Inc.	Federal Services	—	10/31/2020	676		(7)		8
Covenant Surgical Partners, Inc.	Healthcare Services	—	7/1/2021	2,000		(20)		(13)
Heartland Dental, LLC	Healthcare Services	—	4/30/2020	413		—		(2)
MED ParentCo, LP	Healthcare Services	—	8/27/2021	2,044		(20)		5
Premise Health Holding Corp.	Healthcare Services	—	7/10/2020	1,103		(3)		(3)
Total Unfunded Investments				$	10,608	$	(80)	$	(9)
Total Investments				$	493,787	$	480,736	$	475,198

(2)Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP III.

Below is certain summarized financial information for SLP III as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and September 30, 2019:


Selected Balance Sheet Information:	September 30, 2020		December 31, 2019
Investments at fair value (cost of $542,147 and $480,736)	$	526,230	$	475,198
Cash and other assets	14,005		12,836
Receivable from unsettled securities sold	2,385		—
Total assets	$	542,620	$	488,034

Credit facility	$	395,200	$	355,400
Deferred financing costs	(2,322)		(2,385)
Payable for unsettled securities purchased	9,384		8,166
Distribution payable	4,000		3,650
Other liabilities	2,396		3,736
Total liabilities	408,658		368,567

Members' capital	$	133,962	$	119,467
Total liabilities and members' capital	$	542,620	$	488,034

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Selected Statement of Operations Information:	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Interest income	$	6,490	$	7,268	$	20,826	$	19,828
Other income	75		122		320		270
Total investment income	6,565		7,390		21,146		20,098

Interest and other financing expenses	2,516		3,770		9,593		10,511
Other expenses	250		166		571		469
Total expenses	2,766		3,936		10,164		10,980
Less: expenses waived and reimbursed	—		—		—		(22)
Net expenses	2,766		3,936		10,164		10,958
Net investment income	3,799		3,454		10,982		9,140

Net realized (losses) gains on investments	(82)		100		(78)		170
Net change in unrealized appreciation (depreciation) of investments	14,775		(1,800)		(10,379)		1,855
Net increase in members' capital	$	18,492	$	1,754	$	525	$	11,165

For the three and nine months ended September 30, 2020, the Company earned approximately $3,200 and $8,824, respectively, of dividend income related to SLP III, which is included in dividend income. For the three and nine months ended September 30, 2019, the Company earned approximately $2,680 and $7,600, respectively, of dividend income related to SLP III, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $3,200 and $2,920, respectively, of dividend income related to SLP III was included in interest and dividend receivable.

The Company has determined that SLP III is an investment company under ASC 946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company other than a wholly-owned investment company subsidiary. Furthermore, ASC 810 concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate SLP III.

Unconsolidated Significant Subsidiaries

In accordance with Regulation S-X Rule 10-01(b)(1), the Company evaluates its unconsolidated controlled portfolio companies as significant subsidiaries under this rule. On May 21, 2020, the SEC adopted rule amendments that will impact the requirement of BDCs and registered closed-end funds to disclose the financial statements of certain of its portfolio companies or of a fund that the investment company acquires (the "Final Rules"). The Final Rules adopt a new definition of “significant subsidiary” in Rule 1-02(w)(2) that will be applicable to the Company's determination of whether separate financial statements or summary financial information in such Company’s periodic reports for any portfolio company is required, which will (a) modify the investment test and income test, and (b) eliminate the asset test currently in the definition of “significant subsidiary” in Rule 1-02(w). The Final Rules will be effective on January 1, 2021, but, as permitted by the Final Rules, the Company elected to early adopt during the quarter ended June 30, 2020. As of September 30, 2020, the Company did not have any significant unconsolidated subsidiaries under Regulation S-X Rule 10-01(b)(1).

Investment Risk Factors

First and second lien debt that the Company invests in is almost entirely rated below investment grade or may be unrated. Debt investments rated below investment grade are often referred to as “leveraged loans”, “high yield” or “junk” debt investments, and may be considered “high risk” compared to debt investments that are rated investment grade. These debt investments are considered speculative because of the credit risk of the issuers. Such issuers are considered more likely than investment grade issuers to default on their payments of interest and principal, and such risk of default could reduce the net asset value and income distributions of the Company. In addition, some of the Company’s debt investments will not fully amortize during their lifetime, which could result in a loss or a substantial amount of unpaid principal and interest due upon maturity. First and second lien debt may also lose significant market value before a default occurs. Furthermore, an active trading market may not exist for these first and second lien debt investments. This illiquidity may make it more difficult to value the debt.

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Subordinated debt is generally subject to similar risks as those associated with first and second lien debt, except that such debt is subordinated in payment and/or lower in lien priority. Subordinated debt is subject to the additional risk that the cash flow of the borrower and the property securing the debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured and unsecured obligations of the borrower.

The Company may directly invest in the equity of private companies or, in some cases, equity investments could be made in connection with a debt investment. Equity investments may or may not fluctuate in value, resulting in recognized realized gains or losses upon disposition.

The Company's financial condition and portfolio companies may be negatively impacted by the recent outbreak of the novel strain of coronavirus ("COVID-19"). On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, a national emergency was declared in the U.S. The ongoing spread of COVID-19 has had, and will continue to have, a material adverse impact on the U.S. and global economy as commercial activity and public perception have been negatively impacted by the outbreak. The ultimate extent to which the COVID-19 crisis will impact our financial condition and portfolio companies will depend on future developments affecting not only us, but also the entire U.S. and global economy, which are inherently uncertain, including, among others, new information that may emerge concerning the severity and rate of spread of the disease.

Note 4. Fair Value

Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes and ranks the inputs to valuation techniques used in measuring investments at fair value. The hierarchy classifies the inputs used in measuring fair value into three levels as follows:

Level I—Quoted prices (unadjusted) are available in active markets for identical investments and the Company has the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by ASC 820, the Company, to the extent that it holds such investments, does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

Level II—Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following:

•Quoted prices for similar assets or liabilities in active markets;

•Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);

•Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and

•Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.

Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.

The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.

The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period.

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The following table summarizes the levels in the fair value hierarchy that the Company’s portfolio investments fall into as of September 30, 2020:


	Total		Level I		Level II		Level III
First lien	$	1,662,653	$	—	$	167,616	$	1,495,037
Second lien	689,319		—		93,784		595,535
Subordinated	43,536		—		—		43,536
Equity and other	501,115		—		—		501,115
Total investments	$	2,896,623	$	—	$	261,400	$	2,635,223

The following table summarizes the levels in the fair value hierarchy that the Company’s portfolio investments fall into as of December 31, 2019:


	Total		Level I		Level II		Level III
First lien	$	1,801,615	$	—	$	263,192	$	1,538,423
Second lien	788,868		—		369,477		419,391
Subordinated	66,774		—		20,870		45,904
Equity and other	503,023		—		—		503,023
Total investments	$	3,160,280	$	—	$	653,539	$	2,506,741

The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended September 30, 2020, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2020:


	Total		First Lien		Second Lien		Subordinated		Equity and other
Fair value, June 30, 2020	$	2,702,692	$	1,533,018	$	665,894	$	41,362	$	462,418
Total gains or losses included in earnings:
Net realized gains on investments	233		220		13		—		—
Net change in unrealized appreciation	64,266		27,610		10,852		1,368		24,436
Purchases, including capitalized PIK and revolver fundings	56,439		39,901		1,471		806		14,261
Proceeds from sales and paydowns of investments	(43,020)		(31,505)		(11,515)		—		—
Transfers into Level III(1)	6,871		6,871		—		—		—
Transfers out of Level III(1)	(152,258)		(81,078)		(71,180)		—		—
Fair Value, September 30, 2020	$	2,635,223	$	1,495,037	$	595,535	$	43,536	$	501,115
Unrealized appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period:	$	64,284	$	27,628	$	10,852	$	1,368	$	24,436

(1)As of September 30, 2020, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.

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The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended September 30, 2019, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2019:


	Total		First Lien		Second Lien		Subordinated		Equity and other
Fair value, June 30, 2019	$	2,028,442	$	1,198,153	$	330,396	$	43,585	$	456,308
Total gains or losses included in earnings:
Net realized gains on investments	15		15		—		—		—
Net change in unrealized (depreciation) appreciation	(3,165)		2,540		(4,108)		950		(2,547)
Purchases, including capitalized PIK and revolver fundings	410,626		271,086		91,898		980		46,662
Proceeds from sales and paydowns of investments	(94,158)		(54,648)		(39,510)		—		—
Transfers into Level III (1)	175,725		51,662		124,063		—		—
Transfers out of Level III (1)	(135,378)		(17,181)		(118,197)		—		—
Fair Value, September 30, 2019	$	2,382,107	$	1,451,627	$	384,542	$	45,515	$	500,423
Unrealized (depreciation) appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period:	$	(3,317)	$	2,540	$	(4,260)	$	950	$	(2,547)

(1)As of September 30, 2019, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.

The following table summarizes the changes in fair value of Level III portfolio investments for the nine months ended September 30, 2020, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2020:


	Total		First Lien		Second Lien		Subordinated		Equity and other
Fair value, December 31, 2019	$	2,506,741	$	1,538,423	$	419,391	$	45,904	$	503,023
Total gains or losses included in earnings:
Net realized (losses) gains on investments	(2,745)		(2,841)		13		—		83
Net change in unrealized (depreciation)	(64,446)		(27,160)		(784)		(2,983)		(33,519)
Purchases, including capitalized PIK and revolver fundings	316,464		263,378		20,943		615		31,528
Proceeds from sales and paydowns of investments	(369,887)		(318,280)		(51,607)		—		—
Transfers into Level III(1)	306,981		92,872		214,109		—		—
Transfers out of Level III(1)	(57,885)		(51,355)		(6,530)		—		—
Fair Value, September 30, 2020	$	2,635,223	$	1,495,037	$	595,535	$	43,536	$	501,115
Unrealized depreciation for the period relating to those Level III assets that were still held by the Company at the end of the period:	$	(64,723)	$	(27,061)	$	(1,160)	$	(2,983)	$	(33,519)

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The following table summarizes the changes in fair value of Level III portfolio investments for the nine months ended September 30, 2019, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2019:


	Total		First Lien		Second Lien		Subordinated		Equity and other
Fair value, December 31, 2018	$	1,775,071	$	987,528	$	306,815	$	40,087	$	440,641
Total gains or losses included in earnings:
Net realized gains on investments	202		81		121		—		—
Net change in unrealized appreciation (depreciation)	3,897		4,067		(202)		2,234		(2,202)
Purchases, including capitalized PIK and revolver fundings	720,433		504,983		150,272		3,194		61,984
Proceeds from sales and paydowns of investments	(174,984)		(83,747)		(91,237)		—		—
Transfers into Level III (1)	202,728		90,606		112,122		—		—
Transfers out of Level III (1)	(145,240)		(51,891)		(93,349)		—		—
Fair Value, September 30, 2019	$	2,382,107	$	1,451,627	$	384,542	$	45,515	$	500,423
Unrealized (depreciation) appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period:	$	3,220	$	4,069	$	(881)	$	2,234	$	(2,202)

Except as noted in the tables above, there were no other transfers in or out of Level I, II, or III during the three and nine months ended September 30, 2020 and September 30, 2019. Transfers into Level III occur as quotations obtained through pricing services are deemed not representative of fair value as of the balance sheet date and such assets are internally valued. As quotations obtained through pricing services are substantiated through additional market sources, investments are transferred out of Level III. In addition, transfers out of Level III and transfers into Level III occur based on the increase or decrease in the availability of certain observable inputs.

The Company invests in revolving credit facilities. These investments are categorized as Level III investments as these assets are not actively traded and their fair values are often implied by the term loans of the respective portfolio companies.

The Company generally uses the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. The Company typically determines the fair value of its performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company’s performance and associated financial risks. The following outlines additional details on the approaches considered:

Company Performance, Financial Review, and Analysis: Prior to investment, as part of its due diligence process, the Company evaluates the overall performance and financial stability of the portfolio company. Post investment, the Company analyzes each portfolio company’s current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. The Company also attempts to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of its original investment thesis. This analysis is specific to each portfolio company. The Company leverages the knowledge gained from its original due diligence process, augmented by this subsequent monitoring, to continually refine its outlook for each of its portfolio companies and ultimately form the valuation of its investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, the Company will consider the pricing indicated by the external event to corroborate the private valuation.

For debt investments, the Company may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of the Company’s debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, the Company may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value. After enterprise value coverage is demonstrated for the Company’s debt

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investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.

Market Based Approach: The Company may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA) multiples of publicly traded comparable companies and comparable transactions. The Company considers numerous factors when selecting the appropriate companies whose trading multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. The Company may apply an average of various relevant comparable company EBITDA multiples to the portfolio company’s latest twelve month (“LTM”) EBITDA or projected EBITDA to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA multiple will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the market based approach as of September 30, 2020 and December 31, 2019, the Company used the relevant EBITDA multiple ranges set forth in the table below to determine the enterprise value of its portfolio companies. The Company believes these were reasonable ranges in light of current comparable company trading levels and the specific portfolio companies involved.

Income Based Approach: The Company also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security’s contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment’s expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach and a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes an average yield-to maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of September 30, 2020 and December 31, 2019, the Company used the discount ranges set forth in the table below to value investments in its portfolio companies.

The unobservable inputs used in the fair value measurement of the Company's Level III investments as of September 30, 2020 were as follows:


					Range
Type	Fair Value as of September 30, 2020		Approach	Unobservable Input	Low		High		Weighted Average
First lien	$	1,438,801	Market & income approach	EBITDA multiple	5.0x		35.0x		14.0x
				Revenue multiple	3.5x		11.0x		5.9x
				Discount rate	4.5	%	17.0	%	8.3	%
	43,769		Market quote	Broker quote	N/A		N/A		N/A
	12,467		Other	N/A(1)	N/A		N/A		N/A
Second lien	531,932		Market & income approach	EBITDA multiple	7.0x		34.0x		15.1x

				Discount rate	6.8	%	21.7	%	9.5	%
	48,603		Market quote	Broker quote	N/A		N/A		N/A
	15,000		Other	N/A(1)	N/A		N/A		N/A
Subordinated	43,536		Market & income approach	EBITDA multiple	9.0x		15.0x		12.0x
				Discount rate	10.2	%	35.0	%	18.0	%

Equity and other	500,257		Market & income approach	EBITDA multiple	6.5x		19.5x		12.6x

				Discount rate	6.0	%	47.7	%	12.1	%
	700		Black Scholes analysis	Expected life in years	5.5		5.5		5.5
				Volatility	52.3	%	52.3	%	52.3	%
				Discount rate	0.7	%	0.7	%	0.7	%
	158		Other	N/A(1)	N/A		N/A		N/A
	$	2,635,223

(1)Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.

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The unobservable inputs used in the fair value measurement of the Company's Level III investments as of December 31, 2019 were as follows:


					Range
Type	Fair Value as of December 31, 2019		Approach	Unobservable Input	Low		High		Weighted Average
First lien	$	1,239,847	Market & income approach	EBITDA multiple	2.0x		35.0x		14.1x
				Revenue multiple	3.5x		11.0x		6.5x
				Discount rate	6.3	%	14.8	%	8.6	%
	298,576		Market quote	Broker quote	N/A		N/A		N/A

Second lien	196,494		Market & income approach	EBITDA multiple	6.5x		32.0x		14.8x
				Revenue multiple	0.1x		1.3x		0.7x
				Discount rate	8.6	%	20.4	%	11.6	%
	222,897		Market quote	Broker quote	N/A		N/A		N/A
Subordinated	45,904		Market & income approach	EBITDA multiple	5.5x		15.0x		10.7x
				Discount rate	10.2	%	35.0	%	18.8	%
Equity and other	502,125		Market & income approach	EBITDA multiple	5.5x		19.5x		11.9x
				Revenue multiple	0.1x		1.3x		0.7x
				Discount rate	6.2	%	57.4	%	13.8	%
	898		Black Scholes analysis	Expected life in years	6.3		6.3		6.3
				Volatility	23.4	%	23.4	%	23.4	%
				Discount rate	1.8	%	1.8	%	1.8	%
	$	2,506,741

Based on a comparison to similar BDC credit facilities, the terms and conditions of the Holdings Credit Facility, the NMFC Credit Facility and the DB Credit Facility (as defined in Note 7. Borrowings) are representative of market. The carrying values of the Holdings Credit Facility, NMFC Credit Facility and DB Credit Facility approximate fair value as of September 30, 2020, as the facilities are continually monitored and examined by both the borrower and the lender and are considered Level III. The carrying value of the SBA-guaranteed debentures, the 2016 Unsecured Notes, the 2017A Unsecured Notes, the 2018A Unsecured Notes, the 2018B Unsecured Notes and the 2019A Unsecured Notes (as defined in Note 7. Borrowings) approximate fair value as of September 30, 2020 based on a comparison of market interest rates for the Company’s borrowings and similar entities and are considered Level III. The fair value of the 2018 Convertible Notes and the 5.75% Unsecured Notes (as defined in Note 7. Borrowings) as of September 30, 2020 was $202,266 and $51,688, respectively, which was based on quoted prices and considered Level II. See Note 7. Borrowings, for details. The carrying value of the collateralized agreement approximates fair value as of September 30, 2020 and is considered Level III. The fair value of other financial assets and liabilities approximates their carrying value based on the short-term nature of these items.

Fair value risk factors—The Company seeks investment opportunities that offer the possibility of attaining substantial capital appreciation. Certain events particular to each industry in which the Company’s portfolio companies conduct their operations, as well as general economic, political and public health conditions (including the COVID-19 outbreak), may have a significant negative impact on the operations and profitability of the Company’s investments and/or on the fair value of the Company’s investments. The Company’s investments are subject to the risk of non-payment of scheduled interest or principal, resulting in a reduction in income to the Company and their corresponding fair valuations. Also, there may be risk associated with the concentration of investments in one geographic region or in certain industries. These events are beyond the control of the Company and cannot be predicted. Furthermore, the ability to liquidate investments and realize value is subject to uncertainties.

Note 5. Agreements

The Company entered into an investment advisory and management agreement (the “Investment Management Agreement”) with the Investment Adviser which was most recently re-approved by the Company's board of directors on February 6, 2020. Under the Investment Management Agreement, the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. For providing these services, the Investment Adviser receives a fee from the Company, consisting of two components—a base management fee and an incentive fee.

Pursuant to the Investment Management Agreement, the base management fee is calculated at an annual rate of 1.75% of the Company’s gross assets, which equals the Company’s total assets on the Consolidated Statements of Assets and

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Liabilities, less (i) the borrowings under the New Mountain Finance SPV Funding, L.L.C. Loan and Security Agreement, as amended and restated, dated October 27, 2010 (the "SLF Credit Facility") and (ii) cash and cash equivalents. The base management fee is payable quarterly in arrears, and is calculated based on the average value of the Company’s gross assets, which equals the Company’s total assets, as determined in accordance with GAAP, less the borrowings under the SLF Credit Facility and cash and cash equivalents at the end of each of the two most recently completed calendar quarters, and appropriately adjusted on a pro rata basis for any equity capital raises or repurchases during the current calendar quarter. The Company has not invested, and currently is not invested, in derivatives. To the extent the Company invests in derivatives in the future, the Company will use the actual value of the derivatives, as reported on the Consolidated Statements of Assets and Liabilities, for purposes of calculating its base management fee.

Since the IPO, the base management fee calculation has deducted the borrowings under the SLF Credit Facility. The SLF Credit Facility had historically consisted of primarily lower yielding assets at higher advance rates. As part of an amendment to the Company’s existing credit facilities with Wells Fargo Bank, National Association, the SLF Credit Facility merged with the NMF Holdings Loan and Security Agreement, as amended and restated, dated May 19, 2011, and formed the Holdings Credit Facility on December 18, 2014 (as defined in Note 7. Borrowings). The amendment merged the credit facilities and combined the amount of borrowings previously available. Post credit facility merger and to be consistent with the methodology since the IPO, the Investment Adviser will continue to waive management fees on the leverage associated with those assets held under revolving credit facilities that share the same underlying yield characteristics with investments leveraged under the legacy SLF Credit Facility, which as of September 30, 2020 and September 30, 2019 was approximately $634,090 and $777,563, respectively. The Investment Adviser cannot recoup management fees that the Investment Adviser has previously waived. For the three and nine months ended September 30, 2020, management fees waived were approximately $2,841 and $9,567, respectively. For the three and nine months ended September 30, 2019, management fees waived were approximately $3,141 and $8,497, respectively.

The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 20.0% of the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter, subject to a “preferred return”, or “hurdle”, and a “catch-up” feature. “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, upfront, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under an administration agreement, as amended and restated (the “Administration Agreement”), with the Administrator, and any interest expense and distributions paid on any issued and outstanding preferred stock (of which there are none as of September 30, 2020), but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, will be compared to a “hurdle rate” of 2.0% per quarter (8.0% annualized), subject to a “catch-up” provision measured as of the end of each calendar quarter. The hurdle rate is appropriately pro-rated for any partial periods. The calculation of the Company’s incentive fee with respect to the Pre-Incentive Fee Net Investment Income for each quarter is as follows:

•No incentive fee is payable to the Investment Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate of 2.0% (the “preferred return” or “hurdle”).

•100.0% of the Company’s Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than or equal to 2.5% in any calendar quarter (10.0% annualized) is payable to the Investment Adviser. This portion of the Company’s Pre-Incentive Fee Net Investment Income (which exceeds the hurdle rate but is less than or equal to 2.5%) is referred to as the “catch-up”. The catch-up provision is intended to provide the Investment Adviser with an incentive fee of 20.0% on all of the Company’s Pre-Incentive Fee Net Investment Income as if a hurdle rate did not apply when the Company’s Pre-Incentive Fee Net Investment Income exceeds 2.5% in any calendar quarter.

•20.0% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.5% in any calendar quarter (10.0% annualized) is payable to the Investment Adviser once the hurdle is reached and the catch-up is achieved.

For the three and nine months ended September 30, 2020, incentive fees waived were approximately $500 and $500, respectively. For the three and nine months ended September 30, 2019, no incentive fees were waived. The Investment Adviser cannot recoup incentive fees that the Investment Adviser has previously waived.

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The second part of the incentive fee will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement) and will equal 20.0% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each 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 gain incentive fee.

In accordance with GAAP, the Company accrues a hypothetical capital gains incentive fee based upon the cumulative net realized capital gains and realized capital losses and the cumulative net unrealized capital appreciation and unrealized capital depreciation on investments held at the end of each period. Actual amounts paid to the Investment Adviser are consistent with the Investment Management Agreement and are based only on actual realized capital gains computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis from inception through the end of each calendar year as if the entire portfolio was sold at fair value.

The following table summarizes the management fees and incentive fees incurred by the Company for the three and nine months ended September 30, 2020 and September 30, 2019.


	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Management fee	$	12,877	$	12,687	$	39,869	$	35,302
Less: management fee waiver	(2,841)		(3,141)		(9,567)		(8,497)
Total management fee	10,036		9,546		30,302		26,805
Incentive fee, excluding accrued capital gains incentive fees	$	7,135	$	7,792	$	21,857	$	21,642
Less: incentive fee waiver	(500)		—		(500)		—
Total incentive fee	6,635		7,792		21,357		21,642
Accrued capital gains incentive fees(1)	$	—	$	—	$	—	$	—

(1)As of September 30, 2020 and September 30, 2019, no actual capital gains incentive fee was owed under the Investment Management Agreement by the Company, as cumulative net realized capital gains did not exceed cumulative unrealized capital depreciation.

