As filed with the Securities and Exchange Commission on March 23, 2011

Registration No. 333-      

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 

FORM N-2

 

x		REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
		o		PRE-EFFECTIVE AMENDMENT NO.
		o		POST-EFFECTIVE AMENDMENT NO.

o		REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

 

GARRISON CAPITAL LLC

(Exact name of Registrant as Specified in Charter)

 

1350 Avenue of the Americas
New York, New York 10019

(Address of Principal Executive Offices)

Registrant’s Telephone Number, including Area Code: (212) 372-9500

Julian Weldon
Garrison Capital LLC
1350 Avenue of the Americas
New York, New York 10019
(212) 372-9500

(Name And Address of Agent for Service)

 

Copies of information to:

Thomas J. Friedmann David J. Harris William J. Tuttle Dechert LLP 1775 I Street, N.W. Washington, DC 20006 Telephone: (202) 261-3300 Facsimile: (202) 261-3333		Paul K. Risko John A. MacKinnon Sidley Austin LLP 787 Seventh Avenue New York, NY 10019 Telephone: (212) 839-5300 Facsimile: (212) 839-5959

 

Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than Securities offered in connection with a dividend reinvestment plan, check the following box. o

It is proposed that this filing will become effective (check appropriate box):

o when declared effective pursuant to section 8(c).

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

Title of Securities Being Registered		Proposed Maximum Aggregate Offering Price (1)				Amount of Registration Fee (2)
Common Stock, par value $0.001 per share		$	125,000,000			$	14,512.50

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PROSPECTUS

Subject to Completion

Preliminary Prospectus dated           , 2011

      Shares

Garrison Capital Inc.

Common Stock

 

We are a newly-organized, externally managed, non-diversified, closed-end management investment company that intends to file an election to be treated as a business development company under the Investment Company Act of 1940. Our investment objective is to provide our stockholders with current income and capital appreciation through debt and minority equity investments in middle-market companies.

Garrison Capital Advisers LLC will serve as our external manager. Garrison Capital Administrator LLC will serve as our administrator. These entities are affiliated with Garrison Investment Group, an alternative investment and asset management firm founded in March 2007 with approximately $1.9 billion of committed and invested capital under management as of March 1, 2011.

This is an initial public offering of our shares of common stock. All of the    shares of common stock offered by this prospectus are being sold by us.

Our shares of common stock have no history of public trading. We currently expect that the initial public offering price per share of our common stock will be $   . We intend to apply to have our common stock approved for quotation on The NASDAQ Global Select Market under the symbol “GARS.”

Immediately prior to this offering, we expect to sell      shares of common stock to our directors, officers, investment adviser and the managers of our investment adviser at a price of $   per share in a private placement. We will receive the full proceeds of this private placement, and no underwriting discounts or commissions will be paid in respect of these shares. The underwriters will reserve up to      shares from this offering for sale to certain other persons.

This prospectus contains important information you should know before investing in our common stock. Please read it before you invest and keep it for future reference. Upon completion of this offering, we will file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission. We maintain a website at http://www.garrisoncapitalbdc.com and intend to make all of our annual, quarterly and current reports, proxy statements and other publicly filed information available, free of charge, on or through our website. You may also obtain such information and make stockholder inquiries by contacting us at Garrison Capital Inc., 1350 Avenue of the Americas, Attention: Investor Relations, or by calling us collect at (212) 372-9500. The Securities and Exchange Commission also maintains a website at http://www.sec.gov that contains this information.

Shares of closed-end investment companies, including business development companies, frequently trade at a discount to their net asset value. If our shares trade at a discount to our net asset value, it may increase the risk of loss for purchasers in this offering. Assuming an initial public offering price of $   per share, purchasers in this offering will experience immediate dilution of approximately $   per share. See “Dilution” for more information.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Investing in our common stock involves a high degree of risk. Before buying any shares, you should read the discussion of the material risks of investing in our common stock, including the risk of leverage, in “Risk Factors” beginning on page 17 of this prospectus.

 

		Per Share				Total
Public offering price		$				$
Underwriting discount		$				$
Proceeds, before expenses, to us (1)		$				$

The underwriters may also exercise their option to purchase up to an additional        shares from us, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus to cover overallotments, if any.

The shares will be ready for delivery on or about     , 2011.

 

Joint Book-Running Managers

J.P. Morgan		Wells Fargo Securities

 

The date of this prospectus is   , 2011.

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Prospectus Summary			1
The Offering			9
Fees and Expenses			14
Risk Factors			17
Special Note Regarding Forward-Looking Statements			43
Use of Proceeds			44
Distributions			45
Capitalization			46
Dilution			47
Selected Financial and Other Information			48
Management’s Discussion and Analysis of Financial Condition and Results of Operations			49
The Company			60
Portfolio Companies			74
Management of the Company			82
Certain Relationships			87
Control Persons and Principal Stockholders			90
The Adviser and the Administrator			92
Determination of Net Asset Value			101
Dividend Reinvestment Plan			103
Description of Shares			105
Shares Eligible for Future Sale			110
Regulation			112
Brokerage Allocation and Other Practices			118
Tax Matters			119
Underwriting			125
Custodian, Transfer and Distribution Paying Agent and Registrar			130
Legal Matters			130
Independent Registered Public Accounting Firm			130
Additional Information			130
Index to Financial Statements			F-1

* * * * *

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this prospectus is accurate only as of the date on the front of this prospectus. Our business, financial condition and prospects may have changed since that date. To the extent required by applicable law, we will update this prospectus during the offering period to reflect material changes to the disclosure herein.

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PROSPECTUS SUMMARY

This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read carefully the more detailed information set forth under “Risk Factors” and the other information included in this prospectus. Except where the context suggests otherwise, the terms:

Immediately prior to the pricing of our initial public offering and our election to be treated as a business development company, we will convert from a limited liability company into a corporation. In this conversion, Garrison Capital Inc. will succeed to the business of Garrison Capital LLC and its consolidated subsidiaries, and the members of Garrison Capital LLC will become stockholders of Garrison Capital Inc. In this prospectus, we refer to these transactions as the “BDC Conversion.” Unless otherwise indicated, the disclosure in this prospectus gives effect to the BDC Conversion.

Garrison Capital

We are a newly-organized, externally managed, non-diversified, closed-end management investment company that intends to file an election to be treated as a business development company under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, for tax purposes we intend to elect to be treated as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code.

Our investment objective is to generate current income and capital appreciation by making investments generally in the range of $10 million to $25 million primarily in debt securities of U.S. based middle-market companies, which we define as those having annual earnings before interest, taxes and depreciation, or EBITDA, of between $5 million and $30 million. Our goal is to generate attractive risk-adjusted returns by assembling a diversified portfolio of investments.

We intend to invest primarily in (1) first lien senior secured loans, (2) second lien senior secured loans, (3) “one-stop” senior secured or “unitranche” loans, (4) subordinated or mezzanine loans and (5) to a lesser extent, selected equity co-investments in middle-market companies. We use the term “one-stop” or “unitranche” to refer to a loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans. We use the term “mezzanine” to refer to a loan that ranks senior only to a borrower’s equity securities and ranks junior in right of payment to all of such borrower’s other indebtedness.

We believe that the middle market offers attractive risk-adjusted returns for debt investors. Historically, we believe there has been a persistent scarcity of available capital relative to demand, which, from a lender’s perspective, has generally resulted in more favorable transaction structures, including enhanced covenant protection and increased pricing relative to larger companies. We further believe that although the turmoil in the credit markets, which began in mid-2007 and continued through 2010, has generally subsided, such turmoil exacerbated this scarcity of capital, as many traditional lenders to middle-market companies have exited the business or focused their attention on larger borrowers. In addition, middle-market companies traditionally have exhibited lower default rates and improved recoveries compared to larger borrowers and typically offer greater access to key senior managers, which we believe further enhances the attractiveness of lending to this market segment and facilitates due diligence investigations and regular monitoring.

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As of December 31, 2010, through Garrison Funding 2010-1 LLC, our wholly-owned indirect subsidiary, or GF 2010-1, we held an investment portfolio of syndicated secured loans fair valued at $283.8 million and related indebtedness with a par value of $219.5 million. As of that date, this portfolio consisted of 74 investments with an average investment size of approximately $3.7 million, a weighted average yield of 7.32% and a weighted average maturity of four years. See “— Formation Transactions — Our Formation” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Formation Transactions — Our Formation.”

Going forward, we intend to pursue a strategy focused on originating and investing in first lien, second lien, unitranche and mezzanine loans. Accordingly, over time we expect that syndicated first lien senior secured loans will represent a smaller percentage of our investment portfolio as we grow our business and our existing senior secured investments are repaid or sold in the secondary market and we reinvest the proceeds of such repayments or sales.

Our Investment Adviser

Our investment activities are managed by our investment adviser, Garrison Capital Advisers. Our investment adviser is responsible for sourcing potential investments, conducting research and diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. Garrison Capital Advisers was organized in November 2010 and has filed to become a registered investment adviser under the Investment Advisers Act of 1940, as amended, or the Advisers Act. Under an investment advisory agreement with Garrison Capital Advisers, or the Investment Advisory Agreement, which we intend to enter into on the date of this prospectus, we will pay our investment adviser a base management fee and an incentive fee for its services. See “The Offering — Investment Advisory Agreement” for a discussion of the base management fee and incentive fee that will be payable by us to our investment adviser. Prior to the date of this prospectus, our relationship with the investment adviser was governed by an interim investment advisory agreement that was terminated on the date of this prospectus.

Garrison Capital Advisers is an affiliate of Garrison Investment Group. Garrison Capital Advisers has entered into a staffing agreement, or the Staffing Agreement, with Garrison Investment Group under which Garrison Investment Group has agreed to make experienced investment professionals available to Garrison Capital Advisers and to provide access to the senior investment personnel of Garrison Investment Group. We believe that the Staffing Agreement will provide our investment adviser with access to investment opportunities, which we refer to in the aggregate as deal flow, generated by Garrison Investment Group in the ordinary course of its business and commits the members of Garrison Investment Group’s investment committee to serve as members of our investment committee. In addition, Garrison Investment Group is obligated under the Staffing Agreement to allocate investment opportunities among its managed affiliates fairly and equitably over time in accordance with its allocation policy. Our investment adviser intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Garrison Investment Group’s investment professionals.

Garrison Investment Group

Garrison Investment Group is an alternative investment and asset management firm founded in March 2007 by Steven Stuart and Joseph Tansey. As of March 1, 2011, Garrison Investment Group had approximately $1.9 billion of committed and invested capital under management and a team of 53 employees, including 33 investment professionals. Garrison Investment Group is headquartered in New York, New York. Garrison Investment Group invests opportunistically in debt of middle-market companies, primarily in the areas of corporate finance, real estate finance and structured finance.

Since the formation of Garrison Investment Group, Messrs. Stuart and Tansey together with their team of investment professionals, including Rafael Astruc, Brian Chase, Terence Moore and Mitch Drucker, have been investors and lenders to middle-market companies. These investment professionals have significant experience investing in a broad range of industries and types of debt over the course of several economic cycles.

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Before joining Garrison Investment Group, Messrs. Stuart and Tansey were Managing Directors at Fortress Investment Group LLC, or Fortress, and were also partners of the Drawbridge Special Opportunities Fund, or Drawbridge, a hedge fund, from its inception in August 2002 to March 2007. Drawbridge focused primarily on investments in opportunistic debt and equity securities and asset-based transactions. The responsibilities of these individuals included sourcing, evaluating, structuring, managing and monitoring corporate, structured finance and real estate investments, including both debt and equity. Messrs. Stuart and Tansey have 25 and 16 years of investment experience, respectively.

Market Opportunity

We believe that the current credit and asset market dynamics are favorable for us to pursue an investment strategy focused on investing in first lien, second lien, unitranche and mezzanine loans of, and, to a lesser extent, warrants and minority equity securities in, U.S. middle-market companies. As the investment environment changes, our investment adviser intends to adapt its investment focus dynamically to investments that it perceives to have attractive risk-return characteristics. We find middle-market investing attractive for the following reasons:

Significant Refinancing Requirements.    A significant amount of debt begins to mature between 2011 and 2013, much of which we believe is associated with a large number of middle-market leveraged mergers and acquisitions completed from 2005 to 2008. In many cases, we expect that this debt will need to be refinanced by the borrowers.

Reduced Competition.   We believe that dislocations in the capital markets between mid-2007 and the end of 2010 have reduced the amount of credit available to middle-market companies. We believe that much of the traditional lending community for middle-market companies, such as commercial/regional banks, investment banks, commercial finance companies, hedge funds and collateralized loan obligations, have contracted and/or eliminated their origination activities in the wake of this period of credit dislocation or focused on more liquid asset classes. In addition, a 2010 Congressional Oversight Panel report concluded that 3,000 small U.S. banks either have or may need to curtail lending due to financial stresses, further restricting access to capital for middle-market borrowers, and, when implemented, Basel III, published by the Basel Committee on Banking Supervision, is expected to limit the ability of commercial banking institutions to hold non-investment grade leveraged loans on their balance sheets.

Attractive Relative Value Proposition .  We believe that directly originated middle-market loans often exhibit superior default and loss characteristics to syndicated loans, which are often structured with higher levels of debt and a lower percentage of equity contributed. We expect that a substantial backlog of buyout commitments will drive demand for leveraged buyouts over the next several years, which should, in turn, create leveraged lending opportunities for us in the middle market. Meanwhile, reduced access to, and availability of, credit typically increases the interest rates, or pricing, of loans made to U.S. middle-market borrowers, thereby creating an attractive risk-return dynamic for lenders. We believe that the debt of such borrowers typically carries high interest rates and offers attractive up-front fees and prepayment penalties but is not sufficiently attractive to the syndicated debt markets, thereby providing us with many lending opportunities.

Conservative Capital Structure and Increased Percentage of Equity Contributed.   We believe that lenders generally are requiring borrowers to hold more equity as a percentage of their total capitalization and less senior and total leverage than was customary in the years leading up to the credit crisis, creating a greater amount of equity to protect lenders against future economic downturns. Lower leverage levels in mergers and acquisitions executed in the middle market suggest that middle-market companies should have more cash flows available to them to service their debt. In addition, middle-market companies typically have simpler capital structures than larger borrowers, which streamlines the initial structuring and underwriting process and, in our experience, contributes to improved returns to lenders in restructurings.

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Long-Term Capital Solutions.   We believe that many middle-market companies seek to execute transactions with permanent capital vehicles, such as us, rather than execute high-yield bond transactions or borrow capital from hedge funds and other non-permanent vehicles. In addition, we believe that many middle-market companies are positively disposed towards seeking capital from a small number of providers with access to permanent capital that can satisfy their specific needs and serve as value-added financial partners with an understanding of and longer-term view oriented towards the growth of such businesses.

When combined with decreased availability of debt financing for middle-market companies generally, we believe these factors should increase lending opportunities for us.

Competitive Strengths

Experienced Management Team.   We are managed by our investment adviser, which has access through the Staffing Agreement to the resources and expertise of the investment professionals at Garrison Investment Group. Garrison Investment Group is led by Messrs. Stuart and Tansey. Garrison Investment Group’s investment professionals have substantial experience in identifying and executing financing transactions across a broad range of industries and types of financings and have developed related proprietary sourcing and servicing channels. Our seven member investment committee has combined investment experience of more than 145 years.

Access to Deal Flow.   Through the Staffing Agreement, our investment adviser expects to have access to extensive contacts throughout the middle-market through which it intends to source and originate loans. The investment professionals of Garrison Investment Group maintain direct dialog with their contacts at financial sponsors, banks, corporate advisory firms, crisis managers, industry consultants, attorneys, investment banks, middle-market companies, other “club” investors and other potential sources of lending opportunities. In addition, we anticipate that a portion of our deal flow will be generated through non-traditional channels, such as Garrison Investment Group’s real estate and structured finance teams whose contacts typically share opportunities with a limited group of potential lenders, thereby creating a less competitive process for such lending opportunities. Furthermore, Garrison Investment Group’s senior professionals have cultivated relationships with other middle-market lending platforms that we believe will provide us with an additional source of deal flow. We believe that the breadth of these relationships will enable us to be selective in originating or acquiring loans and afford us opportunities to review certain lending proposals in the U.S. middle-market in advance of other potential lenders as well as the opportunity to match the terms offered by other lenders, which should allow for selectivity in the transactions we pursue.

Disciplined Investment and Underwriting Process.   Our investment adviser intends to utilize the established investment processes developed by Garrison Investment Group to analyze investment opportunities and structure loans. Our investment adviser intends to structure loans with appropriate covenants to allow for renegotiation of loan and pricing terms in the event that a portfolio company fails to satisfy its covenants and to price loans based on its knowledge of the middle market and on its rigorous underwriting standards. Our investment adviser expects to focus on capital preservation by extending loans to portfolio companies with assets that it believes will retain sufficient value to repay us even in depressed markets or under liquidation scenarios. The professionals employed by Garrison Investment Group have extensive experience in structuring and underwriting middle-market loans and in evaluating collateral positions to minimize credit risk as a lender.

Active Asset Management Approach.   Our investment adviser intends to employ a regimented credit monitoring system for our portfolio. Garrison Investment Group formally reviews its entire portfolio of loans with our investment committee on a monthly basis. The goal of this review is to enhance the ability of our investment adviser to manage any problems and assist borrowers before operating issues result in financial deterioration. In addition, this process should enable our investment adviser to identify credit and market trends, thereby allowing us to modify underwriting terms for new loans before other lenders have identified such trends. In the event of restructurings, we expect that our investment adviser will manage syndicates of lenders, creditor committees and other creditors and advisors to protect our position. Where necessary, our investment adviser intends to take an active role in any restructuring negotiations and to utilize its extensive industry experience and industry contacts to benefit lenders.

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Investment Strategy

We will seek to create a diversified portfolio consisting of investments generally in the range of $10 million to $25 million primarily in debt securities of U.S. based middle-market companies. The companies to which we extend credit will typically be moderately leveraged, and, in most cases, will not have their loans rated by national rating agencies. If such companies were rated, we believe that they would typically receive a rating below investment grade. In addition, we expect that our investments typically will range in maturity from one to six years and that the overall portfolio will have a weighted average life of approximately five years. However, we may make investments in securities with any maturity or duration.

We intend to invest opportunistically in middle-market loans that we believe have attractive risk adjusted returns. We will also, to a lesser extent, make select equity investments in non-investment grade companies. We expect the majority of our focus to generally be centered upon traditional direct lending but at times will seek to enhance returns by purchasing loans in the secondary market, which purchases we refer to as capital markets activities, and extending credit for certain restructuring of financially troubled companies, which we refer to as special situations. We organize these lending opportunities in three categories.

Traditional Direct Lending .  We will focus on direct origination of first lien senior secured loans, second lien senior secured loans and unitranche loans as well as select mezzanine loans. With respect to these loans, we intend to identify lending opportunities through the extensive origination network to which we have access and will serve as either sole lender or as a partner with like minded creditors. We expect that we will typically extend first and second lien secured term loans, the proceeds of which may be used to refinance existing indebtedness, support acquisitions, growth initiatives, general corporate liquidity or operational turnarounds.

Capital Markets Activities .  We may also acquire loans in the secondary market at favorable discounts or seek to refinance outstanding loans through anchoring or co-anchoring a new issuance of debt. Garrison Investment Group has underwritten and conducted due diligence on more than 500 middle-market companies since July 2007. We believe this experience will allow us to react quickly in executing acquisitions of loans in the secondary market on favorable terms and permit us to refinance loans on a streamlined basis. All of our investments as of December 31, 2010 were acquired in the secondary market.

Special Situations .  We may also extend credit for out-of-court restructurings, rescue financings, debtor-in-possession financings and acquisition financings. We expect that, in extending credit to special situations borrowers, our investments will remain high in borrower’s capital structure, generate returns through the duration of the loan and obtain call protection or opportunities for enhanced returns through equity participation.

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Organizational Structure

The following shows a simplified organizational chart reflecting our relationship with our investment adviser and administrator and our ownership interests in certain of our subsidiaries as of the date of this prospectus:

Formation Transactions

Our Formation.   We were formed in November 2010 to invest primarily in (1) first lien senior secured loans, (2) second lien senior secured loans, (3) “one-stop” senior secured or “unitranche” loans, (4) subordinated or mezzanine loans and (5) to a lesser extent, selected equity co-investments in middle-market companies. In December 2010 we completed an $80 million private placement, the proceeds of which are being used to invest in U.S. middle-market companies in accordance with our investment strategy.

On November 5, 2010, GF 2010-1 completed a $300 million debt securitization, or Debt Securitization. The transaction was executed through a private placement of: (1) $189.5 million of Aaa/AAA Class A Notes, or the Class A Notes, which bear interest at the three-month London Interbank Offered Rate, or LIBOR, plus 2.40%; (2) $12.0 million of Aa2/AA Class B Notes, or the Class B Notes, which bear interest at the three-month LIBOR plus 3.75%; and (3) $18.0 million of A2/A Class C Notes, or the Class C Notes, which bear interest at the three-month LIBOR plus 4.75%; and (4) $80.5 million of subordinated notes, which do not bear interest. All of the classes of notes are scheduled to mature on November 20, 2017. We refer to the Class A Notes, the Class B Notes and the Class C Notes collectively as the Secured Notes and the subordinated notes together with the residual equity interests in GF 2010-1 as the Subordinated Notes.

Certain open-ended funds affiliated with our investment adviser contributed 100% of the stock of Garrison Capital CLO Ltd., which in turn owns all of the Subordinated Notes, to us as of December 31, 2010 in exchange for $80.6 million in fair value of limited liability company units, or units, in Garrison Capital LLC. An independent third-party valuation firm was engaged to provide positive assurance regarding the fair value of the Subordinated Notes that were contributed to us as of the date of such contribution.

BDC Conversion .  Immediately prior to the completion of this offering, Garrison Capital LLC intends to convert into a Delaware corporation, Garrison Capital Inc., and all of the outstanding units in Garrison Capital LLC will be converted into       shares of common stock in Garrison Capital Inc. As part of the BDC Conversion, the existing members of Garrison Capital LLC will receive an aggregate of       shares of our common stock in exchange for the       limited liability company interests they own in Garrison Capital LLC, representing an estimated equivalent price of $       per share based on the fair value of the assets contributed by such members in connection with our formation, as determined by our board of directors.

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Operating and Regulatory Structure

Our investment activities will be managed by Garrison Capital Advisers and supervised by our board of directors, a majority of whom are independent of Garrison Capital, Garrison Capital Advisers and their respective affiliates.

As a business development company, we will be required to comply with certain regulatory requirements. For example, we note that any affiliated investment vehicle formed in the future and managed by our investment adviser may, notwithstanding different stated investment objectives, have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. If our investment adviser undertakes to manage a new fund in the future, we will not invest in any portfolio company in which that fund has a pre-existing investment, although we may co-invest with such affiliate on a concurrent basis, subject to compliance with existing regulatory guidance, applicable regulations and our allocation procedures. See “Regulation.”

Also, as a business development company, we are generally prohibited from acquiring assets other than qualifying assets unless, after giving effect to any acquisition, at least 70% of our total assets are qualifying assets. Qualifying assets generally include securities of eligible portfolio companies, cash, cash equivalents, U.S. government securities and high-quality debt instruments maturing in one year or less from the time of investment. Under the rules of the 1940 Act, “eligible portfolio companies” include (1) private U.S. operating companies, (2) public U.S. operating companies whose securities are not listed on a national securities exchange (e.g., the New York Stock Exchange) or registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and (3) public U.S. operating companies having a market capitalization of less than $250 million. Public U.S. operating companies whose securities are quoted on the over-the-counter bulletin board and through Pink Sheets LLC are not listed on a national securities exchange and therefore are eligible portfolio companies. See “Regulation.”

We intend to elect to be treated for U.S. federal income tax purposes as a RIC under the Code. In order to be treated as a RIC, we must satisfy certain source of income, asset diversification and distribution requirements. See “Tax Matters.”

Conflicts of Interest

We are prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our independent directors and, in some cases, of the Securities and Exchange Commission, or the SEC. Any person that owns, directly or indirectly, five percent or more of our outstanding voting securities will be our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any security from or to, or entering into certain “joint” transactions (which could include investments in the same portfolio company) with such affiliates, absent the prior approval of our independent directors. Our investment adviser and its affiliates, including persons that control, or are under common control with, us or our investment adviser, are also considered to be our affiliates under the 1940 Act, and we are generally prohibited from buying or selling any security from or to, or entering into “joint” transactions with, such affiliates without prior approval of our independent directors and, in some cases, exemptive relief from the SEC.

We may, however, invest alongside our investment adviser’s, and its affiliates’ other clients in certain circumstances where doing so is consistent with applicable law and SEC staff interpretations. For example, we may invest alongside such accounts consistent with guidance promulgated by the staff of the SEC permitting us and such other accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that our investment adviser, acting on our behalf and on behalf of other clients, negotiates no term other than price. We may also invest alongside our investment adviser’s other clients as otherwise permissible under regulatory guidance, applicable regulations and the allocation policy of Garrison Investment Group and our investment adviser. Under this allocation policy, a fixed calculation, based on the type of investment, will be applied to determine the amount of each opportunity to be allocated to us. This allocation policy will be periodically reviewed by our investment adviser and approved by our independent directors. We expect that these determinations will be made similarly for other accounts sponsored or managed by our investment adviser and its affiliates. If sufficient securities or loan amounts are available to satisfy our and each such account’s proposed demand, we expect that the opportunity will be

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allocated in accordance with our investment adviser’s pre-transaction determination. Where there is an insufficient amount of an investment opportunity to satisfy us and other accounts sponsored or managed by our investment adviser or its affiliates, the allocation policy further provides that allocations among us and such other accounts will generally be made pro rata based on the amount that each such party would have invested if sufficient securities or loan amounts were available. However, we can offer no assurance that investment opportunities will be allocated to us fairly or equitably in the short-term or over time.

In situations where co-investment with other accounts managed by our investment adviser or its affiliates is not permitted or appropriate, Garrison Investment Group and our investment adviser will need to decide which client will proceed with the investment. Our investment adviser’s allocation policy provides, in such circumstances, for investments to be allocated on a rotational basis to assure that all clients have fair and equitable access to such investment opportunities. Moreover, except in certain circumstances, we will be unable to invest in any issuer in which a fund managed by our investment adviser or its affiliates has previously invested. Similar restrictions limit our ability to transact business with our officers or directors or their affiliates. These restrictions may limit the scope of investment opportunities that would otherwise be available to us.

See “Risk Factors — Risks Relating to our Business and Structure — There are significant potential conflicts of interest that could affect our investment returns” and “Certain Relationships.”

 

Company Information

Our principal executive offices are located at 1350 Avenue of the Americas, New York, New York 10019, telephone number (212) 372-9500. Our corporate website is located at www.garrisoncapitalbdc.com. Information on our website is not incorporated into or a part of this prospectus.

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THE OFFERING

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FEES AND EXPENSES

The following table is intended to assist you in understanding the costs and expenses that an investor in this offering will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. The following table should not be considered a representation of our future expenses. Actual expenses may be greater or less than shown. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “us” or “Garrison Capital,” or that “we” will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in Garrison Capital.

Stockholder transaction expenses:
Sales load (as a percentage of offering price)			% (1)
Offering expenses (as a percentage of offering price)			% (2)
Dividend reinvestment plan expenses				(3)
Total stockholder transaction expenses (as a percentage of offering price)			—	%
Estimated annual expenses (as a percentage of net assets attributable to common stock):
Base management fees			% (4)
Incentive fees payable under Investment Advisory Agreement (20% of Pre-Incentive Fee Net Investment Income and 20% of realized capital gains)			% (5)
Interest payments on borrowed funds			% (6)
Other expenses			% (7)
Total annual expenses (estimated)			%

The first component, which is income-based and payable quarterly in arrears, will equal 20% of the amount, if any, that our “Pre-Incentive Fee Net Investment Income” exceeds a 1.75% quarterly (7.00% annualized) hurdle rate (the “Hurdle Rate”), subject to a “catch-up” provision measured at the end of each calendar quarter. The operation of the first component of the incentive fee for each quarter is as follows:

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The portion of such incentive fee that is attributable to deferred interest (such as PIK interest or original issue discount) will be paid to our investment adviser, together with interest thereon from the date of deferral to the date of payment, only if and to the extent we actually receive such interest in cash, and any accrual thereof will be reversed if and to the extent such interest is reversed in connection with any write-off or similar treatment of the investment giving rise to any deferred interest accrual. Any reversal of such amounts would reduce net income for the quarter by the net amount of the reversal (after taking into account the reversal of incentive fees payable) and would result in a reduction and possibly elimination of the incentive fees for such quarter.

There is no accumulation of amounts on the Hurdle Rate from quarter to quarter and, accordingly, there is no clawback of amounts previously paid if subsequent quarters are below the quarterly Hurdle Rate and there is no delay of payment if prior quarters are below the quarterly Hurdle Rate. Since the Hurdle Rate is fixed, as interest rates rise, it will be easier for our investment adviser to surpass the Hurdle Rate and receive an incentive fee based on Pre-Incentive Fee Net Investment Income.

The second component, which is capital gains-based, will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), commencing on December 31, 2012, and will equal 20% of our cumulative aggregate realized capital gains from January 1, 2012 through the end of such year, computed net of our aggregate cumulative realized capital losses and aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid capital gains incentive fees. The capital gains component of the incentive fee is not subject to any minimum return to stockholders.

Our investment adviser has also agreed to waive its incentive fee, if any, from the date of our election to become a business development company through December 31, 2011. For a more detailed discussion of the calculation of this fee, see “The Adviser and the Administrator — Investment Advisory Agreement — Management Fee.”

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Example

The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed indebtedness with a par value of $219.5 million, which was our actual indebtedness as of December 31, 2010, and that our annual operating expenses remain at the levels set forth in the table above.

1 year

3 years

5 years

10 years

You would pay the following expenses on a $1,000 investment, assuming a 5% annual return

$

$

$

$

While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. The incentive fee under the Investment Advisory Agreement, which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example. This illustration assumes that we will not realize any capital gains (computed net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses and returns to our investors would be higher. In addition, the example assumes inclusion of the sales load of $     in the first year and reinvestment of all dividends and other distributions at net asset value. Participants in our dividend reinvestment plan will receive a number of shares of our common stock determined by dividing the total dollar amount of the distribution payable to a participant by the market price per share of our common stock at the close of trading on the valuation date for the distribution. See “Dividend Reinvestment Plan” for additional information regarding our dividend reinvestment plan.

This example should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown.

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RISK FACTORS

Before you invest in our shares, you should be aware of various risks, including those described below. You should carefully consider these risk factors, together with all of the other information included in this prospectus, before you decide whether to make an investment in our common stock. The risks set out below are not the only risks we face. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, our net asset value and the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to our Business and Structure

We are a new company with a limited operating history.

We were organized in November 2010. We are subject to all of the business risks and uncertainties associated with any new business, including the risk that we will not achieve our investment objective and that the value of your investment could decline substantially. We anticipate that it will take us six to 12 months following the date of this prospectus to invest substantially all of the net proceeds of this offering and the Concurrent Private Placement in accordance with our investment objective and strategies, in part because privately negotiated investments in illiquid securities or private middle-market companies require substantial due diligence and structuring. During this period, we intend to invest the remaining net proceeds of this offering and the Concurrent Private Placement in short-term investments, such as cash and cash equivalents. We expect we will earn yields substantially lower than the interest income that we anticipate receiving from investments in the future. As a result, any distributions we make during this period may be substantially lower than the distributions that we expect to pay when our portfolio is fully invested.

The lack of experience of our investment adviser in operating under the constraints imposed on us as a business development company and RIC may hinder the achievement of our investment objectives.

The 1940 Act and the Code impose numerous constraints on the operations of business development companies and RICs that do not apply to other investment vehicles managed by Garrison Investment Group and its affiliates. Business development companies are required, for example, to invest at least 70% of their total assets primarily in securities of U.S. private or thinly-traded public companies, cash, cash equivalents, U.S. government securities and other high-quality debt instruments that mature in one year or less from the date of investment. Subject to certain exceptions for follow-on investments and distressed companies, an investment in an issuer that has outstanding securities listed on a national securities exchange may be treated as qualifying assets only if such issuer has a common equity market capitalization that is less than $250 million at the time of such investment. Moreover, qualification for taxation as a RIC requires satisfaction of source-of-income, asset diversification and distribution requirements. Neither we nor our investment adviser has any experience operating under these constraints, which may hinder our ability to take advantage of attractive investment opportunities and to achieve our investment objective.

We may be precluded from investing in what we believe are attractive investments if such investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we could be found to be in violation of the 1940 Act provisions applicable to business development companies and possibly lose our status as a business development company, which would have a material adverse effect on our business, financial condition and results of operations. Similarly, these rules could prevent us from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments at inopportune times in order to come into compliance with the 1940 Act. If we need to dispose of such investments quickly, it may be difficult to dispose of such investments on favorable terms, or at all. For example, we may have difficulty in finding a buyer and, even if we do find a buyer, we may have to sell the investments at a substantial loss or otherwise for less than we could have received if we were able to sell them at a later time.

We depend upon key personnel of Garrison Investment Group and its affiliates.

We are an externally managed business development company and therefore we do not have any internal management capacity or employees. We will depend on the diligence, skill and network of business contacts of our investment adviser to achieve our investment objective. We expect that our investment adviser will evaluate, negotiate, structure, close and monitor our investments in accordance with the terms of the Investment Advisory Agreement.

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Our investment adviser is an affiliate of Garrison Investment Group and will, in turn, depend upon access to the investment professionals and other resources of Garrison Investment Group and its affiliates to fulfill its obligations to us under the Investment Advisory Agreement. Garrison Capital Advisers will also depend upon Garrison Investment Group to obtain access to deal flow generated by the professionals of Garrison Investment Group. Under the Staffing Agreement, Garrison Investment Group has agreed to provide our investment adviser with the resources necessary to fulfill these obligations. The Staffing Agreement provides that Garrison Investment Group will make available to Garrison Capital Advisers experienced investment professionals and access to the senior investment personnel of Garrison Investment Group for purposes of evaluating, negotiating, structuring, closing and monitoring our investments. We are not a party to this Staffing Agreement and cannot assure you that Garrison Investment Group will fulfill its obligations under the agreement. If Garrison Investment Group fails to perform, we cannot assure you that Garrison Capital Advisers will enforce the Staffing Agreement, that such agreement will not be terminated by either party or that we will continue to have access to the investment professionals of Garrison Investment Group and its affiliates or their market knowledge and deal flow. In addition, we cannot assure you that Garrison Investment Group will perform its duties as collateral manager to GF 2010-1.

We depend upon the senior professionals of Garrison Investment Group to maintain relationships with potential sources of lending opportunities, and we intend to rely to a significant extent upon these relationships to provide us with potential investment opportunities. We cannot assure you that these individuals will continue to indirectly provide investment advice to us. If these individuals, including the members of our investment committee, do not maintain their existing relationships with Garrison Investment Group, maintain existing relationships or develop new relationships with other sources of investment opportunities, we may not be able to grow our investment portfolio. In addition, individuals with whom the senior professionals of Garrison Investment Group have relationships are not obligated to provide us with investment opportunities. Therefore, we can offer no assurance that such relationships will generate investment opportunities for us.

If our investment adviser is unable to manage our investments effectively, we may be unable to achieve our investment objective.

Our ability to achieve our investment objective will depend on our ability to manage our business and to grow our business. This will depend, in turn, on our investment adviser’s ability to identify, invest in and monitor companies that meet our investment criteria. This, in turn, will depend on the ability of Garrison Investment Group to identify, invest in and monitor companies that meet our investment criteria. The achievement of our investment objectives on a cost-effective basis will depend upon our investment adviser’s execution of our investment process, its ability to provide competent, attentive and efficient services to us and our access to financing on acceptable terms. Our investment adviser will have substantial responsibilities under the Investment Advisory Agreement. The personnel of Garrison Investment Group who are made available to our investment adviser under the Staffing Agreement are engaged in other business activities and may be called upon to provide managerial assistance to our portfolio companies, either of which could distract them, divert their time and attention such that they could no longer dedicate a significant portion of their time to our businesses or otherwise slow our rate of investment. Any failure to manage our business and our future growth effectively could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The highly competitive market for investment opportunities in which we operate may limit our investment opportunities.

A number of entities compete with us to make the types of investments that we plan to make in middle-market companies. We compete with public and private funds, including other business development companies, commercial and investment banks, commercial financing companies, and, to the extent they provide an alternative form of financing, private equity funds. Additionally, as competition for investment opportunities increases, alternative investment vehicles, such as hedge funds, may frequently invest in middle-market companies. As a result of these new entrants, competition for investment opportunities in middle-market companies has intensified, and we expect the trend to continue. Many of our potential competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors have higher risk tolerances or different risk

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assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act will impose on us as a business development company. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we can offer no assurance that we will be able to identify and make investments that are consistent with our investment objective.

Entrants in our industry compete on several factors, including price, flexibility in transaction structuring, customer service, reputation, market knowledge and speed in decision-making. We will not seek to compete primarily based on the interest rates we offer, and we believe that some of our competitors may make loans with interest rates that are lower than the rates we offer. We may lose investment opportunities if we do not match our competitors’ pricing, terms and structure. However, if we match our competitors’ pricing, terms and structure, we may reduce our net investment income and increase our risk of credit loss.

Current market conditions have materially and adversely affected debt and equity capital markets in the United States and around the world.

Beginning in 2007 and continuing through 2010, the global capital markets experienced a period of disruption resulting in increasing spreads between the yields realized on riskier debt securities and those realized on risk-free securities and a lack of liquidity in parts of the debt capital markets, significant write-offs in the financial services sector relating to subprime mortgages and the re-pricing of credit risk in the syndicated loan market. These events, along with the deterioration of the housing market, illiquid market conditions, declining business and consumer confidence and the failure of major financial institutions in the United States, led to a general decline in economic conditions. This economic decline has materially and adversely affected the broader financial and credit markets and has reduced the availability of debt and equity capital for the market as a whole and to financial firms in particular. To the extent that we wish to incur indebtedness to fund new investments or to refinance existing indebtedness, the debt capital that will be available to us, if at all, may be at a higher cost, and on terms and conditions that may be less favorable, than we expect, which could negatively affect our financial performance and results. A prolonged period of market illiquidity may cause us to reduce the volume of loans we originate and/or fund below historical levels and adversely affect the value of our portfolio investments, which could have a material and adverse effect on our business, financial condition, and results of operations. The continuation or further deterioration of current market conditions could materially and adversely affect our business.

We intend to elect to be treated as a RIC. If we are unable to qualify as a RIC, we will be subject to corporate-level income tax.

We intend to elect to be treated as a RIC under the Code. To qualify as a RIC under the Code and obtain RIC tax benefits, we must meet certain income source, asset diversification and annual distribution requirements. The annual distribution requirement for a RIC is satisfied if we distribute at least 90% of our ordinary income and realized net short term capital gains in excess of realized net short term capital losses, if any, to our stockholders on an annual basis. To the extent we use preferred stock or debt financing in the future, we may be subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants under preferred stock or loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to qualify for RIC tax benefits. If we fail to make sufficient distributions, as a result of contractual restrictions or otherwise, we may fail to qualify for such benefits and, thus, may be subject to corporate-level income tax. To qualify as a RIC, we must also meet certain asset diversification requirements at the end of each calendar quarter. Failure to meet these tests may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because we anticipate that most of our investments will be in the debt of relatively illiquid middle-market private companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses. If we fail to qualify for RIC tax benefits for any reason and remain or become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders.

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Non-U.S. stockholders may be adversely affected by a scheduled change in U.S. federal income tax law.

Under a provision applicable for our taxable years beginning before January 1, 2012, properly designated dividends received by a Non-U.S. stockholder are generally exempt from U.S. federal withholding tax when they (a) are paid in respect of our “qualified net interest income” (generally, our U.S. source interest income, other than certain contingent interest and interest from obligations of a corporation or partnership in which we are at least a 10% stockholder, reduced by expenses that are allocable to such income), or (b) were paid in connection with our “qualified short-term capital gains” (generally, the excess of our net short-term capital gain over our long-term capital loss for such taxable year). If such provision is not renewed, non-U.S. stockholders will be subject to 30% U.S. federal withholding tax on distributions other than actual or deemed distributions of our net capital gains unless reduced under an applicable tax treaty.

We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income.

For U.S. federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as original issue discount, which may arise if we receive warrants in connection with the making of a loan or possibly in other circumstances, or PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term. Such original issue discount, which could be significant relative to our overall investment assets, and increases in loan balances as a result of PIK interest will be included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash.

As a result, we may have difficulty meeting the tax requirement to distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, to obtain RIC tax benefits. Accordingly, we may have to sell some of our investments or the Subordinated Notes at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax benefits and thus be subject to corporate level income tax. See “Tax Matters — Taxation as a RIC.”

Regulations governing our operation as a business development company will affect our ability to, and the way in which we, raise additional debt or equity capital.

In the future, we expect that we will require a substantial amount of capital in addition to the proceeds of this offering and the Concurrent Private Placement. We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we will be permitted as a business development company to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments at a time when such sales may be disadvantageous and, depending on the nature of our leverage, repay a portion of our indebtedness.

By issuing senior securities, we are exposed to typical risks associated with leverage, including an increased risk of loss. If we issue preferred stock, such securities would rank “senior” to common stock in our capital structure, resulting in preferred stockholders having separate voting rights, dividend and liquidation rights, and possibly other rights, preferences or privileges more favorable than those granted to holders of our common stock. Furthermore, the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for our common stockholders or otherwise be in your best interest.

Our board of directors may decide to issue common stock to finance our operations rather than issuing debt or other senior securities. As a business development company, we are not generally able to issue and sell our common stock at a price below current net asset value per share. We may, however, issue or sell our common stock, at a price below the current net asset value of the common stock, or sell warrants, options or rights to acquire such common stock, at a price below the current net asset value of the common stock if our board of directors determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale within the preceding 12 months. In any such case, the price at which our

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securities are to be issued and sold may not be less than a price which, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount). We also may conduct rights offerings at prices per share less than the net asset value per share, subject to the requirements of the 1940 Act. If we raise additional funds by issuing additional common stock or senior securities convertible into, or exchangeable for, our common stock, the percentage ownership of our stockholders at that time would decrease, and our stockholders may experience dilution.

In addition to issuing securities to raise capital as described above, we may in the future seek to securitize our loans to generate cash for funding new investments. To securitize loans, we may create a wholly-owned subsidiary and contribute a pool of loans to the subsidiary. This could include the sale of interests in the subsidiary on a non-recourse basis to purchasers who we would expect to be willing to accept a lower interest rate to invest in investment grade loan pools, and we would retain a portion of the equity in any such securitized pool of loans. An inability to securitize part of our loan portfolio could limit our ability to grow our business, fully execute our business strategy and increase our earnings. Moreover, the successful securitization of part of our loan portfolio might expose us to losses as the residual loans in which we do not sell interests will tend to be those that are riskier and more apt to generate losses.

We intend to finance our investments with borrowed money, which will magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us.

The use of leverage magnifies the potential for gain or loss on amounts invested. We have incurred leverage through the Debt Securitization and, from time to time, intend to incur additional leverage to the extent permitted under the 1940 Act. The use of leverage is generally considered a speculative investment technique and increases the risks associated with investing in our securities. In the future, we may borrow from, and issue senior securities, to banks, insurance companies and other lenders. Holders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such holders to seek recovery against our assets in the event of a default. We may pledge up to 100% of our assets and may grant a security interest in all of our assets under the terms of any debt instruments into which we may enter. In addition, under the terms of any credit facility or other debt instrument we enter into, we are likely to be required by its terms to use the net proceeds of any investments that we sell to repay a portion of the amount borrowed under such facility or instrument before applying such net proceeds to any other uses.

If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged, thereby magnifying losses or eliminating our equity stake in a leveraged investment. Similarly, any decrease in our revenue or income will cause our net income to decline more sharply than it would have had we not borrowed. Such a decline would also negatively affect our ability to make dividend payments on our common stock or preferred stock. Our ability to service our debt will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of our use of leverage, including interest expenses and any increase in the management fee payable to our investment adviser.

As a business development company, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 200%. If this ratio declines below 200%, we cannot incur additional debt and could be required to sell a portion of our investments to repay some debt when it is disadvantageous to do so. This could have a material adverse effect on our operations, and we may not be able to make distributions. The amount of leverage that we employ will depend on our investment adviser’s and our board of directors’ assessment of market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.

In addition, the terms governing the Debt Securitization and any indebtedness that we incur in the future could impose financial and operating covenants that restrict our business activities, including limitations that may hinder our ability to finance additional loans and investments or make the distributions required to maintain our status as a RIC under the Code.

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The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

		Assumed Return on Our Portfolio (Net of Expenses)
		-10%				-5%				0%				5%				10%
Corresponding return to common stockholder (1)			%				%				%				%				%

Based on our outstanding indebtedness with a par value of $219.5 million as of December 31, 2010 and the effective annual interest rate under the Debt Securitization of 2.98% as of that date, our investment portfolio must experience an annual return of at least    % to cover annual interest payments on the Debt Securitization.

Any failure on our part to maintain our status as a business development company would reduce our operating flexibility.

If we do not remain a business development company, we might be regulated as a closed-end investment company under the 1940 Act, which would subject us to substantially more regulatory restrictions under the 1940 Act and correspondingly decrease our operating flexibility.

We are subject to risks associated with the Debt Securitization.

As a result of the Debt Securitization, we are subject to a variety of risks, including those set forth below.

The Subordinated Notes are subordinated unsecured obligations of GF 2010-1.

Our wholly owned subsidiary owns all of the Subordinated Notes, which are valued at approximately $80.3 million. As a result, we consolidate the financial statements of GF 2010-1, as well as our other subsidiaries, in our consolidated financial statements.

The Subordinated Notes are the most junior class of securities issued by GF 2010-1, are subordinated in priority of payment to every other class of notes issued by GF 2010-1, are subject to certain payment restrictions set forth in the indenture governing the notes issued by GF 2010-1, generally have only limited voting rights and generally do not benefit from any creditors’ rights or ability to exercise remedies under the indenture governing the notes issued by GF 2010-1. They are not guaranteed by another party. They do not bear a stated rate of interest. Therefore, we receive cash distributions on the Subordinated Notes only if GF 2010-1 has made all required cash interest payments on all other notes it has issued. We view our interests in the Subordinated Notes as an equity investment in the Debt Securitization and cannot assure you that distributions on the assets held by GF 2010-1 will be sufficient to make any distributions on the Subordinated Notes or that the yield on the Subordinated Notes will meet our expectations. The Subordinated Notes are also unsecured and rank behind all of the secured creditors, known or unknown, of GF 2010-1, including the holders of the Secured Notes it has issued. Consequently, to the extent that the value of GF 2010-1’s portfolio of loan investments has been reduced as a result of conditions in the credit markets, defaulted loans, capital gains and losses on the underlying assets, prepayment or changes in interest rates, the value of the Subordinated Notes realized at their redemption could be reduced. Accordingly, the Subordinated Notes may not be paid in full and may be subject to up to 100% loss.

The Subordinated Notes are a highly leveraged investment.

As of December 31, 2010, GF 2010-1 owed $219.5 million under the Secured Notes, and the fair value of the assets held by GF 2010-1 was $283.8 million. The market value of the Subordinated Notes may be significantly affected by, among other things, changes in the market value of the investments held by GF 2010-1, changes in distributions on the investments held by GF 2010-1, defaults and recoveries on those investments, capital gains and losses on those investments, prepayments on those investments and other risks

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associated with those investments. Accordingly, the Subordinated Notes may not be paid in full and may be subject to up to 100% loss. Furthermore, the leveraged nature of the Subordinated Notes may magnify the adverse impact on the Subordinated Notes of changes in the market value of the investments held by GF 2010-1, changes in the distributions on those investments, defaults and recoveries on those investments, capital gains and losses on those investments, prepayments on those investments and availability, prices and interest rates of those investments. As the holder of the Subordinated Notes, we must be prepared to hold such notes for an indefinite period of time or until their stated maturity.

The interests of holders of certain of the Secured Notes may not be aligned with our interests, and we may have no control over remedies.

The Secured Notes are the debt obligations ranking senior in right of payment to other securities issued by GF 2010-1 in the Debt Securitization and were issued in different classes. As such, there are circumstances in which the interests of holders of a class of notes may not be aligned with the interests of holders of the other classes of notes issued by GF 2010-1. For example, under the terms of the Class A Notes, holders of the Class A Notes have the right to receive payments of principal and interest prior to holders of all other classes of notes.

As the holder of the Subordinated Notes, we will generally not be entitled to exercise remedies under the indenture governing the notes issued by GF 2010-1. For as long as the Class A Notes remain outstanding, holders of the Class A Notes comprise the most senior class of notes of GF 2010-1 then outstanding, or the Controlling Class, under the Debt Securitization. At such time they have the right to act in certain circumstances with respect to the portfolio loans in ways that may benefit their interests but not the interests of holders of more junior classes of notes, including by exercising remedies, waiving events of default or rescinding declaration of acceleration of the notes under the indenture governing the notes issued by GF 2010-1. Upon repayment of the Class A Notes, the Class B Notes will become the Controlling Class. At such time, they will have the right to act in certain circumstances with respect to the portfolio loans in ways that may benefit their interests but not the interests of holders of more junior classes of notes, including by exercising remedies, waiving events of default or rescinding declaration of acceleration of the notes under the indenture governing the notes issued by GF 2010-1. Upon repayment of the Class A Notes and the Class B Notes, the Class C Notes will become the Controlling Class. At such time, they will have the right to act in certain circumstances with respect to the portfolio loans in ways that may benefit their interests but not the interests of holders of more junior classes of notes, including by exercising remedies, waiving events of default or rescinding declaration of acceleration of the notes under the indenture governing the notes issued by GF 2010-1. The Controlling Class has no obligation to consider any possible adverse effect on any other class of notes. For example, upon the occurrence of an event of default with respect to the notes issued by GF 2010-1, the trustee, which is currently Deutsche Bank Trust Company Americas, or holders of a supermajority of the Controlling Class may declare the principal, together with any accrued interest, of all the notes of such class and any junior classes to be immediately due and payable. This would have the effect of accelerating the principal on such notes, triggering a repayment obligation on the part of GF 2010-1. If at such time the portfolio loans were not performing well, GF 2010-1 may not have sufficient proceeds available to enable the trustee under the indenture to repay the obligations of holders of the Subordinated Notes.

We cannot assure you that any remedies pursued by the Controlling Class will be in our best interests or that we will indirectly receive any payments or distributions upon an acceleration of the notes. Any failure of GF 2010-1 to make distributions on the notes we indirectly hold, whether as a result of an event of default or otherwise, could have a material adverse effect on our business, financial condition, results of operations and cash flows and may result our inability to make distributions sufficient to allow our qualification as a RIC.

GF 2010-1 may fail to meet certain asset coverage tests, which would have an adverse effect on the time of payments to us.