The Company has entered into the Administration Agreement with the Administrator under which the Administrator provides administrative services. The Administrator maintains, or oversees the maintenance of, the Company’s consolidated financial records, prepares reports filed with the United States Securities and Exchange Commission (the "SEC"), generally monitors the payment of the Company’s expenses and oversees the performance of administrative and professional services rendered by others. The Company will reimburse the Administrator for the Company’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to the Company under the Administration Agreement. Pursuant to the Administration Agreement and further restricted by the Company, the Administrator may, in its own discretion, submit to the Company for reimbursement some or all of the expenses that the Administrator has incurred on behalf of the Company during any quarterly period. As a result, the amount of expenses for which the Company will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to the Company for reimbursement in the future. However, it is expected that the Administrator will continue to support part of the expense burden of the Company in the near future and may decide to not calculate and charge through certain overhead related amounts as well as continue to cover some of the indirect costs. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three and nine months ended September 30, 2020, approximately $613 and $2,005, respectively, of indirect administrative expenses were included in administrative expenses of which $589 and $924, respectively, were waived by the Administrator. For the three and nine months ended September 30, 2019, approximately $599 and $1,993, respectively, of indirect administrative expenses were included in administrative expenses of which $0 and $335, respectively, were waived by the Administrator. As of September 30, 2020 and December 31, 2019, approximately $426 and $602, respectively, of indirect administrative expenses were included in payable to affiliates. For the three and nine months ended September 30, 2020, the reimbursement to the Administrator represented approximately 0.00% and 0.04%, respectively, of the Company's gross assets. For the three and nine months ended September 30, 2019, the reimbursement to the Administrator represented approximately 0.02% and 0.05%, respectively, of the Company's gross assets.

The Company, the Investment Adviser and the Administrator have also entered into a Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant the Company, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the “New Mountain” and the “New

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Mountain Finance” names. Under the Trademark License Agreement, as amended, subject to certain conditions, the Company, the Investment Adviser and the Administrator will have a right to use the “New Mountain” and “New Mountain Finance” names, for so long as the Investment Adviser or one of its affiliates remains the investment adviser of the Company. Other than with respect to this limited license, the Company, the Investment Adviser and the Administrator will have no legal right to the “New Mountain” or the “New Mountain Finance” names.

Note 6. Related Parties

The Company has entered into a number of business relationships with affiliated or related parties.

The Company has entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.

The Company has entered into the Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges office space for the Company and provides office equipment and administrative services necessary to conduct their respective day-to-day operations pursuant to the Administration Agreement. The Company reimburses the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to the Company under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance and compliance functions, and the compensation of the Company’s chief financial officer and chief compliance officer and their respective staffs.

The Company, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant the Company, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the name “New Mountain” and “New Mountain Finance”.

The Company has adopted a formal code of ethics that governs the conduct of its officers and directors. These officers and directors also remain subject to the duties imposed by the 1940 Act and the Delaware General Corporation Law.

The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, to the Company’s investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for the Company or for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that the Company should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff and consistent with the Investment Adviser’s allocation procedures. On October 8, 2019, the SEC issued an exemptive order (the “Exemptive Order”), which superseded a prior order issued on December 18, 2017, which permits the Company to co-invest in portfolio companies with certain funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions of the Exemptive Order. Pursuant to the Exemptive Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Company's independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of the Company's stockholders and is consistent with its then-current investment objective and strategies.

On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.63 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11,315. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by the Company in exchange for a promissory note with a principal amount of $11,315 and a 7.0% interest rate, which was repaid by NMNLC to the Company on March 31, 2020.

On March 30, 2020, the Company entered into an unsecured revolving credit facility with NMF Investments III, L.L.C., an affiliate of the Investment Adviser, with a $30,000 maximum amount of revolver borrowings available and a maturity date of December 31, 2022. On May 4, 2020, the Company entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30,000 to $50,000. Refer to Note 7. Borrowings for discussion of the Unsecured Management Company Revolver (defined below).

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Note 7. Borrowings

As permitted by the Small Business Credit Availability Act (the “SBCA”) on June 8, 2018 the Company's shareholders approved the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act, as amended by the SBCA, which resulted in the reduction from 200.0% to 150.0% of the minimum asset coverage ratio applicable to the Company as of June 9, 2018 (which means the Company can borrow $2 for every $1 of its equity). As a result of the Company's exemptive relief received on November 5, 2014, the Company is permitted to exclude its SBA-guaranteed debentures from the 150.0% asset coverage ratio that the Company is required to maintain under the 1940 Act. The agreements governing the NMFC Credit Facility, the 2018 Convertible Notes and the Unsecured Notes (as defined below) contain certain covenants and terms, including a requirement that the Company not exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring additional indebtedness and a requirement that the Company not exceed a secured debt ratio of 0.70 to 1.00 at any time. As of September 30, 2020, the Company’s asset coverage ratio was 178.7%.

Holdings Credit Facility—On December 18, 2014, the Company entered into the Second Amended and Restated Loan and Security Agreement among the Company, as the Collateral Manager, NMF Holdings, as the Borrower, Wells Fargo Securities, LLC, as the Administrative Agent and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian (as amended from time to time, the "Holdings Credit Facility"). As of the most recent amendment on September 30, 2020, the maturity date of the Holdings Credit Facility is September 30, 2023, and the maximum facility amount is the lesser of $800,000 and the actual commitments of the lenders to make advances as of such date.

As of September 30, 2020, the maximum amount of revolving borrowings available under the Holdings Credit Facility is $745,000. Under the Holdings Credit Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0%, 67.5% or 70.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Bank, National Association. The Holdings Credit Facility is non-recourse to the Company and is collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Holdings Credit Facility are capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Holdings Credit Facility. The Holdings Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Holdings Credit Facility requires the Company to maintain a minimum asset coverage ratio of 150.0%. The covenants are generally not tied to mark to market fluctuations in the prices of NMF Holdings investments, but rather to the performance of the underlying portfolio companies.

As of the most recent amendment on September 30, 2020, the Holdings Credit Facility bears interest at a rate of LIBOR plus 2.00% per annum for Broadly Syndicated Loans (as defined in the Fourth Amendment to the Loan and Security Agreement) and LIBOR plus 2.50% per annum for all other investments. Previously the Holdings Credit Facility bore interest at a rate of LIBOR plus 1.75% per annum for Broadly Syndicated Loans (as defined in the Second Amendment to the Loan and Security Agreement) and LIBOR plus 2.25% per annum for all other investments. The Holdings Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Fourth Amendment to the Loan and Security Agreement).

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Holdings Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.


	Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Interest expense	$	2,704		$	6,528		$	11,333		$	19,218
Non-usage fee	$	395		$	163		$	937		$	449
Amortization of financing costs	$	334		$	722		$	992		$	2,103
Weighted average interest rate	2.2		%	4.2		%	2.7		%	4.4		%
Effective interest rate	2.8		%	4.8		%	3.2		%	5.0		%
Average debt outstanding	$	488,815		$	612,851		$	551,059		$	581,881

As of September 30, 2020 and December 31, 2019, the outstanding balance on the Holdings Credit Facility was $459,163 and $661,563, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.

NMFC Credit Facility—The Senior Secured Revolving Credit Agreement, (as amended from time to time, and together with the related guarantee and security agreement, the "NMFC Credit Facility"), dated June 4, 2014, among the Company, as the Borrower, Goldman Sachs Bank USA, as the Administrative Agent and Collateral Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A., as Lenders, is structured as a senior secured revolving credit facility. The NMFC Credit Facility is guaranteed by certain of the Company's domestic

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subsidiaries and proceeds from the NMFC Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the NMFC Credit Facility is June 4, 2022.

As of September 30, 2020, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $188,500. The Company is permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Senior Secured Revolving Credit Agreement. All fees associated with the origination of the NMFC Credit Facility are capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the NMFC Credit Facility. The NMFC Credit Facility contains certain customary affirmative and negative covenants and events of default, including certain financial covenants related to asset coverage and liquidity and other maintenance covenants.

The NMFC Credit Facility generally bears interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charges a commitment fee, based on the unused facility amount multiplied by 0.375% per annum (as defined in the Senior Secured Revolving Credit Agreement).

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the NMFC Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.


	Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Interest expense	$	899		$	1,499		$	3,960		$	3,677
Non-usage fee	$	55		$	13		$	96		$	103
Amortization of financing costs	$	35		$	31		$	103		$	250
Weighted average interest rate	2.7		%	4.8		%	3.4		%	4.9		%
Effective interest rate	3.0		%	4.9		%	3.6		%	5.4		%
Average debt outstanding	$	131,804		$	123,777		$	154,974		$	99,405

As of September 30, 2020 and December 31, 2019, the outstanding balance on the NMFC Credit Facility was $150,500 and $188,500, respectively, and NMFC was in compliance with the applicable covenants in the NMFC Credit Facility on such dates.

Unsecured Management Company Revolver—The Uncommitted Revolving Loan Agreement, (the "Unsecured Management Company Revolver"), dated March 30, 2020, by and between the Company, as the Borrower, and NMF Investments III, L.L.C., as Lender, an affiliate of the Investment Adviser, is structured as a discretionary unsecured revolving credit facility. The proceeds from the Unsecured Management Company Revolver may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the Unsecured Management Company Revolver is December 31, 2022. The Unsecured Management Company Revolver generally bears interest at a rate of 7.00% per annum (as defined in the Uncommitted Revolving Loan Agreement). On May 4, 2020, the Company entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30,000 to $50,000. As of September 30, 2020, the maximum amount of revolving borrowings available under the Unsecured Management Company Revolver was $50,000 and no borrowings were outstanding. For the three and nine months ended September 30, 2020, amortization of financing costs were $2 and $5, respectively.

DB Credit Facility—The Loan Financing and Servicing Agreement (the "DB Credit Facility") dated December 14, 2018 and as amended from time to time, among NMFDB as the borrower, Deutsche Bank AG, New York Branch ("Deutsche Bank") as the facility agent, Lender and other agent from time to time party thereto and U.S. Bank National Association, as collateral agent and collateral custodian, is structured as a secured revolving credit facility and the maturity date is December 14, 2023.

As of September 30, 2020, the maximum amount of revolving borrowings available under the DB Credit Facility was $280,000. The Company is permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Loan Financing and Servicing Agreement. The DB Credit Facility is non-recourse to the Company and is collateralized by all of the investments of NMFDB on an investment by investment basis. All fees associated with the origination of the DB Credit Facility are capitalized on the Company's Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the DB Credit Facility. The DB Credit Facility contains certain customary affirmative and negative covenants and events of default. The covenants are generally not tied to mark to market fluctuations in the prices of NMFDB investments, but rather to the performance of the underlying portfolio companies.

The advances under the DB Credit Facility accrue interest at a per annum rate equal to the Applicable Margin plus the lender's Cost of Funds Rate. Prior to June 28, 2019, the "Applicable Margin" was equal to 2.85% during the Revolving Period

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and then increases by 0.20% during an Event of Default. Effective June 28, 2019, the Applicable Margin is equal to 2.60% during the Revolving Period and then increases by 0.20% during an Event of Default. The "Cost of Funds Rate" for a conduit lender is the lower of its commercial paper rate and the Base Rate plus 0.50%, and for any other lender is the Base Rate. The "Base Rate" is the three-months LIBOR Rate but may become an alternative base rate based on Deutsche Bank's base lending rate if certain LIBOR disruption events occur. The Company is also charged a non-usage fee, based on the unused facility amount multiplied by the Undrawn Fee Rate (as defined in the Loan Financing and Servicing Agreement) and a facility agent fee of 0.25% per annum on the total facility amount.The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the DB Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.


	Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Interest expense(1)	$	1,722		$	1,730		$	6,659		$	3,177
Non-usage fee(1)	$	80		$	62		$	177		$	183
Amortization of financing costs	$	161		$	100		$	480		$	256
Weighted average interest rate	3.2		%	5.1		%	3.8		%	5.3		%
Effective interest rate	3.6		%	5.6		%	4.2		%	6.0		%
Average debt outstanding	$	216,761		$	133,913		$	233,401		$	80,095

(1)Interest expense includes the portion of the facility agent fee applicable to the drawn portion of the DB Credit Facility and non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the DB Credit Facility.

As of September 30, 2020 and December 31, 2019, the outstanding balance on the DB Credit Facility was $242,000 and $230,000, respectively, and NMFDB was in compliance with the applicable covenants in the DB Credit Facility on such dates.

NMNLC Credit Facility—The Revolving Credit Agreement (together with the related guarantee and security agreement, the “NMNLC Credit Facility”), dated September 21, 2018, among NMNLC, as the Borrower, and KeyBank National Association, as the Administrative Agent and Lender, was structured as a senior secured revolving credit facility and matured on September 23, 2020. The NMNLC Credit Facility was guaranteed by the Company and proceeds from the NMNLC Credit Facility were able to be used for funding of additional acquisition properties.

The NMNLC Credit Facility bore interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charged a commitment fee, based on the unused facility amount multiplied by 0.15% per annum (as defined in the Revolving Credit Agreement).

For the three and nine months ended September 30, 2020, interest expense, non-usage fees and amortization of financing costs were $0 and $0, $10 and $33 and $0 and $11, respectively. For the three and nine months ended September 30, 2019, interest expense, non-usage fees and amortization of financing costs were $1 and $1, $11 and $34 and $28 and $84, respectively. The NMNLC Credit Facility matured on September 23, 2020. As of December 31, 2019, the outstanding balance on the NMNLC Credit Facility was $0 and NMNLC was in compliance with the applicable covenants in the NMNLC Credit Facility on such date.

Convertible Notes

2014 Convertible Notes—On June 3, 2014, the Company closed a private offering of $115,000 aggregate principal amount of unsecured convertible notes (the “2014 Convertible Notes”), pursuant to an indenture, dated June 3, 2014 (the “2014 Indenture”). The 2014 Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). As of June 3, 2015, the restrictions under Rule 144A under the Securities Act were removed, allowing the 2014 Convertible Notes to be eligible and freely tradable without restrictions for resale pursuant to Rule 144(b)(1) under the Securities Act. On September 30, 2016, the Company closed a public offering of an additional $40,250 aggregate principal amount of the 2014 Convertible Notes. These additional 2014 Convertible Notes constituted a further issuance of, ranked equally in right of payment with, and formed a single series with the $115,000 aggregate principal amount of 2014 Convertible Notes that the Company issued on June 3, 2014.

The 2014 Convertible Notes bore interest at an annual rate of 5.0%, payable semi-annually in arrears on June 15 and December 15 of each year, which commenced on December 15, 2014.

On June 15, 2019, the Company's $155,250 aggregate principal amount of 2014 Convertible Notes matured and the Company repaid the outstanding principal and accrued but unpaid interest in cash.

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2018 Convertible Notes—On August 20, 2018, the Company closed a registered public offering of $100,000 aggregate principal amount of unsecured convertible notes (the “2018 Convertible Notes”), pursuant to an indenture, dated August 20, 2018, as supplemented by a first supplemental indenture thereto, dated August 20, 2018 (together the “2018A Indenture”). On August 30, 2018, in connection with the registered public offering, the Company issued an additional $15,000 aggregate principal amount of the 2018 Convertible Notes pursuant to the exercise of an overallotment option by the underwriter of the 2018 Convertible Notes. On June 7, 2019, the Company closed a registered public offering of an additional $86,250 aggregate principal amount of the 2018 Convertible Notes. These additional 2018 Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115,000 aggregate principal amount of 2018 Convertible Notes that the Company issued in August 2018.

The 2018 Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on February 15 and August 15 of each year, which commenced on February 15, 2019. The 2018 Convertible Notes will mature on August 15, 2023 unless earlier converted, repurchased or redeemed pursuant to the terms of the 2018A Indenture. The Company may not redeem the 2018 Convertible Notes prior to May 15, 2023. On or after May 15, 2023, the Company may redeem the 2018 Convertible Notes for cash, in whole or from time to time in part, at its option at a redemption price, subject to an exception for redemption dates occurring after a record date but on or prior to the interest payment date, equal to the sum of (i) 100% of the principal amount of the 2018 Convertible Notes to be redeemed, (ii) accrued and unpaid interest thereon to, but excluding, the redemption date and (iii) a make-whole premium.

No sinking fund is provided for the 2018 Convertible Notes. Holders of 2018 Convertible Notes may, at their option, convert their 2018 Convertible Notes into shares of the Company’s common stock at any time on or prior to the close of business on the business day immediately preceding the maturity date of the 2018 Convertible Notes. In addition, if certain corporate events occur, holders of the 2018 Convertible Notes may require the Company to repurchase for cash all or part of their 2018 Convertible Notes at a repurchase price equal to 100.0% of the principal amount of the 2018 Convertible Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the repurchase date.

The 2018A Indenture contains certain covenants, including covenants requiring the Company to provide certain financial information to the holders of the 2018 Convertible Notes and the trustee if the Company ceases to be subject to the reporting requirements of the Exchange Act. The 2018A Indenture also includes additional financial covenants related to asset coverage. These covenants are subject to limitations and exceptions that are described in the 2018A Indenture.

The following table summarizes certain key terms related to the convertible features of the Company’s 2018 Convertible Notes as of September 30, 2020.


	2018 Convertible Notes
Initial conversion premium	10.0		%
Initial conversion rate(1)	65.8762
Initial conversion price	$	15.18
Conversion premium at September 30, 2020	10.0		%
Conversion rate at September 30, 2020(1)(2)	65.8762
Conversion price at September 30, 2020(2)(3)	$	15.18
Last conversion price calculation date	August 20, 2020

(1)Conversion rates denominated in shares of common stock per $1 principal amount of the 2018 Convertible Notes converted.

(2)Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.

(3)The conversion price in effect at September 30, 2020 was calculated on the last anniversary of the issuance and will be calculated again on the next anniversary, unless the exercise price shall have changed by more than 1.0% before the anniversary.

The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.34 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $13.80 per share. In no event will the total number of shares of common stock issuable upon conversion exceed 72.4637 per $1 principal amount. The Company has determined that the embedded conversion option in the 2018 Convertible Notes is not required to be separately accounted for as a derivative under GAAP.

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The 2018 Convertible Notes are unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness, if any, that is expressly subordinated in right of payment to the 2018 Convertible Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries and financing vehicles. As reflected in Note 11. Earnings Per Share, the issuance is considered part of the if-converted method for calculation of diluted earnings per share.

The following table summarizes the interest expense, amortization of financing costs and amortization of premium incurred on the Convertible Notes for the three and nine months ended September 30, 2020 and September 30, 2019.


	Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Interest expense	$	2,893		$	2,893		$	8,679		$	10,066
Amortization of financing costs	$	100		$	99		$	297		$	696
Amortization of premium	$	(26)		$	(26)		$	(77)		$	(83)
Weighted average interest rate	5.8		%	5.7		%	5.8		%	5.5		%
Effective interest rate	5.9		%	5.8		%	5.9		%	5.8		%
Average debt outstanding	$	201,250		$	201,250		$	201,250		$	245,481

As of September 30, 2020 and December 31, 2019, the outstanding balance on the Convertible Notes was $201,250 and $201,250, respectively, and NMFC was in compliance with the terms of the 2018A Indenture on such date.

Unsecured Notes

On May 6, 2016, the Company issued $50,000 in aggregate principal amount of five-year unsecured notes that mature on May 15, 2021 (the “2016 Unsecured Notes”), pursuant to a note purchase agreement, dated May 4, 2016, to an institutional investor in a private placement. On September 30, 2016, the Company entered into an amended and restated note purchase agreement (the "NPA") and issued an additional $40,000 in aggregate principal amount of 2016 Unsecured Notes to institutional investors in a private placement. On June 30, 2017, the Company issued $55,000 in aggregate principal amount of five-year unsecured notes that mature on July 15, 2022 (the "2017A Unsecured Notes"), pursuant to the NPA and a supplement to the NPA. On January 30, 2018, the Company issued $90,000 in aggregate principal amount of five year unsecured notes that mature on January 30, 2023 (the "2018A Unsecured Notes") pursuant to the NPA and a second supplement to the NPA. On July 5, 2018, the Company issued $50,000 in aggregate principal amount of five year unsecured notes that mature on June 28, 2023 (the "2018B Unsecured Notes") pursuant to the NPA and a third supplement to the NPA (the "Third Supplement"). On April 30, 2019, the Company issued $116,500 in aggregate principal amount of five year unsecured notes that mature on April 30, 2024 (the "2019A Unsecured Notes") pursuant to the NPA and a fourth supplement to the NPA. The NPA provides for future issuances of unsecured notes in separate series or tranches.

The 2016 Unsecured Notes bear interest at an annual rate of 5.313%, payable semi-annually on May 15 and November 15 of each year, which commenced on November 15, 2016. The 2017A Unsecured Notes bear interest at an annual rate of 4.760%, payable semi-annually on January 15 and July 15 of each year, which commenced on January 15, 2018. The 2018A Unsecured Notes bear interest at an annual rate of 4.870%, payable semi-annually on February 15 and August 15 of each year, which commenced on August 15, 2018. The 2018B Unsecured Notes bear interest at an annual rate of 5.360%, payable semi-annually on January 15 and July 15 of each year, which commenced on January 15, 2019. The 2019A Unsecured Notes bear interest at an annual rate of 5.494%, payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2019. These interest rates are subject to increase in the event that: (i) subject to certain exceptions, the underlying unsecured notes or the Company ceases to have an investment grade rating or (ii) the aggregate amount of the Company’s unsecured debt falls below $150,000. In each such event, the Company has the option to offer to prepay the underlying unsecured notes at par, in which case holders of the underlying unsecured notes who accept the offer would not receive the increased interest rate. In addition, the Company is obligated to offer to prepay the underlying unsecured notes at par if the Investment Adviser, or an affiliate thereof, ceases to be the Company’s investment adviser or if certain change in control events occur with respect to the Investment Adviser.

The NPA contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, an option to offer to prepay all or a portion of the unsecured notes under its governance at par (plus a make-whole amount, if applicable), affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a BDC under the 1940 Act and a RIC under the Code, minimum stockholders’ equity, minimum asset coverage ratio, and prohibitions on certain fundamental changes at the Company or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect,

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breach of covenant, cross-default under other indebtedness of the Company or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy. The Third Supplement includes additional financial covenants related to asset coverage as well as other terms.

On September 25, 2018, the Company closed a registered public offering of $50,000 in aggregate principal amount of five-year unsecured notes that mature on October 1, 2023 (the "5.75% Unsecured Notes" and together with the 2016 Unsecured Notes, 2017A Unsecured Notes, 2018A Unsecured Notes, 2018B Unsecured Notes and 2019A Unsecured Notes, the "Unsecured Notes") pursuant to an indenture, dated August 20, 2018, as supplemented by a second supplemental indenture thereto, dated September 25, 2018 (together, the "2018B Indenture"). On October 17, 2018, in connection with the registered public offering, the Company issued an additional $1,750 aggregate principal amount of the 5.75% Unsecured Notes pursuant to the exercise of an overallotment option by the underwriters of the 5.75% Unsecured Notes.

The 5.75% Unsecured Notes bear interest at an annual rate of 5.75%, payable quarterly on January 1, April 1, July 1 and October 1 of each year, which commenced on January 1, 2019. The 5.75% Unsecured Notes will mature on October 1, 2023 unless earlier redeemed. The 5.75% Unsecured Notes were listed on the NYSE and traded under the trading symbol “NMFX” until September 13, 2020. On September 14, 2020, the 5.75% Unsecured Notes began trading on the NASDAQ under the ticker symbol "NMFCL".