Under the documents governing the Debt Securitization, there are two coverage tests applicable to the Secured Notes. The first such test compares the amount of interest received on the portfolio loans held by GF 2010-1 to the amount of interest payable in respect of the Secured Notes. To meet this first test, the aggregate amount of interest received on the portfolio loans must equal at least 120% of the interest payable in respect of the Class A Notes, 110% of the interest payable on the Class A Notes and the Class B Notes,

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taken together, and 105% of the interest payable on the Secured Notes, taken together. The second such test compares the aggregate principal amount of the portfolio loans to the aggregate outstanding principal amount of the Secured Notes. To meet this test at any time, the aggregate principal amount of the portfolio loans must equal at least 147.5% of the aggregate outstanding principal amount of the Class A Notes, 141.1% of the aggregate outstanding principal amount of the Class A Notes and the Class B Notes, taken together, and 130.0% of the aggregate outstanding principal amount of the Secured Notes, taken together. If the coverage tests are not satisfied on any date on which compliance is measured, GF 2010-1 is required to apply available amounts to the repayment of principal of the Class A Notes, then the Class B Notes and then the Class C Notes to the extent necessary to satisfy the applicable coverage tests.

Restructurings of investments held by GF 2010-1 may decrease their value and reduce amounts payable on the Subordinated Notes.

The collateral manager, on behalf of GF 2010-1, has broad authority to direct and supervise the investment and reinvestment of the investments held by GF 2010-1, which may include the execution of amendments, waivers, modifications and other changes to the investment documentation in accordance with the collateral management agreement. During periods of economic uncertainty and recession, the incidence of amendments, waivers, modifications and restructurings of investments may increase. Such amendments, waivers, modifications and other restructurings will change the terms of the investments, in some cases resulting in GF 2010-1 holding assets not meeting its criteria for investments, and may adversely impact the coverage tests under the indenture governing the notes issued by GF 2010-1. Any such amendment, waiver, modification or other restructuring that reduces GF 2010-1’s compliance with certain financial tests will make it more likely that GF 2010-1 will need to utilize cash to pay down the unpaid principal amount of the Secured Notes to cure any breach in any such test instead of making payments on the Subordinated Notes. Any such diversion would reduce the average life of the Secured Notes and would reduce distributions available and delay the timing of payments to us.

We cannot assure you that any particular restructuring strategy pursued by the collateral manager will maximize the value of or any recovery on any investment. Any restructuring can fundamentally alter the nature of the related investment and restructurings are not subject to the same underwriting standards that are employed in connection with the origination or acquisition of investments. Any restructuring could alter, reduce or delay the payment of interest or principal on any investment and, as such, could delay the timing and reduce the amount of payments made to us. Restructurings of investments might also result in extensions of the term thereof, which would likely extend the average life of such investments and, in the aggregate, could extend the weighted average life of the investments. Such extension could delay the timing of payments made to us.

We may not receive cash from GF 2010-1.

We receive cash from GF 2010-1 only to the extent that our direct subsidiary receives payments on the Subordinated Notes. GF 2010-1 may make payments on such securities only to the extent permitted by the payment priority provisions of the indenture governing the notes issued by GF 2010-1, which generally provides that principal payments on the Subordinated Notes may not be made on any payment date unless all amounts owing under the Secured Notes are paid in full. In addition, if GF 2010-1 does not meet the asset coverage tests or the interest coverage test set forth in the documents governing the Debt Securitization, cash would be diverted from the Subordinated Notes to first pay the Secured Notes in amounts sufficient to cause such tests to be satisfied. In the event that we fail to indirectly receive cash from GF 2010-1, we could be unable to make such distributions in amounts sufficient to maintain our status as a RIC, or at all, or be forced to sell investments in portfolio companies or the Subordinated Notes at less than their fair value in order to continue making such distributions.

GF 2010-1 depends on the managerial expertise available to the collateral manager and its key personnel.

GF 2010-1 activities are directed by the collateral manager. In our capacity as holder of the Subordinated Notes, we are generally not able to make decisions with respect to the management, disposition or other realization of any investment, or other decisions regarding the business and affairs of GF 2010-1. Consequently, the success of GF 2010-1 will depend, in large part, on the financial and managerial expertise of the collateral manager’s investment professionals. Subject to certain exceptions, any change in the

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investment professionals of the collateral manager will not present grounds for termination of the collateral management agreement. In addition, such investment professionals will not devote all of their professional time to the affairs of GF 2010-1.

GF 2010-1 may issue additional Subordinated Notes.

Under the terms of the Debt Securitization, GF 2010-1 could issue additional Subordinated Notes and use the net proceeds of such issuance to purchase additional portfolio loans. Any such additional issuance, however, would require the consent of the collateral manager and the approval of a majority of the Subordinated Notes. Among the other conditions that must be satisfied in connection with an additional issuance of Subordinated Notes, the aggregate face amount of all additional issuances of Subordinated Notes may not exceed 100% of the original face amount of Subordinated Notes on the closing date; GF 2010-1 must notify each rating agency of such issuance prior to the issuance date; and the terms of the notes to be issued must be identical to the terms of previously issued Subordinated Notes (except that all monies due on such additional Subordinated Notes will accrue from the issue date of such notes and that the prices of such Subordinated Notes do not have to be identical to those of the initial Subordinated Notes). We do not expect to issue additional Subordinated Notes.

The ability to sell investments held by GF 2010-1 is limited.

The indenture governing the notes issued by GF 2010-1 places significant restrictions on the collateral manager’s ability to sell investments, and the collateral manager is required to comply with such restrictions. For example, such investments may not be acquired or disposed of for the primary purpose of recognizing gains or decreasing losses resulting from market value changes. Accordingly, during certain periods or in certain specified circumstances, the collateral manager may be unable to sell the investments or to take other actions which it might consider in our best interests as a result of such restrictions.

Our ability to transfer the Subordinated Notes is limited.

The Subordinated Notes are illiquid investments and subject to extensive transfer restrictions, and no party is under any obligation to make a market for the Subordinated Notes. There is no market for the Subordinated Notes, and we may not be able to sell or otherwise transfer the Subordinated Notes at their fair value, or at all, in the event that we determine to sell them. Since 2007, notes issued in securitization transactions have experienced historically high volatility and significant fluctuations in market value. Additionally, some potential buyers of such notes now view securitization products as an inappropriate investment, thereby reducing the number of potential buyers and/or potentially affecting liquidity in the secondary market.

The Subordinated Notes are not registered under the Securities Act or any state securities laws, and GF 2010-1 has no plans, and is under no obligation, to register the Subordinated Notes under the Securities Act. As a result, the Subordinated Notes are subject to certain transfer restrictions and can only be transferred to certain transferees as described in the indenture relating to such notes. GF 2010-1 may, in the future, impose additional restrictions to comply with changes in applicable law. Such restrictions on the transfer of the Subordinated Notes may further limit their liquidity. In addition, no Subordinated Note (or interests in such notes) may be acquired or owned by any person that is classified for U.S. federal income tax purposes as a disregarded entity (unless the beneficial owner of such person is a corporation that is not a subchapter S corporation or otherwise taxable as a corporation), partnership, subchapter S corporation or grantor trust unless such person obtains a legal opinion to the effect that such acquisition or ownership will not cause GF 2010-1 to be treated as a publicly traded partnership taxable as a corporation.

Blocker subsidiaries utilized by GF 2010-1 in connection with investments will be subject to tax.

To reduce the risk that GF 2010-1 will be engaged in a trade or business in the United States, in certain circumstances set forth in the indenture governing the notes issued by GF 2010-1, certain assets may be owned by one or more blocker subsidiaries wholly-owned by GF 2010-1. Income on such securities or obligations will be subject to U.S. federal income tax, and possibly state and local tax, at regular corporate rates and distributions by such subsidiaries to GF 2010-1 or, in the case of non- U.S. blocker subsidiaries, amounts distributed to the blocker subsidiary, attributable to such income may also be subject to U.S. withholding tax.

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GF 2010-1 is subject to various conflicts of interest involving Deutsche Bank Trust Company Americas.

Deutsche Bank Trust Company Americas is the trustee and collateral agent with respect to the notes issued by GF 2010-1. Various potential and actual conflicts of interest may arise as a result of the investment banking, commercial banking, asset management, financing and financial advisory services and products provided by affiliates of Deutsche Bank Trust Company Americas (collectively, the “Deutsche Bank Companies”) to us and GF 2010-1. When acting as administrative agent, collateral agent or in other service capacities with respect to investments held by GF 2010-1, the Deutsche Bank Companies are entitled to fees and expenses senior in priority to payments to the notes issued by GF 2010-1. In addition, Deutsche Bank Companies may act as trustee for other classes of securities issued by one of our portfolio companies or make or administer loans to such portfolio companies and would owe fiduciary duties to the holders of such other classes of securities, which classes of securities may have differing interests from us, and may take actions that are adverse to us, including restructuring a loan, exercising remedies under a loan, foreclosing on collateral, requiring additional collateral, charging significant fees or placing the obligor in bankruptcy. As a counterparty under swaps and any other derivative agreements, the Deutsche Bank Companies might take actions adverse to the interests of GF 2010-1, including demanding collateralization of its exposure under such agreements (if provided for thereunder) or terminating such swaps or agreements in accordance with the terms thereof. As a result of all such transactions or arrangements between the Deutsche Bank Companies and issuers of investments held by GF 2010-1 or their respective affiliates, the Deutsche Bank Companies may have interests that are contrary to the interests of GF 2010-1’s and the holders of the Secured Notes and the Subordinated Notes.

Since we are using debt to finance our investments under the Debt Securitization, and we may use additional debt financing subsequent to this offering, changes in interest rates may affect our cost of capital and net investment income.

Since we are using debt to finance investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates when we have debt outstanding, our cost of funds will increase, which could reduce our net investment income. We expect that our investments will be financed primarily with equity and long-term debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. These activities may limit our ability to participate in the benefits of lower interest rates with respect to the hedged portfolio. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations.

You should also be aware that a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments. Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee Hurdle Rate and may result in a substantial increase in the amount of incentive fees payable to our investment adviser with respect to Pre-Incentive Fee Net Investment Income.

Because we expect to distribute substantially all of our ordinary income and net realized capital gains to our stockholders, we will need additional capital to finance our growth and such capital may not be available on favorable terms, or at all.

We will need additional capital to fund growth in our investment portfolio once we have fully invested the proceeds of this offering. We may issue debt or equity securities or borrow from financial institutions in order to obtain this additional capital. A reduction in the availability of new capital could limit our ability to grow. We will be required to distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, to our stockholders to maintain our RIC status. As a result, these earnings will not be available to fund new investments. If we fail to obtain additional capital to fund new investments, this could limit our ability to grow, which may have an adverse effect on the value of our securities.

In addition, as a business development company, we are generally required to maintain a ratio of at least 200% of total assets to total borrowings, which may restrict our ability to borrow in certain circumstances.

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We may not replicate the historical results achieved by other entities managed or sponsored by members of our investment committee or by Garrison Investment Group or its affiliates.

Our primary focus in making investments generally differs from that of existing investment funds, accounts or other investment vehicles that are or have been managed by members of our investment committee or sponsored by Garrison Investment Group or its affiliates. In addition, investors in our common stock are not acquiring an interest in any such investment funds, accounts or other investment vehicles that are or have been managed by members of our investment committee or sponsored by Garrison Investment Group or its affiliates. While we may consider co-investing in portfolio investments with other investment funds, accounts or investment vehicles managed by members of the investment committee or sponsored by Garrison Investment Group or its affiliates, our ability to make such investments will be subject to limitations under the 1940 Act, including potentially the prior approval of our independent directors and, in some cases, SEC exemptive relief. We can offer no assurance, however, that we will obtain such approvals or exemptive relief or develop opportunities that comply with such limitations. We also cannot assure you that we will replicate the historical results achieved by members of the investment committee, and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods. Additionally, all or a portion of the prior results may have been achieved in particular market conditions which may never be repeated. Moreover, current or future market volatility and regulatory uncertainty may have an adverse impact on our future performance.

There are significant potential conflicts of interest that could affect our investment returns.

As a result of our arrangements with Garrison Investment Group and our investment committee, there may be times when Garrison Investment Group or such persons have interests that differ from those of our stockholders, giving rise to a conflict of interest.

There may be conflicts related to obligations our investment committee, our investment adviser or its affiliates have to other clients.

The members of our investment committee serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do, or of investment funds managed by our investment adviser or its affiliates, including roles related to the management of GF 2010-1. Similarly, our investment adviser or its affiliates may have other clients with similar, different or competing investment objectives. In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders. For example, the members of our investment committee have, and will continue to have, management responsibilities for other investment funds, accounts or other investment vehicles managed or sponsored by our investment adviser and its affiliates. Our investment objective may overlap with the investment objectives of such affiliated investment funds, accounts or other investment vehicles. As a result, those individuals may face conflicts in the allocation of investment opportunities among us and other investment funds or accounts advised by or affiliated with our investment adviser. Our investment adviser will seek to allocate investment opportunities among eligible accounts in a manner that is fair and equitable over time and consistent with its allocation policy. However, we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or over time. Where we are able to co-invest consistent with the requirements of the 1940 Act, if sufficient securities or loan amounts are available to satisfy our and each such account’s proposed demand, the opportunity will be allocated in accordance with our investment adviser’s pre-transaction determination. If there is an insufficient amount of an investment opportunity to satisfy our demand and that of other accounts sponsored or managed by our investment adviser or its affiliates, the allocation policy further provides that allocations among us and such other accounts will generally be made pro rata based on the amount that each such party would have invested if sufficient loan amounts were available. However, there can be no assurance that we will be able to participate in all suitable investment opportunities. Where we are unable to co-invest consistent with the requirements of the 1940 Act, our investment adviser’s allocation policy provides for investments to be allocated on a rotational basis to assure that all clients have fair and equitable access to such investment opportunities.

GF 2010-1 is subject to various conflicts of interest involving Garrison Investment Group.

In addition, we cannot assure you that the interests of Garrison Investment Group in its role as collateral manager to GF 2010-1 will not conflict with its interests as a counterparty under the Staffing Agreement (and

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indirectly your interests as a stockholder), or that any such conflicts would be resolved in the manner that is most favorable to our stockholders. Any such conflict that is not resolved in our favor could decrease the fair value of the Subordinated Notes, cause us to fail to meet certain requirements under the 1940 Act or otherwise have a material adverse effect on our business, financial condition and results of operations.

Our investment committee, our investment adviser or its affiliates may, from time to time, possess material non-public information, limiting our investment discretion.

Principals of our investment adviser and its affiliates and members of our investment committee may serve as directors of, or in a similar capacity with, companies in which we invest, the securities of which are purchased or sold on our behalf. If we obtain material nonpublic information with respect to such companies, or we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.

Our incentive fee structure may create incentives for our investment adviser that are not fully aligned with the interests of our stockholders and may induce our investment adviser to make speculative investments.

In the course of our investing activities, we will pay management and incentive fees to our investment adviser. The incentive fee payable by us to our investment adviser may create an incentive for our investment adviser to make investments on our behalf that are risky or more speculative than would be the case in the absence of such compensation arrangement. The management fee is based on our gross assets. As a result, investors in our common stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in a lower rate of return than one might achieve through direct investments. Because the management fee is based on our gross assets, our investment adviser will benefit when we incur debt or use leverage. The use of leverage will increase the likelihood of default, which would disfavor the holders of our common stock, including investors in this offering.

Additionally, under the incentive fee structure, our investment adviser may benefit when capital gains are recognized and, because our investment adviser determines when a holding is sold, our investment adviser controls the timing of the recognition of such capital gains. Our board of directors is charged with protecting our interests by monitoring how our investment adviser addresses these and other conflicts of interest associated with its management services and compensation. While they are not expected to review or approve each investment or realization, our independent directors will periodically review our investment adviser’s services and fees as well as its portfolio management decisions and portfolio performance. In connection with these reviews, our independent directors will consider whether such fees and our expenses (including those related to leverage) remain appropriate. As a result of this arrangement, our investment adviser or its affiliates may from time to time have interests that differ from those of our stockholders, giving rise to a conflict.

Unlike that portion of the incentive fee based on income, there is no Hurdle Rate applicable to the incentive fee based on net capital gains. As a result, our investment adviser may seek to invest more capital in investments that are likely to result in capital gains as compared to income producing securities. This practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.

The valuation process for certain of our portfolio holdings creates a conflict of interest.

Many of our portfolio investments are expected to be made in the form of securities that are not publicly traded. As a result, our board of directors will determine the fair value of these securities in good faith as described elsewhere in this prospectus. In connection with that determination, investment professionals from our investment adviser will provide our board of directors with portfolio company valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company. In addition, certain members of our board of directors, including Messrs. Tansey and Stuart, have an indirect pecuniary interest in our investment adviser. The participation of our investment adviser’s investment professionals in our valuation process, and the indirect pecuniary interest in our investment adviser by certain members of our board of directors, could result in a conflict of interest as the management fee paid to our investment adviser is based, in part, on our gross assets.

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Conflicts related to other arrangements with our investment adviser or its affiliates.

We have entered into a license agreement with Garrison Investment Group under which Garrison Investment Group has agreed to grant us a non-exclusive, royalty-free license to use the name “Garrison”. See “The Adviser and the Administrator — License Agreement.” In addition, we will pay to Garrison Capital Administrator our allocable portion of overhead and other expenses incurred by Garrison Capital Administrator in performing its obligations under the Administration Agreement, such as rent and our allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs. This will create conflicts of interest that our board of directors must monitor.

The Investment Advisory Agreement with Garrison Capital Advisers, the Administration Agreement with Garrison Capital Administrator and the collateral management agreement between GF 2010-1 and Garrison Investment Group were not negotiated on an arm’s length basis and may not be as favorable to us as if they had been negotiated with an unaffiliated third party.

The Investment Advisory Agreement, the Administration Agreement and the collateral management agreement were negotiated between related parties. Consequently, their terms, including fees payable to our investment adviser, may not be as favorable to us as if they had been negotiated with an unaffiliated third party. In addition, we may choose not to enforce, or to enforce less vigorously, our rights and remedies under these agreements because of our desire to maintain our ongoing relationship with our investment adviser, our administrator, the collateral manager and their respective affiliates. Any such decision, however, would breach our fiduciary obligations to our stockholders.

Our ability to enter into transactions with our affiliates will be restricted, which may limit the scope of investments available to us.

We are prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our independent directors and, in some cases, of the SEC. Any person that owns, directly or indirectly, five percent or more of our outstanding voting securities will be our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any security from or to, or entering into certain “joint” transactions (which could include investments in the same portfolio company) with such affiliates, absent the prior approval of our independent directors. Our investment adviser and its affiliates, including persons that control, or are under common control with, us or our investment adviser, are also considered to be our affiliates under the 1940 Act, and we are generally prohibited from buying or selling any security from or to, or entering into “joint” transactions with such affiliates without prior approval of our independent directors and, in some cases, exemptive relief from the SEC.

We may, however, invest alongside our investment adviser’s, and its affiliates’ other clients in certain circumstances where doing so is consistent with applicable law and SEC staff interpretations. For example, we may invest alongside such accounts consistent with guidance promulgated by the staff of the SEC permitting us and such other accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that our investment adviser, acting on our behalf and on behalf of other clients, negotiates no term other than price. We may also invest alongside our investment adviser’s other clients as otherwise permissible under regulatory guidance, applicable regulations and the allocation policy of Garrison Investment Group and our investment adviser. Under this allocation policy, a fixed calculation, based on the type of investment, will be applied to determine the amount of each opportunity to be allocated to us. This allocation policy will be periodically reviewed by our investment adviser and approved by our independent directors. We expect that these determinations will be made similarly for other accounts sponsored or managed by our investment adviser and its affiliates. If sufficient securities or loan amounts are available to satisfy our and each such account’s proposed demand, we expect that the opportunity will be allocated in accordance with our investment adviser’s pre-transaction determination. Where there is an insufficient amount of an investment opportunity to satisfy us and other accounts sponsored or managed by our investment adviser or its affiliates, the allocation policy further provides that allocations among us and such other accounts will generally be made pro rata based on the amount that each such party would have invested if sufficient securities or loan amounts were available. However, we can offer no assurance that investment opportunities will be allocated to us fairly or equitably in the short-term or over time.

In situations where co-investment with other accounts managed by our investment adviser or its affiliates is not permitted or appropriate, Garrison Investment Group and our investment adviser will need to decide

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which client will proceed with the investment. Our investment adviser’s allocation policy provides, in such circumstances, for investments to be allocated on a rotational basis to assure that all clients have fair and equitable access to such investment opportunities. Moreover, except in certain circumstances, we will be unable to invest in any issuer in which a fund managed by our investment adviser or its affiliates has previously invested. Similar restrictions limit our ability to transact business with our officers or directors or their affiliates. These restrictions may limit the scope of investment opportunities that would otherwise be available to us.

We will be exposed to risks associated with changes in interest rates.

Interest rate fluctuations may have a substantial negative impact on our investments, the value of our common stock and our rate of return on invested capital. A reduction in the interest rates on new investments relative to interest rates on current investments could also have an adverse impact on our net investment income. An increase in interest rates could decrease the value of any investments we hold which earn fixed interest rates and also could increase our interest expense, thereby decreasing our net income. Also, an increase in interest rates available to investors could make investment in our common stock less attractive if we are not able to increase our dividend rate, which could reduce the market value of our common stock.

Many of our portfolio investments will be recorded at fair value as determined in good faith by our board of directors. As a result, there will be uncertainty as to the value of our portfolio investments.

Many of our portfolio investments will take the form of securities that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable, and we value these securities at fair value as determined in good faith by our board of directors, including to reflect significant events affecting the value of our securities. As discussed in more detail under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies,” most, if not all, of our investments (other than cash and cash equivalents) are classified as Level 3 under Accounting Standards Codification, or ASC, Topic 820, Fair Value Measurement. This means that our portfolio valuations are based on unobservable inputs and our own assumptions about how market participants would price the asset or liability in question. Inputs into the determination of fair value of our portfolio investments requires significant management judgment or estimation. Even if observable market data are available, such information may be the result of consensus pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information. We have retained the services of one or more independent service providers to review the valuation of these securities. The types of factors that the board of directors may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly traded securities including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.

We adjust quarterly the valuation of our portfolio to reflect our board of directors’ determination of the fair value of each investment in our portfolio. Any changes in fair value are recorded in our consolidated statement of operations as net change in unrealized appreciation or depreciation.

The lack of liquidity in our investments may adversely affect our business.

We will generally make investments in private companies. Substantially all of these investments will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. In addition, we may face other

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restrictions on our ability to liquidate an investment in a portfolio company to the extent that we have material non-public information regarding such portfolio company.

Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments, reducing our net asset value through increased net unrealized depreciation.

As a business development company, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by our board of directors under our valuation policy and process. As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments:

When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation. We record decreases in the market values or fair values of our investments as unrealized depreciation. Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized depreciation in our portfolio. The effect of all of these factors on our portfolio may reduce our net asset value by increasing net unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have not yet identified the investments we will acquire using the proceeds of this offering.

While we currently hold a portfolio of investments directly and through GF 2010-1, we have not yet identified additional potential investments for our portfolio that we will acquire with the proceeds of this offering and the Concurrent Private Placement. Privately negotiated investments in illiquid securities or loans to private middle-market companies require substantial due diligence and structuring, and we cannot assure you that we will achieve our anticipated investment pace. As a result, you will be unable to evaluate any future investments prior to purchasing our shares of common stock. Additionally, our investment adviser will select our investments subsequent to the closing of this offering, and our stockholders will have no input with respect to such investment decisions. These factors increase the uncertainty, and thus the risk, of investing in our common stock.

During this period, we will invest these amounts in cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less from the date of investment. We expect these temporary investments to earn yields substantially lower than the income that we expect to receive in respect of investments in first lien, second lien, unitranche and mezzanine loans and equity securities. As a result, any distributions we make during this period may be substantially smaller than the distributions that we expect to pay when our portfolio is fully invested.

We may experience fluctuations in our quarterly results.

We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt securities we acquire, the default rate on such securities, the level of our expenses, variations in, and the timing of the recognition of, realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

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Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.

We and our portfolio companies will be subject to regulation at the local, state and federal level. We are also subject to federal, state and local laws and regulations and are subject to judicial and administrative decisions that affect our operations, including maximum interest rates, fees and other charges, disclosures to portfolio companies, the terms of secured transactions, collection and foreclosure proceedings and other trade practices. If these laws, regulations or decisions change, or if we expand our business into additional jurisdictions, we may have to incur significant expenses in order to comply or we might have to restrict our operations. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we or our portfolio companies are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect. In particular, on July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, became law. The scope of the Dodd-Frank Act impacts many aspects of the financial services industry, and it requires the development and adoption of many implementing regulations over the next several years. The effects of the Dodd-Frank Act on the financial services industry will depend, in large part, upon the extent to which regulators exercise the authority granted to them and the approaches taken in implementing regulations. We have begun to assess the potential impact of the Dodd-Frank Act on our business and operations, but at this early stage, the likely impact cannot be ascertained with any degree of certainty. In addition, if we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of our business and may be subject to civil fines and criminal penalties.

Additionally, changes to the laws and regulations governing our operations related to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth in this prospectus and may shift our investment focus from the areas of expertise of our investment adviser to other types of investments in which our investment adviser may have little or no expertise or experience. Any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.

Our board of directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval.

Our board of directors has the authority to modify or waive certain of our operating policies and strategies without prior notice and without stockholder approval (except as required by the 1940 Act). However, absent stockholder approval, we may not change the nature of our business so as to cease to be, or withdraw our election as, a business development company. We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results and value of our stock. Nevertheless, the effects of any such changes may adversely affect our business and impact our ability to make distributions.

Risks Related to our Investments

Our investments may be risky, and you could lose all or part of your investment.

We intend to invest primarily in (1) first lien senior secured loans, (2) second lien senior secured loans, (3) “one-stop” senior secured or “unitranche” loans, (4) subordinated or mezzanine loans and (5), to a lesser extent, selected equity co-investments in middle-market companies.