The Company may redeem the 5.75% Unsecured Notes, in whole or in part, at any time, or from time to time, at its option on or after October 1, 2020, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption.

No sinking fund is provided for the 5.75% Unsecured Notes and holders of the 5.75% Unsecured Notes have no option to have their 5.75% Unsecured Notes repaid prior to the stated maturity date.

The 2018B Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements set forth in Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a) of the 1940 Act as may be applicable to the Company from time to time or any successor provisions, whether or not the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to the Company by the SEC and (ii) provide certain financial information to the holders of the 5.75% Unsecured Notes and the trustee if the Company ceases to be subject to the reporting requirements of the Exchange Act. The 2018B Indenture also includes additional financial covenants related to asset coverage. These covenants are subject to limitations and exceptions that are described in the 2018B Indenture.

The 2018B Indenture provides for customary events of default and further provides that the trustee or the holders of 25% in aggregate principal amount of the outstanding 5.75% Unsecured Notes may declare such 5.75% Unsecured Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period.

The Unsecured Notes are unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness, if any, that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries and financing vehicles.

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The following table summarizes the interest expense and amortization of financing costs incurred on the Unsecured Notes for the three and nine months ended September 30, 2020 and September 30, 2019.


	Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019(1)
Interest expense	$	5,960		$	5,959		$	17,879		$	15,763
Amortization of financing costs	$	320		$	320		$	955		$	886
Weighted average interest rate	5.3		%	5.2		%	5.3		%	5.2		%
Effective interest rate	5.5		%	5.5		%	5.5		%	5.5		%
Average debt outstanding	$	453,250		$	453,250		$	453,250		$	402,041

(1)For the nine months ended September 30, 2019, amounts reported include interest and amortization of financing costs related to the 2019A Unsecured Notes for the period from April 30, 2019 (issuance date of the 2019A Unsecured Notes) to September 30, 2019.

As of September 30, 2020 and December 31, 2019, the outstanding balance on the Unsecured Notes was $453,250 and $453,250, respectively, and the Company was in compliance with the terms of the NPA and the 2018B Indenture as of such dates, as applicable.

SBA-guaranteed debentures—On August 1, 2014 and August 25, 2017, respectively, SBIC I and SBIC II received licenses from the SBA to operate as SBICs.

The SBIC licenses allow SBICs to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse to the Company, interest only debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with ten year maturities. The SBA, as a creditor, will have a superior claim to the assets of SBIC I and SBIC II over the Company’s stockholders in the event SBIC I and SBIC II are liquidated or the SBA exercises remedies upon an event of default.

The maximum amount of borrowings available under current SBA regulations for a single licensee is $150,000 as long as the licensee has at least $75,000 in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing. In June 2018, legislation amended the 1958 Act by increasing the individual leverage limit from $150,000 to $175,000, subject to SBA approvals.

As of September 30, 2020 and December 31, 2019, SBIC I had regulatory capital of $75,000 and $75,000, respectively, and SBA-guaranteed debentures outstanding of $150,000 and $150,000, respectively. As of September 30, 2020 and December 31, 2019, SBIC II had regulatory capital of $75,000 and $64,500, respectively, and $150,000 and $75,000, respectively, of SBA-guaranteed debentures outstanding. The SBA-guaranteed debentures incur upfront fees of 3.435%, which consists of a 1.00% commitment fee and a 2.435% issuance discount, which are amortized over the life of the SBA-guaranteed debentures.

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The following table summarizes the Company’s SBA-guaranteed debentures as of September 30, 2020.


Issuance Date	Maturity Date	Debenture Amount		Interest Rate		SBA Annual Charge
Fixed SBA-guaranteed debentures(1):
March 25, 2015	March 1, 2025	$	37,500	2.517	%	0.355	%
September 23, 2015	September 1, 2025	37,500		2.829	%	0.355	%
September 23, 2015	September 1, 2025	28,795		2.829	%	0.742	%
March 23, 2016	March 1, 2026	13,950		2.507	%	0.742	%
September 21, 2016	September 1, 2026	4,000		2.051	%	0.742	%
September 20, 2017	September 1, 2027	13,000		2.518	%	0.742	%
March 21, 2018	March 1, 2028	15,255		3.187	%	0.742	%
Fixed SBA-guaranteed debentures(2):
September 19, 2018	September 1, 2028	15,000		3.548	%	0.222	%
September 25, 2019	September 1, 2029	19,000		2.283	%	0.222	%
March 25, 2020	March 1, 2030	41,000		2.078	%	0.222	%
March 25, 2020	March 1, 2030	24,000		2.078	%	0.275	%
September 23, 2020	September 1, 2030	51,000		1.034	%	0.275	%
Total SBA-guaranteed debentures		$	300,000

(1)SBA-guaranteed debentures are held in SBIC I.

(2)SBA-guaranteed debentures are held in SBIC II.

Prior to pooling, the SBA-guaranteed debentures bear interest at an interim floating rate of LIBOR plus 0.30%. Once pooled, which occurs in March and September each year, the SBA-guaranteed debentures bear interest at a fixed rate that is set to the current 10-year treasury rate plus a spread at each pooling date.

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, 2020 and September 30, 2019.


	Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Interest expense	$	2,080		$	1,455		$	5,963		$	4,159
Amortization of financing costs	$	253		$	149		$	706		$	423
Weighted average interest rate	2.8		%	3.3		%	2.8		%	3.3		%
Effective interest rate	3.1		%	3.6		%	3.2		%	3.6		%
Average debt outstanding	$	300,000		$	176,565		$	281,102		$	168,897

The SBIC program is designed to stimulate the flow of private investor capital into eligible smaller businesses, as defined by the SBA. Under SBA regulations, SBICs are subject to regulatory requirements, including making investments in SBA-eligible businesses, investing at least 25.0% of its investment capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, regulating the types of financing, prohibiting investments in smaller businesses with certain characteristics or in certain industries and requiring capitalization thresholds that limit distributions to the Company. SBICs are subject to an annual periodic examination by an SBA examiner to determine the SBIC’s compliance with the relevant SBA regulations and an annual financial audit of its financial statements that are prepared on a basis of accounting other than GAAP (such as ASC 820) by an independent auditor. As of September 30, 2020 and December 31, 2019, SBIC I and SBIC II were in compliance with SBA regulatory requirements.

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Leverage risk factors—The Company utilizes and may utilize leverage to the maximum extent permitted by the law for investment and other general business purposes. The Company's lenders will have fixed dollar claims on certain assets that are superior to the claims of the Company's common stockholders, and the Company would expect such lenders to seek recovery against these assets in the event of a default. The use of leverage also magnifies the potential for gain or loss on amounts invested. Leverage may magnify interest rate risk (particularly on the Company's fixed-rate investments), which is the risk that the prices of portfolio investments will fall or rise if market interest rates for those types of securities rise or fall. As a result, leverage may cause greater changes in the Company's net asset value. Similarly, leverage may cause a sharper decline in the Company's income than if the Company had not borrowed. Such a decline could negatively affect the Company's ability to make distributions to its stockholders. Leverage is generally considered a speculative investment technique. The Company's ability to service any debt incurred will depend largely on financial performance and will be subject to prevailing economic conditions and competitive pressures.

Note 8. Regulation

The Company has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a RIC under Subchapter M of the Code. In order to continue to qualify and be subject to tax as a RIC, among other things, the Company is required to timely distribute to its stockholders at least 90.0% of investment company taxable income, as defined by the Code, for each year. The Company, among other things, intends to make and will continue to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal, state, and local income taxes (excluding excise taxes which may be imposed under the Code).

Additionally, as a BDC, the Company must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70.0% of its total assets are qualifying assets (with certain limited exceptions). In addition, the Company must offer to make available to all eligible portfolio companies managerial assistance.

Note 9. Commitments and Contingencies

In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company may also enter into future funding commitments such as revolving credit facilities, bridge financing commitments or delayed draw commitments. As of September 30, 2020, the Company had unfunded commitments on revolving credit facilities of $64,512, no outstanding bridge financing commitments and other future funding commitments of $29,315. As of December 31, 2019, the Company had unfunded commitments on revolving credit facilities of $66,061, no outstanding bridge financing commitments and other future funding commitments of $137,781. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments.

The Company also had revolving borrowings available under the Holdings Credit Facility, the DB Credit Facility, the NMFC Credit Facility and the Unsecured Management Company Revolver as of September 30, 2020 and revolver borrowings available under the Holdings Credit Facility, the DB Credit Facility and the NMNLC Credit Facility as of December 31, 2019. See Note 7. Borrowings, for details.

The Company may from time to time enter into financing commitment letters. As of September 30, 2020 and December 31, 2019, the Company had commitment letters to purchase investments in the aggregate par amount of $0 and $34,248, respectively, which could require funding in the future.

COVID-19 Developments

On March 11, 2020 the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. As of the nine months ended September 30, 2020 and subsequent to September 30, 2020, COVID-19 has had a significant impact on the U.S. economy and the Company. The Company has experienced a significant reduction in its net asset value as of September 30, 2020 as compared to its net asset value as of December 31, 2019, due to an increase in unrealized depreciation of its investment portfolio resulting from decreases in fair value of investments. These decreases were attributable to the impact of the COVID-19 pandemic on the markets.

The extent of the continued impact of the COVID-19 pandemic on the financial performance of our current and future investments will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions and the impact of COVID-19 on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. To the extent the Company’s portfolio companies continue to be adversely impacted by the effects of the COVID-19 pandemic, the Company may experience a material adverse impact on the its future net investment income, the fair value of its portfolio investments, its financial condition and the results of operations and financial condition of its portfolio companies.

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Note 10. Net Assets

The table below illustrates the effect of certain transactions on the net asset accounts of the Company during the nine months ended September 30, 2020:


						Accumulated Overdistributed Earnings
	Common Stock			Paid in Capital in Excess		Accumulated Net Investment		Accumulated Net Realized (Losses)		Net Unrealized Appreciation		Total Net Assets		Non- Controlling Interest in		Total
	Shares	Par Amount		of Par		Income		Gains		(Depreciation)		of NMFC		NMNLC		Net Assets
Net assets at December 31, 2019	96,827,342	$	968	$	1,287,853	$	91,333	$	(85,448)	$	(11,238)	$	1,283,468	$	—	$	1,283,468





Distributions declared	—	—		—		(32,921)		—		—		(32,921)		—		(32,921)
Purchase of non-controlling interest in NMNLC	—	—		—		—		—		—		—		11,315		11,315
Net increase (decrease) in net assets resulting from operations	—	—		—		31,305		114		(203,776)		(172,357)		(65)		(172,422)
Net assets at March 31, 2020	96,827,342	$	968	$	1,287,853	$	89,717	$	(85,334)	$	(215,014)	$	1,078,190	$	11,250	$	1,089,440





Distributions declared	—	—		—		(29,048)		—		—		(29,048)		(258)		(29,306)
Net increase (decrease) in net assets resulting from operations	—	—		—		27,327		(3,756)		52,910		76,481		251		76,732
Net assets at June 30, 2020	96,827,342	$	968	$	1,287,853	$	87,996	$	(89,090)	$	(162,104)	$	1,125,623	$	11,243	$	1,136,866





Distributions declared	—	—		—		(29,049)		—		—		(29,049)		(245)		(29,294)
Net increase (decrease) in net assets resulting from operations	—	—		—		28,779		47		59,364		88,190		1,398		89,588
Net assets at September 30, 2020	96,827,342	$	968	$	1,287,853	$	87,726	$	(89,043)	$	(102,740)	$	1,184,764	$	12,396	$	1,197,160

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The table below illustrates the effect of certain transactions on the net asset accounts of the Company during the nine months ended September 30, 2019:


						Accumulated Overdistributed Earnings
	Common Stock			Paid in Capital in		Accumulated Net Investment		Accumulated Net Realized		Net Unrealized Appreciation		Total
	Shares	Par Amount		Excess of Par		Income		(Losses) Gains		(Depreciation)		Net Assets
Net assets at December 31, 2018	76,106,372	$	761	$	1,035,629	$	61,975	$	(86,338)	$	(5,758)	$	1,006,269
Issuances of common stock	4,413,058	44		60,617		—		—		—		60,661



Deferred offering costs	—	—		(229)		—		—		—		(229)
Distributions declared	—	—		—		(27,342)		—		—		(27,342)
Net increase in net assets resulting from operations	—	—		—		27,450		46		16,424		43,920
Net assets at March 31, 2019	80,519,430	$	805	$	1,096,017	$	62,083	$	(86,292)	$	10,666	$	1,083,279
Issuances of common stock	90,872	1		1,269		—		—		—		1,270




Distributions declared	—	—		—		(27,377)		—		—		(27,377)
Net increase (decrease) in net assets resulting from operations	—	—		—		27,948		52		(4,255)		23,745
Net assets at June 30, 2019	80,610,302	$	806	$	1,097,286	$	62,654	$	(86,240)	$	6,411	$	1,080,917
Issuances of common stock	6,958,393	70		94,910		—		—		—		94,980



Deferred offering costs	—	—		(315)		—		—		—		(315)
Distributions declared	—	—		—		(29,753)		—		—		(29,753)
Net increase (decrease) in net assets resulting from operations	—	—		—		31,170		355		(8,075)		23,450
Net assets at September 30, 2019	87,568,695	$	876	$	1,191,881	$	64,071	$	(85,885)	$	(1,664)	$	1,169,279

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Note 11. Earnings Per Share

The following information sets forth the computation of basic and diluted net increase (decrease) in the Company’s net assets per share resulting from operations for the three and nine months ended September 30, 2020 and September 30, 2019:


	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Earnings (loss) per share—basic
Numerator for basic earnings (loss) per share:	$	88,190	$	23,450	$	(7,686)	$	91,115
Denominator for basic weighted average share:	96,827,342		86,987,841		96,827,342		82,020,549
Basic earnings (loss) per share:	$	0.91	$	0.27	$	(0.08)	$	1.11
Earnings (loss) per share—diluted(1)
Numerator for increase (decrease) in net assets per share	$	88,190	$	23,450	$	(7,686)	$	91,115
Adjustment for interest on Convertible Notes and incentive fees, net	2,314		2,314		6,943		8,053
Numerator for diluted earnings (loss) per share:	$	90,504	$	25,764	$	(743)	$	99,168
Denominator for basic weighted average share	96,827,342		86,987,841		96,827,342		82,020,549
Adjustment for dilutive effect of Convertible Notes	13,257,585		13,257,585		13,257,585		15,927,676
Denominator for diluted weighted average share	110,084,927		100,245,426		110,084,927		97,948,225
Diluted earnings (loss) per share:	$	0.82	$	0.26	$	(0.08)	$	1.01

(1)In applying the if-converted method, conversion is not assumed for purposes of computing diluted earnings per share if the effect would be anti-dilutive. For the nine months ended September 30, 2020 there was anti-dilution. For the three months ended September 30, 2020 and the three and nine months ended September 30, 2019, there was no anti-dilution.

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Note 12. Financial Highlights

The following information sets forth the Company's financial highlights for the nine months ended September 30, 2020 and September 30, 2019.


	Nine Months Ended
	September 30, 2020			September 30, 2019
Per share data(1):
Net asset value, January 1, 2020 and January 1, 2019, respectively	$	13.26		$	13.22
Net investment income	0.90			1.06
Net realized and unrealized (losses) gains(2)	(0.98)			0.09
Total net (decrease) increase	(0.08)			1.15
Distributions declared to stockholders from net investment income	(0.94)			(1.02)
Net asset value, September 30, 2020 and September 30, 2019, respectively	$	12.24		$	13.35
Per share market value, September 30, 2020 and September 30, 2019, respectively	$	9.56		$	13.63
Total return based on market value(3)	(22.30)		%	16.60		%
Total return based on net asset value(4)	(0.06)		%	8.86		%
Shares outstanding at end of period	96,827,342			87,568,695
Average weighted shares outstanding for the period	96,827,342			82,020,549
Average net assets for the period	$	1,162,509		$	1,111,191
Ratio to average net assets:
Net investment income	10.10		%	10.42		%
Total expenses, before waivers/reimbursements	14.78		%	15.10		%
Total expenses, net of waivers/reimbursements	13.52		%	14.04		%
Average debt outstanding—Holdings Credit Facility	$	551,059		$	581,881
Average debt outstanding—Unsecured Notes	453,250			402,041
Average debt outstanding—Convertible Notes	201,250			245,481
Average debt outstanding—SBA-guaranteed debentures	281,102			168,897
Average debt outstanding—NMFC Credit Facility	154,974			99,405
Average debt outstanding—DB Credit Facility	233,401			80,095
Average debt outstanding—NMNLC Credit Facility	—			39
Asset coverage ratio(5)	178.65		%	171.14		%
Portfolio turnover	9.12		%	7.63		%

(1)Per share data is based on weighted average shares outstanding for the respective period (except for distributions declared to stockholders, which is based on actual rate per share).

(2)Includes the accretive effect of common stock issuances per share, which for the nine months ended September 30, 2020 and September 30, 2019 were $0.00 and $0.03, respectively.

(3)Total return is calculated assuming a purchase of common stock at the opening of the first day of the year and a sale on the closing of the last business day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at prices obtained under the Company’s dividend reinvestment plan.

(4)Total return is calculated assuming a purchase at net asset value on the opening of the first day of the year and a sale at net asset value on the last day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at the net asset value on the last day of the respective quarter.

(5)On November 5, 2014, the Company received exemptive relief from the SEC allowing the Company to modify the asset coverage requirement to exclude the SBA-guaranteed debentures from this calculation.

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Note 13. Recent Accounting Standards Updates

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the impact of the optional guidance on the Company's consolidated financial statements and disclosures. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the quarter ended September 30, 2020.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, after adoption, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis. The Company is in the process of evaluating the impact that this guidance will have on its consolidated financial statements.

Note 14. Subsequent Events

On October 28, 2020, the Company’s board of directors declared a fourth quarter 2020 distribution of $0.30 per share payable on December 30, 2020 to holders of record as of December 16, 2020.

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			Deloitte & Touche LLP 30 Rockefeller Plaza New York, NY 10112 USA Tel: 212 492 4000 Fax: 212 489 1687 www.deloitte.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of New Mountain Finance Corporation

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated statement of assets and liabilities of New Mountain Finance Corporation and subsidiaries (the “Company”) including the consolidated schedule of investments, as of September 30, 2020, and the related consolidated statements of operations and changes in net assets for the three-month and nine-month periods ended September 30, 2020 and 2019, and cash flows for the nine-month periods ended September 30, 2020 and 2019, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities of the Company, including the consolidated schedule of investments, as of December 31, 2019, and the related consolidated statements of operations, changes in net assets and cash flows for the year then ended (not presented herein); and in our report dated February 26, 2020, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ DELOITTE & TOUCHE LLP

November 4, 2020

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

The information in management's discussion and analysis of financial condition and results of operations relates to New Mountain Finance Corporation, including its wholly-owned direct and indirect subsidiaries (collectively, "we", "us", "our", "NMFC" or the "Company").

Forward-Looking Statements

The information contained in this section should be read in conjunction with the financial data and consolidated financial statements and notes thereto appearing elsewhere in this report. Some of the statements in this report (including in the following discussion) constitute forward-looking statements, which relate to future events or our future performance or our financial condition. The forward-looking statements contained in this section involve a number of risks and uncertainties, including:

•statements concerning the impact of a protracted decline in the liquidity of credit markets;

•the general economy, including the impact of interest and inflation rates, and the COVID-19 pandemic on the industries in which we invest;

•our future operating results, our business prospects, the adequacy of our cash resources and working capital, and the impact of the COVID-19 pandemic thereon;

•the ability of our portfolio companies to achieve their objectives and the impact of COVID-19 pandemic thereon;

•our ability to make investments consistent with our investment objectives, including with respect to the size, nature and terms of our investments;

•the ability of New Mountain Finance Advisers BDC, L.L.C. (the "Investment Adviser") or its affiliates to attract and retain highly talented professionals;

•actual and potential conflicts of interest with the Investment Adviser and New Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its affiliates, "New Mountain Capital") whose ultimate owners include Steven B. Klinsky and related and other vehicles; and

•the risk factors set forth in Item 1A.—Risk Factors contained in our annual report on Form 10-K for the year ended December 31, 2019 and in this quarterly report on Form 10-Q.

Forward-looking statements are identified by their use of such terms and phrases such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “project”, “seek”, “should”, “target”, “will”, “would” or similar expressions. Actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth in Item 1A.—Risk Factors contained in our annual report on Form 10-K for the year ended December 31, 2019 and in this quarterly report on Form 10-Q.

We have based the forward-looking statements included in this report on information available to us on the date of this report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the United States Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.

Overview

We are a Delaware corporation that was originally incorporated on June 29, 2010 and completed our initial public offering ("IPO") on May 19, 2011. We are a closed-end, non-diversified 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"). We have elected to be treated, and intend to comply with the requirements to continue to qualify annually, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). NMFC is also registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). Since our IPO, and through September 30, 2020, we raised approximately $893.2 million in net proceeds from additional offerings of our common stock.

The Investment Adviser is a wholly-owned subsidiary of New Mountain Capital. New Mountain Capital is a firm with a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, public equity and credit investment vehicles. The Investment Adviser manages our day-to-day operations and provides us with investment advisory and management services. The Investment Adviser also manages other

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funds that may have investment mandates that are similar, in whole or in part, to ours. New Mountain Finance Administration, L.L.C. (the "Administrator”), a wholly-owned subsidiary of New Mountain Capital, provides the administrative services necessary to conduct our day-to-day operations.

We have established the following wholly-owned direct and indirect subsidiaries:

•New Mountain Finance SBIC, L.P. ("SBIC I") and New Mountain Finance SBIC II, L.P. ("SBIC II"), who have received licenses from the United States ("U.S.") Small Business Administration ("SBA") to operate as small business investment companies ("SBICs") under Section 301(c) of the Small Business Investment Act of 1958, as amended (the "1958 Act") and their general partners, New Mountain Finance SBIC G.P., L.L.C. ("SBIC I GP") and New Mountain Finance SBIC II G.P., L.L.C. ("SBIC II GP"), respectively;

•NMF Ancora Holdings Inc. ("NMF Ancora"), NMF QID Holdings, Inc. ("NMF QID") and NMF YP Holdings Inc. ("NMF YP"), which serve as tax blocker corporations by holding equity or equity-like investments in portfolio companies organized as limited liability companies (or other forms of pass-through entities); we consolidate our tax blocker corporations for accounting purposes but the tax blocker corporations are not consolidated for U.S. federal income tax purposes and may incur income tax expense as a result of their ownership of the portfolio companies; and

•New Mountain Finance Servicing, L.L.C. ("NMF Servicing"), which serves as the administrative agent on certain investment transactions.

New Mountain Net Lease Corporation ("NMNLC") is a majority-owned consolidated subsidiary of ours, which acquires commercial real estate properties that are subject to ‘‘triple net’’ leases has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a real estate investment trust, or REIT, within the meaning of Section 856(a) of the Code.

Our investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. The first lien debt may include traditional first lien senior secured loans or unitranche loans. Unitranche loans combine characteristics of traditional first lien senior secured loans as well as second lien and subordinated loans. Unitranche loans will expose us to the risks associated with second lien and subordinated loans to the extent we invest in the “last out” tranche. In some cases, our investments may also include equity interests.

Our primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. Similar to us, SBIC I's and SBIC II's investment objectives are to generate current income and capital appreciation under our investment criteria. However, SBIC I's and SBIC II's investments must be in SBA-eligible small businesses. Our portfolio may be concentrated in a limited number of industries. As of September 30, 2020, our top five industry concentrations were software, business services, healthcare services, education and investment funds (which includes our investments in our joint ventures).