Secured Loans.   When we extend first lien senior secured, second lien senior secured and unitranche loans, we will generally take a security interest in the available assets of these portfolio companies, including the equity interests of their subsidiaries. We expect this security interest to help mitigate the risk that we will not be repaid. However, there is a risk that the collateral securing our loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the portfolio company to raise additional capital. Also, in the case of first lien loans, our lien may be subordinated to claims of other creditors and, in the case of second lien loans, our lien will be subordinated to claims of other creditors. In addition, deterioration in a portfolio company’s financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the

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loan. Consequently, the fact that a loan is secured does not guarantee that we will receive principal and interest payments according to the loan’s terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies.

Mezzanine Loans.   Our mezzanine investments will generally be subordinated to senior loans and will generally be unsecured. This may result in an above average amount of risk and volatility or a loss of principal. These investments may involve additional risks that could adversely affect our investment returns. To the extent interest payments associated with such debt are deferred, such debt may be subject to greater fluctuations in valuations, and such debt could subject us and our stockholders to non-cash income as described above under “We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income.” Since we will not receive any substantial repayments of principal prior to the maturity of our mezzanine debt investments, such investments are riskier than amortizing loans.

Equity Investments.   We expect to make selected equity investments. In addition, when we invest in first lien, second lien, unitranche or mezzanine loans, we may acquire warrants to purchase equity securities. Our goal is ultimately to dispose of these equity interests and realize gains upon our disposition of such interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

We are subject to risks associated with middle-market companies.

Investing in middle-market companies involves a number of significant risks, including:

We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.

We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. To the extent that we assume large positions in the securities of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market’s assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. Beyond

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the asset diversification requirements associated with our qualification as a RIC under the Code and the requirements under the documents governing the Debt Securitization, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies.

Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry.

Our portfolio may be concentrated in a limited number of portfolio companies and industries. Beyond the asset diversification requirements associated with our qualification as a RIC under the Code and the requirements of the documents governing the Debt Securitization, we do not have fixed guidelines for diversification. As a result, the aggregate returns we realize may be significantly adversely affected if a small number of investments perform poorly or if we need to write down the value of any one investment. Additionally, while we are not targeting any specific industries, our investments may be concentrated in relatively few industries. As a result, a downturn in any particular industry in which we are invested could also significantly impact the aggregate returns we realize.

We may hold the debt securities of leveraged companies that may, due to the significant volatility of such companies, enter into bankruptcy proceedings.

Leveraged companies may experience bankruptcy or similar financial distress. The bankruptcy process has a number of significant inherent risks. Many events in a bankruptcy proceeding are the product of contested matters and adversary proceedings and are beyond the control of the creditors. A bankruptcy filing by an issuer may adversely and permanently affect the issuer. If the proceeding is converted to a liquidation, the value of the issuer may not equal the liquidation value that was believed to exist at the time of our investment. The duration of a bankruptcy proceeding is also difficult to predict, and a creditor’s return on investment can be adversely affected by delays until a plan of reorganization or liquidation ultimately becomes effective. The administrative costs in connection with a bankruptcy proceeding are frequently high and would be paid out of the debtor’s estate prior to any return to creditors. Because the standards for classification of claims under bankruptcy law are vague, our influence with respect to the class of securities or other obligations we own may be lost by increases in the number and amount of claims in the same class or by different classification and treatment. In the early stages of the bankruptcy process, it is often difficult to estimate the extent of, or even to identify, any contingent claims that might be made. In addition, certain claims that have priority by law (for example, claims for taxes) may be substantial, eroding the value of any recovery by holders of other securities of the bankrupt entity.

Depending on the facts and circumstances of our investments and the extent of our involvement in the management of a portfolio company, upon the bankruptcy of a portfolio company, a bankruptcy court may recharacterize our debt investments as equity interests and subordinate all or a portion of our claim to that of other creditors. This could occur even though we may have structured our investment as senior debt.

Economic recessions or downturns could impair the ability of our portfolio companies to repay loan and increase our costs, which, in turn, could increase our non-performing assets, decrease the value of our portfolio, reduce our volume of new loans and otherwise harm our operating results.

The U.S. economy and that of most other countries have recently been in a recessionary period. Many of our portfolio companies may be susceptible to economic slowdowns or recessions and may be unable to repay our loans during these periods. Therefore, our non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods. Adverse economic conditions also may decrease the value of collateral securing some of our loans and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could 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 could prevent us from making new investments, increase credit losses and harm our operating results, which could have an adverse effect on our results of operations.

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We may be subject to risks associated with syndicated loans.

As of the date of this prospectus, our investments consist primarily of syndicated loans. Under the documentation for such loans, a financial institution or other entity typically is designated as the administrative agent and/or collateral agent. This agent is granted a lien on any collateral on behalf of the other lenders and distributes payments on the indebtedness as they are received. The agent is the party responsible for administering and enforcing the loan and generally may take actions only in accordance with the instructions of a majority or two-thirds in commitments and/or principal amount of the associated indebtedness. In most cases, we do not expect to hold a sufficient amount of the indebtedness to be able to compel any actions by the agent. For example, in many cases, the investments held by GF 2010-1 represent less than the amount of associated indebtedness sufficient to compel such actions or represent subordinated debt which is precluded from acting and, consequently, GF 2010-1 would only be able to direct such actions if instructions from GF 2010-1 were made in conjunction with other holders of associated indebtedness that together with GF 2010-1 compose the requisite percentage of the related indebtedness then entitled to take action. Conversely, if holders of the required amount of the associated indebtedness other than GF 2010-1 desire to take certain actions, such actions may be taken even if GF 2010-1 did not support such actions. Furthermore, if an investment is subordinated to one or more senior loans made to the applicable obligor, the ability of GF 2010-1 to exercise such rights may be subordinated to the exercise of such rights by the senior lenders. Accordingly, we may be precluded from directing such actions unless we act together with other holders of the indebtedness. If we are unable to direct such actions, we cannot assure you that the actions taken will be in our best interests.

If an investment is a syndicated revolving loan or delayed drawdown loan, other lenders may fail to satisfy their full contractual funding commitments for such loan, which could create a breach of contract, result in a lawsuit by the obligor against the lenders and adversely affect the fair market value of our investment.

There is a risk that a loan agent may become bankrupt or insolvent. Such an event would delay, and possibly impair, any enforcement actions undertaken by holders of the associated indebtedness, including attempts to realize upon the collateral securing the associated indebtedness and/or direct the agent to take actions against the related obligor or the collateral securing the associated indebtedness and actions to realize on proceeds of payments made by obligors that are in the possession or control of any other financial institution. In addition, we may be unable to remove the agent in circumstances in which removal would be in our best interests. Moreover, agented loans typically allow for the agent to resign with certain advance notice.

We may not realize gains from our equity investments.

When we invest in mezzanine loans or senior secured loans, we may also invest in the equity securities of the borrower or acquire warrants or other equity securities as well. In addition, we may invest directly in the equity securities of portfolio companies. Our goal is ultimately to dispose of such equity interests and realize gains upon our disposition of such interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not realize gains from our equity interests, and any gains that we do realize on the disposition of such equity interests may not be sufficient to offset any other losses we experience.

Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio, and our ability to make follow-on investments in certain portfolio companies may be restricted.

Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments, in order to:

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We will have the discretion to make any follow-on investments, subject to the availability of capital resources, the limitations of the 1940 Act and the requirements associated with our status as a RIC. We may elect not to make follow-on investments or otherwise lack sufficient funds to make those investments. The failure to make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful operation. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we do not want to increase our exposure to the portfolio company, because we prefer other opportunities or because we are inhibited by compliance with business development company requirements or the desire to maintain our tax status.

Because we will generally not hold controlling equity interests in our portfolio companies, we will not be in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.

Although we may do so in the future, we do not currently anticipate taking controlling equity positions in our portfolio companies. In addition, we may not be in a position to control any portfolio company by investing in its debt securities. As a result, we will be subject to the risk that a portfolio company may make business decisions with which we disagree, and the stockholders and management of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity for the debt and equity investments that we will typically hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company, and we may therefore suffer a decrease in the value of our investments.

Defaults by our portfolio companies will harm our operating results.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its assets. This could trigger cross-defaults under other agreements and jeopardize such portfolio company’s ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.

Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.

We generally intend to invest a portion of our capital in first lien, second lien and unitranche loans and, to a lesser extent, mezzanine loans and equity securities of U.S. middle-market companies. The portfolio companies usually have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in which we invest. By their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying senior creditors, the portfolio company may not have sufficient assets to use for repaying its obligation to us in full, or at all. In the case of debt ranking equally with debt securities in which we invest, we would have to share any distributions on an equal and ratable basis with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

Additionally, certain loans that we make to portfolio companies may be secured on a second-priority basis by the same collateral securing senior secured debt of such companies. The first-priority liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by the portfolio company under the agreements governing the loans. The holders of obligations secured by first-priority liens on the collateral will generally control the liquidation of, and be entitled to receive proceeds from, any realization of the collateral to repay their obligations in full before us.

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In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second-priority liens after payment in full of all obligations secured by the first-priority liens on the collateral. If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second-priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio company’s remaining assets, if any.

The rights we may have with respect to the collateral securing the loans we make to our portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the holders of such senior debt. Under a typical intercreditor agreement, at any time that obligations that have the benefit of the first-priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first-priority liens:

We may not have the ability to control or direct such actions, even if our rights are adversely affected.

We may also make unsecured loans to portfolio companies, meaning that such loans will not benefit from any interest in the assets of such companies. Liens on such portfolio companies’ assets, if any, will secure the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that is permitted to be incurred by the portfolio company under its secured loan agreements. The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before us. In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured obligations after payment in full of all secured loan obligations. If such proceeds were not sufficient to repay the outstanding secured loan obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the portfolio company’s remaining assets, if any.

Our investment adviser’s liability will be limited under the Investment Advisory Agreement, and we have agreed to indemnify our investment adviser against certain liabilities, which may lead our investment adviser to act in a riskier manner on our behalf than it would when acting for its own account.

Under the Investment Advisory Agreement, our investment adviser will not assume any responsibility to us other than to render the services called for under that agreement, and it will not be responsible for any action of our board of directors in following or declining to follow our investment adviser’s advice or recommendations. Our investment adviser maintains a contractual, as opposed to a fiduciary, relationship with us. Under the terms of the Investment Advisory Agreement, our investment adviser, its officers, members, personnel, any person controlling or controlled by our investment adviser will not be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts constituting gross negligence, willful misconduct, bad faith or reckless disregard of our investment adviser’s duties under the Investment Advisory Agreement. In addition, we have agreed to indemnify our investment adviser and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Investment Advisory Agreement, except where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person’s duties under the Investment

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Advisory Agreement. These protections may lead our investment adviser to act in a riskier manner when acting on our behalf than it would when acting for its own account.

Our investment adviser may be paid incentive compensation even if we incur a net loss, and we cannot recover any portion of the incentive fee previously paid.

Our investment adviser is entitled to incentive compensation for each fiscal quarter in an amount equal to a percentage of our Pre-Incentive Fee Net Investment Income, subject to the Hurdle Rate and a catch-up provision. Our Pre-Incentive Fee Net Investment Income excludes realized and unrealized capital losses that we may incur in the fiscal quarter, even if such capital losses result in a net loss for that quarter. Thus, we may be required to pay our investment adviser incentive compensation for a fiscal quarter even if we incur a net loss. In addition, if we pay the capital gains portion of the incentive fee and thereafter experience additional realized capital losses or unrealized capital depreciation, we will not be able to recover any portion of the incentive fee previously paid.

We may not be approved for a Small Business Investment Company license

An affiliate of Garrison Investment Group intends to apply for a license to form a Small Business Investment Company, or SBIC. If the application is approved and the Small Business Administration, or SBA, so permits, the SBIC license will be transferred to a wholly-owned subsidiary of ours. Following such transfer, the SBIC subsidiary will be allowed to issue SBA-guaranteed debentures, subject to the required capitalization of the SBIC subsidiary. SBA guaranteed debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt. We cannot assure you that Garrison Investment Group will be successful in receiving an SBIC license from the SBA or that the SBA will permit such license to be transferred to us. If we do receive an SBIC license, there is no minimum amount of SBA-guaranteed debentures that must be allocated to us.

Our portfolio companies may prepay loans, which prepayment may reduce our yields if capital returned cannot be invested in transactions with equal or greater expected yields.

The loans in our investment portfolio generally are prepayable at any time, most of them at no premium to par. It is not clear at this time when each loan may be prepaid. Whether a loan is prepaid will depend both on the continued positive performance of the portfolio company and the existence of favorable financing market conditions that allow such company the ability to replace existing financing with less expensive capital. As market conditions change frequently, it is unknown when, and if, this may be possible for each portfolio company. In the case of some of these loans, having the loan prepaid may reduce the achievable yield for us if the capital returned cannot be invested in transactions with equal or greater expected yields, which could have a material adverse effect on our business, financial condition and results of operations.

The disposition of our investments may result in contingent liabilities.

We currently expect that a significant portion of our investments will involve private securities. In connection with the disposition of an investment in private securities, we may be required to make representations about the business and financial affairs of the portfolio company typical of those made in connection with the sale of a business. We may also be required to indemnify the purchasers of such investment to the extent that any such representations turn out to be inaccurate or with respect to certain potential liabilities. These arrangements may result in contingent liabilities that ultimately yield funding obligations that must be satisfied through our return of certain distributions previously made to us.

We may expose ourselves to risks if we engage in hedging transactions.

If we engage in hedging transactions, we may expose ourselves to risks associated with such transactions. We may borrow under a credit facility in currencies selected to minimize our foreign currency exposure or use instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the values of our portfolio positions caused by these risks does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline for other reasons. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. Moreover, it may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.

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While we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not related to currency fluctuations.

Provisions of the General Corporation Law of the State of Delaware and our certificate of incorporation and bylaws could deter takeover attempts and have an adverse effect on the price of our common stock.

The General Corporation Law of the State of Delaware, or the DGCL, contains provisions that may discourage, delay or make more difficult a change in control of us or the removal of our directors. Our certificate of incorporation and bylaws contain provisions that limit liability and provide for indemnification of our directors and officers. These provisions and others also may have the effect of deterring hostile takeovers or delaying changes in control or management. We are subject to Section 203 of the DGCL, the application of which is subject to any applicable requirements of the 1940 Act. This section generally prohibits us from engaging in mergers and other business combinations with stockholders that beneficially own 15% or more of our voting stock, or with their affiliates, unless our directors or stockholders approve the business combination in the prescribed manner. Our board of directors will adopt a resolution exempting from Section 203 of the DGCL any business combination between us and any other person, subject to prior approval of such business combination by our board of directors, including approval by a majority of our directors who are not “interested persons.” If the resolution exempting business combinations is repealed or our board of directors does not approve a business combination, Section 203 of the DGCL may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.

We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our certificate of incorporation classifying our board of directors in three classes serving staggered three-year terms, and provisions of our certificate of incorporation authorizing our board of directors to classify or reclassify shares of our preferred stock in one or more classes or series, to cause the issuance of additional shares of our stock, and to amend our certificate of incorporation, without stockholder approval, to increase or decrease the number of shares of stock that we have authority to issue. These provisions, as well as other provisions of our certificate of incorporation and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders.

Our investment adviser can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

Our investment adviser has the right, under the Investment Advisory Agreement, to resign at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. If our investment adviser resigns, we may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our shares may decline. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by our investment adviser and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.

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Garrison Capital Administrator can resign from its role as our Administrator under the Administration Agreement, and we may not be able to find a suitable replacement, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

Garrison Capital Administrator has the right to resign under the Administration Agreement, whether we have found a replacement or not. If Garrison Capital Administrator resigns, we may not be able to find a new administrator or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our shares may decline. In addition, the coordination of our internal management and administrative activities is likely to suffer if we are unable to identify and reach an agreement with a service provider or individuals with the expertise possessed by Garrison Capital Administrator. Even if we are able to retain a comparable service provider or individuals to perform such services, whether internal or external, their integration into our business and lack of familiarity with our operations may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.

Investments in securities of foreign companies, if any, may involve significant risks in addition to the risks inherent in U.S. investments.

We may make investments in securities of foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

In addition, any investments that we make that are denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments. We may employ hedging techniques to minimize these risks, but we can offer no assurance that we will, in fact, hedge currency risk, or, that if we do, such strategies will be effective.

We will incur significant costs as a result of being a publicly traded company.

As a publicly traded company, we will incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange Act as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and other rules implemented by the SEC.

Efforts to comply with Section 404 of the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with Section 404 of the Sarbanes-Oxley Act may adversely affect us and the market price of our common stock.

Under current SEC rules, beginning with our fiscal year ending September 30, 2012, we will be required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, and related rules and regulations of the SEC. We will be required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in our internal control over financial reporting.

As a result, we expect to incur additional expenses in the near term that may negatively impact our financial performance and our ability to make distributions. This process also will result in a diversion of management’s time and attention. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations, and we may not be able to ensure that the process is effective or that our internal control over financial reporting is or will be effective in a timely manner. In the event that we are unable to maintain or achieve compliance with Section 404 of the Sarbanes-Oxley Act and related rules, we and the market price of our common stock may be adversely affected.

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Risks Relating to this Offering

We cannot assure you that we will be able to deploy the proceeds of our initial public offering and the Concurrent Private Placement within the timeframe we have contemplated.

We anticipate that approximately $      million of the net proceeds of our initial public offering (after expenses of the offering of approximately $      million) and the Concurrent Private Placement will be invested in portfolio companies in accordance with our investment objective and the strategies described in this prospectus within six to 12 months of the closing of this offering. We cannot assure you, however, that we will be able to locate a sufficient number of suitable investment opportunities to allow us to deploy those proceeds successfully in that timeframe. To the extent we are unable to invest those proceeds within our contemplated timeframe after the completion of our initial public offering, our investment income and, in turn, our results of operations, will likely be materially adversely affected. Delays in investing the proceeds of this offering may cause us to underperform other investment vehicles pursuing similar strategies.

There is a risk that you may not receive distributions or that our distributions may not grow over time.

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 or year-to-year increases in cash distributions. In addition, due to the asset coverage test applicable to us as a business development company, we may be limited in our ability to make distributions. Finally, if more stockholders opt to receive cash dividends and other distributions rather than participate in our dividend reinvestment plan, we may be forced to liquidate some of our investments and raise cash in order to make distribution payments. All distributions will be paid at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our RIC status, compliance with applicable business development company regulations and such other factors as our board of directors may deem relevant from time to time. We cannot assure you that we will pay distributions to our stockholders in the future.

Investing in our shares may involve an above average degree of risk and is intended for long-term investors.

The investments we make in accordance with our investment objective and strategies may result in a higher amount of risk than alternative investment options and volatility or loss of principal. Our investments in portfolio companies may be highly speculative and aggressive, and therefore, an investment in our shares may not be suitable for someone with lower risk tolerance. In addition, our common stock is intended for long-term investors and should not be treated as a trading vehicle. Our shares may trade at a price that is less than the offering price. This risk may be greater for investors who sell their shares in a relatively short period of time after completion of this offering.

The market price of our common stock may fluctuate significantly.

The market price and liquidity of the market for shares of our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

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We may allocate the net proceeds from this offering in ways with which you may not agree.

We will have significant flexibility in investing the net proceeds of this offering. Accordingly, we may use the net proceeds from this offering in ways with which you may not agree or for purposes other than those contemplated at the time of the offering.

Prior to this offering, there has been no public market for our common stock, and we cannot assure you that the market price of our shares will not decline following the offering.

We cannot assure you that a trading market will develop for our common stock after this offering or, if one develops, that such trading market can be sustained. Shares of companies offered in an initial public offering often trade at a discount to the initial offering price due to underwriting discounts and related offering expenses. Also, shares of closed-end investment companies, including business development companies, frequently trade at a discount from net asset value. This characteristic of closed-end investment companies is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our common stock will trade at, above or below net asset value.

Investors in this offering will suffer immediate dilution upon the closing of this offering.

After giving effect to the underwriting discount for this offering of $    per share and offering and organizational expenses of $    per share, upon the completion of this offering, taking into account the         shares to be issued in the Concurrent Private Placement, our net asset value per share is estimated to be approximately $    per share, compared to a price of $    per share in this offering. Accordingly, investors purchasing shares in this offering will pay a price per share of common stock that exceeds the estimated net asset value per share of common stock after this offering by $    and will bear the costs of the underwriting discount and, indirectly, other offering and organizational expenses.

Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.

Upon completion of this offering and the Concurrent Private Placement, we will have         shares of common stock outstanding (or        shares of common stock if the underwriters’ over-allotment option is fully exercised). Following this offering, sales of substantial amounts of our common stock or the availability of such shares for sale, could adversely affect the prevailing market prices for our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of equity securities should we desire to do so.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this prospectus involve risks and uncertainties, including statements as to:

We use words such as “anticipates,” “believes,” “expects,” “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and elsewhere in this prospectus.

We have based the forward-looking statements included in this prospectus on information available to us on the date of this prospectus, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

You should understand that under Sections 27A(b)(2)(B) and (D) of the Securities Act and Sections 21E(b)(2)(B) and (D) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to statements made in connection with this offering or any periodic reports we file under the Exchange Act.

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USE OF PROCEEDS

We estimate that the net proceeds we will receive from the sale of shares of our common stock in this offering will be approximately $     million (or approximately $     million if the underwriters fully exercise their over-allotment option). This assumes, in each case, an initial public offering price of $     per share, after deducting the underwriting discounts and commissions and estimated offering expenses of approximately $     payable by us. The amount of net proceeds may be more or less than the amount described in this prospectus depending on the public offering price of the common stock and the actual number of shares of common stock we sell in the offering, both of which will be determined at pricing. We may change the size of this offering based on demand and market conditions.

Separately, immediately prior to the closing of this offering, we expect to sell     shares of common stock to our directors and officers, our investment adviser and the managers of our investment adviser at a price of $     per share of $     in a private placement. We will receive the full proceeds of this private placement, and no underwriting discounts or commissions will be paid in respect of these shares.

We plan to invest the net proceeds of this offering and the Concurrent Private Placement in accordance with our investment objective and strategies described in this prospectus and for general corporate purposes, including payment of operating expenses. We anticipate that substantially all of the net proceeds of this offering and the Concurrent Private Placement will be invested within six to 12 months of the closing of this offering, in accordance with our investment objective and strategies, depending on the availability of appropriate investment opportunities and market conditions. We cannot assure you we will achieve our targeted investment pace.

Pending these investments, we intend to invest the remaining net proceeds of this offering and the Concurrent Private Placement primarily in cash, cash equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less from the date of investment. These securities may have lower yields than our other investments and, accordingly, may result in lower distributions, if any, during such period. See “Regulation — Temporary Investments” for additional information about temporary investments we may make while waiting to make longer-term investments in pursuit of our investment objective.

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DISTRIBUTIONS

We intend to make quarterly distributions to our stockholders. The timing and amount of our quarterly distributions, if any, will be determined by our board of directors. Any distributions to our stockholders will be declared out of assets legally available for distribution.

Our board of directors intends to declare a distribution of approximately $     per share, payable at or near the end of the     calendar quarter of 2011. This distribution is contingent upon the completion of this offering during the     calendar quarter of 2011. The amount of any such distribution will be proportionately reduced to reflect the number of days remaining in the quarter after the completion of this offering. Purchasers in this offering will be entitled to receive this distribution. We anticipate that this distribution will be paid from income primarily generated by interest and dividend income earned on our investment portfolio. The specific tax characteristics of our distributions each year will be reported to stockholders after the end of the calendar year.

We intend to elect to be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code. To obtain RIC tax benefits, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute during each calendar year an amount at least equal to the sum of (1) 98% of our ordinary income for the calendar year, (2) 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 (3) any ordinary income and net capital gains for preceding years that were not distributed during such years on which we paid no U.S. federal income tax.

In addition, although we currently intend to distribute realized net capital gains ( i.e. , net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment. In such event, the consequences of our retention of net capital gains are as described under “Tax Matters.”

We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

We intend to maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a dividend or other distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions. See “Dividend Reinvestment Plan.”

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CAPITALIZATION

The following table sets forth:

		As of December 31, 2010
		Garrison Capital LLC				Garrison Capital Inc.
		Actual				Pro Forma (1)				Pro Forma as Adjusted (2)
						(Unaudited)
		(dollars in thousands except per unit and per share data)
Assets:
Cash and cash equivalents		$	101,354			$				$
Investments at fair value			283,828
Other assets			7,150
Total assets		$	392,332			$				$
Liabilities:
Secured Notes		$	218,304			$				$
Other liabilities			13,795
Unitholders’ Equity:
Total members’ capital (3)		$	160,233				—				—
Members’ capital per unit		$	14.96				—				—
Stockholders’ equity:
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 0 shares issued and outstanding, actual; shares issued and outstanding, pro forma; and shares issued and outstanding, pro forma as adjusted			—			$				$
Capital in excess of par			—
Total stockholders’ equity			—
Pro forma net asset value per share			—

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DILUTION

The dilution to investors in this offering is represented by the difference between the offering price per share and the pro forma net asset value per share after this offering. Net asset value per share is determined by dividing our net asset value, which is our total tangible assets less total liabilities, by the number of outstanding shares of common stock.

As of December 31, 2010, we had 10,707,221 limited liability company interests outstanding, and our net asset value was $160.2 million, or approximately $     per share of common stock (giving pro forma effect to the Pre-Conversion Payment and the BDC Conversion). The effective cash contribution of our investment adviser for the shares it received in connection with the Pre-Conversion Payment was $   per share. After giving effect to the sale of the shares to be sold in this offering and the deduction of discounts and estimated expenses of this offering and the Concurrent Private Placement, our pro forma net asset value would have been approximately $     million, or $     per share, representing an immediate decrease in net asset value of $     per share, or     %, to shares sold in this offering.