As of September 30, 2020, our net asset value was approximately $1,184.8 million and our portfolio had a fair value of approximately $2,896.6 million in 105 portfolio companies, with a weighted average yield to maturity at cost for income producing investments ("YTM at Cost") of approximately 8.6% and a weighted average yield to maturity at cost for all investments ("YTM at Cost for Investments") of approximately 7.8%. The YTM at Cost calculation assumes that all investments, including secured collateralized agreements, not on non-accrual are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. The YTM at Cost for Investments calculation assumes that all investments, including secured collateralized agreements, are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. YTM at Cost and YTM at Cost for Investments calculations exclude the impact of existing leverage. YTM at Cost and YTM at Cost for Investments use the London Interbank Offered Rate ("LIBOR") curves at each quarter's end date. The actual yield to maturity may be higher or lower due to the future selection of the LIBOR contracts by the individual companies in our portfolio or other factors.

Recent Developments

On October 28, 2020, our board of directors declared a fourth quarter 2020 distribution of $0.30 per share payable on December 30, 2020 to holders of record as of December 16, 2020.

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COVID-19 Developments

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The COVID-19 pandemic has had, and continues to have, a significant impact on the U.S. economy. The extent of the continued impact of the COVID-19 pandemic on the financial performance of our current and future investments will depend on future developments, including the duration and spread of the virus, related advisories and restrictions, and the health of the financial markets and economy as a result of COVID-19, all of which are highly uncertain and cannot be predicted. To the extent our portfolio companies continue to be adversely impacted by the effects of the COVID-19 pandemic, such impact may have a material adverse impact on our future net investment income, the fair value of our portfolio investments, our financial condition and results of operations and the financial condition of our portfolio companies.

An increase in unrealized depreciation of our investment portfolio due to decreases in fair value of investments attributable to the COVID-19 pandemic has resulted in a significant reduction in our net asset value as of September 30, 2020, as compared to our net asset value as of December 31, 2019. As of September 30, 2020, we were in compliance with our asset coverage requirements under the 1940 Act. In addition, we are not in default of any of the asset coverage requirements under any of our credit facilities as of September 30, 2020. However, any continued increase in unrealized depreciation of our investment portfolio or further significant reductions in our net asset value, as a result of the effects of the COVID-19 pandemic or otherwise, increases the risk of breaching the relevant covenants. For additional discussion on the impact of COVID-19 on our portfolio companies, see “Monitoring of Portfolio Investments”.

We will continue to monitor the rapidly evolving situation surrounding the COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health authorities, and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our plan of operation. For example, recurring COVID-19 outbreaks have led to the re-introduction or continuation of certain public health restrictions (such as instituting quarantines, prohibitions on travel and the closure of offices, business, schools, retail stores and other public venues) in certain states in the United States and globally and could continue to lead to the re-introduction of such restrictions elsewhere. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impact of COVID-19 on our financial condition, results of operations or cash flows in the future.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.

Basis of Accounting

We consolidate our wholly-owned direct and indirect subsidiaries: NMF Holdings, NMF Servicing, NMFDB, SBIC I, SBIC I GP, SBIC II, SBIC II GP, NMF Ancora, NMF QID and NMF YP and our majority-owned consolidated subsidiary, NMNLC. We are an investment company following accounting and reporting guidance as described in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, ("ASC 946").

Valuation and Leveling of Portfolio Investments

At all times consistent with GAAP and the 1940 Act, we conduct a valuation of assets, which impacts our net asset value.

We value our assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, our board of directors is ultimately and solely responsible for determining the fair value of our portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where our portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. Our quarterly valuation procedures are set forth in more detail below:

(1)Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.

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a.Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and

b.For investments other than bonds, we look at the number of quotes readily available and perform the following procedures:

i.Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. We will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, we will use one or more of the methodologies outlined below to determine fair value;

ii.Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).

(3)Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:

a.Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;

b.Preliminary valuation conclusions will then be documented and discussed with our senior management;

c.If an investment falls into (3) above for four consecutive quarters and if the investment's par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our board of directors; and

d.When deemed appropriate by our management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.

The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period and the fluctuations could be material.

GAAP fair value measurement guidance classifies the inputs used in measuring fair value into three levels as follows:

Level I—Quoted prices (unadjusted) are available in active markets for identical investments and we have the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), we, to the extent that we hold such investments, do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.

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•Quoted prices for similar assets or liabilities in active markets;

•Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);

•Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.

Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.

The following table summarizes the levels in the fair value hierarchy that our portfolio investments fall into as of September 30, 2020:


(in thousands)	Total		Level I		Level II		Level III
First lien	$	1,662,653	$	—	$	167,616	$	1,495,037
Second lien	689,319		—		93,784		595,535
Subordinated	43,536		—		—		43,536
Equity and other	501,115		—		—		501,115
Total investments	$	2,896,623	$	—	$	261,400	$	2,635,223

We generally use the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. We typically determine the fair value of our performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company's performance and associated financial risks. The following outlines additional details on the approaches considered:

Company Performance, Financial Review, and Analysis: Prior to investment, as part of our due diligence process, we evaluate the overall performance and financial stability of the portfolio company. Post investment, we analyze each portfolio company's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. We also attempt to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of our original investment thesis. This analysis is specific to each portfolio company. We leverage the knowledge gained from our original due diligence process, augmented by this subsequent monitoring, to continually refine our outlook for each of our portfolio companies and ultimately form the valuation of our investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, we will consider the pricing indicated by the external event to corroborate the private valuation.

For debt investments, we may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of our debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, we may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value. After enterprise value coverage is demonstrated for our debt investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.

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Market Based Approach: We may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA) multiples of publicly traded comparable companies and comparable transactions. We consider numerous factors when selecting the appropriate companies whose trading multiples are used to value our portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. We may apply an average of various relevant comparable company EBITDA multiples to the portfolio company's latest twelve month ("LTM") EBITDA or projected EBITDA to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA multiple will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the market based approach as of September 30, 2020, we used the relevant EBITDA multiple ranges set forth in the table below to determine the enterprise value of our portfolio companies. We believe these were reasonable ranges in light of current comparable company trading levels and the specific portfolio companies involved.

Income Based Approach: We also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security's contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment's expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach and a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes an average yield-to maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of September 30, 2020, we used the discount ranges set forth in the table below to value investments in our portfolio companies.

The unobservable inputs used in the fair value measurement of our Level III investments as of September 30, 2020 were as follows:


(in thousands)					Range
Type	Fair Value as of September 30, 2020		Approach	Unobservable Input	Low		High		Weighted Average
First lien	$	1,438,801	Market & income approach	EBITDA multiple	5.0x		35.0x		14.0x
				Revenue multiple	3.5x		11.0x		5.9x
				Discount rate	4.5	%	17.0	%	8.3	%
	43,769		Market quote	Broker quote	N/A		N/A		N/A
	12,467		Other	N/A(1)	N/A		N/A		N/A
Second lien	531,932		Market & income approach	EBITDA multiple	7.0x		34.0x		15.1x

				Discount rate	6.8	%	21.7	%	9.5	%
	48,603		Market quote	Broker quote	N/A		N/A		N/A
	15,000		Other	N/A(1)	N/A		N/A		N/A
Subordinated	43,536		Market & income approach	EBITDA multiple	9.0x		15.0x		12.0x

				Discount rate	10.2	%	35.0	%	18.0	%

Equity and other	500,257		Market & income approach	EBITDA multiple	6.5x		19.5x		12.6x

				Discount rate	6.0	%	47.7	%	12.1	%
	700		Black Scholes analysis	Expected life in years	5.5		5.5		5.5
				Volatility	52.3	%	52.3	%	52.3	%
				Discount rate	0.7	%	0.7	%	0.7	%
	158		Other	N/A(1)	N/A		N/A		N/A
	$	2,635,223

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NMFC Senior Loan Program I LLC

NMFC Senior Loan Program I LLC ("SLP I") was formed as a Delaware limited liability company on May 27, 2014 and commenced operations on June 10, 2014. SLP I is a portfolio company held by us. SLP I is structured as a private investment fund, in which all of the investors are "qualified purchasers", as such term is defined in section 2(a)(51) of the 1940 Act. Transfer of interests in SLP I is subject to restrictions and, as a result, such interests are not readily marketable. SLP I operates under a limited liability company agreement (the "SLP I Agreement") and will continue in existence until August 31, 2022, subject to earlier termination pursuant to certain terms of the SLP I Agreement. The term may be extended pursuant to certain terms of the SLP I Agreement. SLP I's re-investment period ended on August 31, 2020. SLP I invests in senior secured loans issued by companies within our core industry verticals. These investments are typically broadly syndicated first lien loans.

SLP I is capitalized with $93.0 million of capital commitments and debt from a revolving credit facility and is managed by us. Our capital commitment is $23.0 million, representing less than 25.0% ownership, with third party investors representing the remaining capital commitments. As of September 30, 2020, SLP I had total investments with an aggregate fair value of approximately $292.9 million, debt outstanding of $220.1 million and capital that had been called and funded of $93.0 million. As of December 31, 2019, SLP I had total investments with an aggregate fair value of approximately $313.7 million, debt outstanding of $227.4 million and capital that had been called and funded of $93.0 million. Our investment in SLP I is disclosed on our Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.

We, as an investment adviser registered under the Advisers Act, act as the collateral manager to SLP I and are entitled to receive a management fee for our investment management services provided to SLP I. As a result, SLP I is classified as our affiliate. No management fee is charged on our investment in SLP I in connection with the administrative services provided to SLP I. For the three and nine months ended September 30, 2020, we earned approximately $0.3 million and $0.8 million, respectively, in management fees related to SLP I, which is included in other income. For the three and nine months ended September 30, 2019, we earned approximately $0.3 million and $0.9 million, respectively, in management fees related to SLP I, which is included in other income. As of September 30, 2020 and December 31, 2019, approximately $0.5 million and $0.3 million, respectively, of management fees related to SLP I was included in receivable from affiliates. For the three and nine months ended September 30, 2020, we earned approximately $0.7 million and $2.1 million, respectively, of dividend income related to SLP I, which is included in dividend income. For the three and nine months ended September 30, 2019, we earned approximately $0.8 million and $2.3 million, respectively, of dividend income related to SLP I, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $0.8 million and $0.7 million, respectively, of dividend income related to SLP I was included in interest and dividend receivable.

NMFC Senior Loan Program II LLC

NMFC Senior Loan Program II LLC ("SLP II") was formed as a Delaware limited liability company on March 9, 2016 and commenced operations on April 12, 2016. SLP II is structured as a private joint venture investment fund between us and SkyKnight Income, LLC (“SkyKnight”) and operates under a limited liability company agreement (the "SLP II Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP II, which has equal representation from us and SkyKnight. SLP II's investment period ended on April 12, 2020 and SLP II will continue in existence until April 12, 2022. The term may be extended for up to one year pursuant to certain terms of the SLP II Agreement.

SLP II is capitalized with equity contributions which were called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP II to call down on capital commitments requires approval by the board of managers of SLP II. As of September 30, 2020, we and SkyKnight have committed and contributed $79.4 million and $20.6 million, respectively, of equity to SLP II. Our investment in SLP II is disclosed on our Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.

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On April 12, 2016, SLP II entered into its revolving credit facility with Wells Fargo Bank, National Association, which matures on April 12, 2022 and bears interest at a rate of the LIBOR plus 1.60% per annum. As of September 30, 2020 and December 31, 2019, SLP II had total investments with an aggregate fair value of approximately $286.4 million and $340.0 million, respectively, and debt outstanding under its credit facility of $204.5 million and $246.9 million, respectively. As of September 30, 2020 and December 31, 2019, none of SLP II's investments were on non-accrual. Additionally, as of September 30, 2020 and December 31, 2019, SLP II had unfunded commitments in the form of delayed draws of $0.2 million and $3.2 million, respectively. Below is a summary of SLP II's portfolio, along with a listing of the individual investments in SLP II's portfolio as of September 30, 2020 and December 31, 2019:


(in thousands)	September 30, 2020			December 31, 2019
First lien investments (1)	$	300,199		351,160
Weighted average interest rate on first lien investments (2)	5.11		%	6.29	%
Number of portfolio companies in SLP II	34			37
Largest portfolio company investment (1)	$	17,322		17,456
Total of five largest portfolio company investments (1)	$	78,225		78,932

(1)Reflects principal amount or par value of investments.

(2)Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.

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The following table is a listing of the individual investments in SLP II's portfolio as of September 30, 2020:


Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Funded Investments - First lien:				(in thousands)		(in thousands)		(in thousands)
Access CIG, LLC	Business Services	3.91% (L + 3.75%)	2/27/2025	$	4,625	$	4,609	$	4,532
ADG, LLC	Healthcare Services	6.25 % (L + 2.50% + 2.75% PIK)	9/28/2023	16,412		16,335		14,876
Advisor Group Holdings, Inc.	Consumer Services	5.15% (L + 5.00%)	7/31/2026	4,962		4,920		4,815
Bearcat Buyer, Inc.	Healthcare Services	5.25% (L + 4.25%)	7/9/2026	90		89		90
Bearcat Buyer, Inc.	Healthcare Services	5.25% (L + 4.25%)	7/9/2026	1,368		1,363		1,368
Bleriot US Bidco Inc.	Federal Services	4.97% (L + 4.75%)	10/31/2026	1,345		1,332		1,335
Bleriot US Bidco Inc.	Federal Services	4.97% (L + 4.75%)	10/30/2026	8,605		8,528		8,546
Brave Parent Holdings, Inc.	Software	4.15% (L + 4.00%)	4/18/2025	3,662		3,652		3,622
CentralSquare Technologies, LLC	Software	3.90% (L + 3.75%)	8/29/2025	14,737		14,710		13,286
CHA Holdings, Inc.	Business Services	5.50% (L + 4.50%)	4/10/2025	2,031		2,023		1,899
CHA Holdings, Inc.	Business Services	5.50% (L + 4.50%)	4/10/2025	10,615		10,582		9,925
CommerceHub, Inc.	Software	3.65% (L + 3.50%)	5/21/2025	2,444		2,435		2,389
Dealer Tire, LLC	Distribution & Logistics	4.40% (L + 4.25%)	12/12/2025	7,444		7,427		7,295
Drilling Info Holdings, Inc.	Business Services	4.40% (L + 4.25%)	7/30/2025	14,646		14,598		14,139
Edgewood Partners Holdings LLC	Business Services	5.25% (L + 4.25%)	9/6/2024	7,375		7,320		7,117
eResearchTechnology, Inc.	Healthcare Services	5.50% (L + 4.50%)	2/4/2027	3,137		3,108		3,129
Fastlane Parent Company, Inc.	Distribution & Logistics	4.65% (L + 4.50%)	2/4/2026	3,447		3,392		3,328
Greenway Health, LLC	Software	4.75% (L + 3.75%)	2/16/2024	14,512		14,474		12,989
Help/Systems Holdings, Inc.	Software	5.75% (L + 4.75%)	11/19/2026	4,422		4,382		4,362
Institutional Shareholder Services Inc.	Business Services	4.72% (L + 4.50%)	3/5/2026	13,790		13,678		13,376
Keystone Acquisition Corp.	Healthcare Services	6.25% (L + 5.25%)	5/1/2024	5,238		5,208		4,767
LSCS Holdings, Inc.	Healthcare Services	4.47% (L + 4.25%)	3/17/2025	1,870		1,868		1,776
LSCS Holdings, Inc.	Healthcare Services	4.47% (L + 4.25%)	3/17/2025	7,243		7,236		6,881
Market Track, LLC	Business Services	5.25% (L + 4.25%)	6/5/2024	11,610		11,577		11,432
Medical Solutions Holdings, Inc.	Healthcare Services	5.50% (L + 4.50%)	6/14/2024	2,774		2,766		2,684
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	2,078		2,074		2,059
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	873		871		865
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	12,066		12,039		11,955
Peraton Corp. (fka MHVC Acquisition Corp.)	Federal Services	6.25% (L + 5.25%)	4/29/2024	10,159		10,130		10,083
Premise Health Holding Corp.	Healthcare Services	3.72% (L + 3.50%)	7/10/2025	1,362		1,357		1,318
Project Accelerate Parent, LLC	Business Services	5.25% (L + 4.25%)	1/2/2025	12,450		12,409		11,329
PSC Industrial Holdings Corp.	Industrial Services	4.98% (L + 3.75%)	10/11/2024	3,036		3,017		2,892
Quest Software US Holdings Inc.	Software	4.51% (L + 4.25%)	5/16/2025	14,737		14,685		14,467
Salient CRGT Inc.	Federal Services	7.50% (L + 6.50%)	2/28/2022	12,665		12,625		12,484
Wirepath LLC	Distribution & Logistics	4.22% (L + 4.00%)	8/5/2024	14,700		14,700		13,524
WP CityMD Bidco LLC	Healthcare Services	5.54% (L + 4.50%)	8/13/2026	5,432		5,384		5,413
Wrench Group LLC	Consumer Services	4.22% (L + 4.00%)	4/30/2026	5,935		5,883		5,816
YI, LLC	Healthcare Services	5.00% (L + 4.00%)	11/7/2024	14,687		14,679		12,851
Zelis Cost Management Buyer, Inc.	Healthcare Information Technology	4.90% (L + 4.75%)	9/30/2026	4,099		4,062		4,077
Zywave, Inc.	Software	6.00% (L + 5.00%)	11/17/2022	16,844		16,810		16,844
Zywave, Inc.	Software	6.00% (L + 5.00%)	11/17/2022	478		474		478



Total Funded Investments				$	300,005	$	298,811	$	286,413
Unfunded Investments - First lien:
Bearcat Buyer, Inc.	Healthcare Services	—	7/9/2021	$	194	$	(1)	$	—





Total Unfunded Investments				$	194	$	(1)	$	—
Total Investments				$	300,199	$	298,810	$	286,413

(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP II.

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The following table is a listing of the individual investments in SLP II's portfolio as of December 31, 2019:


Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Funded Investments - First lien				(in thousands)		(in thousands)		(in thousands)
Access CIG, LLC	Business Services	5.44% (L + 3.75%)	2/27/2025	$	9,833	$	9,794	$	9,841
ADG, LLC	Healthcare Services	7.17% (L + 4.75% + 0.50% PIK)	9/28/2023	16,074		15,980		15,813
Advisor Group Holdings, Inc.	Consumer Services	6.80% (L + 5.00%)	7/31/2026	5,000		4,952		4,972
Bearcat Buyer, Inc.	Healthcare Services	6.19% (L + 4.25%)	7/9/2026	1,379		1,372		1,372
Bearcat Buyer, Inc.	Healthcare Services	6.19% (L + 4.25%)	7/9/2026	90		90		90
Bleriot US Bidco Inc.	Federal Services	6.69% (L + 4.75%)	10/30/2026	8,649		8,563		8,746
Brave Parent Holdings, Inc.	Software	5.93% (L + 4.00%)	4/18/2025	15,267		15,222		15,045
CentralSquare Technologies, LLC	Software	5.55% (L + 3.75%)	8/29/2025	14,850		14,819		14,231
CHA Holdings, Inc.	Business Services	6.44% (L + 4.50%)	4/10/2025	10,697		10,658		10,683
CHA Holdings, Inc.	Business Services	6.44% (L + 4.50%)	4/10/2025	2,047		2,037		2,044
CommerceHub, Inc.	Software	5.30% (L + 3.50%)	5/21/2025	2,463		2,453		2,432
Drilling Info Holdings, Inc.	Business Services	6.05% (L + 4.25%)	7/30/2025	14,758		14,703		14,696
Edgewood Partners Holdings LLC	Business Services	6.05% (L + 4.25%)	9/6/2024	7,432		7,367		7,413
Explorer Holdings, Inc.	Healthcare Services	6.26% (L + 4.50%)	11/20/2026	3,145		3,113		3,171
Fastlane Parent Company, Inc.	Distribution & Logistics	6.44% (L + 4.50%)	2/4/2026	3,474		3,411		3,448
Greenway Health, LLC	Software	5.69% (L + 3.75%)	2/16/2024	14,625		14,578		13,053
Help/Systems Holdings, Inc.	Software	6.55% (L + 4.75%)	11/19/2026	4,444		4,400		4,428
Idera, Inc.	Software	6.30% (L + 4.50%)	6/28/2024	4,446		4,417		4,449
Institutional Shareholder Services Inc.	Business Services	6.44% (L + 4.50%)	3/5/2026	13,895		13,769		13,687
Keystone Acquisition Corp.	Healthcare Services	7.19% (L + 5.25%)	5/1/2024	5,278		5,243		5,173
LSCS Holdings, Inc.	Healthcare Services	6.31% (L + 4.25%)	3/17/2025	7,298		7,290		7,225
LSCS Holdings, Inc.	Healthcare Services	6.31% (L + 4.25%)	3/17/2025	1,884		1,882		1,865
Market Track, LLC	Business Services	6.18% (L + 4.25%)	6/5/2024	11,700		11,660		10,530
MediaOcean, LLC	Software	5.80% (L + 4.00%)	8/18/2025	7,392		7,372		7,410
Medical Solutions Holdings, Inc.	Healthcare Services	6.30% (L + 4.50%)	6/14/2024	2,795		2,786		2,791
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	12,160		12,124		12,160
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	2,095		2,089		2,095
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	880		877		880
NorthStar Financial Services Group, LLC	Software	5.30% (L + 3.50%)	5/25/2025	5,885		5,861		5,789
Peraton Corp. (fka MHVC Acquisition Corp.)	Federal Services	7.05% (L + 5.25%)	4/29/2024	10,237		10,203		10,193
Premise Health Holding Corp.	Healthcare Services	5.44% (L + 3.50%)	7/10/2025	1,372		1,367		1,358
Project Accelerate Parent, LLC	Business Services	5.99% (L + 4.25%)	1/2/2025	13,545		13,494		13,511
PSC Industrial Holdings Corp.	Industrial Services	5.49% (L + 3.75%)	10/11/2024	7,305		7,252		7,269
Quest Software US Holdings Inc.	Software	6.18% (L + 4.25%)	5/16/2025	14,850		14,790		14,739
Salient CRGT Inc.	Federal Services	8.29% (L + 6.50%)	2/28/2022	13,134		13,071		12,510
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)	Education	6.19% (L + 4.25%)	7/30/2025	716		715		721
Wirepath LLC	Distribution & Logistics	5.94% (L + 4.00%)	8/5/2024	14,813		14,813		12,886
WP CityMD Bidco LLC	Healthcare Services	6.44% (L + 4.50%)	8/13/2026	15,000		14,855		15,038
Wrench Group LLC	Consumer Services	6.19% (L + 4.25%)	4/30/2026	4,478		4,435		4,488
YI, LLC	Healthcare Services	5.94% (L + 4.00%)	11/7/2024	14,801		14,791		13,839
Zelis Cost Management Buyer, Inc.	Healthcare I.T.	6.55% (L + 4.75%)	9/30/2026	10,363		10,261		10,427
Zywave, Inc.	Software	6.93% (L + 5.00%)	11/17/2022	16,975		16,930		16,975
Zywave, Inc.	Software	6.84% (L + 5.00%)	11/17/2022	481		477		481
Total Funded Investments				$	348,005	$	346,336	$	339,967
Unfunded Investments - First lien
Bearcat Buyer, Inc.	Healthcare Services	—	7/9/2021	$	194	$	(1)	$	(1)
Bleriot US Bidco Inc.	Federal Services	—	10/31/2020	1,351		(14)		15
Premise Health Holding Corp.	Healthcare Services	—	7/10/2020	110		—		—
Wrench Group LLC	Consumer Services	—	4/30/2021	$	1,500	$	—	$	4
Total Unfunded Investments				3,155		(15)		18

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Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Total Investments				$	351,160	$	346,321	$	339,985

(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP II.