The following table illustrates the dilution to the shares on a per share basis:

Assumed initial public offering price per share		$
Net asset value upon completion of the Pre-Conversion Payment and BDC Conversion		$
Increase in net asset value attributable to this offering and the Concurrent Private Placement		$
Pro forma net asset value after this offering and the Concurrent Private Placement		$
Dilution to new stockholders (without exercise of the over-allotment option)		$

The following table sets forth information with respect to the shares prior to and following this offering and the Concurrent Private Placement (without exercise of the underwriters’ over-allotment option):

		Shares Purchased								Total Consideration								Average Price Per Share
		Number				%				Amount				%
Shares outstanding upon completion of the Pre-Conversion Payment and the BDC Conversion							%								%
Shares to be sold in this offering							%								%
Shares to be sold in the Concurrent Private Placement							%								%
Total							100.0	%							100.0	%

The pro forma net asset value upon completion of this offering and the Concurrent Private Placement is calculated as follows:

Numerator:
Net asset value upon completion of the Pre-Conversion Payment and BDC Conversion		$
Assumed proceeds from this offering and the Concurrent Private Placement (after deduction of underwriting discounts and commissions and offering expenses payable by us)		$
Net Asset value upon completion of this offering and the Concurrent Private Placement		$
Denominator:
Shares outstanding upon completion of the Pre-Conversion Payment and the BDC Conversion
Shares included in this offering and the Concurrent Private Placement

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SELECTED FINANCIAL AND OTHER INFORMATION

The selected financial and other information below should be read in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto. Financial information at December 31, 2010 and for the period from December 17, 2010 (commencement of operations) to December 31, 2010 has been derived from our financial statements that were audited by Ernst & Young LLP, an independent registered public accounting firm.

		Period from December 17, 2010 (commencement of operations) through December 31, 2010
		(dollars in thousands)
Income statement data:
Net investment loss		$	375
Total expenses			375
Other data:
Weighted average yield (1)			7.32	%
Number of portfolio companies at period end			74

		At December 31, 2010
		(dollars in thousands except per unit data)
Balance sheet data:
Investments, fair value		$	283,828
Cash and cash equivalents			80,000
Cash and cash equivalents, securitization accounts			21,354
Total assets			392,332
Members’ capital			160,233
Per unit data:
Member’s capital per unit (2)		$	14.96

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with “Selected Financial and Other Information” and the financial statements and the related notes thereto appearing elsewhere in this prospectus. For the period ended December 31, 2010, the discussion and analysis contained in this section refers to the financial condition, results of operations and cash flows of Garrison Capital LLC. The information in this section contains forward-looking statements that involve risks and uncertainties. Prior to the completion of this offering, Garrison Capital LLC will convert into Garrison Capital Inc. and file an election to be treated as a business development company under the 1940 Act. Please see “Risk Factors” and “Special Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

We are a newly-organized, externally managed, non-diversified, closed-end management investment company that intends to file an election to be treated as a business development company under the 1940 Act. In addition, for tax purposes we intend to elect to be treated as a RIC under Subchapter M of the Code.

Our investment objective is to generate current income and capital appreciation by making investments generally in the range of $10 million to $25 million primarily in debt securities of U.S. based middle-market companies. Our goal is to generate attractive risk-adjusted returns by assembling a diversified portfolio of investments.

We intend to invest primarily in (1) first lien senior secured loans, (2) second lien senior secured loans, (3) “one-stop” senior secured or “unitranche” loans, (4) subordinated or mezzanine loans and (5) to a lesser extent, selected equity co-investments in middle-market companies.

We believe that the middle market offers attractive risk-adjusted returns for debt investors. Historically, we believe there has been a persistent scarcity of available capital relative to demand, which, from a lender’s perspective, has generally resulted in more favorable transaction structures, including enhanced covenant protection and increased pricing relative to larger companies. We further believe that although the turmoil in the credit markets, which began in mid-2007 and continued through 2010, has generally subsided, such turmoil exacerbated this scarcity of capital, as many traditional lenders to middle-market companies have exited the business or focused their attention on larger borrowers. In addition, middle-market companies traditionally have exhibited lower default rates and improved recoveries compared to larger borrowers and typically offer greater access to key senior managers, which we believe further enhances the attractiveness of lending to this market segment and facilitates due diligence investigations and regular monitoring.

As of December 31, 2010, indirectly through GF 2010-1, we held an investment portfolio of syndicated secured loans fair valued at $283.8 million and related indebtedness with a par value of $219.5 million. As of that date, this portfolio consisted of 74 investments with an average investment size of approximately $3.7 million, a weighted average yield of 7.32% and a weighted average maturity of four years. As of that date, the Subordinated Notes had a fair value of $80.3 million.

Going forward, we intend to pursue a strategy focused on originating and investing in first lien, second lien, unitranche and mezzanine loans. Accordingly, over time we expect that syndicated first lien senior secured loans will represent a smaller percentage of our investment portfolio as we grow our business and our existing senior secured investments are repaid or sold in the secondary market and we reinvest the proceeds of such repayments or sales.

Revenues .  We generate revenue in the form of interest earned on the securities that we hold and capital gains and distributions, if any, on the warrants or other equity interests that we may acquire in portfolio companies. We expect our debt investments, whether in the form of senior secured, unitranche or mezzanine loans, to have a term of one to seven years and typically to bear interest at a fixed or floating rate. Interest is generally payable quarterly or semiannually, with the amortization of principal generally being deferred for several years from the date of the initial investment. In some cases, loans may have a PIK feature. The principal amount of the debt securities and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or

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diligence fees, fees for providing managerial assistance and possibly consulting fees. Loan origination fees, original issue discount and market discount are recorded as a reduction of par value, and we then accrete such amounts into interest income. Upon the prepayment of a loan or debt security, any unamortized loan origination fees are recorded as interest income. We record prepayment premiums on loans and debt securities as interest income when we receive such amounts.

Expenses .  Our primary operating expenses subsequent to the completion of this offering will include the payment of (1) the base management fee and incentive fee to our investment adviser; (2) the allocable portion of overhead under the Administration Agreement; (3) the interest expense on our outstanding debt, if any, and (4) other operating costs as detailed below. Our investment advisory fee will compensate our investment adviser for its work in identifying, evaluating, negotiating, consummating and monitoring our investments. See “The Adviser and the Administrator — Investment Advisory Agreement — Management Fees.” We will bear all other costs and expenses of our operations and transactions, including:

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Formation Transactions

Our Formation .  We were formed in November 2010 to invest primarily in (1) first lien senior secured loans, (2) second lien senior secured loans, (3) “one-stop” senior secured or “unitranche” loans, (4) subordinated or mezzanine loans and (5) to a lesser extent, selected equity co-investments in middle-market companies. In December 2010 we completed an $80 million private placement, the proceeds of which are being used to invest in U.S. middle-market companies in accordance with our investment strategy.

On November 5, 2010, GF 2010-1 completed the Debt Securitization. See “— Debt Securitization.” Certain open-ended funds affiliated with our investment adviser contributed 100% of the stock of Garrison CLO Ltd., which in turn owns all of the Subordinated Notes, to us as of December 31, 2010 in exchange for $80.6 million in fair value of units in Garrison Capital LLC. An independent third-party valuation firm was engaged to provide positive assurance regarding the fair value of the Subordinated Notes that were contributed to us as of the date of such contribution.

BDC Conversion .  Immediately prior to the completion of this offering, Garrison Capital LLC intends to convert into a Delaware corporation, Garrison Capital Inc., and all of the outstanding units in Garrison Capital LLC will be converted into     shares of common stock in Garrison Capital Inc. As part of the BDC Conversion, the existing members of Garrison Capital LLC will receive an aggregate of     shares of our common stock in exchange for the     limited liability company interests they own in Garrison Capital LLC, representing an estimated equivalent price of $     per share based on the fair value of the assets contributed by such members in connection with our formation, as determined by our board of directors.

Calculation of Net Asset Value

As of December 31, 2010, our total assets were $392.3 million. Our board of directors intends to retain one or more independent valuation firms to review the valuation of each portfolio investment that does not have a readily available market quotation at least once during each 12-month period. We plan for the independent valuation firms retained by our board of directors to provide a valuation review on 25% of our investments for which market quotations are not readily available each quarter subsequent to         , 2011 to ensure that the fair value of each investment for which a market quote is not readily available is reviewed by an independent valuation firm at least once during each 12-month period. However, our board of directors does not intend to have de minimis investments of less than 0.5% of our total assets (up to an aggregate of 10% of our total assets) independently reviewed. However, our board of directors is ultimately and solely responsible for determining the fair value of our assets using a documented valuation policy and consistently applied valuation process. See “Determination of Net Asset Value.”

Investment Activity and Yield

As of December 31, 2010, indirectly through GF 2010-1, our portfolio consisted of 74 investments with an average investment size of approximately $3.7 million, a weighted average yield of 7.32% and a weighted average maturity of four years. As of December 31, 2010, approximately 100% of our portfolio had interest rate floors that limit minimum interest rates on such loans. As of December 31, 2010, our investments had a fair value of $283.8 million. The Subordinated Notes do not bear interest at a stated interest rate. Instead, the Subordinated Notes have claim to all residual cash flows of GF 2010-1 after cash flows are allocated to the holders of the Secured Notes in accordance with the payment priority provisions of the indenture governing the notes issued by GF 2010-1.

Debt Securitization

General.   On November 5, 2010, GF 2010-1 completed the Debt Securitization. The transaction was executed through a private placement of: (1) $189.5 million of Aaa/AAA Class A Notes, which bear interest at

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the three-month LIBOR plus 2.40%; (2) $12.0 million of Aa2/AA Class B Notes, which bear interest at the three-month LIBOR plus 3.75%; and (3) $18.0 million of A2/A Class C Notes, which bear interest at the three-month LIBOR plus 4.75%; and (4) $80.5 million of subordinated notes, which do not bear interest and were issued at $75.9 million, or 94.3% of their par value. All of the classes of notes are scheduled to mature on November 20, 2017, at which date they will be mandatorily redeemed and payments made in connection with the payment provisions set forth in the indenture governing the notes issued by GF 2010-1.

Certain open-ended funds affiliated with our investment adviser indirectly contributed 100% of the stock of Garrison Capital CLO Ltd., which in turn owns all of the Subordinated Notes, to us as of December 31, 2010 in exchange for $80.6 million in fair value of units in Garrison Capital LLC. An independent third-party valuation firm was engaged to provide positive assurance regarding the fair value of the Subordinated Notes that were contributed to us as of the date of such contribution.

As of December 31, 2010, GF 2010-1 held investments in 74 portfolio companies with a total fair value of $283.8 million. The pool of loans in the Debt Securitization must meet certain requirements, including asset mix and concentration, collateral coverage, term, agency rating, minimum coupon, minimum spread and sector diversity requirements.

Under the investment company rules and regulations pursuant to the American Institute of Certified Public Accountants Audit and Accounting Guide for Investment Companies, codified in Financial Accounting Standards Board, or FASB, ASC 946, Financial Services-Investment Companies, we are precluded from consolidating any entity other than another investment company. We generally consolidate any investment company and controlled entity when we own 100% of its partners’ or members’ capital or equity units. Garrison Capital CLO Ltd., the intermediate holding company of GF 2010-1 is a 100% owned company. Furthermore, it owns a 100% interest in GF 2010-1 which is deemed to be an investment company. As such, we have consolidated the accounts of both of these entities into our financial statements.

An important aspect of a debt securitization transaction is that the purchaser of the notes must become comfortable through their due diligence investigation that the sale and/or contribution of income producing assets into a special purpose entity would be considered a true sale and/or contribution or, in other words, that as a result of such sale and/or contribution, the originator no longer owns the income producing assets. This structure seeks to reduce risk to noteholders by insulating them from the credit and bankruptcy risks faced by the originator. The structure of any debt securitization is in large part intended to prevent, in the event of a bankruptcy, the consolidation in the originator’s bankruptcy case of the special purpose entity with the operations of the originator, based on equitable principles, and the noteholders must become comfortable with this analysis. As a result of this structure, debt securitization transactions frequently achieve lower overall borrowing costs than would be achieved if the borrowing had been structured as a traditional secured lending transaction.

A collateral management agreement is an agreement entered into between an adviser and a debt securitization vehicle or similar issuer and sets forth the terms and conditions pursuant to which the adviser will provide advisory and/or management services with respect to the debt securitization vehicle’s securities portfolio. Garrison Investment Group is not entitled to receive a fee as collateral manager under the collateral management agreement.

Garrison Investment Group, as the collateral manager of GF 2010-1, selected the loans that were transferred to GF 2010-1. The loans were selected in accordance with the criteria set forth in the Debt Securitization documents, including requirements that GF 2010-1 maintain a portfolio of loans that meet certain conditions governing GF 2010-1’s conduct of business. These are primarily objective requirements determined by the constraints of the market for collateralized loan obligations, and are generally designed to comply with regulations governing commercial lending and similar financing activities in the United States and the requirements of Rule 3a-7 under the 1940 Act. In addition, GF 2010-1 must be in compliance with all debt covenants set forth in the indenture governing the notes issued by GF 2010-1, including minimum over-collateralization levels, an interest coverage test, limitations on industry concentrations and rating agency compliance. At December 31, 2010, the trustee certified that GF 2010-1 was in compliance with its debt covenants.

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Pursuant to GF 2010-1’s investment objective, the collateral manager monitors the financial condition of the borrowers under the loans held by GF 2010-1 and under certain circumstances will substitute loans failing to meet certain criteria specified in GF 2010-2’s indenture.

Status and Ranking.   The Subordinated Notes do not bear interest at a stated interest rate. Instead, the Subordinated Notes have claim to all residual cash flows of GF 2010-1 after cash flows are allocated to the holders of the Secured Notes in accordance with the payment priority provisions of the indenture governing the notes issued by GF 2010-1. By their terms, the Subordinated Notes are limited recourse, unsecured obligations of GF 2010-1 payable solely from payments made under the portfolio loans and other assets held by GF 2010-1 and, in the event of a portfolio loan event of default, from the proceeds of any liquidation of the collateral underlying such portfolio loans. Under the terms of the indenture governing the Subordinated Notes, distributions on the Subordinated Notes may be made solely from payments made under the portfolio loans and other assets after payment of all other obligations of GF 2010-1 ranking senior in right of payment to the Subordinated Notes. Additionally, for as long as the Secured Notes remain outstanding, holders of the Subordinated Notes will not generally be entitled to exercise remedies under the indenture. As an unsecured class of notes, the interests and rights of holders of the Subordinated Notes in and to the portfolio loans and other assets owned by GF 2010-1 are subject to the prior claims of secured creditors of GF 2010-1 and are potentially subject to or will rank equally with the claims of other unsecured creditors of GF 2010-1.

Distributions on the Subordinated Notes.   The indenture governing the notes issued by GF 2010-1 provides that, to the extent cash is available from cash collections the holders of the notes are to receive quarterly interest payments on the twentieth business day of February, May, August and November of each year until the stated maturity. To the extent that interest is not paid on the Class B Notes and/or the Class C Notes on any such payment date, such amounts will be deferred and added to the outstanding principal of the respective notes.

The Subordinated Notes are subordinated in right of payment on each payment date to payments on the Secured Notes as well as to certain amounts payable by GF 2010-1 as administrative expenses and to the claims of other unsecured creditors of GF 2010-1. No payments of interest or principal may be made to holders of any class of notes on any payment date, including upon the mandatory redemption of the notes at maturity, until all required interest and principal payments have been made on the notes ranking senior, if any, in right of payment to such class of notes.

Therefore, to the extent that any losses are suffered by noteholders as a result of losses on the portfolio loans and other assets owned by GF 2010-1, such losses will be borne in the first instance by the Subordinated Notes, then by the holders of the Class C Notes, then by the holders of the Class B Notes and lastly by the holders of the Class A Notes. Furthermore, payments on the Subordinated Notes are subject to diversion to pay more senior classes of notes if GF 2010-1 fails to meet certain coverage tests set forth in the indenture governing the notes issued by GF 2010-1.

The Debt Securitization documents expressly provide that we and our subsidiaries (other than GF 2010-1) are not, and cannot be held, liable for any shortfall in payments or any defaults on any of the classes of notes issued by GF 2010-1 in connection with the Debt Securitization because such obligations are the obligations of GF 2010-1 only, and the sole recourse for such obligations is to the collateral owned by GF 2010-1 rather than our assets.

Additional Issuance.   Under the terms of the Debt Securitization documents, GF 2010-1 could issue additional Subordinated Notes and use the net proceeds of such issuance to purchase additional portfolio loans. Any such additional issuance, however, would require the consent of the collateral manager and the approval of a majority of the Subordinated Notes. Among the other conditions that must be satisfied in connection with an additional issuance of Subordinated Notes, the aggregate principal amount of all additional issuances of Subordinated Notes may not exceed 100% of the original outstanding principal of Subordinated Notes on the closing date, or $80.5 million; the Issuer must notify each rating agency of such issuance prior to the issuance date; the terms of the notes to be issued must be identical to the terms of previously issued Subordinated Notes (except that all monies due on such additional Subordinated Notes will accrue from the issue date of such notes and that the prices of such Subordinated Notes do not have to be identical to those of the initial Subordinated Notes); and immediately after giving effect to such issuance, each coverage test

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provided for in the indenture governing the notes issued by GF 2010-1 is satisfied or, with respect to any coverage test that was not satisfied immediately prior to giving effect to such issuance and will continue not to be satisfied after giving effect to such issuance, the degree of compliance with such coverage test is maintained or improved immediately after giving effect to such issuance and the application of the proceeds thereof. We do not expect to cause GF 2010-1 to issue any additional Subordinated Notes at this time.

Optional Redemption.   The Secured Notes and the Subordinated Notes will mature at par on their stated maturity date unless previously redeemed or repaid. Starting November 20, 2011, at the direction of greater than 50% of the holders of the Subordinated Notes, all of the Secured Notes may be redeemed without penalty in whole or in part on any payment date.

The Subordinated Notes will be redeemed by GF 2010-1, in whole but not in part, on any payment date on or after the date on which all of the Secured Notes have been redeemed or repaid, from the proceeds of the assets remaining after giving effect to redemption or repayment of the Secured Notes and payment in full of all expenses of GF 2010-1, at the written direction of either of (x) a majority of the Subordinated Notes or (y) the collateral manager, so long as Garrison Investment Group is the collateral manager (which direction may be given in connection with a direction to redeem the Secured Notes or at any time after the Secured Notes have been redeemed or repaid in full). The price payable to us upon any such redemption will be our proportionate share (based on the unpaid face amount of such Subordinated Notes) of the amount of the proceeds of the assets remaining after the payments described above.

Voting.   Holders of the Subordinated Notes will have no voting rights except as set forth in the Debt Securitization documents. As the indirect holder of the Subordinated Notes, we will have the rights with respect thereto set forth in GF 2010-1’s organizational documents including the right to make additional capital contributions to GF 2010-1. We may also direct a redemption of the Secured Notes and/or the Subordinated Notes under certain circumstances pursuant to the indenture governing the notes issued by GF 2010-1 and, at any time, may approve an amendment of the indenture to effect the issuance of additional Subordinated Notes, as described above.

Other Restrictions.   No Subordinated Note (or interests in such notes) may be acquired or owned by any person that is classified for U.S. federal income tax purposes as a disregarded entity (unless the beneficial owner of such person is a corporation that is not a subchapter S corporation or otherwise taxable as a corporation), partnership, subchapter S corporation or grantor trust unless such person obtains a legal opinion to the effect that such acquisition or ownership will not cause GF 2010-1 to be treated as a publicly traded partnership taxable as a corporation.

Small Business Investment Company.

An affiliate of Garrison Investment Group intends to apply for a license to form an SBIC. If the application is approved and the SBA so permits, the SBIC license will be transferred to a wholly-owned subsidiary of ours, or the “SBIC subsidiary”. The SBIC subsidiary will be able to rely on an exclusion from the definition of investment company under the 1940 Act. As such, this SBIC subsidiary will not elect to be treated as a business development company, nor registered as an investment company under the 1940 Act. If this application is approved, the SBIC subsidiary will have an investment objective substantially similar to ours and will make similar types of investments in accordance with SBIC regulations.

To the extent that we, through the wholly-owned subsidiary, have an SBIC license, the SBIC subsidiary will be allowed to issue SBA-guaranteed debentures, subject to the required capitalization of the SBIC subsidiary. SBA guaranteed debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt. Under the regulations applicable to SBICs, an SBIC may have outstanding debentures guaranteed by the SBA generally in an amount of up to twice its regulatory capital, which generally equates to the amount of its equity capital. The SBIC regulations currently limit the amount that an SBIC subsidiary may borrow to a maximum of $150 million, assuming that it has at least $75 million of equity capital. In addition, if we are able to obtain financing under the SBIC program, our SBIC subsidiary will be subject to regulation and oversight by the SBA, including requirements with respect to maintaining certain minimum financial ratios and other covenants. In the event an affiliate of Garrison Investment Group applies for a license to form a SBIC, we cannot be certain such approval will be granted or, if granted, the timing of approval for an SBIC license.

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Financial Condition, Liquidity and Capital Resources

As a business development company, we expect to distribute substantially all of our net income to our stockholders. We will generate cash primarily from the net proceeds of this offering and future offerings of equity securities and cash flows from operations, including interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. We have borrowed funds through the Debt Securitization and, to the extent permitted under the 1940 Act, we may also borrow funds subsequent to this offering to the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our board of directors determines that leveraging our portfolio would be in the best interest of us and our stockholders. We do not intend to borrow additional money to fund our investments until such time as we have invested substantially all of the proceeds of the offering. We expect that our primary use of funds will be investments in portfolio companies, cash distributions to holders of our common stock and the payment of operating expenses.

As of December 31, 2010, we had cash and cash equivalents of $101.3 million, of which $21.4 million was restricted cash held by GF 2010-1. Our cash and cash equivalents, as of December 31, 2010 have been generated primarily from the proceeds of an $80 million private placement that occurred in December 2010. The proceeds from that private placement are being used to fund new investments and operating expenses. We do not have the ability to use the restricted cash held by GF 2010-1 for our general use, including distributions to our stockholders, and a portion of this restricted cash is required to pay interest expense, reduce borrowings or pay other amounts in accordance with the indenture governing the notes issued by GF 2010-1 and the payment priority provisions therein. We believe that, following completion of this offering and the Concurrent Private Placement, our cash and cash equivalents will be sufficient to fund our anticipated requirements for the next 12 months.

Inflation

Inflation has not had a significant effect on our results of operations in any of the reporting periods presented in our financial statements. However, our portfolio companies may, from time to time, experience the impact of inflation on their operating results.

Off-Balance Sheet Arrangements

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of December 31, 2010, we had no outstanding commitments to fund investments.

Contractual Obligations

A summary of our significant contractual payment obligations as of December 31, 2010 is as follows:

		Payments Due by Period (in millions)
		Total				Less Than 1 Year				1 – 3 Years				3 – 5 Years				More Than 5 Years
Secured Notes		$	219.5			$	—			$	—			$	—			$	219.5
Total contractual obligations		$	219.5			$	—			$	—			$	—			$	219.5

We had no future funding commitments at December 31, 2010.

We have certain contracts under which we have material future commitments. Prior to the date of this prospectus, we were party to an interim investment advisory agreement with Garrison Capital Advisers and as of the date of this prospectus we have entered into the Investment Advisory Agreement in accordance with the 1940 Act on the date of this prospectus. Under the Investment Advisory Agreement, Garrison Capital Advisers will agree to provide us with investment advisory and management services. We will agree to pay for these services (1) a base management fee equal to a percentage of the average adjusted value of our gross assets and (2) an incentive fee based on our performance. See “The Adviser and the Administrator — Investment Advisory Agreement — Management Fee.”

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We will enter into the Administration Agreement with Garrison Capital Administrator as our administrator on the date of this prospectus. Under the Administration Agreement, Garrison Capital Administrator will agree to furnish us with office facilities and equipment, provide us clerical, bookkeeping and record keeping services and provide us with other administrative services necessary to conduct our day-to-day operations. See “The Adviser and the Administrator — Administration Agreement.”

If any of the contractual obligations discussed above are terminated, our costs under any new agreements that we enter 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 our Investment Advisory Agreement and our Administration Agreement. Any new investment advisory agreement would also be subject to approval by our stockholders.

On the date of this prospectus, the interim investment advisory agreement with Garrison Capital Advisers was terminated with no continuing payment or other obligations on the part of either party. Both the Investment Advisory Agreement and the Administration Agreement may be terminated by either party without penalty upon no fewer than 60 days’ written notice to the other.

Distributions

In order to qualify as a RIC and to avoid corporate level tax on the income we distribute to our stockholders, we are required, under the Code, to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an annual basis. Additionally, we must distribute at least 98% of our ordinary income and 98.2% of our capital gain net income (both long-term and short-term) to avoid a U.S. federal excise tax. We intend to distribute quarterly dividends to our stockholders. Our quarterly dividends will be determined by our board of directors.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of our distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including the possible loss of our RIC status. We cannot assure stockholders that they will receive any distributions.

To the extent our taxable earnings fall below the total amount of our distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. Stockholders should read any written disclosure accompanying a dividend payment carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our dividend reinvestment plan. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders participating in our dividend reinvestment plan will not receive any corresponding cash distributions with which to pay any such applicable taxes.

Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. During the period covered by our financial statements, all of the loans in our portfolio had floating interest rates, and we expect that our loans in the future will also have floating interest rates. These loans are usually based on a floating LIBOR and typically have interest rate re-set provisions that adjust applicable LIBOR under such loans to current market rates on a quarterly basis. In addition, the Debt Securitization has a floating interest rate provision based on LIBOR which resets quarterly and we expect that any other credit facilities into which we enter in the future may have floating interest rate provisions.