Below is certain summarized financial information for SLP II as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and September 30, 2019:


Selected Balance Sheet Information:	September 30, 2020		December 31, 2019
	(in thousands)		(in thousands)
Investments at fair value (cost of $298,810 and $346,321, respectively)	$	286,413	$	339,985

Cash and other assets	8,838		8,159
Total assets	$	295,251	$	348,144

Credit facility	$	204,470	$	246,870
Deferred financing costs	(758)		(1,408)
Distribution payable	2,550		3,250
Payable for unsettled securities purchased	—		3,113
Other liabilities	1,201		2,367
Total liabilities	207,463		254,192

Members' capital	$	87,788	$	93,952
Total liabilities and members' capital	$	295,251	$	348,144


Selected Statement of Operations Information:	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
	(in thousands)		(in thousands)		(in thousands)		(in thousands)
Interest income	$	4,174	$	6,013	$	14,153	$	18,581
Other income	—		31		70		89
Total investment income	4,174		6,044		14,223		18,670

Interest and other financing expenses	1,190		2,745		4,696		8,484
Other expenses	98		129		360		408
Total expenses	1,288		2,874		5,056		8,892
Less: expenses waived and reimbursed	—		—		—		(20)
Net expenses	1,288		2,874		5,056		8,872
Net investment income	2,886		3,170		9,167		9,798

Net realized gains (losses) on investments	3		116		(803)		377
Net change in unrealized appreciation (depreciation) of investments	6,988		(2,371)		(6,061)		(1,311)
Net increase in members' capital	$	9,877	$	915	$	2,303	$	8,864

For the three and nine months ended September 30, 2020, we earned approximately $2.0 million and $6.7 million, respectively, of dividend income related to SLP II, which is included in dividend income. For the three and nine months ended September 30, 2019, we earned approximately $2.5 million and $8.5 million, respectively, of dividend income related to SLP II, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $2.0 million and $2.6 million, respectively, of dividend income related to SLP II was included in interest and dividend receivable.

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We have determined that SLP II is an investment company under ASC 946; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly-owned investment company subsidiary. Furthermore, Accounting Standards Codification Topic 810, Consolidation ("ASC 810"), concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, we do not consolidate SLP II.

NMFC Senior Loan Program III LLC

NMFC Senior Loan Program III LLC ("SLP III") was formed as a Delaware limited liability company and commenced operations on April 25, 2018. SLP III is structured as a private joint venture investment fund between us and SkyKnight Income II, LLC (“SkyKnight II”) and operates under a limited liability company agreement (the "SLP III Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP III, which has equal representation from us and SkyKnight II. SLP III has a five year investment period and will continue in existence until April 25, 2025. The investment period may be extended for up to one year pursuant to certain terms of the SLP III Agreement.

SLP III is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III. As of September 30, 2020, we and SkyKnight II have committed and contributed $120.0 million and $30.0 million, respectively, of equity to SLP III. Our investment in SLP III is disclosed on our Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.

On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A., which matures on May 2, 2023 and bears interest at a rate of LIBOR plus 1.70% per annum. Effective February 13, 2020, SLP III's revolving credit facility has a maximum borrowing capacity of $450.0 million. As of September 30, 2020 and December 31, 2019, SLP III had total investments with an aggregate fair value of approximately $526.2 million and $475.2 million, respectively, and debt outstanding under its credit facility of $395.2 million and $355.4 million, respectively. As of September 30, 2020 and December 31, 2019, none of SLP III's investments were on non-accrual. Additionally, as of September 30, 2020 and December 31, 2019, SLP III had unfunded commitments in the form of delayed draws of $8.8 million and $10.6 million, respectively. Below is a summary of SLP III's portfolio, along with a listing of the individual investments in SLP III's portfolio as of September 30, 2020 and December 31, 2019:


(in thousands)	September 30, 2020			December 31, 2019
First lien investments (1)	$	554,145		493,787
Weighted average interest rate on first lien investments (2)	4.63		%	5.95	%
Number of portfolio companies in SLP III	58			49
Largest portfolio company investment (1)	$	23,787		23,947
Total of five largest portfolio company investments (1)	$	99,403		99,906

(1)Reflects principal amount or par value of investment.

(2)Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.

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The following table is a listing of the individual investments in SLP III's portfolio as of September 30, 2020:


Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Funded Investments - First lien				( in thousands)		( in thousands)		( in thousands)
Access CIG, LLC	Business Services	3.91% (L + 3.75%)	2/27/2025	$	870	$	870	$	852
Advisor Group Holdings, Inc.	Consumer Services	5.15% (L + 5.00%)	7/31/2026	4,963		4,920		4,815
Affordable Care Holding Corp.	Healthcare Services	5.75% (L + 4.75%)	10/24/2022	5,917		5,858		5,605
AG Parent Holdings, LLC	Healthcare Services	5.15% (L + 5.00%)	7/31/2026	12,406		12,353		12,220
Ascensus Specialties LLC	Business Services	4.91% (L + 4.75%)	9/24/2026	9,925		9,881		9,578
Aston FinCo S.a.r.l. / Aston US Finco, LLC	Software	4.40% (L + 4.25%)	10/9/2026	5,970		5,917		5,895
Astra Acquisition Corp.	Software	6.50% (L + 5.50%)	3/1/2027	11,519		11,438		11,577
BCPE Empire Holdings, Inc.	Distribution & Logistics	4.15% (L + 4.00%)	6/11/2026	9,098		9,021		8,916
BCPE Empire Holdings, Inc.	Distribution & Logistics	4.15% (L + 4.00%)	6/11/2026	1,430		1,421		1,401
Bearcat Buyer, Inc.	Healthcare Services	5.25% (L + 4.25%)	7/9/2026	19,703		19,619		19,703
Bearcat Buyer, Inc.	Healthcare Services	5.25% (L + 4.25%)	7/9/2026	1,292		1,287		1,292
Bleriot US Bidco Inc.	Federal Services	4.97% (L + 4.75%)	10/31/2026	4,303		4,264		4,273
Bleriot US Bidco Inc.	Federal Services	4.97% (L + 4.75%)	10/31/2026	672		666		668
Bluefin Holding, LLC	Software	4.15% (L + 4.00%)	9/4/2026	9,925		9,795		9,925
Bracket Intermediate Holding Corp.	Healthcare Services	4.55% (L + 4.25%)	9/5/2025	14,700		14,645		14,443
Brave Parent Holdings, Inc.	Software	4.15% (L + 4.00%)	4/18/2025	11,246		11,217		11,123
CentralSquare Technologies, LLC	Software	3.90% (L + 3.75%)	8/29/2025	14,738		14,710		13,286
Certara Holdco, Inc.	Healthcare I.T.	3.72% (L + 3.50%)	8/15/2024	1,249		1,252		1,236
CHA Holdings, Inc.	Business Services	5.50% (L + 4.50%)	4/10/2025	980		980		916
CommerceHub, Inc.	Software	3.65% (L + 3.50%)	5/21/2025	14,663		14,611		14,333
Covenant Surgical Partners, Inc.	Healthcare Services	4.16% (L + 4.00%)	7/1/2026	9,900		9,816		9,133
CRCI Longhorn Holdings, Inc.	Business Services	3.64% (L + 3.50%)	8/8/2025	14,700		14,646		14,228
Dealer Tire, LLC	Distribution & Logistics	4.40% (L + 4.25%)	12/12/2025	9,925		9,902		9,727
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)	Healthcare Services	4.75% (L + 3.75%)	6/6/2025	14,673		14,647		13,921
Drilling Info Holdings, Inc.	Business Services	4.40% (L + 4.25%)	7/30/2025	18,624		18,555		17,980
Edgewood Partners Holdings LLC	Business Services	5.25% (L + 4.25%)	9/6/2024	7,375		7,320		7,117
eResearchTechnology, Inc.	Healthcare Services	5.50% (L + 4.50%)	2/4/2027	3,921		3,885		3,912
EyeCare Partners, LLC	Healthcare Services	3.90% (L + 3.75%)	2/18/2027	12,101		12,087		11,448
Fastlane Parent Company, Inc.	Distribution & Logistics	4.65% (L + 4.50%)	2/4/2026	3,448		3,392		3,328
Greenway Health, LLC	Software	4.75% (L + 3.75%)	2/16/2024	14,557		14,565		13,029
Heartland Dental, LLC	Healthcare Services	3.65% (L + 3.50%)	4/30/2025	18,588		18,522		17,199
Help/Systems Holdings, Inc.	Software	5.75% (L + 4.75%)	11/19/2026	18,486		18,311		18,232
Idera, Inc.	Software	5.00% (L + 4.00%)	6/28/2024	5,529		5,509		5,467
Institutional Shareholder Services Inc.	Business Services	4.72% (L + 4.50%)	3/5/2026	985		977		955
Kestra Advisor Services Holdings A, Inc.	Business Services	4.40% (L + 4.25%)	6/3/2026	9,405		9,338		9,240
LSCS Holdings, Inc.	Healthcare Services	4.47% (L + 4.25%)	3/17/2025	2,634		2,618		2,502
LSCS Holdings, Inc.	Healthcare Services	4.47% (L + 4.25%)	3/17/2025	680		676		646
Market Track, LLC	Business Services	5.25% (L + 4.25%)	6/5/2024	4,741		4,737		4,668
MED ParentCo, LP	Healthcare Services	4.40% (L + 4.25%)	8/31/2026	10,298		10,214		9,818
MED ParentCo, LP	Healthcare Services	4.40% (L + 4.25%)	8/31/2026	1,807		1,792		1,723
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	4,514		4,502		4,472
Ministry Brands, LLC	Software	5.00% (L + 4.00%)	12/2/2022	873		871		865
National Intergovernmental Purchasing Alliance Company	Business Services	3.97% (L + 3.75%)	5/23/2025	8,724		8,720		8,571
National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)	Healthcare Services	4.40% (L + 4.25%)	3/9/2026	8,901		8,901		8,823
National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)	Healthcare Services	4.40% (L + 4.25%)	3/9/2026	406		406		403
Navex Topco, Inc.	Software	3.40% (L + 3.25%)	9/5/2025	18,255		18,118		17,844
Navicure, Inc.	Healthcare Services	4.75% (L + 4.00%)	10/22/2026	4,118		4,107		4,035
Netsmart Technologies, Inc.	Healthcare I.T.	6.00% (P + 2.75%)	4/19/2023	10,250		10,250		10,250
Newport Group Holdings II, Inc.	Business Services	3.72% (L + 3.50%)	9/12/2025	4,900		4,882		4,722
Orion Advisor Solutions, Inc.	Business Services	5.00% (L + 4.00%)	9/24/2027	5,250		5,198		5,219
Outcomes Group Holdings, Inc.	Healthcare Services	3.47% (L + 3.25%)	10/24/2025	3,409		3,402		3,341

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Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Pelican Products, Inc.	Business Products	4.50% (L + 3.50%)	5/1/2025	4,888		4,879		4,688
Peraton Corp. (fka MHVC Acquisition Corp.)	Federal Services	6.25% (L + 5.25%)	4/29/2024	15,312		15,262		15,197
Premise Health Holding Corp.	Healthcare Services	3.72% (L + 3.50%)	7/10/2025	13,619		13,569		13,177
Project Accelerate Parent, LLC	Business Services	5.25% (L + 4.25%)	1/2/2025	9,848		9,809		8,962
Quest Software US Holdings Inc.	Software	4.51% (L + 4.25%)	5/16/2025	14,737		14,685		14,467
Ryan Specialty Group, LLC	Business Services	4.00% (L + 3.25%)	9/1/2027	3,500		3,448		3,483
Sierra Enterprises, LLC	Food & Beverage	5.00% (L + 4.00%)	11/11/2024	2,437		2,435		2,255
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)	Education	4.47% (L + 4.25%)	7/30/2025	12,214		12,193		11,580
TIBCO Software Inc.	Software	3.90% (L + 3.75%)	6/30/2026	7,673		7,655		7,500
Unitek Acquisition, Inc.	Business Services	7.50% (L + 5.50% + 1.00% PIK)	8/20/2024	3,325		2,700		2,975
Unitek Acquisition, Inc.	Business Services	7.50% (L + 5.50% + 1.00% PIK)	8/20/2024	665		540		595
Wirepath LLC	Distribution & Logistics	4.22% (L + 4.00%)	8/5/2024	17,170		17,171		15,798
WP CityMD Bidco LLC	Healthcare Services	5.50% (L + 4.50%)	8/13/2026	19,918		19,744		19,852
VT Topco, Inc.	Business Services	3.40% (L + 3.25%)	8/1/2025	2,802		2,802		2,676
YI, LLC	Healthcare Services	5.00% (L + 4.00%)	11/7/2024	9,716		9,710		8,501
Total Funded Investments				$	545,370	$	542,193	$	526,581

Unfunded Investments - First lien
BCPE Empire Holdings, Inc.	Distribution & Logistics	—	6/11/2021	$	369	$	(4)	(7)
Bearcat Buyer, Inc.	Healthcare Services	—	7/9/2021	2,792		(14)		—
Covenant Surgical Partners, Inc.	Healthcare Services	—	7/1/2021	2,000		(20)		(155)
EyeCare Partners, LLC	Healthcare Services	—	2/18/2022	2,838		—		(153)
MED ParentCo, LP	Healthcare Services	—	8/27/2021	776		(8)		(36)
Total Unfunded Investments				$	8,775	$	(46)	$	(351)
Total Investments				$	554,145	$	542,147	$	526,230

(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP III.

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The following table is a listing of the individual investments in SLP III's portfolio as of December 31, 2019:


Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
Funded Investments - First lien				(in thousands)		(in thousands)		(in thousands)
Access CIG, LLC	Business Services	5.44% (L + 3.75%)	2/27/2025	$	1,204	$	1,204	$	1,205
Advisor Group Holdings, Inc.	Consumer Services	6.80% (L + 5.00%)	7/31/2026	5,000		4,952		4,972
Affordable Care Holding Corp.	Healthcare Services	6.59% (L + 4.75%)	10/24/2022	5,963		5,884		5,814
AG Parent Holdings, LLC	Healthcare Services	6.91% (L + 5.00%)	7/31/2026	12,500		12,440		12,406
Aston FinCo S.a r.l. / Aston US Finco, LLC	Software	6.26% (L + 4.25%)	10/9/2026	6,000		5,941		5,970
Ascensus Specialties LLC	Business Services	6.44% (L + 4.75%)	9/24/2026	10,000		9,951		9,975
BCPE Empire Holdings, Inc.	Distribution & Logistics	5.80% (L + 4.00%)	6/11/2026	9,167		9,080		9,224
BCPE Empire Holdings, Inc.	Distribution & Logistics	5.80% (L + 4.00%)	6/11/2026	229		243		231
Bearcat Buyer, Inc.	Healthcare Services	6.19% (L + 4.25%)	7/9/2026	19,853		19,759		19,753
Bearcat Buyer, Inc.	Healthcare Services	6.19% (L + 4.25%)	7/9/2026	1,302		1,296		1,296
Bleriot US Bidco Inc.	Federal Services	6.69% (L + 4.75%)	10/30/2026	4,324		4,281		4,373
Bluefin Holding, LLC	Software	6.14% (L + 4.25%)	9/4/2026	10,000		9,855		9,900
Bracket Intermediate Holding Corp.	Healthcare Services	6.35% (L + 4.25%)	9/5/2025	14,813		14,750		14,775
Brave Parent Holdings, Inc.	Software	5.93% (L + 4.00%)	4/18/2025	14,775		14,732		14,560
CentralSquare Technologies, LLC	Software	5.55% (L + 3.75%)	8/29/2025	14,850		14,819		14,231
Certara Holdco, Inc.	Healthcare I.T.	5.44% (L + 3.50%)	8/15/2024	1,262		1,266		1,262
CHA Holdings, Inc.	Business Services	6.44% (L + 4.50%)	4/10/2025	987		987		986
CommerceHub, Inc.	Software	5.30% (L + 3.50%)	5/21/2025	14,775		14,716		14,590
Covenant Surgical Partners, Inc.	Healthcare Services	5.69% (L + 4.00%)	7/1/2026	9,975		9,881		9,913
CRCI Longhorn Holdings, Inc.	Business Services	5.19% (L + 3.50%)	8/8/2025	14,813		14,751		14,414
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)	Healthcare Services	5.55% (L + 3.75%)	6/6/2025	14,786		14,755		14,737
Drilling Info Holdings, Inc.	Business Services	6.05% (L + 4.25%)	7/30/2025	18,766		18,688		18,688
Edgewood Partners Holdings LLC	Business Services	6.05% (L + 4.25%)	9/6/2024	7,432		7,367		7,413
Explorer Holdings, Inc.	Healthcare Services	6.25% (L + 4.50%)	11/20/2026	3,931		3,892		3,964
Fastlane Parent Company, Inc.	Distribution & Logistics	6.44% (L + 4.50%)	2/4/2026	3,474		3,411		3,448
Greenway Health, LLC	Software	5.69% (L + 3.75%)	2/16/2024	14,670		14,679		13,093
Heartland Dental, LLC	Healthcare Services	5.55% (L + 3.75%)	4/30/2025	18,317		18,243		18,248
Help/Systems Holdings, Inc.	Software	6.55% (L + 4.75%)	11/19/2026	5,556		5,500		5,535
Idera, Inc.	Software	6.30% (L + 4.50%)	6/28/2024	5,572		5,548		5,576
Institutional Shareholder Services Inc.	Business Services	6.44% (L + 4.50%)	3/5/2026	993		983		978
Kestra Advisor Services Holdings A, Inc.	Business Services	6.20% (L + 4.25%)	6/3/2026	9,476		9,402		9,477
LSCS Holdings, Inc.	Healthcare Services	6.31% (L + 4.25%)	3/17/2025	2,654		2,634		2,627
LSCS Holdings, Inc.	Healthcare Services	6.31% (L + 4.25%)	3/17/2025	685		680		678
Market Track, LLC	Business Services	6.18% (L + 4.25%)	6/5/2024	4,778		4,773		4,300
MED ParentCo, LP	Healthcare Services	6.05% (L + 4.25%)	8/31/2026	10,376		10,282		10,402
MED ParentCo, LP	Healthcare Services	6.05% (L + 4.25%)	8/31/2026	553		549		554
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	4,549		4,534		4,549
Ministry Brands, LLC	Software	5.85% (L + 4.00%)	12/2/2022	880		877		880
National Intergovernmental Purchasing Alliance Company	Business Services	5.69% (L + 3.75%)	5/23/2025	8,790		8,786		8,790
Navex Topco, Inc.	Software	5.05% (L + 3.25%)	9/5/2025	18,394		18,237		18,448
Netsmart Technologies, Inc.	Healthcare I.T.	5.55% (L + 3.75%)	4/19/2023	10,330		10,330		10,308
Newport Group Holdings II, Inc.	Business Services	5.65% (L + 3.75%)	9/12/2025	4,938		4,917		4,950
NorthStar Financial Services Group, LLC	Software	5.30% (L + 3.50%)	5/25/2025	11,770		11,723		11,579
Outcomes Group Holdings, Inc.	Healthcare Services	5.41% (L + 3.50%)	10/24/2025	6,435		6,421		6,344
Pelican Products, Inc.	Business Products	5.24% (L + 3.50%)	5/1/2025	4,925		4,915		4,531
Peraton Corp. (fka MHVC Acquisition Corp.)	Federal Services	7.05% (L + 5.25%)	4/29/2024	15,430		15,371		15,363
Premise Health Holding Corp.	Healthcare Services	5.44% (L + 3.50%)	7/10/2025	13,723		13,666		13,580
Project Accelerate Parent, LLC	Business Services	5.99% (L + 4.25%)	1/2/2025	9,924		9,878		9,899
Quest Software US Holdings Inc.	Software	6.18% (L + 4.25%)	5/16/2025	14,850		14,790		14,739
Sierra Enterprises, LLC	Food & Beverage	5.80% (L + 4.00%)	11/11/2024	2,456		2,454		2,447
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)	Education	6.19% (L + 4.25%)	7/30/2025	14,812		14,782		14,905
Wirepath LLC	Distribution & Logistics	5.94% (L + 4.00%)	8/5/2024	17,302		17,302		15,053
WP CityMD Bidco LLC	Healthcare Services	6.44% (L + 4.50%)	8/13/2026	20,069		19,875		20,119

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Portfolio Company and Type of Investment	Industry	Interest Rate (1)	Maturity Date	Principal Amount or Par Value		Cost		Fair Value (2)
YI, LLC	Healthcare Services	5.94% (L + 4.00%)	11/7/2024	$	9,791	$	9,784	$	9,155
Total Funded Investments				$	483,179	$	480,816	$	475,207
Unfunded Investments - First lien
BCPE Empire Holdings, Inc.	Distribution & Logistics	—	6/11/2021	$	1,580	$	(16)	$	10
Bearcat Buyer, Inc.	Healthcare Services	—	7/9/2021	2,792		(14)		(14)
Bleriot US Bidco Inc.	Federal Services	—	10/31/2020	676		(7)		8
Covenant Surgical Partners, Inc.	Healthcare Services	—	7/1/2021	2,000		(20)		(13)
Heartland Dental, LLC	Healthcare Services	—	4/30/2020	413		—		(2)
MED ParentCo, LP	Healthcare Services	—	8/27/2021	2,044		(20)		5
Premise Health Holding Corp.	Healthcare Services	—	7/10/2020	1,103		(3)		(3)
Total Unfunded Investments				$	10,608	$	(80)	$	(9)
Total Investments				$	493,787	$	480,736	$	475,198

(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP III.

Below is certain summarized financial information for SLP III as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and September 30, 2019:


Selected Balance Sheet Information:	September 30, 2020		December 31, 2019
	(in thousands)		(in thousands)
Investments at fair value (cost of $542,147 and $480,736)	$	526,230	$	475,198
Cash and other assets	14,005		12,836
Receivable from unsettled securities sold	2,385		—
Total assets	$	542,620	$	488,034

Credit facility	$	395,200	$	355,400
Deferred financing costs	(2,322)		(2,385)
Payable for unsettled securities purchased	9,384		8,166
Distribution payable	4,000		3,650
Other liabilities	2,396		3,736
Total liabilities	408,658		368,567

Members' capital	$	133,962	$	119,467
Total liabilities and members' capital	$	542,620	$	488,034

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Selected Statement of Operations Information:	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
	(in thousands)		(in thousands)		(in thousands)		(in thousands)
Interest income	$	6,490	$	7,268	$	20,826	$	19,828
Other income	75		122		320		270
Total investment income	6,565		7,390		21,146		20,098

Interest and other financing expenses	2,516		3,770		9,593		10,511
Other expenses	250		166		571		469
Total expenses	2,766		3,936		10,164		10,980
Less: expenses waived and reimbursed	—		—		—		(22)
Net expenses	2,766		3,936		10,164		10,958
Net investment income	3,799		3,454		10,982		9,140

Net realized (losses) gains on investments	(82)		100		(78)		170
Net change in unrealized appreciation (depreciation) of investments	14,775		(1,800)		(10,379)		1,855
Net increase in members' capital	$	18,492	$	1,754	$	525	$	11,165

For the three and nine months ended September 30, 2020, we earned approximately $3.2 million and $8.8 million of dividend income related to SLP III, which is included in dividend income. For the three and nine months ended September 30, 2019, we earned approximately $2.7 million and $7.6 million of dividend income related to SLP III, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $3.2 million and $2.9 million, respectively, of dividend income related to SLP III was included in interest and dividend receivable.