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Assuming that the balance sheet as of December 31, 2010 covered by this analysis were to remain constant and that no actions are taken to alter our existing interest rate sensitivity, a hypothetical immediate 1% change in interest rates may affect net income by more than 1% over a one-year horizon. Although management believes that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit markets, the size, credit quality or composition of the assets in our portfolio and other business developments, including indebtedness under the Debt Securitization or other borrowing, that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the statement above.

We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts, and the collateral manager may engage in similar hedging activities with respect to the obligations of GF 2010-1. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates. We, our investment adviser and the collateral manager have not hedged any of the obligations of GF 2010-1.

Critical Accounting Policies

The preparation of our financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. We have identified the following as critical accounting policies.

Basis for Consolidation

Under the investment company rules and regulations pursuant to the American Institute of Certified Public Accountants Audit and Accounting Guide for Investment Companies, codified in Financial Accounting Standards Board ASC 946, Financial Services-Investment Companies, we are precluded from consolidating any entity other than another investment company. We generally consolidate any investment company or controlled entity when we own 100% of its partners’ or members’ capital or equity units. Garrison Capital CLO Ltd. is a 100% owned company. Furthermore, it owns a 100% interest in GF 2010-1 which is deemed to be an investment company. As such, we have consolidated the accounts of both these entities into these financial statements.

Valuation of Portfolio Investments

We value our investments in accordance with ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about assets and liabilities measured at fair value. ASC 820’s definition of fair value focuses on exit price in the principal, or most advantageous, market and prioritizes the use of market-based inputs over entity-specific inputs within a measurement of fair value.

Our portfolio consists of primarily debt investments. These investments are valued at their bid quotations obtained from unaffiliated market makers, other financial institutions that trade in similar investments or based on prices provided by independent third party pricing services. For investments where there are no available bid quotations, fair value is derived using proprietary models that consider the analyses of independent valuation agents as well as credit risk, liquidity, market credit spreads, and other applicable factors for similar transactions.

Due to the nature of our strategy, our portfolio includes relatively illiquid investments that are privately held. Valuations of privately held investments are inherently uncertain and they may fluctuate over short periods of time and may be based on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these investments existed. Our net asset value could be materially affected if the determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately realize upon the disposal of such investments.

Our board of directors is ultimately and solely responsible for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily available on a quarterly basis in good faith or any other situation where portfolio investments require a fair value determination.

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The valuation process is conducted at the end of each fiscal quarter, with a portion of our valuations of portfolio companies without market quotations subject to review by the independent valuation firms each quarter. When an external event with respect to one of our portfolio companies, such as a purchase transaction, public offering or subsequent equity sale occurs, we expect to use the pricing indicated by the external event to corroborate our valuation.

With respect to investments for which market quotations are not readily available, our board of directors will undertake a multi-step valuation process each quarter, as described below:

See “Determination of Net Asset Value.”

Investment Transactions and Related Investment Income and Expense

We record our investment transactions on a trade date basis, which is the date when we have determined that all material terms have been defined for the transactions. These transactions could possibly settle on a subsequent date depending on the transaction type. All related revenue and expenses attributable to these transactions are reflected on the consolidated statement of operations commencing on the trade date unless otherwise specified by the transaction documents. Realized gains and losses on investment transactions are recorded on the specific identification method.

We accrue interest income if we expect that ultimately we will be able to collect it. Generally, when an interest payment default occurs on a loan in our portfolio, or if our management otherwise believes that the issuer of the loan will not be able to service the loan and other obligations, we will place the loan on non-accrual status and will cease recognizing interest income on that loan until all principal and interest is current through payment or until a restructuring occurs, such that the interest income is deemed to be collectible. However, we remain contractually entitled to this interest. We may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. Accrued interest is written off when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. As of December 31, 2010, no loans were on non-accrual status. Any original issue discounts, as well as any other purchase discounts or premiums on debt investments, are accreted or amortized to interest income or expense, respectively, over the maturity periods of the investments. During the period ended December 31, 2010, there were no loans originated at discounts or premiums. However, there were loans purchased at a discount.

Interest expense is recorded on an accrual basis. Certain expenses related to legal and tax consultation, due diligence, rating fees, valuation expenses and independent collateral appraisals may arise when we make certain investments. These expenses are recognized in the consolidated statement of operations as they are incurred.

Loan Origination, Facility, Commitment and Amendment Fees

We may receive fees in addition to interest income from the loans during the life of the investment. We may receive origination fees upon the origination of an investment. These origination fees are initially deferred and reduced from the cost basis of the investment and subsequently accreted into income over the term of the loan. GF 2010-1 is prohibited from originating loans by its indenture; therefore, it does not receive any origination fees. We may receive facility, commitment and amendment fees, which are paid to us on an ongoing basis. Facility fees, sometimes referred to as asset management fees, are accrued as a percentage

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periodic fee on the base amount (either the funded facility amount or the committed principal amount). Commitment fees are based upon the undrawn portion committed by us and are recorded on an accrual basis. Amendment fees are paid in connection with loan amendments and waivers and are accounted for upon completion of the amendments or waivers, generally when such fees are receivable. Any such fees are included in other income on the consolidated statement of operations. For the period ended December 31, 2010 we had not earned any such fees.

Recent Accounting Pronouncements

On January 21, 2010, the Financial Accounting Standards Board issued Accounting Standards Update No. 2010-06, Improving Disclosures about Fair Value Measurements , or ASU 2010-06. ASU 2010-06 amends FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (formerly FASB Statement No. 157, or ASC 820), to require entities to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition, the ASU 2010-06 amends ASC 820 to clarify that reporting entities are required to provide fair value measurement disclosures for each “class” of assets and liabilities. All of the amendments to ASC 820 made by ASU 2010-06 are effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of the requirement to separately disclose purchases, sales, issuances, and settlements of recurring Level 3 measurements, which becomes effective for fiscal years beginning after December 15, 2010. The adoption of ASU 2010-06 is not expected to have a material impact on our consolidated financial statements, except that it will enhance the disclosures with respect to fair value of investments.

Senior Securities

Information about our senior securities is shown in the following table as of December 31, 2010. Ernst & Young LLP’s report on the senior securities table at December 31, 2010 is attached as an exhibit to the registration statement of which this prospectus is a part.

Class and Year		Total Amount Outstanding Exclusive of Treasury Securities (1)				Asset Coverage per Unit (2)				Involuntary Liquidating Preference per Unit (3)				Average Market Value per Unit (4)
Secured Notes		$	219,500,000			$	1,730				—				N/A
December 31, 2010		$	219,500,000			$	1,730				—				N/A

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THE COMPANY

Overview

We are a newly-organized, externally managed, non-diversified, closed-end management investment company that intends to file an election to be treated as a business development company under the 1940 Act. In addition, for tax purposes we intend to elect to be treated as a RIC under Subchapter M of the Code.

Our investment objective is to generate current income and capital appreciation by making investments generally in the range of $10 million to $25 million primarily in debt securities of U.S. based middle-market companies. Our goal is to generate attractive risk-adjusted returns by assembling a diversified portfolio of investments.

We intend to invest primarily in (1) first lien senior secured loans, (2) second lien senior secured loans, (3) “one-stop” senior secured or “unitranche” loans, (4) subordinated or mezzanine loans and (5) to a lesser extent, selected equity co-investments in middle-market companies.

We believe that the middle market offers attractive risk-adjusted returns for debt investors. Historically, we believe there has been a persistent scarcity of available capital relative to demand, which, from a lender’s perspective, has generally resulted in more favorable transaction structures, including enhanced covenant protection and increased pricing relative to larger companies. We further believe that although the turmoil in the credit markets, which began in mid-2007 and continued through 2010, has generally subsided, such turmoil exacerbated this scarcity of capital, as many traditional lenders to middle-market companies have exited the business or focused their attention on larger borrowers. In addition, middle-market companies traditionally have exhibited lower default rates and improved recoveries compared to larger borrowers and typically offer greater access to key senior managers, which we believe further enhances the attractiveness of lending to this market segment and facilitates due diligence investigations and regular monitoring.

As of December 31, 2010, indirectly through GF 2010-1, we held an investment portfolio of syndicated secured loans fair valued at $283.8 million and related indebtedness with a par value of $219.5 million. As of that date, this portfolio consisted of 74 investments with an average investment size of approximately $3.7 million, a weighted average yield of 7.32% and a weighted average maturity of four years. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Going forward, we intend to pursue a strategy focused on originating and investing in first lien, second lien, unitranche and mezzanine loans. Accordingly, over time we expect that syndicated first lien senior secured loans will represent a smaller percentage of our investment portfolio as we grow our business and our existing senior secured investments are repaid or sold in the secondary market and we reinvest the proceeds of such repayments or sales.

Our Investment Adviser

Our investment activities are managed by our investment adviser, Garrison Capital Advisers. Our investment adviser is responsible for sourcing potential investments, conducting research and diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. Garrison Capital Advisers was organized in November 2010 and has filed to become a registered investment adviser under the Investment Advisers Act of 1940, as amended, or the Advisers Act. Under an investment advisory agreement with Garrison Capital Advisers that we intend to enter into on the date of this prospectus, or the Investment Advisory Agreement, we will pay our investment adviser a base management fee and an incentive fee for its services. See “The Adviser and the Administrator” for a discussion of the base management fee and incentive fee that will be payable by us to our investment adviser. Prior to the date of this prospectus, our relationship with the investment adviser was governed by an interim investment advisory agreement that was terminated on the date of this prospectus.

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Garrison Capital Advisers is an affiliate of Garrison Investment Group. Garrison Capital Advisers has entered into the Staffing Agreement with Garrison Investment Group under which Garrison Investment Group has agreed to make experienced investment professionals available to Garrison Capital Advisers and to provide access to the senior investment personnel of Garrison Investment Group. We believe that the Staffing Agreement provides our investment adviser with access to deal flow generated by Garrison Investment Group in the ordinary course of business and commits the members of Garrison Investment Group’s investment committee to serve as members of our investment committee. In addition, Garrison Investment Group is obligated under the Staffing Agreement to allocate investment opportunities among its managed affiliates fairly and equitably over time in accordance with its allocation policy. See “Certain Relationships.” Our investment adviser intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Garrison Investment Group’s investment professionals.

Garrison Capital Administrator

Garrison Capital Administrator, an affiliate of our investment adviser, will provide certain administrative services and facilities necessary for us to operate, including, office facilities and equipment and clerical, bookkeeping and record-keeping services. Garrison Capital Administrator will oversee our financial reporting as well as prepare our reports to stockholders and reports required to be filed with the SEC. Garrison Capital Administrator will also manage the determination and publication of our net asset value and the preparation and filing of our tax returns and will generally monitor the payment of our expenses and the performance of administrative and professional services rendered to us by others. Garrison Capital Administrator may retain third parties to assist in providing administrative services to us. To the extent that Garrison Capital Administrator outsources any of its functions, we will pay the fees associated with such functions on a direct basis without any profit to Garrison Capital Administrator.

About Garrison Investment Group

Garrison Investment Group is an alternative investment and asset management firm founded in March 2007 by Steven Stuart and Joseph Tansey. As of March 1, 2011, Garrison Investment Group had approximately $1.9 billion of committed and invested capital under management and a team of 53 employees, including 33 investment professionals. Garrison Investment Group is headquartered in New York, New York. Garrison Investment Group invests opportunistically in debt of middle-market companies, primarily in the areas of corporate finance, real estate finance and structured finance.

Since the formation of Garrison Investment Group, Messrs. Stuart and Tansey together with their team of investment professionals, including Rafael Astruc, Brian Chase, Terence Moore and Mitch Drucker, have been investors and lenders to middle-market companies. These investment professionals have significant experience investing in a broad range of industries and types of debt over the course of several economic cycles.

Before joining Garrison Investment Group, Messrs. Stuart and Tansey were Managing Directors at Fortress Investment Group LLC, or Fortress, and were also partners of the Drawbridge Special Opportunities Fund, a hedge fund, from its inception in August 2002 to March 2007. Drawbridge focused primarily on investments in opportunistic debt and equity securities and asset-based transactions. The responsibilities of these individuals included sourcing, evaluating, structuring, managing and monitoring corporate, structured finance and real estate investments, including both debt and equity. Messrs. Stuart and Tansey have 25 and 16 years of investment experience, respectively.

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Market Opportunity

We believe that the current credit and asset market dynamics are favorable for us to pursue an investment strategy focused on investing in first lien, second lien, unitranche and mezzanine loans of, and, to a lesser extent, warrants and minority equity securities in, U.S. middle-market companies. As the investment environment changes, our investment adviser intends to adapt its investment focus dynamically to investments that it perceives to have attractive risk-return characteristics. We find middle-market investing attractive for the following reasons:

Significant Refinancing Requirements.   A significant amount of debt begins to mature between 2011 and 2013, much of which we believe is associated with a large number of middle-market leveraged mergers and acquisitions completed from 2005 to 2008. In many cases, we expect that this debt will need to be refinanced by the borrowers. The following chart demonstrates the distribution of maturity dates of institutional loans, which are expected to increase the number of refinancing opportunities in the coming years.

Many of these loans were held in debt securitizations completed between 2004 and 2007. These securitization vehicles often had reinvestment periods ranging from three to six years, and therefore most such vehicles are unlikely to be able to offer refinancing options to existing portfolio borrowers when their credit facilities approach maturity.

We believe the loss of the lending capacity in the middle-market combined with the need for borrowers to refinancing existing indebtedness over the next several years will create significant lending opportunities for us.

Reduced Competition.   We believe that dislocations in the capital markets between mid-2007 and the end of 2010 have reduced the amount of credit available to middle-market companies. We believe that much of the traditional lending community for middle-market companies, such as commercial/regional banks, investment banks, commercial finance companies, hedge funds and collateralized loan obligations, have contracted and/or eliminated their origination activities in the wake of this period of credit dislocation or focused on more liquid asset classes. In addition, a 2010 Congressional Oversight Panel report concluded that 3,000 small U.S. banks either have or may need to curtail lending due to financial stresses, further restricting access to capital for middle-market borrowers, and, when implemented, Basel III, published by the Basel Committee on Banking Supervision, is expected to limit the ability of commercial banking institutions to hold non-investment grade leveraged loans on their balance sheets.

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Attractive Relative Value Proposition .  We believe that directly originated middle-market loans often exhibit superior default and loss characteristics to syndicated loans, which are often structured with higher levels of debt and a lower percentage of equity contributed. For example, in 2009 middle-market borrowers had a default rate of 4.1% compared to a default rate of 8.6% for large capitalization companies; middle-market companies have a recovery rate of approximately 86.1% as compared to 81.0% for large capitalization companies. The following chart shows the changes in default rates since 1999 and the significant decrease in such rates from mid-2010 to early 2011.

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We expect that a substantial backlog of buyout commitments will drive demand for leveraged buyouts over the next several years, which should, in turn, create leveraged lending opportunities for us in the middle market. Meanwhile, reduced access to, and availability of, credit typically increases the interest rates, or pricing, of loans made to U.S. middle-market borrowers, thereby creating an attractive risk-return dynamic for lenders. We believe that the debt of such borrowers typically carries high interest rates and offers attractive up-front fees and prepayment penalties but is not sufficiently attractive to the syndicated debt markets, thereby providing us with many lending opportunities. The following chart highlights the relatively higher increase in interest rates since mid-2008 for single B rated leveraged loans to middle-market borrowers compared to larger corporate borrowers:

Source: S&P/Loan Syndications and Trading Association (“LSTA”) Leveraged Loan Index, December 2010 Review.

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Conservative Capital Structure and Increased Percentage of Equity Contributed.   We believe that lenders generally are requiring borrowers to hold more equity as a percentage of their total capitalization and less senior and total leverage than was customary in the years leading up to the credit crisis, creating a greater amount of equity to protect lenders against future economic downturns. Lower leverage levels in mergers and acquisitions executed in the middle market suggest that middle-market companies should have more cash flows available to them to service their debt. In addition, middle-market companies typically have simpler capital structures than larger borrowers, which streamlines the initial structuring and underwriting process and, in our experience, contributes to improved returns to lenders in restructurings. The following charts illustrate the average equity contributions to middle-market leveraged buyout loans as a percent of total transaction value since 1997 and highlight the increase in average equity contributions since 2007 and also the decrease in purchase price multiples:

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In addition, the chart below highlights the decreased debt multiples of middle-market loans since 2007, which we believe is indicative of the capital structure of prospective portfolio companies.

Debt Multiples of Middle-Market Loans

Source: Standard & Poor’s Q4 2010 High-End Middle Market Lending Review.

Long-Term Capital Solutions.   We believe that many middle-market companies seek to execute transactions with permanent capital vehicles, such as us, rather than execute high-yield bond transactions or borrow capital from hedge funds and other non-permanent vehicles. In addition, we believe that many middle-market companies are positively disposed towards seeking capital from a small number of providers with access to permanent capital that can satisfy their specific needs and serve as value-added financial partners with an understanding of and longer-term view oriented towards the growth of such businesses.

When combined with decreased availability of debt financing for middle-market companies generally, we believe these factors should increase lending opportunities for us.

Competitive Strengths

Experienced Management Team.   We are managed by our investment adviser, which has access through the Staffing Agreement to the resources and expertise of the investment professionals at Garrison Investment Group. Garrison Investment Group is led by Messrs. Stuart and Tansey. Garrison Investment Group’s investment professionals have substantial experience in identifying and executing financing transactions across a broad range of industries and types of financings and have developed related proprietary sourcing and servicing channels. Our seven member investment committee has combined investment experience of more than 145 years.

Access to Deal Flow.   Through the Staffing Agreement, our investment adviser expects to have access to extensive contacts throughout the middle-market through which it intends to source and originate loans. The investment professionals of Garrison Investment Group maintain direct dialog with their contacts at financial sponsors, banks, corporate advisory firms, crisis managers, industry consultants, attorneys, investment banks, middle-market companies, other “club” investors and other potential sources of lending opportunities. In addition, we anticipate that a portion of our deal flow will be generated through non-traditional channels, such as Garrison Investment Group’s real estate and structured finance teams whose contacts typically share

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opportunities with a limited group of potential lenders, thereby creating a less competitive process for such lending opportunities. Furthermore, Garrison Investment Group’s senior professionals have cultivated relationships with other middle-market lending platforms that we believe will provide us with an additional source of deal flow. We believe that the breadth of these relationships will enable us to be selective in originating or acquiring loans and afford us opportunities to review certain lending proposals in the U.S. middle-market in advance of other potential lenders as well as the opportunity to match the terms offered by other lenders, which should allow for selectivity in the transactions we pursue.

Disciplined Investment and Underwriting Process.   Our investment adviser intends to utilize the established investment processes developed by Garrison Investment Group to analyze investment opportunities and structure loans. Our investment adviser intends to structure loans with appropriate covenants to allow for renegotiation of loan and pricing terms in the event that a portfolio company fails to satisfy its covenants and to price loans based on its knowledge of the middle market and on its rigorous underwriting standards. Our investment adviser expects to focus on capital preservation by extending loans to portfolio companies with assets that it believes will retain sufficient value to repay us even in depressed markets or under liquidation scenarios. The professionals employed by Garrison Investment Group have extensive experience in structuring and underwriting middle-market loans and in evaluating collateral positions to minimize credit risk as a lender.

Active Asset Management Approach.   Our investment adviser intends to employ a regimented credit monitoring system for our portfolio. Garrison Investment Group formally reviews its entire portfolio of loans with our investment committee on a monthly basis. The goal of this review is to enhance the ability of our investment adviser to manage any problems and assist borrowers before operating issues result in financial deterioration. In addition, this process should enable our investment adviser to identify credit and market trends, thereby allowing us to modify underwriting terms for new loans before other lenders have identified such trends. In the event of restructurings, we expect that our investment adviser will manage syndicates of lenders, creditor committees and other creditors and advisors to protect our position. Where necessary, our investment adviser intends to take an active role in any restructuring negotiations and to utilize its extensive industry experience and industry contacts to benefit lenders.

Investment Criteria/Guidelines

Our investment objective is to generate current income and capital appreciation by making investments generally in the range of $10 million to $25 million primarily in debt securities of middle-market companies. We may also selectively make investments in amounts larger than $25 million in certain of our portfolio companies. We generally expect that the size of our individual investments will vary proportionately with the size of our capital base. Our goal is to generate attractive risk-adjusted returns by assembling a diversified portfolio of investments.

Target businesses will typically exhibit some or all of the following characteristics:

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While we believe that the criteria listed above are important in identifying and investing in prospective portfolio companies, not all of these criteria will be met by each prospective portfolio company.

Investment Strategy

We will seek to create a diversified portfolio consisting of investments generally in the range of $10 million to $25 million primarily in debt securities of U.S. based middle-market companies. The companies to which we extend credit will typically be moderately leveraged, and, in most cases, will not have their loans rated by national rating agencies. If such companies were rated, we believe that they would typically receive a rating below investment grade. In addition, we expect that our investments typically will range in maturity from one to six years and that the overall portfolio will have a weighted average life of approximately five years. However, we may make investments in securities with any maturity or duration.

We intend to invest opportunistically in middle-market loans that we believe have attractive risk adjusted returns. We will also, to a lesser extent, make select equity investments in non-investment grade companies, which may be in the form of warrants. We expect the majority of our focus to generally be centered upon traditional direct lending but at times will seek to enhance returns by purchasing loans in the secondary market, which purchases we refer to as capital markets activities, and extending credit for certain restructuring of financially troubled companies, which we refer to as special situations. We organize these lending opportunities in three categories.

Traditional Direct Lending .  We will focus on direct origination of first lien senior secured loans, second lien senior secured loans and unitranche loans as well as select mezzanine loans. With respect to these loans, we intend to identify lending opportunities through the extensive origination network to which we have access and will serve as either sole lender or as a partner with like minded creditors. We expect that we will typically extend first and second lien secured term loans, the proceeds of which may be used to refinance existing indebtedness, support acquisitions, growth initiatives, general corporate liquidity or operational turnarounds.

Capital Markets Activities .  We may also acquire loans in the secondary market at favorable discounts or seek to refinance outstanding loans through anchoring or co-anchoring a new issuance of debt. Garrison Investment Group has underwritten and conducted due diligence on more than 500 middle-market companies since July 2007. We believe this experience will allow us to react quickly in executing acquisitions of loans in the secondary market on favorable terms and permit us to refinance loans on a streamlined basis. All of our investments as of December 31, 2010 were acquired in the secondary market.

Special Situations .  We may also extend credit for out-of-court restructurings, rescue financings, debtor-in-possession financings and acquisition financings. We expect that, in extending credit to special situations borrowers, our investments will remain high in the borrower’s capital structure, generate returns through the duration of the loan and obtain call protection or opportunities for enhanced returns through equity participation.

Due Diligence

We believe it is critical to conduct extensive due diligence on investment targets, and in evaluating new investments. We, through our investment adviser, will conduct a rigorous due diligence process that draws from our investment adviser’s investment experience, industry expertise and network of contacts. Our investment adviser intends to conduct extensive due diligence and perform thorough credit analysis on each potential portfolio company investment. In conducting due diligence, we expect that our investment adviser will use publicly available information and private information provided by borrowers, their financial sponsors and their advisors. Our investment adviser expects to use its relationships with former and current management teams, consultants, competitors and investment bankers to gain further insights into businesses and industries, generally, and our potential portfolio companies, specifically.

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Our due diligence will typically include the following elements (although not all elements will necessarily form part of each due diligence review):

Additional due diligence with respect to any investment may be conducted on our behalf by attorneys and independent accountants as well as other outside advisers, as appropriate.

Investment Committee

Upon the completion of due diligence and a decision to proceed with an investment in a company, the principals leading the investment will present the investment opportunity to our investment adviser’s investment committee, which will determine whether to pursue the potential investment. All new investments will be required to be reviewed by the investment committee of our investment adviser, which currently consists of the following seven members: Joseph Tansey, Steven Stuart, Rafael Astruc, Brian Chase, Mitch Drucker, Susan George and Terence Moore. As our investment adviser adds senior investment professionals subsequent to this offering, our investment adviser may add them to its investment committee. The members of our investment committee will receive no compensation from us. These members will be employees or partners of our investment adviser and will receive compensation or profit distributions from our investment adviser.

Investment Structure

Once our investment adviser determines that a prospective portfolio company is suitable for investment, it will work with the company’s management and its other capital providers to structure an investment. Our investment adviser intends to negotiate among these parties to agree how our investment should be structured relative to the other capital in the portfolio company’s capital structure.

We expect to structure our loans as follows:

Secured Loans.   We typically will structure these loans, which include unitranche loans, with either a first or second lien security interest in the portfolio company’s assets that will support the repayment of such loans. First and second lien senior secured loans may provide for moderate loan amortization in the early years of the loan, with the majority of the amortization deferred until loan maturity but in all cases amortization will be based on the free cash flows generated by the portfolio company and available for debt service. Unitranche loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche loans also generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In these cases, maturity extension or

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restructuring could be necessary to preserve collateral and enterprise value. Secured loans may include a PIK interest feature although we expect that a majority of the interest will be cash pay.

Special Situations Loans.   These loans can be either secured or unsecured and often support an operational or financial restructuring. These loans can also include situations that require unusual speed to closing or structural flexibility. In some cases we will structure these loans as secured debtor-in-possession or bankruptcy exit loans. We will seek to obtain security interests in the assets of the portfolio company borrowers that serve as collateral in support of the repayment of such loans. Such collateral may take the form of first-priority or second-priority liens on the assets of the portfolio company borrower. Our special situation loans may provide for moderate loan amortization in the early years of the loan, with the majority of the amortization deferred until loan maturity, and may include a PIK interest feature although we expect that a majority of the interest will be cash pay.

Unsecured Loans.   We typically will structure these loans as unsecured, subordinated loans that provide for relatively high, fixed interest rates and provide us with significant current interest income. These loans typically have interest-only payments (often representing a combination of cash pay and payment-in-kind interest) in the early years, with the amortization of principal deferred to maturity. Mezzanine loans, which are often unsecured, generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. We expect that mezzanine loans will typically provide for a portion of the interest to be paid-in-kind. In these cases, maturity extension or restructuring could be necessary to preserve collateral and enterprise value.

Warrants and Minority Equity Securities.   In some cases, we may receive nominally priced warrants or options to buy a minority equity interest in the portfolio company in connection with a loan. As a result, if a portfolio company appreciates in value, we may achieve additional investment return. We may also structure warrants to include provisions protecting its rights as a minority-interest holder, as well as a “put,” or right to sell such securities back to the issuer, upon the occurrence of specified events. In many cases, we may seek to obtain registration rights in connection with these equity interests, which may include demand and “piggy-back” registration rights.

We intend to tailor the terms of each investment to the facts and circumstances of the transaction and the prospective portfolio company, negotiating a structure that protects its rights and manages risk while creating incentives for the portfolio company to achieve its business plan and improve its operating results. We seek to limit the downside potential of our investments by:

We expect to hold most of our investments to maturity or repayment but may sell some investments earlier if liquidity event occurs, such as a sale, recapitalization or worsening of the credit quality of the portfolio company.

Ongoing Monitoring

We view active portfolio monitoring as a vital part of the investment process. Our investment adviser will monitor the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action for each company.

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We expect that our investment adviser will use several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

Our investment adviser will assign an internal rating for each of our portfolio companies. The rating scale is a numeric scale of 1 to 4 based on the credit attributes and prospects of the portfolio company’s business. In general, we use the ratings as follows:

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Investments

We seek to create a diverse portfolio that includes senior secured, unitranche, mezzanine and unsecured loans and warrants and minority equity securities by making investments generally in the range of $10 million to $25 million in U.S. based middle-market companies. Set forth below is a list of our ten largest portfolio company investments as of December 31, 2010, as well as the top ten industries in which we were invested as of December 31, 2010, in each case calculated as a percentage of our total investments as of such date.

Portfolio Company		Fair Value of Investment (dollars in thousands)				Percentage of Total Investments
Peak 10, Inc.		$	9,022				3.2	%
Volume Services America, Inc.			8,892				3.1	%
Cengage Learning, Inc.			8,214				2.9	%
R3 Treatment Inc.			7,611				2.7	%
MCCI Group Holdings, LLC			7,423				2.6	%
Midwest Dental			7,213				2.5	%
SMG			6,851				2.4	%
Hoffmaster Group, Inc.			6,807				2.4	%
Strategic Partners, Inc.			6,983				2.5	%
Inland Pipe Rehabilitation, LLC			6,673				2.4	%
		$	75,689				26.7	%

Industry		Fair Value of Investment (dollars in thousands)				Percentage of Total Investments
Miscellaneous Services		$	55,922				19.7	%
Health Services			25,889				9.1	%
Communications			24,311				8.6	%
Printing & Publishing			13,523				4.8	%
Miscellaneous Manufacturing			12,892				4.5	%
Papers & Allied Products			11,756				4.1	%
Chemicals			11,545				4.1	%
Food Products			10,054				3.5	%
Restaurants			9,769				3.4	%
Business Finance Services			8,891				3.1	%
		$	184,552				65.0	%

Managerial Assistance

As a business development company, we will offer, and must provide upon request, managerial assistance to our portfolio companies. This assistance could involve monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. Garrison Capital Administrator or an affiliate of Garrison Capital Administrator will provide such managerial assistance on our behalf to portfolio companies that request this assistance. We may receive fees for these services and will reimburse Garrison Capital Administrator or an affiliate of Garrison Capital Administrator for its allocated costs in providing such assistance, subject to the review and approval by our board of directors, including our independent directors. See “The Adviser and the Administrator — Administration Agreement.”

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Competition

Our primary competitors to provide financing to middle-market companies will include public and private funds, including other business development companies, commercial and investment banks, commercial financing companies, and, to the extent they provide an alternative form of financing, private equity funds. As the economic recovery continues, we expect that we may face enhanced competition in the future. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act will impose on us as a business development company and that the Code will impose on us as a RIC. For additional information concerning the competitive risks we face, see “Risk Factors — Risks Relating to our Business and Structure — The highly competitive market for investment opportunities in which we operate may limit our investment opportunities.”

Administration

We will not have any direct employees, and our day-to-day investment operations will be managed by our investment adviser. We have a chief executive officer, chief financial officer and chief compliance officer and, to the extent necessary, our board of directors may elect to hire additional personnel going forward. Our officers will be employees of Garrison Investment Group LP, an affiliate of our investment adviser, and our allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs will be paid by us pursuant to the Administration Agreement. Some of our executive officers described under “Management of the Company” are also officers of Garrison Capital Advisers. See “The Adviser and the Administrator — Administration Agreement.”

Properties

Our executive offices are located at 1350 Avenue of the Americas, New York, New York 10019 and are provided by our administrator pursuant to our Administration Agreement. We believe that our office facilities are suitable and adequate for our business as it is contemplated to be conducted.

Legal Proceedings

None of our investment adviser, our administrator, Garrison Investment Group or us is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our investment adviser or administrator.

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PORTFOLIO COMPANIES

The following table sets forth certain information as of December 31, 2010 for each portfolio company in which we had an investment. Other than these investments, our only formal relationships with our portfolio companies are the managerial assistance that we may provide upon request and the board observer or participation rights we may receive in connection with our investment. See “Regulation — Managerial Assistance to Portfolio Companies.” We do not “control” and are not an “affiliate” of any of our portfolio companies, each as defined in the 1940 Act. In general, under the 1940 Act, we would “control” a portfolio company if we owned more than 25% of its voting securities and would be an “affiliate” of a portfolio company if we owned five percent or more of its voting securities.

As of December 31, 2010, indirectly through GF 2010-1, we held an investment portfolio of syndicated senior secured loans fair valued at $283.8 million and related indebtedness with a par value of $219.5 million. As of that date, this portfolio consisted of 74 investments with an average investment size of approximately $3.7 million, a weighted average yield of 7.32% and a weighted average maturity of 4 years. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We do not believe that there are any material differences in the underwriting standards that were used to evaluate these investments and the underwriting standards described in this prospectus that we expect to implement. However, over time we expect that syndicated first lien senior secured loans will represent a smaller percentage of our investment portfolio as we grow our business and our syndicated senior secured investments are repaid or sold in the secondary market and we reinvest the proceeds of such repayments or sales.

Name and Address of Portfolio Company

Industry

Type of Investment

Interest Rate (1)

Maturity Date

Principal Due at Maturity

Amortized Cost

Fair Value of Investment

Percentage of Class Held*

Aerostructures Acquisition, LLC c/o Vitron Manufacturing 18008A N. Black Canyon Hwy. Phoenix, AZ 85053

Transport Equipment

Senior Secured

7.25% (LIBOR + 5.00%, 2.50% Floor)

03/01/2013

$926,363

$833,726

$852,253

*

Alliance Laundry Systems LLC P.O. Box 990 Shepard Street, Ripon, WI 54971

Miscellaneous Manufacturing

Senior Secured

6.25% (LIBOR + 4.50%, 1.75% Floor)

09/30/2016

$978,947

$987,268

$991,576

*

Alpha Packing Holdings, Inc. 1555 Page Industrial Blvd. St. Louis, MO 63132

Miscellaneous Manufacturing

Senior Secured

6.75% (LIBOR + 5.00%, 1.75% Floor)

09/17/2016

$3,241,875

$3,144,619

$3,144,619

*

Andrews International Inc. 27959 Smyth Drive Valencia, CA 91355

Miscellaneous Services

Senior Secured

7.55% (LIBOR + 5.50%, 1.75% Floor)

09/20/2015

$6,000,000

$5,940,000

$5,940,000

*

APS Healthcare, Inc. 8403 Colesville Road Silver Springs, MD 20910

Health Services

Senior Secured

3.52% (LIBOR + 3.25%)

03/30/2013

$3,545,574

$3,297,384

$3,297,384

*

Arclin US Holdings Inc. (2) 5865 McLaughlin Road Unit 3 Mississauga, ON L5R 1B8, Canada

Chemicals

Senior Secured

7.75% (LIBOR + 6.00%, 1.75% Floor)

01/15/2015

$2,654,844

—

—

*

Senior Secured

8.25% (BASE RATE + 5.00%, 3.25% Floor)

01/15/2015

$24,749

—

—

*

TOTAL

$2,679,593

$2,545,613

$2,599,205

*

Aspect Software, Inc. 300 Apollo Drive Chelmsford, MA 01824

Communications

Senior Secured

6.25% (LIBOR + 4.50%, 1.75% Floor)

05/07/2016

$5,969,923

$5,984,850

$5,992,312

*

Avantor Performance Materials Holdings, Inc. c/o New Mountain Capital LLC 787 Seventh Avenue 49 th Floor New York, NY 10019

Chemicals

Senior Secured

6.25% (LIBOR + 4.50%, 1.75% Floor)

10/07/2016

$5,985,000

$5,999,962

$6,029,887

*

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Name and Address of Portfolio Company

Industry

Type of Investment

Interest Rate (1)

Maturity Date

Principal Due at Maturity

Amortized Cost

Fair Value of Investment

Percentage of Class Held*

BBB Industries, LLC 5640 Commerce Blvd. East Mobile, AL 36619

Automotive

Senior Secured

6.50% (LIBOR + 4.50%, 2.00% Floor)

06/29/2013

$5,407,805

—

—

*

Senior Secured

6.50% (LIBOR + 4.50%, 2.00% Floor)

06/29/2013

$3,352

—

—

*

TOTAL

$5,411,157

$5,203,910

$5,212,567

*

BMP/Pennant Holdings, LLC (3) 9041 Executive Park Drive Suite 300 Knoxville, TN 37923

Restaurants

Senior Secured Term Loan A

5.71% (LIBOR + 5.25%)

06/27/2014

$2,976,562

—

—

*

Senior Secured Term Loan A

7.50% (BASE RATE + 4.25%)

06/27/2014

$20,848

—

—

*

TOTAL

$2,997,402

$2,399,454

$2,397,922

*

Senior Secured Term Loan B

12.46% (LIBOR + 12.00%)

06/27/2014

$621,875

—

—

*

Senior Secured Term Loan B

14.25% (BASE RATE + 11.00%)

06/27/2014

$22,846

—

—

*

TOTAL

$644,721

$517,729.06

$515,777

*

BRSP, LLC (4) 505 Fifth Avenue New York, NY 10017

Miscellaneous Services

Senior Secured

7.50% (LIBOR + 4.50%, 3.00% Floor)

06/24/2014

$994,855

$999,615

$999,829

*

Camelbak Products, LLC 2000 McDowell Petaluma, CA 94954

Miscellaneous Manufacturing

Senior Secured

7.00% (LIBOR + 5.25%, 1.75% Floor)

06/21/2015

$,800,987

—

—

*

Senior Secured

7.50% (BASE RATE + 4.25%)

06/21/2015

$1,974

—

—

*

TOTAL

$4,802,961

$4,725,152

$4,742,923

CareMore Holdings, Inc. 1221 Avenue of the Americas 39 th Floor New York, NY 10020

Health Services

Senior Secured

3.03% (LIBOR + 2.75%)

02/28/2013

$3,234,000

$2,991,450

$2,910,600

*

Cengage Learning, Inc. 200 First Stamford Place Suite 400 Stamford, CT 06902

Printing & Publishing

Senior Secured

2.55% (LIBOR + 2.25%)

07/03/2014

$8,702,638

$7,995,114

$8,213,550

*

Convergent Resources, Inc. 6 Concourse Parkway Suite 2920 Atlanta, GA 30328

Business Finance Services

Senior Secured

5.80% (LIBOR + 5.50%)

06/30/2012

$3,978,898

$3,779,953

$3,779,953

*

ConvergeOne Holdings Corp. 3344 Highway 149 Eagan, MN 55121

Communications

Senior Secured

3.04% (LIBOR + 2.75%)

05/31/2013

$2,140,727

$1,926,654

$1,926,654

*

Dana Holding Corporation (4) 4500 Dorr Street Toledo, OH 43615

Machinery

Senior Secured

4.53% (LIBOR + 4.25%)

01/30/2015

$3,126,222

—

—

*

Senior Secured

4.53% (LIBOR + 4.25%)

01/30/2015

$1,271,775

—

—

*

TOTAL

$4,397,997

$4,390,521

$4,430,983

Darling International Inc. 251 O’Connor Ridge Boulevard Suite 300 Irving, TX 75038

Food Products

Senior Secured

5.00% (LIBOR + 3.50%, 1.50% Floor)

12/17/2016

$1,500,000

$1,492,500

$1,510,650

*

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Name and Address of Portfolio Company

Industry

Type of Investment

Interest Rate (1)

Maturity Date

Principal Due at Maturity

Amortized Cost

Fair Value of Investment

Percentage of Class Held*

Denny’s Inc. 203 E. Main St. Spartanburg, SC 29319

Restaurants

Senior Secured

6.50% (LIBOR + 4.75%, 1.75% Floor)

09/30/2016

$3,840,000

$3,871,104

$3,884,928

*

Earthbound Holdings III, LLC 1721 San Juan Highway San Juan Bautista, CA 95045

Crop Agriculture

Senior Secured

6.75% (LIBOR + 5.00%, 1.75% Floor)

12/21/2016

$3,000,000

$2,955,041

$3,020,700

*

Educate, Inc. 1001 Fleet Street Baltimore, MD 21202

Educational Services

Senior Secured

8.50% (LIBOR + 7.00%, 1.50% Floor)

06/14/2014

$1,480,000

—

—

*

Senior Secured

9.25% (BASE RATE + 6.00%)

06/14/2014

$8,515

—

—

*

TOTAL

$1,488,515

$1,466,940

$1,466,187

*

eInstruction Corp. 308 N. Carroll Blvd. Denton, TX 76201

Communications

Senior Secured

4.06% (LIBOR + 3.75%)

07/02/2013

$3,033,431

—

—

*

Senior Secured

5.75% (BASE RATE + 2.50%)

07/02/2013

$6,598

—

—

*

TOTAL

$3,040,029

$2,705,625

$2,766,426

*

Farley’s & Sathers Candy Company, Inc. One Sather Plaza P.O. Box 28 Round Lake, MN 56167

Food Products

Senior Secured

7.00% (LIBOR + 5.00%, 2.00% Floor)

06/15/2011

$1,807,013

—

—

*

Senior Secured

7.25% (BASE RATE + 4.00%)

06/15/2011

$2,787

—

—

*

TOTAL

$1,809,799

$1,791,702

$1,805,275

*

Fleetgistics Holdings, Inc. c/o Fleetgistics Enterprises, Inc. 7701 Forsyth Blvd. Suite 600 St. Louis, MO 63105

Transportation Services

Senior Secured

7.50% (LIBOR + 5.50%, 2.00% Floor)

03/23/2015

$3,082,979

—

—

*

Senior Secured

7.75% (BASE RATE + 4.00%)

03/23/2015

$220,146

—

—

TOTAL

$3,303,125

$3,311,383

$3,311,383

*

General Chemical Corporation 90 East Halsey Road Parsippany, NJ 07054

Chemicals

Senior Secured

6.75% (LIBOR + 5.00%, 1.75% Floor)

10/06/2015

$995,294

—

—

*

Senior Secured

7.25% (BASE RATE + 4.00%)

10/06/2015

$2,206

—

—

*

TOTAL

$997,500

$1,004,483

$1,009,171

*

Goodman Global, Inc. 5151 San Felipe Suite 500 Houston, TX 77056

Machinery

Senior Secured

5.75% (LIBOR + 4.00%, 1.75% Floor)

10/28/2016

$997,500

$987,772

$1,001,889

*

Green Tree Credit Solutions LLC 1100 Landmark Towers 345 St. Peter Street St. Paul, MN 55102

Consumer Finance Services

Senior Secured

8.00% (LIBOR + 5.75%, 2.25% Floor)

12/18/2015

$4,385,714

$4,341,857

$4,371,241

*

Gulf Coast Machine & Supply Co. (3) P.O. Box 26002 Beaumont, TX 77705

Oil & Gas Extraction

Senior Secured

13.50% (LIBOR + 9.50%, 4.00% Floor)

01/31/2013

$3,035,155

$2,429,000

$2,428,125

*

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Name and Address of Portfolio Company

Industry

Type of Investment

Interest Rate (1)

Maturity Date

Principal Due at Maturity

Amortized Cost

Fair Value of Investment

Percentage of Class Held*

Hamilton Beach/Proctor-Silex, Inc. 4421 Waterfront Dr. Glen Allen, VA 23060

Home Furnishings Stores

Senior Secured

2.30% (LIBOR + 2.00%)

05/31/2013

$792,600

—

—

*

Senior Secured

2.31% (LIBOR + 2.00%)

05/31/2013

$1,321,000

—

—

*

Senior Secured

2.29% (LIBOR + 2.00%)

05/31/2013

$1,321,000

—

—

*

Senior Secured

2.27% (LIBOR + 2.00%)

05/31/2013

$2,632,462

—

—

*

TOTAL

$6,067,062

$5,824,380

$5,930,554

*

Hoffmaster Group, Inc. 2920 N. Main Street Oshkosh, WI 54901

Papers & Allied Products

Senior Secured

7.00% (LIBOR + 5.00%, 2.00% Floor)

06/02/2016

$6,893,592

$6,812,908

$6,807,422

*

Hyland Software, Inc. 28500 Clemens Road Westlake, OH 44145

Communications

Senior Secured

6.75% (LIBOR + 5.00%, 1.75% Floor)

12/17/2016

$4,000,000

$3,960,183

$3,982,000

*

Inland Pipe Rehabilitation, LLC 2021 S. Schaefer Highway Detroit, MI 48217

Pipe Lines

Senior Secured

6.75% (LIBOR + 4.50%, 3.00% Floor)

07/05/2013

$6,879,301

$6,672,922

$6,672,922

*

Interactive Data Corporation 32 Crosby Drive Bedford, MA 01730

Printing & Publishing

Senior Secured

6.75% (LIBOR + 5.00%, 1.75% Floor)

01/29/2017

$2,487,500

$2,530,036

$2,516,852

*

Kenan Advantage Group, Inc. (The) 4366 Mt. Pleasant St. North Canton, OH 44720

Transportation Services

Senior Secured

5.50% (LIBOR + 4.00%, 1.50% Floor)

06/11/2016

$3,000,000

$2,970,150

$2,997,000

*

LabelCorp Holdings, Inc. 13321 California St. Suite 400 Omaha, NE 68154

Papers & Allied Products

Senior Secured

8.50% (LIBOR + 5.50%, 3.00% Floor)

08/08/2014

$5,320,813

$4,908,450

$4,948,356

*

Landry’s Restaurants, Inc. 1510 West Loop South Houston, TX 77027

Restaurants

Senior Secured

6.25% (LIBOR + 4.50%, 1.75% Floor)

12/10/2014

$3,000,000

$2,962.575

$2,970,000

*

Marshall Retail Group LLC 5385 Wynn Road Las Vegas, NV 89118

Apparel & Accessory Stores

Senior Secured

7.25% (LIBOR + 4.50%, 2.75% Floor)

04/16/2013

$1,798,573

$1,672,673

$1,672,673

*

MCCI Group Holdings, LLC c/o Medical Care Consortium, Inc. 4960 SW 72 nd Street Suite 406 Miami, FL 33155

Health Services

Senior Secured

4.05% (LIBOR + 3.75%)

12/21/2012

$5,510,007

—

—

*

Senior Secured

4.04% (LIBOR + 3.75%)

12/21/2012

$1,002,761

—

—

*

Senior Secured

4.04% (LIBOR + 3.75%)

12/21/2012

$1,469,335

—

—

*

TOTAL

$7,982,104

$7,423,356

$7,423,356

*

Metaldyne, LLC 47659 Halyard Drive Plymouth, MI 48170

Transport Equipment

Senior Secured

7.75% (LIBOR + 6.00%, 1.75% Floor)

10/22/2016

$4,987,500

$5,049,844

$5,027,899

*

Midwest Dental 680 Hehli Way Mondovi,WI 54755

Health Services

Senior Secured

3.51% (LIBOR + 3.25%)

05/03/2012

$7,714,615

$7,213,165

$7,213,165

*

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Name and Address of Portfolio Company

Industry

Type of Investment

Interest Rate (1)

Maturity Date

Principal Due at Maturity

Amortized Cost

Fair Value of Investment

Percentage of Class Held*

NaviSite, Inc. (4) 400 Minuteman Rd. Andover, MA 01810

Communications

Senior Secured

9.15% (LIBOR + 6.00%, 3.15% Floor)

06/08/2013

$1,824,357

—

—

*

Senior Secured

9.15% (BASE RATE + 5.00%)

06/08/2013

$59,811

—

—

*

TOTAL

$1,884,169

$1,771,118

$1,789,960

*

NBTY Inc. 2100 Smithtown Avenue Ronkonkoma, NY 11779

Food Products

Senior Secured

6.25% (LIBOR + 4.50%, 1.75% Floor)

10/01/2017

$2,000,000

$2,025,400

$2,027,000

*

Network Solutions, LLC 13861 Sunrise Valley Drive Suite 300 Herndon, VA 20171

Business Services

Senior Secured

2.52% (LIBOR + 2.25%)

03/07/2014

$6,187,509

$5,831,727

$5,893,602

*

Ocwen Financial Corporation 1661 Worthington Road Suite 100 West Palm Beach, FL 33409

Business Finance Services

Senior Secured

9.00% (LIBOR + 7.00%, 2.00% Floor)

07/29/2015

$5,136,447

$5,118,954

$5,110,765

*

Ozburn-Hessey Holding Company LLC 7101 Executive Center Drive Suite 333 Brentwood, TN 37027

Transportation Services

Senior Secured

7.50% (LIBOR + 5.50%, 2.00% Floor)

04/08/2016

$1,985,000

$2,012,393

$2,004,850

*

Pabst Brewing Company 9014 Heritage Parkway Suite 308 Woodridge, IL 60517

Food Products

Senior Secured

6.50% (LIBOR + 5.00%, 1.50% Floor)

06/25/2015

$3,889,889

$3,869,444

$3,869,444

*

Peak 10, Inc. 8910 Lenox Point Drive Suite A Charlotte, NC 28273

Miscellaneous Services

Senior Secured

7.25% (LIBOR + 5.00%, 1.75% Floor)

10/05/2016

$8,977,500

$8,887,725

$9,022,387

*

Pelican Products, Inc. 23215 Early Avenue Torrance, CA 90505

Miscellaneous Manufacturing

Senior Secured

5.75% (LIBOR + 4.25%, 1.50% Floor)

11/30/2016

$4,000,000

$3,960,458

$4,012,400

*

Physiotherapy Associates, Inc. c/o Benchmark Medical, Inc. 101 Lindenwood Drive Malvern, PA 19355

Health Services

Senior Secured Term Loan

8.5% (LIBOR + 5.25%, 3.25% Floor)

06/28/2013

$4,558,259

$3,945,903

$4,244,140

*

Senior Secured Term Loan (Second Lien)

13.00% (LIBOR + 9.75%, 3.25% Floor)

12/31/2013

$1,000,000

$555,000

$800,000

*

TOTAL

$5,888,259

$4,500,903

$5,044,140

*

Pinnacle Foods Finance LLC 1 Old Bloomfield Avenue Mountain Lakes, NJ 07046

Food Products

Senior Secured

6.00% (LIBOR + 4.25%, 1.75% Floor)

04/02/2014

$832,454

$841,111

$841,694

*

Porex Corporation 500 Bohannon Road Fairburn, GA 30213

Chemicals

Senior Secured

7.25% (LIBOR + 5.75%, 1.50% Floor)

03/31/2015

$1,884,000

—

—

*

Senior Secured

8.00% (BASE RATE + 4.75%)

03/31/2015

$3,500

—

—

TOTAL

$1,887,500

$1,868,625

$1,906,375

*

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Name and Address of Portfolio Company

Industry

Type of Investment

Interest Rate (1)

Maturity Date

Principal Due at Maturity

Amortized Cost

Fair Value of Investment

Percentage of Class Held*

Princeton Review, Inc. (The) 111 Speen Street Framingham, MA 01701

Printing & Publishing

Senior Secured

6.75% (LIBOR + 5.25%, 1.50% Floor)

12/07/2014

$2,825,000

—

—

*

Senior Secured

7.50% (BASE RATE + 4.25%)

12/07/2014

$25,000

—

—

*

TOTAL

$2,850,000

$2,793,000

$2,793,000

*

Protection One, Inc. 1035 N.3d Street Suite 101 Lawrence, KS 66044

Miscellaneous Services

Senior Secured

6.00% (LIBOR + 4.25%, 1.75% Floor)

06/04/2016

$2,877,308

$2,870,114

$2,877,308

*

Provo Craft & Novelty, Inc. 151 E. 3450 North Spanish Fork, UT 84660

Miscellaneous Retail

Senior Secured

8.00% (LIBOR + 6.00%, 2.00% Floor)

03/22/2016

$4,000,000

—

—

*

Senior Secured

8.25% (BASE RATE + 5.00%)

03/22/2016

$38,462

—

—

*

TOTAL

$4,038,462

$3,922,558

$3,885,000

*

PSP Holdco, LLC 22710 Haggerty Rd. Suite 100 Farmington Hills, MI 48335

Miscellaneous Retail

Senior Secured

7.50% (LIBOR + 5.75%, 1.75% Floor)

09/13/2016

$4,987,500

$4,912,687

$4,912,688

*

R3 Treatment Inc. One Franklin Parkway Building 910 Suite 120 San Mateo, CA 94403