We have determined that SLP III is an investment company under ASC 946; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly-owned investment company subsidiary. Furthermore, ASC 810 concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, we do not consolidate SLP III.

New Mountain Net Lease Corporation

NMNLC was formed to acquire commercial real estate properties that are subject to "triple net" leases. NMNLC's investments are disclosed on our Consolidated Schedule of Investments as of September 30, 2020.

On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.

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Below is certain summarized property information for NMNLC as of September 30, 2020:

Lease

Total

Fair Value as of

Portfolio Company

Tenant

Expiration Date

Location

Square Feet

September 30, 2020

(in thousands)

NM NL Holdings LP / NM GP Holdco LLC

Various

50,085

NM GLCR LP

Arctic Glacier U.S.A.

2/28/2038

214

26,464

NM CLFX LP

Victor Equipment Company

8/31/2033

423

12,677

NM APP Canada, Corp.

A.P. Plasman, Inc.

9/30/2031

Canada

436

11,100

NM DRVT LLC

FMH Conveyors, LLC

10/31/2031

195

6,980

NM APP US LLC

Plasman Corp, LLC / A-Brite LP

9/30/2033

AL / OH

261

6,886

NM YI, LLC

Young Innovations, Inc.

10/31/2039

IL / MO

212

6,175

NM JRA LLC

J.R. Automation Technologies, LLC

1/31/2031

3,784

NM KRLN LLC

None

N/A

940

125,091

Collateralized agreements or repurchase financings

We follow the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral, (“ASC 860”) when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of September 30, 2020 and December 31, 2019, we held one collateralized agreement to resell with a cost basis of $30.0 million and $30.0 million, respectively, and a fair value of $21.4 million and $21.4 million, respectively. The collateralized agreement to resell is on non-accrual. The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from us at the par value of the collateralized agreement. The private hedge fund has breached its agreement to repurchase the collateral under the collateralized agreement. The default by the private hedge fund did not release the collateral to us, therefore, we do not have full rights and title to the collateral. A claim has been filed with the Cayman Islands joint official liquidators to resolve this matter. The joint official liquidators have recognized our contractual rights under the collateralized agreement. We continue to exercise our rights under the collateralized agreement and continue to monitor the liquidation process of the private hedge fund. The fair value of the collateralized agreement to resell is reflective of the increased risk of the position.

PPVA Black Elk (Equity) LLC

On May 3, 2013, we entered into a collateralized securities purchase and put agreement (the “SPP Agreement”) with a private hedge fund. Under the SPP Agreement, we purchased twenty million Class E Preferred Units of Black Elk Energy Offshore Operations, LLC (“Black Elk”) for $20.0 million with a corresponding obligation of the private hedge fund, PPVA Black Elk (Equity) LLC, to repurchase the preferred units for $20.0 million plus other amounts due under the SPP Agreement. The majority owner of Black Elk was the private hedge fund. In August 2014, we received a payment of $20.5 million, the full amount due under the SPP Agreement.

In August 2017, a trustee (the “Trustee”) for Black Elk informed us that the Trustee intended to assert a fraudulent conveyance claim (the “Claim”) against us and one of its affiliates seeking the return of the $20.5 million repayment. Black Elk filed a Chapter 11 bankruptcy petition pursuant to the United States Bankruptcy Code in August 2015. The Trustee alleged that individuals affiliated with the private hedge fund conspired with Black Elk and others to improperly use proceeds from the sale of certain Black Elk assets to repay, in August 2014, the private hedge fund’s obligation to us under the SPP Agreement. We were unaware of these claims at the time the repayment was received. The private hedge fund is currently in liquidation under the laws of the Cayman Islands.

On December 22, 2017, we settled the Trustee’s $20.5 million Claim for $16.0 million and filed a claim with the Cayman Islands joint official liquidators of the private hedge fund for $16.0 million that is owed to us under the SPP Agreement. The SPP Agreement was restored and is in effect since repayment has not been made. We continue to exercise our rights under the SPP Agreement and continue to monitor the liquidation process of the private hedge fund. During the year

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ended December 31, 2018, we received a $1.5 million payment from our insurance carrier in respect to the settlement. As of September 30, 2020 and December 31, 2019, the SPP Agreement has a cost basis of $14.5 million and $14.5 million, respectively, and a fair value of $10.4 million and $10.4 million, respectively, which is reflective of the higher inherent risk in this transaction.

Revenue Recognition

Sales and paydowns of investments: Realized gains and losses on investments are determined on the specific identification method.

Interest and dividend income: Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. We have loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer. For the three and nine months ended September 30, 2020, we recognized PIK and non-cash interest from investments of approximately $5.0 million and $11.7 million, respectively, and PIK and non-cash dividends from investments of approximately $3.8 million and $9.2 million, respectively. For the three and nine months ended September 30, 2019, we recognized PIK and non-cash interest from investments of approximately $3.8 million and $9.9 million, respectively, and PIK and non-cash dividends from investments of approximately $4.8 million and $13.6 million, respectively.

Other income: Other income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees, management fees from a non-controlled/affiliated investment and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. Other income may also include fees from bridge loans. We may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.

Monitoring of Portfolio Investments

We monitor the performance and financial trends of our portfolio companies on at least a quarterly basis. We attempt to identify any developments within the portfolio company, the industry or the macroeconomic environment that may alter any material element of our original investment strategy.

We use an investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in the portfolio. We use a four-level numeric rating scale as follows:

•Investment Rating 1—Investment is performing materially above expectations;

•Investment Rating 2—Investment is performing materially in-line with expectations. All new loans are rated 2 at initial purchase;

•Investment Rating 3—Investment is performing materially below expectations, where the risk of loss has materially increased since the original investment; and

•Investment Rating 4—Investment is performing substantially below expectations and risks have increased substantially since the original investment. Payments may be delinquent. There is meaningful possibility that we will not recoup our original cost basis in the investment and may realize a substantial loss upon exit.

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The following table shows the distribution of our investments and securities purchased under collateralized agreements to resell on the 1 to 4 investment rating scale at fair value as of September 30, 2020:


(in millions)	As of September 30, 2020
Investment Rating		Cost		Percent		Fair Value		Percent
Investment Rating 1		$	212.1	7.1	%	$	213.0	7.3	%
Investment Rating 2		2,425.3		80.6	%	2,444.5		83.8	%
Investment Rating 3		216.5		7.2	%	174.4		6.0	%
Investment Rating 4		154.4		5.1	%	86.1		2.9	%
		$	3,008.3	100.0	%	$	2,918.1	100.0	%

As of September 30, 2020, all investments in our portfolio had an Investment Rating of 1 or 2 with the exception of eight portfolio companies that had an Investment Rating of 3 and six portfolio companies that had an Investment Rating of 4.

During the second quarter of 2020, we placed a portion of our first lien positions in Benevis Holding Corp. on non-accrual status with an investment rating of 4 due to its ongoing restructuring, which included the filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas on August 3, 2020. As of September 30, 2020, our investment in Benevis Holding Corp., which was placed on non-accrual status, had an aggregate cost basis of $42.8 million, an aggregate fair value of $39.3 million and total unearned interest income of $0.8 million and $1.6 million for the three and nine months then ended.

During the second quarter of 2020, our subordinated position in Permian Holdco 3, Inc. was placed on non-accrual status and had an investment rating of 4. Our subordinated positions in Permian Holdco 2, Inc. and preferred shares in Permian Holdco 1, Inc. remain on non-accrual status with an investment rating of 4 due to its ongoing restructuring, which included the filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on July 19, 2020. As of September 30, 2020, our common shares in Permian Holdco 1, Inc. and first lien position in Permian Holdco 3, Inc. had an investment rating of 4. As of September 30, 2020, our investments in Permian Holdco 1, Inc., Permian Holdco 2, Inc. and Permian Holdco 3, Inc., on non-accrual had an aggregate cost basis of $10.9 million and an aggregate fair value of $0.0 million. As of September 30, 2020, our investments in Permian Holdco 1, Inc., Permian Holdco 2, Inc. and Permian Holdco 3, Inc. with an investment rating of 4 had an aggregate cost basis of $23.1 million and an aggregate fair value of $10.5 million. During the three months ended March 31, 2020, we reversed $3.4 million of previously recorded PIK dividends related to our investment in Permian Holdco 1, Inc. as we believe these PIK dividends will ultimately not be collectible. During the three months ended June 30, 2020, we reversed $2.0 million of previously recorded PIK interest related to our investments in Permian Holdco 2, Inc. as we believe this PIK interest will ultimately not be collectible.

During the first quarter of 2020, we placed our investment in our junior preferred shares of UniTek Global Services, Inc. on non-accrual status and the investment had a rating of 4. As of September 30, 2020, our investment had an aggregate cost basis of $34.4 million, an aggregate fair value of $3.6 million and total unearned dividend income $1.3 million and $2.6 million of for the three and nine months then ended.

During the first quarter of 2018, we placed our first lien positions in Education Management II LLC on non-accrual status as the portfolio company announced its intention to wind down and liquidate the business. Our first lien positions and our preferred and common shares in Education Management Corporation ("EDMC") had an investment rating of 4. As of September 30, 2020, our investment in EDMC, with an Investment Rating of 4, had an aggregate cost basis of $1.4 million, an aggregate fair value of $0.0 million and total unearned interest income of $0.0 million and $0.0 million for the three and nine months ended.

Since March 31, 2020, our investment in NM KRLN LLC had an investment rating of 4. As of September 30, 2020, NM KRLN LLC had an aggregate cost basis of $8.2 million and an aggregate fair value of $0.9 million.

Since December 31, 2019, our subordinated position in PPVA Black Elk (Equity) LLC had an investment rating of 4. As of September 30, 2020, our investment in this security had an aggregate cost basis of $14.5 million and an aggregate fair value of $10.4 million.

During the year ended December 31, 2019, our security purchased under collateralized agreements to resell was placed on non-accrual and the investment had an Investment Rating of 4. As of September 30, 2020, our investment in this security had an aggregate cost basis of $30.0 million and an aggregate fair value of $21.4 million.

In response to the continuing impact of the outbreak of the COVID-19 pandemic and its impact on the overall market environment and the health of our portfolio companies, we performed a company-by-company evaluation of the anticipated impact of COVID-19. The evaluation process consisted of dialogue with sponsors and portfolio companies to understand

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COVID-19’s impact on each portfolio company, the portfolio company’s response to any disruption, the level of sponsor support, and the current and projected financial and liquidity position of the portfolio company. Based on this evaluation, we assigned each portfolio company a “Risk Rating” of red, orange, yellow and green, with red reflecting a portfolio company with the potential for the most severe impact, due to the COVID-19 pandemic, and green reflecting the least. We will continue to monitor our portfolio companies and provide support to their management teams where possible. The following table shows the Risk Rating of our portfolio companies as of September 30, 2020:


(in millions)	As of September 30, 2020
Risk Rating		Cost		Percent		Fair Value		Percent
Red		$	96.6	3.2	%	$	66.4	2.3	%
Orange		250.9		8.4	%	183.7		6.3	%
Yellow		238.8		7.9	%	214.2		7.3	%
Green		2,422.0		80.5	%	2,453.7		84.1	%
		$	3,008.3	100.0	%	$	2,918.0	100.0	%

Portfolio and Investment Activity

The fair value of our investments was approximately $2,896.6 million in 105 portfolio companies at September 30, 2020 and approximately $3,160.3 million in 114 portfolio companies at December 31, 2019.

The following table shows our portfolio and investment activity for the nine months ended September 30, 2020 and September 30, 2019:


	Nine Months Ended
(in millions)	September 30, 2020		September 30, 2019
New investments in 25 and 52 portfolio companies, respectively	$	272.8	$	827.6
Debt repayments in existing portfolio companies	277.2		141.6
Sales of securities in 16 and 7 portfolio companies, respectively	214.5		66.2
Change in unrealized appreciation on 41 and 46 portfolio companies, respectively	21.8		41.7
Change in unrealized depreciation on 75 and 66 portfolio companies, respectively	(113.0)		(36.4)

Recent Accounting Standards Updates

See Item 1.—Financial Statements—Note 13. Recent Accounting Standards for details on recent accounting standards updates.

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Results of Operations for the Three Months Ended September 30, 2020 and September 30, 2019

Revenue


	Three Months Ended
(in thousands)	September 30, 2020		September 30, 2019
Total interest income	$	49,654	$	55,220
Total dividend income	12,644		13,270
Other income	3,223		4,104
Total investment income	$	65,521	$	72,594

Our total investment income decreased by approximately $7.1 million, or (10)%, for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019. For the three months ended September 30, 2020, total investment income of approximately $65.5 million consisted of approximately $43.0 million in cash interest from investments, approximately $5.0 million in PIK and non-cash interest from investments, approximately $0.3 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $1.4 million, approximately $8.8 million in cash dividends from investments, approximately $3.8 million in PIK and non-cash dividends from investments and approximately $3.2 million in other income. Our interest income decreased by approximately $5.6 million during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019 which was primarily attributable to lower LIBOR rates on invested balances in 2020. Our dividend income for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019 remained relatively flat. Other income during the three months ended September 30, 2020, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront, consent and amendment fees received from 9 different portfolio companies and management fees from a non-controlled affiliated portfolio company.

Operating Expenses


	Three Months Ended
(in thousands)	September 30, 2020		September 30, 2019
Management fee	$	12,877	$	12,687
Less: management fee waiver	(2,841)		(3,141)
Total management fee	10,036		9,546
Incentive fee	7,135		7,792
Less: incentive fee waiver	(500)		—
Total incentive fee	6,635		7,792

Interest and other financing expenses	18,077		21,830
Administrative expenses	1,024		930
Professional fees	731		834
Other general and administrative expenses	442		492
Total expenses	36,945		41,424
Less: expenses waived and reimbursed	(589)		—
Net expenses before income taxes	36,356		41,424
Income tax expense	123		—
Net expenses after income taxes	$	36,479	$	41,424

Our total net operating expenses decreased by approximately $4.9 million for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019. Our management fee increased by approximately $0.5 million, net of a management fee waiver, and our incentive fee decreased by approximately $1.2 million, net of an incentive fee waiver, for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019. The increase in management fees was attributable to larger invested balances while the incentive fee decreased due to lower investment income driven by decreasing LIBOR rates in 2020 and an incentive fee waiver by the Investment Adviser.

Interest and other financing expenses decreased by approximately $3.8 million during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019, primarily due to lower rates on our floating rate borrowings. Our total professional fees, administrative expenses and total other general and administrative expenses for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019 decreased by

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approximately $0.6 million, which was primarily attributable to the Administrator's waiver of indirect administrative expenses during the quarter ended September 30, 2020.

Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)


	Three Months Ended
(in thousands)	September 30, 2020		September 30, 2019
Net realized gains on investments	$	47	$	355
Net change in unrealized appreciation (depreciation) of investments	60,242		(7,024)
Net change in unrealized depreciation securities purchased under collateralized agreements to resell	—		(1,332)
Benefit for taxes	257		281
Net realized and unrealized gains (losses)	$	60,546	$	(7,720)

Our net realized and unrealized gains resulted in a net gain of approximately $60.5 million for the three months ended September 30, 2020 compared to net realized gains and unrealized losses resulting in a net loss of approximately $7.7 million for the same period in 2019. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net gain for the three months ended September 30, 2020 was primarily driven by the overall increase in market prices of our investments during the period due to the partial recovery of the market from the impact of the COVID-19 pandemic. The provision for income taxes was attributable to equity investments that are held as of September 30, 2020 in three of our corporate subsidiaries. The net loss for the three months ended September 30, 2019 was primarily driven by the overall decrease in market prices of our investments during the period.

Results of Operations for the Nine Months Ended September 30, 2020 and September 30, 2019

Revenue


	Nine Months Ended
(in thousands)	September 30, 2020		September 30, 2019
Total interest income	$	162,653	$	154,779
Total dividend income	35,353		39,338
Other income	7,566		9,133
Total investment income	$	205,572	$	203,250

Our total investment income increased by approximately $2.3 million, or 1%, for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019. For the nine months ended September 30, 2020, total investment income of approximately $205.6 million consisted of approximately $141.8 million in cash interest from investments, approximately $11.7 million in PIK and non-cash interest from investments, approximately $1.3 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $7.9 million, approximately $26.2 million in cash dividends from investments, approximately $9.2 million in PIK and non-cash dividends from investments and approximately $7.5 million in other income. The increase in interest income of approximately $7.9 million during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 was primarily due to increased interest income which is attributable to larger invested balances. Our larger invested balances were driven by higher drawn balances on our SBA-guaranteed debentures and revolving credit facilities and proceeds from the July 2019 and October 2019 public offerings of our common stock, all of which contributed to the origination of new investments. The decrease in dividend income for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 was primarily due to the reversal of approximately $3.4 million of previously recorded PIK dividends related to our preferred shares in Permian Holdco 1, Inc., which was deemed to no longer be collectible. Other income during the nine months ended September 30, 2020, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront, consent and amendment fees received from 21 different portfolio companies and management fees from a non-controlled affiliated portfolio company.

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Operating Expenses


	Nine Months Ended
(in thousands)	September 30, 2020		September 30, 2019
Management fee	$	39,869	$	35,302
Less: management fee waiver	(9,567)		(8,497)
Total management fee	30,302		26,805
Incentive fee	21,857		21,642
Less: incentive fee waiver	(500)		—
Total incentive fee	21,357		21,642

Interest and other financing expenses	59,500		61,695
Administrative expenses	3,303		3,074
Professional fees	2,605		2,486
Other general and administrative expenses	1,383		1,302
Total expenses	118,450		117,004
Less: expenses waived and reimbursed	(924)		(335)
Net expenses before income taxes	117,526		116,669
Income tax expense	116		13
Net expenses after income taxes	$	117,642	$	116,682

Our total net operating expenses increased by approximately $1.0 million for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019. Our management fee increased by approximately $3.5 million, net of a management fee waiver, and our incentive fee decreased by approximately $0.3 million, net of an incentive fee waiver, for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019. The increase in management fees was attributable to larger invested balances, driven by our use of leverage from our revolving credit facilities and SBA-guaranteed debentures and proceeds from our July 2019 and October 2019 public offerings of our common stock used to originate new investments.

Interest and other financing expenses decreased by approximately $2.2 million during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, primarily due to lower LIBOR rates on our floating rate borrowings. Our total professional fees, administrative expenses and total other general and administrative expenses for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 remained relatively flat.

Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)


	Nine Months Ended
(in thousands)	September 30, 2020		September 30, 2019
Net realized (losses) gains on investments	$	(3,595)	$	453
Net change in unrealized (depreciation) appreciation of investments	(91,215)		5,305
Net change in unrealized depreciation securities purchased under collateralized agreements to resell	—		(1,332)
Benefit for taxes	778		121
Net realized and unrealized (losses) gains	$	(94,032)	$	4,547

Our net realized and unrealized losses resulted in a net loss of approximately $94.0 million for the nine months ended September 30, 2020 compared to net realized and unrealized gains resulting in a net gain of approximately $4.5 million for the same period in 2019. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the nine months ended September 30, 2020 was primarily driven by the overall decrease in market prices of our investments during the period due to the impact of the COVID-19 pandemic. The provision for income taxes was attributable to equity investments that are held as of September 30, 2020 in three of our corporate subsidiaries. The net gain for the nine months ended September 30, 2019 was primarily driven by the overall increase in market prices of our investments during the period.

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Liquidity and Capital Resources

The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate purposes.

Since our IPO, and through September 30, 2020, we raised approximately $893.2 million in net proceeds from additional offerings of common stock.

Our liquidity is generated and generally available through advances from the revolving credit facilities, from cash flows from operations, and, we expect, through periodic follow-on equity offerings. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including unsecured debt and/or debt securities convertible into common stock. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. As permitted by the Small Business Credit Availability Act (the “SBCA”) on June 8, 2018 our shareholders approved the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act, as amended by the SBCA, which resulted in the reduction from 200.0% to 150.0% of the minimum asset coverage ratio applicable to us as of June 9, 2018. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 150.0% after such borrowing (which means we can borrow $2 for every $1 of our equity). As a result of our exemptive relief received on November 5, 2014, we are permitted to exclude our SBA-guaranteed debentures from the 150.0% asset coverage ratio that the we are required to maintain under the 1940 Act. The agreements governing the NMFC Credit Facility, the 2018 Convertible Notes and the Unsecured Notes (as defined below) contain certain covenants and terms, including a requirement that we not exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring additional indebtedness and a requirement that we not exceed a secured debt ratio of 0.70 to 1.00 at any time. As of September 30, 2020, our asset coverage ratio was 178.7% as compared to 177.7% as of June 30, 2020.

At September 30, 2020 and December 31, 2019, we had cash and cash equivalents of approximately $68.7 million and $48.6 million, respectively. Our cash provided by (used in) operating activities during the nine months ended September 30, 2020 and September 30, 2019 was approximately $269.6 million and $(473.6) million, respectively. We expect that all current liquidity needs will be met with cash flows from operations and other activities.

Borrowings

Holdings Credit Facility—On December 18, 2014, we entered into the Second Amended and Restated Loan and Security Agreement among us, as the Collateral Manager, NMF Holdings, as the Borrower, Wells Fargo Securities, LLC, as the Administrative Agent and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian (as amended from time to time, the "Holdings Credit Facility"). As of the most recent amendment on September 30, 2020, the maturity date of the Holdings Credit Facility is September 30, 2023, and the maximum facility amount is the lesser of $800.0 million and the actual commitments of the lenders to make advances as of such date.

As of September 30, 2020, the maximum amount of revolving borrowings available under the Holdings Credit Facility is $745.0 million. Under the Holdings Credit Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0%, 67.5% or 70.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Bank, National Association. The Holdings Credit Facility is non-recourse to us and is collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Holdings Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Holdings Credit Facility. The Holdings Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Holdings Credit Facility requires us to maintain a minimum asset coverage ratio of 150.0%. The covenants are generally not tied to mark to market fluctuations in the prices of NMF Holdings investments, but rather to the performance of the underlying portfolio companies.

As of the most recent amendment on September 30, 2020, the Holdings Credit Facility bears interest at a rate of LIBOR plus 2.00% per annum for Broadly Syndicated Loans (as defined in the Fourth Amendment to the Loan and Security Agreement) and LIBOR plus 2.50% per annum for all other investments. Previously the Holdings Credit Facility bore interest at a rate of LIBOR plus 1.75% per annum for Broadly Syndicated Loans (as defined in the Second Amended and Restated Loan and Security Agreement) and LIBOR plus 2.25% per annum for all other investments. The Holdings Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Fourth Amendment to the Loan and Security Agreement).

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	Three Months Ended						Nine Months Ended
(in millions)	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Interest expense	$	2.7		$	6.5		$	11.3		$	19.2
Non-usage fee	$	0.4		$	0.1		$	0.9		$	0.4
Amortization of financing costs	$	0.3		$	0.7		$	1.0		$	2.1
Weighted average interest rate	2.2		%	4.2		%	2.7		%	4.4		%
Effective interest rate	2.8		%	4.8		%	3.2		%	5.0		%
Average debt outstanding	$	488.8		$	612.9		$	551.1		$	581.9

As of September 30, 2020 and December 31, 2019, the outstanding balance on the Holdings Credit Facility was $459.2 million and $661.6 million, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.

NMFC Credit Facility—The Senior Secured Revolving Credit Agreement, (as amended from time to time, and together with the related guarantee and security agreement, the "NMFC Credit Facility"), dated June 4, 2014, among us, as the Borrower, Goldman Sachs Bank USA, as the Administrative Agent and Collateral Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A., as Lenders, is structured as a senior secured revolving credit facility. The NMFC Credit Facility is guaranteed by certain of our domestic subsidiaries and proceeds from the NMFC Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the NMFC Credit Facility is June 4, 2022.

As of September 30, 2020, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $188.5 million. We are permitted to borrow at various advance rates depending on the type of portfolio investment as outlined in the related Senior Secured Revolving Credit Agreement. All fees associated with the origination of the NMFC Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the NMFC Credit Facility. The NMFC Credit Facility contains certain customary affirmative and negative covenants and events of default, including certain financial covenants related to the asset coverage and liquidity and other maintenance covenants.


	Three Months Ended								Nine Months Ended
(in millions)	September 30, 2020				September 30, 2019				September 30, 2020			September 30, 2019
Interest expense	$	0.9			$	1.5			$	4.0		$	3.7
Non-usage fee	$	0.1			$	—		(1)	$	0.1		$	0.1
Amortization of financing costs	$	—		(2)	$	0.1			$	0.1		$	0.3
Weighted average interest rate	2.7		%		4.8		%		3.4		%	4.9		%
Effective interest rate	3.0		%		4.9		%		3.6		%	5.4		%
Average debt outstanding	$	131.8			$	123.8			$	155.0		$	99.4

(1)For the three months ended September 30, 2019, the total non-usage fees were less than $50.0 thousand.

(2)For the three months ended September 30, 2020, the total amortization of financing costs were less than $50.0 thousand.

As of September 30, 2020 and December 31, 2019, the outstanding balance on the NMFC Credit Facility was $150.5 million and $188.5 million, respectively, and NMFC was in compliance with the applicable covenants in the NMFC Credit Facility on such dates.

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As of September 30, 2020, the maximum amount of revolving borrowings available under the DB Credit Facility was $280.0 million. We are permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Loan Financing and Servicing Agreement. The DB Credit Facility is non-recourse to us and is collateralized by all of the investments of NMFDB on an investment by investment basis. All fees associated with the origination of the DB Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the DB Credit Facility. The DB Credit Facility contains certain customary affirmative and negative covenants and events of default. The covenants are generally not tied to mark to market fluctuations in the prices of NMFDB investments, but rather to the performance of the underlying portfolio companies.

The advances under the DB Credit Facility accrue interest at a per annum rate equal to the Applicable Margin plus the lender's Cost of Funds Rate. The "Applicable Margin" is equal to 2.85% during the Revolving Period and then increases by 0.20% during an Event of Default. The "Cost of Funds Rate" for a conduit lender is the lower of its commercial paper rate and the Base Rate plus 0.50%, and for any other lender is the Base Rate. The "Base Rate" is the three-months LIBOR Rate but may become an alternative base rate based on Deutsche Bank's base lending rate if certain LIBOR disruption events occur. We are also charged a non-usage fee, based on the unused facility amount multiplied by the Undrawn Fee Rate (as defined in the Loan Financing and Servicing Agreement).

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the DB Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.


	Three Months Ended						Nine Months Ended
(in millions)	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Interest expense(1)	$	1.8		$	1.8		$	6.7		$	3.2
Non-usage fee(1)	$	0.1		$	0.1		$	0.2		$	0.2
Amortization of financing costs	$	0.2		$	0.1		$	0.5		$	0.3
Weighted average interest rate	3.2		%	5.1		%	3.8		%	5.3		%
Effective interest rate	3.6		%	5.6		%	4.2		%	6.0		%
Average debt outstanding	$	216.8		$	133.9		$	233.4		$	80.1

As of September 30, 2020 and December 31, 2019, the outstanding balance on the DB Credit Facility was $242.0 million and $230.0 million, respectively, and NMFDB was in compliance with the applicable covenants in the DB Credit Facility on such date.

Unsecured Management Company Revolver—The Uncommitted Revolving Loan Agreement, (the "Unsecured Management Company Revolver"), dated March 30, 2020, by and between us, as the Borrower, and NMF Investments III, L.L.C., as Lender, an affiliate of the Investment Adviser, is structured as a discretionary unsecured revolving credit facility. The proceeds from the Unsecured Management Company Revolver may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the Unsecured Management Company Revolver is December 31, 2022. The Unsecured Management Company Revolver generally bears interest at a rate of 7.00% per annum (as defined in the Uncommitted Revolving Loan Agreement). On May 4, 2020, we entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30.0 million to $50.0 million. As of September 30, 2020, the maximum amount of revolving borrowings available under the Unsecured Management Company Revolver was $50.0 million and no borrowings were outstanding. For the three and nine months ended September 30, 2020, amortization of financing costs were each less than $50.0 thousand, respectively.

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matured on September 23, 2020. The NMNLC Credit Facility was guaranteed by us and proceeds from the NMNLC Credit Facility were able to be used for funding of additional acquisition properties.

For the three and nine months ended September 30, 2020, interest expense, non-usage fees and amortization of financing costs were each less than $50.0 thousand. For the three months ended September 30, 2019, interest expense, non-usage fees and amortization of financing costs were each less than $50.0 thousand. For the nine months ended September 30, 2019, interest expense and non-usage fees were each less than $50.0 thousand and amortization of financing costs was $0.1 million. The NMNLC Credit Facility matured on September 23, 2020. As of December 31, 2019, the outstanding balance on the NMNLC Credit Facility was $0 and NMNLC was in compliance with the applicable covenants in the NMNLC Credit Facility on such date.

Convertible Notes

2014 Convertible Notes—On June 3, 2014, we closed a private offering of $115.0 million aggregate principal amount of unsecured convertible notes (the “2014 Convertible Notes”), pursuant to an indenture, dated June 3, 2014 (the “2014 Indenture”). The 2014 Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). As of June 3, 2015, the restrictions under Rule 144A under the Securities Act were removed, allowing the 2014 Convertible Notes to be eligible and freely tradable without restrictions for resale pursuant to Rule 144(b)(1) under the Securities Act. On September 30, 2016, we closed a public offering of an additional $40.3 million aggregate principal amount of the 2014 Convertible Notes. These additional 2014 Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115.0 million aggregate principal amount of 2014 Convertible Notes that we issued on June 3, 2014.

The 2014 Convertible Notes bore interest at an annual rate of 5.0%, payable semi-annually in arrears on June 15 and December 15 of each year, which commenced on December 15, 2014.

On June 15, 2019, our $155.3 million aggregate principal amount of 2014 Convertible Notes matured and we repaid the outstanding principal and accrued but unpaid interest in cash.

2018 Convertible Notes—On August 20, 2018, we closed a registered public offering of $100.0 million aggregate principal amount of unsecured convertible notes (the “2018 Convertible Notes” and together with the 2014 Convertible Notes, the "Convertible Notes"), pursuant to an indenture, dated August 20, 2018, as supplemented by a first supplemental indenture thereto, dated August 20, 2018 (together the “2018A Indenture”). On August 30, 2018, in connection with the registered public offering, we issued an additional $15.0 million aggregate principal amount of the 2018 Convertible Notes pursuant to the exercise of an overallotment option by the underwriter of the 2018 Convertible Notes. On June 7, 2019, we closed a registered public offering of an additional $86.3 million aggregate principal amount of the 2018 Convertible Notes. These additional 2018 Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115.0 million aggregate principal amount of 2018 Convertible Notes that we issued in August 2018.

The 2018 Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on February 15 and August 15 of each year. The 2018 Convertible Notes will mature on August 15, 2023 unless earlier converted, repurchased or redeemed pursuant to the terms of the 2018A Indenture. We may not redeem the 2018 Convertible Notes prior to May 15, 2023. On or after May 15, 2023, we may redeem the 2018 Convertible Notes for cash, in whole or from time to time in part, at our option at a redemption price, subject to an exception for redemption dates occurring after a record date but on or prior to the interest payment date, equal to the sum of (i) 100% of the principal amount of the 2018 Convertible Notes to be redeemed, (ii) accrued and unpaid interest thereon to, but excluding, the redemption date and (iii) a make-whole premium.

No sinking fund is provided for the 2018 Convertible Notes. Holders of 2018 Convertible Notes may, at their option, convert their 2018 Convertible Notes into shares of our common stock at any time on or prior to the close of business on the business day immediately preceding the maturity date of the 2018 Convertible Notes. In addition, if certain corporate events occur, holders of the 2018 Convertible Notes may require us to repurchase for cash all or part of their 2018 Convertible Notes at a repurchase price equal to 100.0% of the principal amount of the 2018 Convertible Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the repurchase date.

The 2018A Indenture contains certain covenants, including covenants requiring us to provide certain financial information to the holders of the 2018 Convertible Notes and the trustee if we cease to be subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). The 2018A Indenture also includes additional financial covenants related to our asset coverage ratio. These covenants are subject to limitations and exceptions that are described in the 2018A Indenture.

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The following table summarizes certain key terms related to the convertible features of our 2018 Convertible Notes as of September 30, 2020.


	2018 Convertible Notes
Initial conversion premium	10.0		%
Initial conversion rate(1)	65.8762
Initial conversion price	$	15.18
Conversion premium at September 30, 2020	10.0		%
Conversion rate at September 30, 2020(1)(2)	65.8762
Conversion price at September 30, 2020(2)(3)	$	15.18
Last conversion price calculation date	August 20, 2020

(1)Conversion rates denominated in shares of common stock per $1.0 thousand principal amount of the 2018 Convertible Notes converted.

(2)Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.

The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.34 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $13.80 per share. In no event will the total number of shares of common stock issuable upon conversion exceed 72.4637 per $1 principal amount. We have determined that the embedded conversion option in the 2018 Convertible Notes is not required to be separately accounted for as a derivative under GAAP.

The 2018 Convertible Notes are unsecured obligations and rank senior in right of payment to our existing and future indebtedness, if any, that is expressly subordinated in right of payment to the 2018 Convertible Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries and financing vehicles. As reflected in Item 1. - Financial Statements - Note 11. Earnings Per Share, the issuance is considered part of the if-converted method for calculation of diluted earnings per share.


	Three Months Ended								Nine Months Ended
(in millions)	September 30, 2020				September 30, 2019				September 30, 2020			September 30, 2019
Interest expense	$	2.9			$	2.9			$	8.7		$	10.1
Amortization of financing costs	$	0.1			$	0.1			$	0.3		$	0.7
Amortization of premium	$	—		(1)	$	—		(1)	$	(0.1)		$	(0.1)
Weighted average interest rate	5.8		%		5.7		%		5.8		%	5.5		%
Effective interest rate	5.9		%		5.8		%		5.9		%	5.8		%
Average debt outstanding	$	201.3			$	201.3			$	201.3		$	245.5

(1)For the three months ended September 30, 2020 and September 30, 2019, the amortization of premium was less than $50.0 thousand.

As of September 30, 2020 and December 31, 2019, the outstanding balance on the Convertible Notes was $201.2 million and $201.2 million, respectively, and NMFC was in compliance with the terms of the 2018A Indenture on such date.

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Unsecured Notes

On May 6, 2016, we issued $50.0 million in aggregate principal amount of five-year unsecured notes that mature on May 15, 2021 (the “2016 Unsecured Notes”), pursuant to a note purchase agreement, dated May 4, 2016, to an institutional investor in a private placement. On September 30, 2016, we entered into an amended and restated note purchase agreement (the "NPA") and issued an additional $40.0 million in aggregate principal amount of 2016 Unsecured Notes to institutional investors in a private placement. On June 30, 2017, we issued $55.0 million in aggregate principal amount of five-year unsecured notes that mature on July 15, 2022 (the "2017A Unsecured Notes"), pursuant to the NPA and a supplement to the NPA. On January 30, 2018, we issued $90.0 million in aggregate principal amount of five year unsecured notes that mature on January 30, 2023 (the "2018A Unsecured Notes") pursuant to the NPA and a second supplement to the NPA. On July 5, 2018, we issued $50.0 million in aggregate principal amount of five year unsecured notes that mature on June 28, 2023 (the "2018B Unsecured Notes") pursuant to the NPA and a third supplement to the NPA (the "Third Supplement"). On April 30, 2019, we issued $116.5 million in aggregate principal amount of five year unsecured notes that mature on April 30, 2024 (the "2019A Unsecured Notes") pursuant to the NPA and a fourth supplement to the NPA. The NPA provides for future issuances of unsecured notes in separate series or tranches.

The 2016 Unsecured Notes bear interest at an annual rate of 5.313%, payable semi-annually on May 15 and November 15 of each year. The 2017A Unsecured Notes bear interest at an annual rate of 4.760%, payable semi-annually on January 15 and July 15 of each year. The 2018A Unsecured Notes bear interest at an annual rate of 4.870%, payable semi-annually on February 15 and August 15 of each year. The 2018B Unsecured Notes bear interest at an annual rate of 5.360%, payable semi-annually on January 15 and July 15 of each year. These interest rates are subject to increase in the event that: (i) subject to certain exceptions, the underlying unsecured notes or we cease to have an investment grade rating or (ii) the aggregate amount of our unsecured debt falls below $150.0 million. In each such event, we have the option to offer to prepay the underlying unsecured notes at par, in which case holders of the underlying unsecured notes who accept the offer would not receive the increased interest rate. In addition, we are obligated to offer to prepay the underlying unsecured notes at par if the Investment Adviser, or an affiliate thereof, ceases to be our investment adviser or if certain change in control events occur with respect to the Investment Adviser.

The NPA contains customary terms and conditions for unsecured notes issued, including, without limitation, an option to offer to prepay all or a portion of the unsecured notes under its governance at par (plus a make-whole amount if applicable), affirmative and negative covenants such as information reporting, maintenance of our status as a BDC under the 1940 Act and a RIC under the Code, minimum stockholders’ equity, minimum asset coverage ratio, and prohibitions on certain fundamental changes at NMFC or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of NMFC or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy. The Third Supplement includes additional financial covenants related to asset coverage as well as other terms.

On September 25, 2018, we closed a registered public offering of $50.0 million in aggregate principal amount of five-year unsecured notes that mature on October 1, 2023 (the "5.75% Unsecured Notes", together with the 2016 Unsecured Notes, 2017A Unsecured Notes, 2018A Unsecured Notes and 2018B Unsecured Notes, the "Unsecured Notes"), pursuant to an indenture, dated August 20, 2018, as supplemented by a second supplemental indenture thereto, dated September 25, 2018 (together, the "2018B Indenture"). On October 17, 2018, in connection with the registered public offering, we issued an additional $1.8 million aggregate principal amount of the 5.75% Unsecured Notes pursuant to the exercise of an overallotment option by the underwriters of the 5.75% Unsecured Notes.

The 5.75% Unsecured Notes bear interest at an annual rate of 5.75%, payable quarterly on January 1, April 1, July 1 and October 1 of each year. The 5.75% Unsecured Notes will mature on October 1, 2023 unless earlier redeemed. The 5.75% Unsecured Notes were listed on the New York Stock Exchange and traded under the trading symbol “NMFX” until September 13, 2020. On September 14, 2020, the 5.75% Unsecured Notes began trading on the Nasdaq Global Select Market LLC under the ticker symbol "NMFCL".

We may redeem the 5.75% Unsecured Notes, in whole or in part, at any time, or from time to time, at our option on or after October 1, 2020, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption.

No sinking fund is provided for the 5.75% Unsecured Notes and holders of the 5.75% Unsecured Notes have no option to have their 5.75% Unsecured Notes repaid prior to the stated maturity date.

The 2018B Indenture contains certain covenants, including covenants requiring us to (i) comply with the asset coverage requirements set forth in Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a) of the 1940 Act as may be

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applicable to us from time to time or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to us by the SEC and (ii) provide certain financial information to the holders of the 5.75% Unsecured Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. The 2018B Indenture also includes additional financial covenants related to asset coverage. These covenants are subject to limitations and exceptions that are described in the 2018B Indenture.

The Unsecured Notes are unsecured obligations and rank senior in right of payment to our existing and future indebtedness, if any, that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries and financing vehicles.

The following table summarizes the interest expense and amortization of financing costs incurred on the Unsecured Notes for the three and nine months ended September 30, 2020 and September 30, 2019.


	Three Months Ended						Nine Months Ended
(in millions)	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019(1)
Interest expense	$	6.0		$	6.0		$	17.9		$	15.8
Amortization of financing costs	$	0.4		$	0.3		$	1.0		$	0.9
Weighted average interest rate	5.3		%	5.2		%	5.3		%	5.2		%
Effective interest rate	5.5		%	5.5		%	5.5		%	5.5		%
Average debt outstanding	$	453.3		$	453.3		$	453.3		$	402.0

As of September 30, 2020 and December 31, 2019, the outstanding balance on the Unsecured Notes was $453.3 million and $453.3 million, respectively, and we were in compliance with the terms of the NPA and the 2018B Indenture as of such dates, as applicable.

SBA-guaranteed debentures—On August 1, 2014 and August 25, 2017, respectively, SBIC I and SBIC II received SBIC licenses from the SBA to operate as SBICs.

The SBIC license allows SBICs to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse to us, interest only debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with ten year maturities. The SBA, as a creditor, will have a superior claim to the assets of SBIC I and SBIC II over our stockholders in the event SBIC I and SBIC II are liquidated or the SBA exercises remedies upon an event of default.

The maximum amount of borrowings available under current SBA regulations for a single licensee is $150.0 million as long as the licensee has at least $75.0 million in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing. In June 2018, legislation amended the 1958 Act by increasing the individual leverage limit from $150.0 million to $175.0 million, subject to SBA approvals.

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As of September 30, 2020 and December 31, 2019, SBIC I had regulatory capital of $75.0 million and $75.0 million, respectively, and SBA-guaranteed debentures outstanding of $150.0 million and $150.0 million, respectively. As of September 30, 2020 and December 31, 2019, SBIC II had regulatory capital of $75.0 million and $64.5 million, respectively, and $150.0 million and $75.0 million, respectively, of SBA-guaranteed debentures outstanding. The SBA-guaranteed debentures incur upfront fees of 3.435%, which consists of a 1.00% commitment fee and a 2.435% issuance discount, which are amortized over the life of the SBA-guaranteed debentures. The following table summarizes our SBA-guaranteed debentures as of September 30, 2020.


(in millions)
Issuance Date	Maturity Date	Debenture Amount		Interest Rate		SBA Annual Charge
Fixed SBA-guaranteed debentures(1):
March 25, 2015	March 1, 2025	$	37.5	2.517	%	0.355	%
September 23, 2015	September 1, 2025	37.5		2.829	%	0.355	%
September 23, 2015	September 1, 2025	28.8		2.829	%	0.742	%
March 23, 2016	March 1, 2026	13.9		2.507	%	0.742	%
September 21, 2016	September 1, 2026	4.0		2.051	%	0.742	%
September 20, 2017	September 1, 2027	13.0		2.518	%	0.742	%
March 21, 2018	March 1, 2028	15.3		3.187	%	0.742	%
Fixed SBA-guaranteed debentures(2):
September 19, 2018	September 1, 2028	15.0		3.548	%	0.222	%
September 25, 2019	September 1, 2029	19.0		2.283	%	0.222	%
March 25, 2020	March 1, 2030	41.0		2.078	%	0.222	%
March 25, 2020	March 1, 2030	24.0		2.078	%	0.275	%
September 23, 2020	September 1, 2030	51.0		1.034	%	0.275	%
Total SBA-guaranteed debentures		$	300.0

(1)SBA-guaranteed debentures are held in SBIC I.

(2)SBA-guaranteed debentures are held in SBIC II.


	Three Months Ended						Nine Months Ended
(in millions)	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Interest expense	$	2.1		$	1.5		$	6.0		$	4.2
Amortization of financing costs	$	0.2		$	0.1		$	0.7		$	0.4
Weighted average interest rate	2.8		%	3.3		%	2.8		%	3.3		%
Effective interest rate	3.1		%	3.6		%	3.2		%	3.6		%
Average debt outstanding	$	300.0		$	176.6		$	281.1		$	168.9

The SBIC program is designed to stimulate the flow of private investor capital into eligible smaller businesses, as defined by the SBA. Under SBA regulations, SBICs are subject to regulatory requirements, including making investments in SBA-eligible businesses, investing at least 25.0% of its investment capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, regulating the types of financing, prohibiting investments in small businesses with certain characteristics or in certain industries and requiring capitalization thresholds that limit distributions to us. SBICs are subject to an annual periodic examination by an SBA examiner to determine the SBIC's compliance with the relevant SBA regulations and an annual financial audit of its financial statements that are prepared on a basis of accounting other than GAAP (such as ASC 820) by an independent auditor. As of September 30, 2020 and December 31, 2019, SBIC I and SBIC II were in compliance with SBA regulatory requirements.

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Off-Balance Sheet Arrangements

We may become a party to financial instruments with off-balance sheet risk in the normal course of 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, 2020 and December 31, 2019, we had outstanding commitments to third parties to fund investments totaling $93.8 million and $203.8 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.

We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future. As of September 30, 2020 and December 31, 2019, we had commitment letters to purchase investments in an aggregate par amount of $0 and $34.2 million, respectively. As of September 30, 2020 and December 31, 2019, we had not entered into any bridge financing commitments which could require funding in the future.

Contractual Obligations

A summary of our significant contractual payment obligations as of September 30, 2020 is as follows:


	Contractual Obligations Payments Due by Period
(in millions)	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Holdings Credit Facility(1)	$	459.2	$	—	$	459.2	$	—	$	—
Unsecured Notes(2)	453.3		90.0		195.0		168.3		—
SBA-guaranteed debentures(3)	300.0		—		—		103.8		196.2
DB Credit Facility(4)	242.0		—		—		242.0		—
Convertible Notes(5)	201.2		—		201.2		—		—
NMFC Credit Facility(6)	150.5		—		150.5		—		—

Total Contractual Obligations	$	1,806.2	$	90.0	$	1,005.9	$	514.1	$	196.2

(1)Under the terms of the $745.0 million Holdings Credit Facility, all outstanding borrowings under that facility ($459.2 million as of September 30, 2020) must be repaid on or before September 30, 2023. As of September 30, 2020, there was approximately $285.8 million of possible capacity remaining under the Holdings Credit Facility.

(2)$90.0 million of the 2016 Unsecured Notes will mature on May 15, 2021 unless earlier repurchased, $55.0 million of the 2017A Unsecured Notes will mature on July 15, 2022 unless earlier repurchased, $90.0 million of the 2018A Unsecured Notes will mature on January 30, 2023 unless earlier repurchased, $50.0 million of the 2018B Unsecured Notes will mature on June 28, 2023 unless earlier repurchased, $51.8 million of the 5.75% Unsecured Notes will mature on October 1, 2023 unless earlier repurchased and $116.5 million of the 2019A Unsecured Notes will mature on April 30, 2024 unless earlier repurchased.

(3)Our SBA-guaranteed debentures will begin to mature on March 1, 2025.

(4)Under the terms of the $280.0 million DB Credit Facility, all outstanding borrowings under that facility ($242.0 million as of September 30, 2020) must be repaid on or before December 14, 2023. As of September 30, 2020, there was approximately $38.0 million of possible capacity remaining under the DB Credit Facility.

(5)The 2018 Convertible Notes will mature on August 15, 2023 unless earlier converted or repurchased at the holder's option or redeemed by us.

(6)Under the terms of the $188.5 million NMFC Credit Facility, all outstanding borrowings under that facility ($150.5 million as of September 30, 2020) must be repaid on or before June 4, 2022. As of September 30, 2020, there was approximately $38.0 million of available capacity remaining under the NMFC Credit Facility.

We have entered into an investment management and advisory agreement (the "Investment Management Agreement") with the Investment Adviser in accordance with the 1940 Act. Under the Investment Management Agreement, the Investment Adviser has agreed to provide us with investment advisory and management services. We have agreed to pay for these services (1) a management fee and (2) an incentive fee based on our performance.

We have also entered into the administration agreement, as amended and restated (the "Administration Agreement") with the Administrator. Under the Administration Agreement, the Administrator has agreed to arrange office space for us and provide office equipment and clerical, bookkeeping and record keeping services and other administrative services necessary to conduct our respective day-to-day operations. The Administrator has also agreed to maintain, or oversee the maintenance of, our financial records, our reports to stockholders and reports filed with the SEC.

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If any of the contractual obligations discussed above are terminated, our costs under any new agreements that are entered into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under the Investment Management Agreement and the Administration Agreement.

Distributions and Dividends

Distributions declared and paid to stockholders for the nine months ended September 30, 2020 totaled approximately $91.0 million.

The following table reflects cash distributions, including dividends and returns of capital, if any, per share that have been declared by our board of directors for the two most recent fiscal years and the current fiscal year to date:

Fiscal Year Ended

Date Declared

Record Date

Payment Date

Per Share
Amount (1)

December 31, 2020

Third Quarter

July 29, 2020

September 16, 2020

September 30, 2020

0.30

Second Quarter

April 29, 2020

June 16, 2020

June 30, 2020

0.30

First Quarter

February 19, 2020

March 13, 2020

March 27, 2020

0.34

0.94

December 31, 2019

Fourth Quarter

November 4, 2019

December 13, 2019

December 27, 2019

0.34

Third Quarter

August 1, 2019

September 13, 2019

September 27, 2019

0.34

Second Quarter

May 1, 2019

June 14, 2019

June 28, 2019

0.34

First Quarter

February 22, 2019

March 15, 2019

March 29, 2019

0.34

1.36

December 31, 2018

Fourth Quarter

November 1, 2018

December 14, 2018

December 28, 2018

0.34

Third Quarter

August 1, 2018

September 14, 2018

September 28, 2018

0.34

Second Quarter

May 2, 2018

June 15, 2018

June 29, 2018

0.34

First Quarter

February 21, 2018

March 15, 2018

March 29, 2018

0.34

1.36

(1)Tax characteristics of all distributions paid are reported to stockholders on Form 1099 after the end of the calendar year. For the years ended December 31, 2019 and December 31, 2018, total distributions were $117.4 million and $103.4 million, respectively, of which the distributions were comprised of approximately 72.01% and 83.74%, respectively, of ordinary income, 0.00% and 0.00%, respectively, of long-term capital gains and approximately 27.99% and 16.26%, respectively, of a return of capital. Future quarterly distributions, if any, will be determined by our board of directors.

We intend to pay quarterly distributions to our stockholders in amounts sufficient to maintain our status as a RIC. We intend to distribute approximately all of our net investment income on a quarterly basis and substantially all of our taxable income on an annual basis, except that we may retain certain net capital gains for reinvestment.

We maintain an "opt out" dividend reinvestment plan on behalf of our common stockholders, pursuant to which each of our stockholders' cash distributions will be automatically reinvested in additional shares of common stock, unless the stockholder elects to receive cash. See Item 1— Financial Statements—Note 2. Summary of Significant Accounting Policies for additional details regarding our dividend reinvestment plan.

Related Parties

We have entered into a number of business relationships with affiliated or related parties, including the following:

•We have entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.

•We have entered into the Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges our office space and provides office equipment and administrative

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services necessary to conduct our respective day-to-day operations pursuant to the Administration Agreement. We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to us under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance, and compliance functions, and the compensation of our chief financial officer and chief compliance officer and their respective staffs. Pursuant to the Administration Agreement and further restricted by us, the Administrator may, in its own discretion, submit to us for reimbursement some or all of the expenses that the Administrator has incurred on our behalf during any quarterly period. As a result, the amount of expenses for which we will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to us for reimbursement in the future. However, it is expected that the Administrator will continue to support part of our expense burden in the near future and may decide to not calculate and charge through certain overhead related amounts as well as continue to cover some of the indirect costs. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three and nine months ended September 30, 2020 approximately $0.6 million and $2.0 million, respectively, of indirect administrative expenses were included in administrative expenses, of which approximately $0.6 million and $0.9 million, respectively, were waived by the Administrator. As of September 30, 2020, approximately $0.4 million of indirect administrative expenses were included in payable to affiliates. For the three and nine months ended September 30, 2020, the reimbursement to the Administrator represented approximately 0.00% and 0.04%, respectively, of our gross assets.

•We, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant us, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the name "New Mountain" and "New Mountain Finance".

In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors, which is available on our website at http://www.newmountainfinance.com. These officers and directors also remain subject to the duties imposed by the 1940 Act and the Delaware General Corporation Law.

The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, to our investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser's allocation procedures. On October 8, 2019, the SEC issued an exemptive order (the “Exemptive Order”), which superseded a prior order issued on December 18, 2017, which permits us to co-invest in portfolio companies with certain funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions of the Exemptive Order. Pursuant to the Exemptive Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment objective and strategies.

On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.

On March 30, 2020, we entered into an unsecured revolving credit facility with NMF Investments III, L.L.C., an affiliate of the Investment Adviser, with a $30.0 million maximum amount of revolver borrowings available and a maturity date of December 31, 2022. On May 4, 2020, we entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30.0 million to $50.0 million. Refer to Borrowings for discussion of the Unsecured Management Company Revolver.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to certain financial market risks, such as interest rate fluctuations. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the securities that we hold. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. In addition, in a prolonged low interest rate environment, including a reduction of LIBOR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results. During the nine months ended September 30, 2020, certain of the loans held in our portfolio had floating interest rates. As of September 30, 2020, approximately 94.74% of investments at fair value (excluding investments on non-accrual, unfunded debt investments and non-interest bearing equity investments) represent floating-rate investments with a LIBOR floor (includes investments bearing prime interest rate contracts) and approximately 5.26% of investments at fair value represent fixed-rate investments. Additionally, our senior secured revolving credit facilities are also subject to floating interest rates and are currently paid based on floating LIBOR rates.

The following table estimates the potential changes in net cash flow generated from interest income and expenses, should interest rates increase by 100, 200 or 300 basis points, or decrease by 25 basis points. Interest income is calculated as revenue from interest generated from our portfolio of investments held on September 30, 2020. Interest expense is calculated based on the terms of our outstanding revolving credit facilities, convertible notes and unsecured notes. For our floating rate credit facilities, we use the outstanding balance as of September 30, 2020. Interest expense on our floating rate credit facilities is calculated using the interest rate as of September 30, 2020, adjusted for the hypothetical changes in rates, as shown below. The base interest rate case assumes the rates on our portfolio investments remain unchanged from the actual effective interest rates as of September 30, 2020. These hypothetical calculations are based on a model of the investments in our portfolio, held as of September 30, 2020, and are only adjusted for assumed changes in the underlying base interest rates. In addition, in a prolonged low interest rate environment, including a reduction of LIBOR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results.

Actual results could differ significantly from those estimated in the table.


Change in Interest Rates	Estimated Percentage Change in Interest Income Net of Interest Expense (unaudited)
-25 Basis Points	0.21	%
Base Interest Rate	—	%
+100 Basis Points	2.35	%
+200 Basis Points	13.79	%
+300 Basis Points	25.23	%

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Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures

As of September 30, 2020 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating 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 such possible controls and procedures.

(b)Changes in Internal Controls Over Financial Reporting

Management has not identified any change in our internal control over financial reporting that occurred during the quarter ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

The terms “we”, “us”, “our” and the “Company” refers to New Mountain Finance Corporation and its consolidated subsidiaries.

Item 1. Legal Proceedings

We, and our consolidated subsidiaries, the Investment Adviser and the Administrator are not currently subject to any material pending legal proceedings as of September 30, 2020. From time to time, we or our consolidated subsidiaries may be a party to certain legal proceedings incidental to the normal course of our business including 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 business, financial condition or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which could materially affect our business, financial condition and/or operating results, including the Risk Factor titled "Recent legislation allows us to incur additional leverage, which could increase the risk of investing in our securities". The risks described in our Annual Report on Form 10-K 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. Other than as set forth below, there have been no material changes during the nine months ended September 30, 2020 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019.

Events outside of our control, including public health crises, could negatively affect our portfolio companies and our results of our operations.

Periods of market volatility have occurred and could continue to occur in response to pandemics or other events outside of our control. These types of events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies. For example, in December 2019, a novel strain of coronavirus (also known as “COVID-19”) surfaced in China and has since spread and continues to spread to other countries, including the United States This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby, including a recession and a steep increase in unemployment in the United States. With respect to the U.S. credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things: (i) government imposition of various forms of shelter-in-place orders and the closing of “non-essential” businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses.

While several countries, as well as certain states in the United States, have begun to lift public health restrictions with the view to reopening their economies, recurring COVID-19 outbreaks have led to the re-introduction of such restrictions in certain states in the United States and globally and could continue to lead to the re-introduction of such restrictions elsewhere. Health advisors warn that recurring COVID-19 outbreaks will continue if reopening is pursued too soon or in the wrong manner, which may lead to the re-introduction or continuation of certain public health restrictions (such as instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools, retail stores and other public venues). Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration, severity or potential worsening of the COVID-19 pandemic and the actions taken by authorities and other entities to contain the COVID-19 pandemic or treat its impact, all of which are beyond our control.

This outbreak is having, and any future outbreaks could have, an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things. As of the date of this 10-Q, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on us and our portfolio companies. Any potential impact

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to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio companies’ operating results.

If the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase. In addition, collateral for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity of loan guarantors could decline, impairing their ability to honor commitments to us. An increase in loan delinquencies and non-accruals or a decrease in loan collateral and guarantor net worth could result in increased costs and reduced income which would have a material adverse effect on our business, financial condition or results of operations.

We will also be negatively affected if our operations and effectiveness or the operations and effectiveness of a portfolio company (or any of the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted.

Any public health emergency, including the COVID-19 pandemic or any outbreak of other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments. Our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that may not show the complete impact of the COVID-19 pandemic and the resulting measures taken in response thereto. These potential impacts, while uncertain, could adversely affect our and our portfolio companies’ operating results.

We are currently operating in a period of capital markets disruption and economic uncertainty.

The impact of the COVID-19 pandemic has led to significant volatility and declines in the global public equity markets and it is uncertain how long this volatility will continue. As COVID-19 continues to spread, the potential impacts, including a global, regional or other economic recession, are increasingly uncertain and difficult to assess. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn.

Disruptions in the capital markets caused by the COVID-19 pandemic have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments.

Additionally, the recent disruption in economic activity caused by the COVID-19 pandemic has had, and may continue to have, a negative effect on the potential for liquidity events involving our investments. The illiquidity of our investments may make it difficult for us to sell such investments to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes. An inability to raise or access capital, and any required sale of all or a portion of our investments as a result, could have a material adverse effect on our business, financial condition or results of operations.

Adverse developments in the credit markets may impair our ability to secure debt financing.

In past economic downturns, such as the financial crisis in the United States that began in mid-2007 and during other times of extreme market volatility, many commercial banks and other financial institutions stopped lending or significantly curtailed their lending activity. In addition, in an effort to stem losses and reduce their exposure to segments of the economy deemed to be high risk, some financial institutions limited routine refinancing and loan modification transactions and even reviewed the terms of existing facilities to identify bases for accelerating the maturity of existing lending facilities. If these conditions recur, for example as a result of the COVID-19 pandemic, it may be difficult for us to obtain desired financing to finance the growth of our investments on acceptable economic terms, or at all.

So far, the COVID-19 pandemic has resulted in, and until fully resolved is likely to continue to result in, among other things, increased draws by borrowers on revolving lines of credit and increased requests by borrowers for amendments, modifications and waivers of their credit agreements to avoid default or change payment terms, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans. In addition, the duration and

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effectiveness of responsive measures implemented by governments and central banks cannot be predicted. The commencement, continuation, or cessation of government and central bank policies and economic stimulus programs, including changes in monetary policy involving interest rate adjustments or governmental policies, may contribute to the development of or result in an increase in market volatility, illiquidity and other adverse effects that could negatively impact the credit markets and the Company.

If we are unable to consummate credit facilities on commercially reasonable terms, our liquidity may be reduced significantly. If we are unable to repay amounts outstanding under any facility we may enter into and are declared in default or are unable to renew or refinance any such facility, it would limit our ability to initiate significant originations or to operate our business in the normal course. These situations may arise due to circumstances that we may be unable to control, such as inaccessibility of the credit markets, a severe decline in the value of the U.S. dollar, a further economic downturn or an operational problem that affects third parties or us, and could materially damage our business. Moreover, we are unable to predict when economic and market conditions may become more favorable. Even if such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our business.

There is uncertainty surrounding potential legal, regulatory and policy changes by new presidential administrations in the United States that may directly affect financial institutions and the global economy.

The presidential election occurred on November 3, 2020. Changes in federal policy, including tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which lead to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities. The nature, timing and economic and political effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain pending the results of the presidential election. Uncertainty surrounding future changes may adversely affect our operating environment and therefore our business, financial condition, results of operations and growth prospects.

Changes relating to the LIBOR calculation process may adversely affect the value of our portfolio of LIBOR-indexed, floating-rate debt securities.

LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in floating-rate loans we extend to portfolio companies such that the interest due to us pursuant to a term loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR. In the recent past, concerns have been publicized that some of the member banks surveyed by the British Bankers’ Association (“BBA”) in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivative positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are ongoing.

Actions by the ICE Benchmark Administration, regulators or law enforcement agencies as a result of these or future events, may result in changes to the manner in which LIBOR is determined. Potential changes, or uncertainty related to such potential changes may adversely affect the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate debt securities. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or the value of our portfolio of LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us.

On July 27, 2017, the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. In addition, on March 25, 2020, the FCA stated that although the central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed, the outbreak of COVID-19 has impacted the timing of many firms’ transition planning, and the FCA will continue to assess the impact of the COVID-19 pandemic on transition timelines and update the marketplace as soon as possible. It is unclear if after 2021 LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. We have exposure to LIBOR, including in financial instruments that mature after 2021. Our exposure arises from the value of our portfolio of LIBOR-indexed, floating-rate debt securities.

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In the United States, the Federal Reserve Board and the Federal Reserve Bank of New York, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by Treasury securities called the Secured Overnight Financing Rate (“SOFR”). The Federal Reserve Bank of New York began publishing SOFR in April 2018. Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the future of LIBOR at this time is uncertain, including whether the COVID-19 pandemic will have further effect on LIBOR transition plans.

The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for or value of any LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. If LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established. In the event that the LIBOR Rate is no longer available or published on a current basis or no longer made available or used for determining the interest rate of loans, our administrative agent that manages our loans will generally select a comparable successor rate; provided that (i) to the extent a comparable or successor rate is approved by the administrative agent, the approved rate shall be applied in a manner consistent with market practice; and (ii) to the extent such market practice is not administratively feasible for the administrative agent, such approved rate shall be applied as otherwise reasonably determined by the administrative agent.

If the current period of capital market disruption and instability continues for an extended period of time, there is a risk that investors in our equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital.

We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, including the COVID-19 pandemic described above. For example, if the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories in the jurisdictions, including the United States, affected by the COVID-19 pandemic were to continue for an extended period of time it could result in reduced cash flows to us from our existing portfolio companies, which could reduce cash available for distribution to our stockholders. If we violate certain covenants under our existing or future credit facilities or other leverage, we may be limited in our ability to make distributions. If we declare a distribution and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution payments. To the extent we make distributions to stockholders that include a return of capital, such portion of the distribution essentially constitutes a return of the stockholder’s investment. Although such return of capital may not be taxable, such distributions would generally decrease a stockholder’s basis in our common stock and may therefore increase such stockholder’s tax liability for capital gains upon the future sale of such stock. A return of capital distribution may cause a stockholder to recognize a capital gain from the sale of our common stock even if the stockholder sells its shares for less than the original purchase price.

Due to the COVID-19 pandemic or other disruptions in the economy, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur US federal excise tax in order preserve cash and maintain flexibility.

As a BDC, we are not required to make any distributions to shareholders other than in connection with our election to be taxed as a RIC under subchapter M of the Code. In order to maintain our tax treatment as a RIC, we must distribute to shareholders for each taxable year at least 90.0% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses). If we qualify for taxation as a RIC, we generally will not be subject to corporate-level U.S. federal income tax on our investment company taxable income and net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) that we timely distribute to shareholders. We will be subject to a 4.0% US federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year, and (iii) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no federal income tax.

Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year. In particular, if we pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, the dividend will be treated for all US federal tax purposes as if it were paid on December 31 of the current year. In addition, under the Code, we may pay dividends, referred to

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as “spillover dividends,” that are paid during the following taxable year that will allow us to maintain our qualification for taxation as a RIC and eliminate our liability for corporate-level U.S. federal income tax. Under these spillover dividend procedures, we may defer distribution of income earned during the current year until December of the following year. For example, we may defer distributions of income earned during 2020 until as late as December 31, 2021. If we choose to pay a spillover dividend, we will incur the 4% U.S. federal excise tax on some or all of the distribution.

Due to the COVID-19 pandemic or other disruptions in the economy, we anticipate that we may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility. For example, we anticipate that we will not be able to increase our dividends. In addition, we may reduce our dividends and/or defer our dividends to the following taxable year. If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4.0% U.S. federal excise tax on such amounts. To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our common stock as discussed below under “We may in the future choose to pay dividends in our own common stock, in which case you may be required to pay tax in excess of the cash you receive.”

We may in the future choose to pay dividends in our own common stock, in which case you may be required to pay tax in excess of the cash you receive.

We may distribute taxable dividends that are payable in part in our common stock. In accordance with certain applicable U.S. Department of Treasury regulations and published guidance issued by the Internal Revenue Service, a publicly offered RIC may treat a distribution of its own stock as fulfilling the RIC distribution requirements if each shareholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all shareholders must be at least 20.0% (which has been temporarily reduced to 10% for distributions declared on or after April 1, 2020, and on or before December 31, 2020) of the aggregate declared distribution. If too many shareholders elect to receive cash, the cash available for distribution must be allocated among the shareholders electing to receive cash (with the balance of the distribution paid in stock). In no event will any shareholder, electing to receive cash, receive less than the lesser of (a) the portion of the distribution such shareholder has elected to receive in cash or (b) an amount equal to his or her entire distribution times the percentage limitation on cash available for distribution. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. Taxable shareholders receiving such dividends will be required to include the amount of the dividends as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. shareholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. shareholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to non-U.S. shareholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock. In addition, if a significant number of our shareholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.

Due to the recent COVID-19 pandemic, shares of BDCs have traded below their respective net asset values ("NAV"). If our shares of common stock trade at a discount from NAV, it could limit our ability to raise equity capital.

As a result of the COVID-19 pandemic, the stocks of BDCs as an industry, including shares of our common stock, have traded below NAV, at or near historic lows as a result of concerns over liquidity, leverage restrictions and distribution requirements. If our common stock trades below its NAV, we will generally not be able to issue additional shares of our common stock at its market price without first obtaining the approval for such issuance from our stockholders and our independent directors. If additional funds are not available to us, we could be forced to curtail or cease our new lending and investment activities, and our NAV could decrease and our level of distributions could be impacted.

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

We did not engage in unregistered sales of equity securities during the nine months ended September 30, 2020.

Issuer Purchases of Equity Securities

Dividend Reinvestment Plan

During the nine months ended September 30, 2020, as part of our dividend reinvestment plan for our common stockholders, our dividend reinvestment plan administrator purchased 248,201 shares of our common stock for $2.0 million in the open market in order to satisfy the reinvestment portion of our distribution. The following table outlines purchases by our dividend reinvestment plan administrator of our common stock for this purpose during the nine months ended September 30, 2020.


(in thousands, except shares and per share data)	Total Number of	Weighted Average Price		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the
Period	Shares Purchased	Paid Per Share		or Programs	Plans or Programs
January 2020	—	$	—	—	$	—
February 2020	—	—		—	—
March 2020	133,539	6.75		—	—
April 2020	12,551	6.76		—	—
May 2020	—	—		—	—
June 2020	—	—		—	—
July 2020	102,111	9.52
August 2020	—	—		—	—
September 2020	—	—		—	—
Total	248,201	$	7.89	—	—

Stock Repurchase Program

On February 4, 2016, our board of directors authorized a program for the purpose of repurchasing up to $50.0 million worth of our common stock (the "Repurchsae Program"). Under the Repurchase Program, we were permitted, but were not obligated to, repurchase our outstanding common stock in the open market from time to time, provided that we complied with our code of ethics and the guidelines specified in Rule 10b-18 of the Exchange Act, including certain price, market volume and timing constraints. In addition, any repurchases were conducted in accordance with the 1940 Act. On December 31, 2019, our board of directors extended our Repurchase Program and we expect the Repurchase Program to be in place until the earlier of December 31, 2020 or until $50.0 million of outstanding shares of common stock have been repurchased. We did not repurchase any shares of our common stock under the Repurchase Program during the quarter ended September 30, 2020.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

(a)Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the United States Securities and Exchange Commission:


Exhibit Number						Description
3.1(a)						Amended and Restated Certificate of Incorporation of New Mountain Finance Corporation(2)

3.1(b)						Certificate of Change of Registered Agent and/or Registered Office of New Mountain Finance Corporation(3)

3.2						Amended and Restated Bylaws of New Mountain Finance Corporation(2)

3.3						Certificate of Amendment to the Amended and Restated Certificate of Incorporation New Mountain Finance Corporation(4)

4.1						Form of Stock Certificate of New Mountain Finance Corporation(1)

10.1						Form of Fourth Amendment to Loan and Security Agreement, dated as of September 30, 2020, by and among New Mountain Finance Corporation, as the collateral manager, New Mountain Finance Holdings, L.L.C., as the borrower, Wells Fargo Bank, National Association, as the administrative agent, the lenders party thereto and Wells Fargo Bank, National Association, as the collateral custodian(5)

10.2						Amended and Restated Dividend Reinvestment Plan*















31.1						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended*

31.2						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended*

32.1						Certification of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)*

32.2						Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)*

(1)Previously filed in connection with New Mountain Finance Holdings, L.L.C.’s registration statement on Form N-2 Pre-Effective Amendment No. 3 (File Nos. 333-168280 and 333-172503) filed on May 9, 2011.

(2)Previously filed in connection with New Mountain Finance Corporation’s quarterly report on Form 10-Q filed on August 11, 2011.

(3)Previously filed in connection with New Mountain Finance Corporation and New Mountain Finance AIV Holdings Corporation report on Form 8-K filed on August 25, 2011.

(4)Previously filed in connection with New Mountain Finance Corporation's report on Form 8-K filed on April 3, 2019.

(5)Previously filed in connection with New Mountain Finance Corporation's report on Form 8-K filed on October 6, 2020.

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 4, 2020.


			NEW MOUNTAIN FINANCE CORPORATION

			By:			/s/ ROBERT A. HAMWEE
						Robert A. Hamwee
						Chief Executive Officer
						(Principal Executive Officer), and Director

			By:			/s/ SHIRAZ Y. KAJEE
						Shiraz Y. Kajee
						Chief Financial Officer
						(Principal Financial and Accounting Officer)

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