Miscellaneous Services

Senior Secured Term Loan A

8.00% (LIBOR + 6.00%, 2.00% Floor)

12/29/14

$4,687,500

$4,640,625

$4,640,625

*

Senior Secured Tranche B Loan

8.50% (LIBOR + 6.50%, 2.00% Floor)

07/01/2015

$2,985,000

$2,970,542

$2,970,075

*

TOTAL

$7,672,500

$7,611,167

$7,610,700

*

RailWorks, LLC 5 Penn Plaza 12 th Floor New York, NY 10001

Railroad Transportation

Senior Secured

5.25% (LIBOR + 3.75%, 1.50% Floor)

05/07/2013

$3,483,946

$3,414,169

$3,414,169

*

Resco Products, Inc. Penn Center West Two Suite 430 Pittsburgh, PA 15276

Mining (Nonmetallic)

Senior Secured

8.50% (LIBOR + 6.50%, 2.00% Floor)

06/22/2013

$4,072,347

$3,746,559

$3,746,559

*

Savvis Communications Corporation (4) 1 Savvis Parkway Town and Country, MO 63017

Miscellaneous Services

Senior Secured

6.75% (LIBOR + 5.00%, 1.75% Floor)

08/04/2016

$4,987,500

$5,039,869

$5,060,816

*

SI Organization, Inc. 720 Vandenburg Road PA/C King of Prussia, PA 19406

Specialty Services

Senior Secured

5.75% (LIBOR + 4.00%, 1.75% Floor)

11/22/2016

$4,000,000

$3,977,793

$4,025,200

*

SMG c/o SMG Holdings, Inc. 701 Market Street Suite 4400 Philadelphia, PA 19106

Miscellaneous Services

Senior Secured

3.29% (LIBOR + 3.00%)

07/27/2014

$7,211,931

$6,779,215

$6,851,334

*

Source Refrigeration & HVAC, Inc. (3) 800 E. Orangethorpe Avenue Anaheim, CA 92801

Electrical Equipment

Senior Secured

11.00% (BASE RATE + 7.75%)

01/30/2015

$1,328,688

$1,222,393

$1,222,393

*

Strategic Partners, Inc. 9800 De Soto Avenue Chatsworth, CA 91311

Apparel Products

Senior Secured

7.25% (LIBOR + 5.50%, 1.75% Floor)

08/23/2016

$6,982,500

$6,982,000

$6,982,500

*

Syncsort Incorporated 50 Tice Boulevard Woodcliff Lake, NJ 07677

Electrical Equipment

Senior Secured

7.50% (LIBOR + 5.50%, 2.00% Floor)

03/31/2015

$4,875,000

$4,777,500

$4,777,500

*

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Name and Address of Portfolio Company

Industry

Type of Investment

Interest Rate (1)

Maturity Date

Principal Due at Maturity

Amortized Cost

Fair Value of Investment

Percentage of Class Held*

Transaction Network Services, Inc. (4) 11380 Commerce Park Drive Suite 600 Reston, VA 20191

Communications

Senior Secured Initial Term Loan

6.00% (LIBOR + 4.00%, 2.00% Floor)

11/18/2015

$4,180,000

$4,188,360

$4,188,360

*

Senior Secured Series 1 New Term Loan

6.00% (LIBOR + 4.00%, 2.00% Floor)

11/18/2015

$668,439

$669,776

$669,776

*

TOTAL

$4,848,439

$4,858,136

$4,858,136

*

Transtar Holding Company 7350 Young Drive Walton Hills,OH 44146

Automotive

Senior Secured

6.25% (LIBOR + 4.50%, 1.75% Floor)

12/21/2016

$3,000,000

$2,970,000

$3,030,000

*

TSI Acquisition LLC 11785 Highway 132 Pampa, TX 79065

Oil & Gas Extraction

Senior Secured

3.05% (LIBOR + 2.75%)

03/12/2013

$1,787,813

$1,537,519

$1,537,519

*

U.S. TelePacific Corp. 515 S. Flower St. 47 th Floor Los Angeles, CA 90071

Communications

Senior Secured

9.25% (LIBOR + 7.25%, 2.00% Floor)

08/17/2015

$992,500

$999,944

$1,000,738

*

United Components, Inc. 1001 Pennsylvania Avenue, NW Washington, DC 20004

Transport Equipment

Senior Secured

6.25% (LIBOR + 4.50%, 1.75% Floor)

03/23/2017

$498,750

$503,139

$498,750

*

United States Infrastructure Corporation 13085 Hamilton Crossing Blvd. Suite 200 Carmel, IN 46032

Miscellaneous Services

Senior Secured

5.50% (LIBOR + 4.00%, 1.50% Floor)

05/13/2015

$1,989,427

—

—

*

Senior Secured

6.00% (BASE RATE + 3.25%)

05/13/2015

$5,573

—

—

*

TOTAL

$1,995,000

$1,995,000

$1,997,494

*

Universal Fiber Systems, LLC 14401 Industrial Park Road Bristol, VA 24202

Textile Equipment

Senior Secured

7.00% (LIBOR + 5.25%, 1.75% Floor)

06/26/2015

$5,000,000

$4,950,000

$4,950,000

*

Vision Solutions, Inc. 15300 Barranca Parkway Irvine, CA 92618

Miscellaneous Services

Senior Secured

7.75% (LIBOR + 6.00%, 1.75% Floor)

07/23/2016

$6,737,500

$6,636,438

$6,670,125

*

Volume Services America, Inc. (Centerplate) 2187 Atlantic Street 6 th Floor Stamford, CT 06902

Miscellaneous Services

Senior Secured Term Loan A

10.00% (LIBOR + 8.00%, 2.00% Floor)

09/16/2015

$1,920,000

—

—

*

Senior Secured Term Loan A

10.25% (BASE RATE + 7.00%)

09/16/2015

$5,000

—

—

*

TOTAL

$1,925,000

$1,896,125

$1,896,125

*

Senior Secured Term Loan B

10.50% (LIBOR + 8.50%, 2.00% Floor)

09/16/2016

$6,979,904

—

—

*

Senior Secured Term Loan B

10.75% (BASE RATE + 7.50%)

09/16/2016

$2,596

—

—

*

TOTAL

$6,982,500

$6,860,306

$6,995,767

*

Vonage America Inc. (4) 23 Main Street Holmdel, NJ 07733

Communications

Senior Secured

9.75% (LIBOR + 8.00%, 1.75% Floor)

12/14/2015

$2,000,000

$1,940,396

$1,995,000

*

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TABLE OF CONTENTS

MANAGEMENT OF THE COMPANY

Our business and affairs are managed under the direction of our board of directors. The board of directors currently consists of seven members, four of whom are not “interested persons” of Garrison Capital as defined in Section 2(a)(19) of the 1940 Act, and are “independent” as determined by our board of directors, consistent with the rules of the NASDAQ Global Select Market. We refer to these individuals as our independent directors. Our board of directors elects our officers, who will serve at the discretion of the board of directors.

Board of Directors and its Leadership Structure

Under our certificate of incorporation, our directors will be divided into three classes. Each class of directors will hold office for a three-year term. However, the initial members of the three classes have initial terms of one, two and three years, respectively. At each annual meeting of our stockholders, the successors to the class of directors whose terms expire at such meeting will be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Each director will hold office for the term to which he or she is elected and until his or her successor is duly elected and qualifies.

Oversight of our investment activities extends to oversight of the risk management processes employed by our investment adviser as part of its day-to-day management of our investment activities. The board of directors anticipates reviewing risk management processes at both regular and special board meetings throughout the year, consulting with appropriate representatives of our investment adviser as necessary and periodically requesting the production of risk management reports or presentations. The goal of the board of directors’ risk oversight function is to ensure that the risks associated with our investment activities are accurately identified, thoroughly investigated and responsibly addressed. Investors should note, however, that the board of directors’ oversight function cannot eliminate all risks or ensure that particular events do not adversely affect the value of our investments.

The board of directors has established an audit committee and a nominating and corporate governance committee, and may establish additional committees from time to time as necessary. The scope of each committee’s responsibilities is discussed in greater detail below. Joseph Tansey, Co-President of Garrison Investment Group, and therefore an interested person of Garrison Capital, serves as Chairman of the board of directors. Our board of directors believes that it is in the best interests of our investors for Mr. Tansey to lead the board of directors because of his familiarity with our portfolio companies, his broad experience with the day-to-day management and operation of other investment funds and his significant background in the financial services industry, as described below.

The board of directors does not have a lead independent director. However,       , the chairman of the audit committee and the nominating and corporate governance committee, is an independent director and acts as a liaison between the independent directors and management between meetings of the board of directors and is involved in the preparation of agendas for board and committee meetings. The board of directors believes that its leadership structure is appropriate because the structure allocates areas of responsibility among the individual directors and the committees in a manner that enhances effective oversight. The board of directors also believes that its small size creates an efficient governance structure that provides opportunity for direct communication and interaction between our investment adviser and the board of directors.

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Directors

Information regarding the members of the board of directors as of the date of this prospectus is as follows:

Name		Age		Position		Director Since		Expiration of Term
Interested Directors
Joseph Tansey		38		Chairman of the board of directors and Chief Executive Officer		2011
Steven Stuart		47		Director		2011
Rafael Astruc		42		Director		2011
Independent Directors
				Director, Chairman of the audit and nominating and corporate governance committees		2011
				Director		2011
				Director		2011
				Director		2011

The address for each director is c/o Garrison Investment Group, 1350 Avenue of the Americas, New York, New York 10019.

Executive Officers Who are Not Directors

Information regarding our executive officers who are not directors is as follows:

Name		Age		Position
Brian Chase		33		Chief Financial Officer, Treasurer
Julian Weldon		38		Chief Compliance Officer

The address for each executive officer is c/o Garrison Investment Group, 1350 Avenue of the Americas, New York, New York 10019.

Biographical Information

Directors

Our directors have been divided into two groups — interested directors and independent directors. Interested directors are “interested persons” as defined in the 1940 Act.

Interested Directors

Joseph Tansey has served as Chairman of our board of directors and Chief Executive Officer since 2011 and is a member of our investment committee. He has served as Co-President of Garrison Investment Group since its formation in March 2007. Prior to forming Garrison Investment Group, Mr. Tansey was a Managing Director at Fortress from 2002 to 2007 and a partner of Drawbridge from its inception in August 2002 to March 2007. At Drawbridge, he was responsible for investment and loan structuring with a focus on structured finance and real estate transactions. Most recently, he ran Drawbridge’s rediscount lending business. From 1998 to 2002, Mr. Tansey worked at Goldman Sachs & Co. in Tokyo, Hong Kong and New York as a member of the Asian Special Situations Group, the Real Estate Principal Investment Group and the Mortgages Department. Prior to joining Goldman Sachs, Mr. Tansey worked at Starwood Capital Group from 1995 to 1998 where he was involved in the acquisition and management of real estate operating businesses and distressed debt. Mr. Tansey received a B.A. and a B.S. from The University of Pennsylvania.

Steven Stuart has served as director since 2011 and is a member of our investment committee. He has served as Co-President of Garrison Investment Group since its formation in March 2007. Prior to forming Garrison Investment Group, Mr. Stuart was a Managing Director at Fortress and a partner of Drawbridge from its inception in August 2002 to March 2007. At Drawbridge, Mr. Stuart was a senior partner in the real estate

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area and had primary responsibility for originating both debt and equity transactions in real estate and was also involved in the origination of transactions across all asset categories in the hedge fund. Prior to joining Fortress, Mr. Stuart was the head of the Leveraged Lending and Real Estate Finance Groups at Shinsei Bank, formerly known as Long Term Credit Bank of Japan, where his group originated corporate and real estate loans in excess of $3 billion. From January 1997 through 1998, he was responsible for loan origination for the Real Estate Finance group at Deutsche Bank. Prior to Deutsche Bank, Mr. Stuart spent nearly 10 years at Goldman Sachs & Co., working in both the Real Estate Group and the Mortgage and Asset-Backed Group, where he focused on real estate financings, distressed asset transactions, loan portfolio sales and the securitization of a wide range of consumer loans, residential mortgages and commercial mortgages. Mr. Stuart received a B.A. from Columbia University.

Rafael Astruc has served as a director since 2011 and is a member of our investment committee. Mr. Astruc is currently the president of Cicero Alternative Asset Management, LLC, an advisory firm he founded in January 2011 that provides strategic advisory services to Garrison Investment Group. Prior to founding Cicero Alternative Asset Management, LLC, Mr. Astruc co-founded Private Advisors, LLC, a fund of funds platform specializing in hedge funds and private equity partnerships targeting middle market buyouts, in 1997. While at Private Advisors, LLC from 1997 through 2010, Mr. Astruc served on the board of directors, management committee and investment committee and focused on credit, distressed, direct lending and private equity strategies, with responsibility for portfolio construction, manager selection, due diligence and interfacing with institutional investors and consultants. Prior to co-founding Private Advisors, Mr. Astruc served as an associate at Matrix Capital Markets Group, Inc., a merger and acquisition advisory firm representing sellers of privately-held businesses in the middle market. Over the course of his career, Mr. Astruc has served on numerous private equity and hedge fund advisory boards. Mr. Astruc received a B.S. from George Mason University.

Independent Directors

Executive officers who are not directors

Brian Chase has served as our Chief Financial Officer and Treasurer since 2011 . Mr. Chase is also a member of our investment committee. He joined Garrison Investment Group at its formation in March 2007 and currently serves as its chief operating officer and chief financial officer with responsibility for structuring of funds, financing, operations, tax, accounting and general administration. Prior to joining Garrison Investment Group, from 2005 until March 2007, Mr. Chase was chief financial officer of the Distressed Securities business at The Blackstone Group, where he was responsible for building and overseeing the fund infrastructure and operations. From 2002 until 2005, Mr. Chase was a controller for Drawbridge where he helped develop and oversee the fund’s accounting, tax, financing and operations. Prior to Fortress, Mr. Chase worked at UBS Alternative Investment Group, a manager of equity and distressed hedge funds, and in the Capital Markets Group at PricewaterhouseCoopers LLP specializing in hedge fund audits. Mr. Chase received a B.S. from the State University of New York at Binghamton and is a Certified Public Accountant in the State of New York.

Julian Weldon has served as our Chief Compliance Officer since 2011. Mr. Weldon is the General Counsel for Garrison Investment Group. Prior to joining Garrison in September 2008, Mr. Weldon was Senior Counsel in the Banking department in the New York office of Allen & Overy LLP where he advised on their lending activities across a wide range of product areas. Earlier in his career, Mr. Weldon worked in the Banking department in Allen & Overy’s London office from March 1997 to July 2000. Mr. Weldon was seconded to the leverage finance team of The Goldman Sachs Group, Inc. in London from 1998 to 1999 and also spent five months in 2000 seconded to the internal legal team of Barclays Bank plc in New York. Mr. Weldon attended law school at the College of Law in London and obtained an undergraduate degree in law (J.D. equivalent) from the University of East Anglia, England. Mr. Weldon is admitted to practice in New York and England.

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Committees of the Board of Directors

Audit Committee

The members of the audit committee are Messrs.     , and     , each of whom is independent for purposes of the 1940 Act and The NASDAQ Global Select Market corporate governance regulations. Mr.     serves as chairman of the audit committee. The audit committee is responsible for approving our independent accountants, reviewing with our independent accountants the plans and results of the audit engagement, approving professional services provided by our independent accountants, reviewing the independence of our independent accountants and reviewing the adequacy of our internal accounting controls. The audit committee is also responsible for aiding our board of directors in fair value pricing debt and equity securities that are not publicly traded or for which current market values are not readily available. The board of directors and audit committee will use the services of one or more independent valuation firms to help them determine the fair value of these securities. Our board of directors has determined that Mr.       is an “audit committee financial expert,” as defined under Item 407(d)(5) of Regulation S-K under the Exchange Act. In addition, each member of our audit committee meets the current independence and experience requirements of Rule 10A-3 under the Exchange Act.

Nominating and Corporate Governance Committee

The members of the nominating and corporate governance committee are Messrs.     , and     , each of whom is independent for purposes of the 1940 Act and the corporate governance regulations of The NASDAQ Global Select Market. Mr.     serves as chairman of the nominating and corporate governance committee. The nominating and corporate governance committee is responsible for selecting, researching and nominating directors for election by our stockholders, selecting nominees to fill vacancies on the board of directors or a committee of the board of directors, developing and recommending to the board of directors a set of corporate governance principles and overseeing the evaluation of the board of directors and our management.

The nominating and corporate governance committee will consider nominees to the board of directors recommended by a stockholder, if such stockholder complies with the advance notice provisions of our bylaws. Our bylaws provide that a stockholder who wishes to nominate a person for election as a director at a meeting of stockholders must deliver written notice to our corporate secretary. This notice must contain, as to each nominee, all of the information relating to such person as would be required to be disclosed in a proxy statement meeting the requirements of Regulation 14A under the Exchange Act, and certain other information set forth in the bylaws. In order to be eligible to be a nominee for election as a director by a stockholder, such potential nominee must deliver to our corporate secretary a written questionnaire providing the requested information about the background and qualifications of such person and a written representation and agreement that such person is not and will not become a party to any voting agreements, any agreement or understanding with any person with respect to any compensation or indemnification in connection with service on the board of directors, and would be in compliance with all of our publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines.

Compensation Committee

We will not have a compensation committee because our executive officers will not receive any direct compensation from us.

Compensation of Directors

Our independent directors each will receive an annual fee of $    . They will also receive $     plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board of directors meeting and will receive $     plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each committee meeting. In addition, the Chairman of the Audit Committee will receive an annual fee of $     and each chairman of any other committee will receive an annual fee of $     for their additional services in these capacities. Independent directors will have the option to receive their directors’ fees paid in shares of our common stock issued at a price per share equal to the greater of net asset value or the market price at the time of payment. No compensation is expected to be paid to directors who are “interested persons.” In addition, we have purchased directors’ and officers’ liability insurance on behalf of our directors and officers.

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Compensation of Chief Executive Officer and Other Executive Officers

None of our officers will receive direct compensation from us. The compensation of our chief financial officer and our chief compliance officer will be paid by Garrison Capital Administrator, subject to reimbursement by us of an allocable portion of such compensation for services rendered by him to us. To the extent that our administrator outsources any of its functions we will pay the fees associated with such functions on a direct basis without profit to the administrators.

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CERTAIN RELATIONSHIPS

We have entered into agreements with our investment adviser, in which our senior management and members of our investment committee have ownership and financial interests. Members of our senior management and members of the investment committee also serve as principals of other investment managers affiliated with our investment adviser that do and may in the future manage investment funds, accounts or other investment vehicles with investment objectives similar to ours. In addition, our executive officers and directors and the members of our investment adviser and members of the investment committee serve or may serve as officers, directors or principals of entities that operate in the same, or related, line of business as we do or of investment funds, accounts or other investment vehicles managed by our affiliates. These investment funds, accounts or other investment vehicles may have investment objectives similar to our investment objective. As a result, we may not be given the opportunity to participate in certain investments made by investment funds, accounts or other investment vehicles managed by our investment or its affiliates or by members of the investment committee. However, in order to fulfill its fiduciary duties to each of its clients, our investment adviser intends to allocate investment opportunities in a manner that is fair and equitable over time and is consistent with our investment adviser’s allocation policy, investment objective and strategies so that we are not disadvantaged in relation to any other client. See “Risk Factors — Risks Relating to our Business and Structure — There are significant potential conflicts of interest that could affect our investment returns.” Where we are able to co-invest consistent with the requirements of the 1940 Act, if sufficient securities or loan amounts are available to satisfy our and each such account’s proposed demand, the opportunity will be allocated in accordance with our investment adviser’s pre-transaction determination. If there is an insufficient amount of an investment opportunity to satisfy our demand and that of other accounts sponsored or managed by our investment adviser or its affiliates, the allocation policy further provides that allocations among us and such other accounts will generally be made pro rata based on the amount that each such party would have invested if sufficient securities or loan amounts were available. Where we are unable to co-invest consistent with the requirements of the 1940 Act, our investment adviser’s allocation policy provides for investments to be allocated on a rotational basis to assure that all clients have fair and equitable access to such investment opportunities.

Policies and Procedures for Managing Conflicts

Our investment adviser and its affiliates have both subjective and objective procedures and policies in place and designed to manage the potential conflicts of interest between our investment adviser’s fiduciary obligations to us and its similar fiduciary obligations to other clients. For example, such policies and procedures are designed to ensure that investment opportunities are allocated in a fair and equitable manner among us and their other clients. An investment opportunity that is suitable for multiple clients of our investment adviser and its affiliates may not be capable of being shared among some or all of such clients and affiliates due to the limited scale of the opportunity or other factors, including regulatory restrictions imposed by the 1940 Act. There can be no assurance that our investment adviser’s or its affiliates’ efforts to allocate any particular investment opportunity fairly among all clients for whom such opportunity is appropriate will result in an allocation of all or part of such opportunity to us. Not all conflicts of interest can be expected to be resolved in our favor.

Our investment adviser may manage investment vehicles with similar or overlapping investment strategies with us and has put in place a conflict-resolution policy that addresses the co-investment restrictions set forth under the 1940 Act and seeks to ensure the equitable allocation of investment opportunities when we are able to invest alongside other accounts managed by our adviser and its affiliates. When we invest alongside such other accounts as permitted, such investments are made consistent with the allocation policy of Garrison Investment Group and our investment adviser. Under this allocation policy, a fixed calculation, based on the type of investment, will be applied to determine the amount of each opportunity to be allocated to us. This allocation policy will be periodically reviewed by our investment adviser and approved by our independent directors. We expect that these determinations will be made similarly for other accounts sponsored or managed by our investment adviser and its affiliates. Where we are able to co-invest consistent with the requirements of the 1940 Act, if sufficient securities or loan amounts are available to satisfy our and each such account’s proposed demand, we expect that the opportunity will be allocated in accordance with our investment adviser’s pre-transaction determination. If there is an insufficient amount of an investment

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opportunity to satisfy us and other accounts sponsored or managed by our investment adviser or its affiliates, the allocation policy further provides that allocations among us and such other accounts will generally be made pro rata based on the amount that each such party would have invested if sufficient securities or loan amounts were available. However, we can offer no assurance that investment opportunities will be allocated to us fairly or equitably in the short-term or over time. We expect that these determinations will be made similarly for other accounts sponsored or managed by Garrison Investment Group and its affiliates. In situations where co-investment with other accounts managed by our investment adviser or its affiliates is not permitted or appropriate, Garrison Investment Group and our investment adviser will need to decide which client will proceed with the investment. Our investment adviser’s allocation policy provides, in such circumstances, for investments to be allocated on a rotational basis to assure that all clients have fair and equitable access to such investment opportunities.

Co-Investment Opportunities

We have in the past and expect in the future to co-invest on a concurrent basis with other affiliates, unless doing so is impermissible with existing regulatory guidance, applicable regulations and our allocation procedures. Certain types of negotiated co-investments may be made only if we receive an order from the SEC permitting us to do so. There can be no assurance that we will obtain any such order. See “Regulation.” We, Garrison Investment Group and our investment adviser intend to submit an exemptive application to the SEC to permit greater flexibility to negotiate the terms of co-investments if our board of directors determines that it would be advantageous for us to co-invest with other accounts managed by our investment adviser or its affiliates in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.

Material Non-Public Information

Our senior management, members of our investment committee and other investment professionals from our investment adviser may serve as directors of, or in a similar capacity with, companies in which we invest or in which we are considering making an investment. Through these and other relationships with a company, these individuals may obtain material non-public information that might restrict our ability to buy or sell the securities of such company under the policies of the company or applicable law.

Investment Advisory Agreement

Under the Investment Advisory Agreement, we will pay Garrison Capital Advisers a fee for investment management services consisting of a base management fee and an incentive fee. This fee structure may create an incentive for Garrison Capital Advisers to invest in certain types of securities. Additionally, we rely on investment professionals from our investment adviser to assist our board of directors with the valuation of our portfolio investments. See “— Staffing Agreement.”

The management fee and incentive fee paid to our investment adviser are based on the value of our investments and there may be a conflict of interest when personnel of our investment adviser are involved in the valuation process for our portfolio investments. See “Risk Factors — Risks Relating to our Business and Structure — There are significant conflicts of interest that could affect our investment returns.”

Staffing Agreement

Garrison Capital Advisers is an affiliate of Garrison Investment Group, with whom it has entered into the Staffing Agreement. Under the Staffing Agreement, Garrison Investment Group will make available to Garrison Capital Advisers experienced investment professionals and access to the senior investment personnel and other resources of Garrison Investment Group and its affiliates. The Staffing Agreement should provide Garrison Capital Advisers with access to deal flow generated by the professionals of Garrison Investment Group and commits the members of our investment adviser’s investment committee to serve in that capacity. Garrison Capital Advisers intends to capitalize on what we believe to be the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Garrison Investment Group’s investment professionals.

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Administration Agreement

We have entered into an Administration Agreement, pursuant to which Garrison Capital Administrator furnishes us with office facilities, equipment and clerical, bookkeeping, recordkeeping and other administrative services. Under our Administration Agreement, Garrison Capital Administrator performs, or oversees the performance of, our required administrative services, which include being responsible for the financial records which we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. Garrison Capital Advisers is the sole member of and controls Garrison Capital Administrator.

Concurrent Private Placement

Concurrently with the closing of this offering, we will sell to certain of our officers and directors, their immediate family members or entities owned by, or family trusts for the benefit of, such persons,     shares of our common stock in the Concurrent Private Placement at the initial public offering price per share, resulting in aggregate net cash proceeds to us of $     million. We have also granted investors in the Concurrent Private Placement customary registration rights.

License Agreement

We have entered into the License Agreement with Garrison Investment Group LP pursuant to which Garrison Investment Group LP has agreed to grant us a non-exclusive, royalty-free license to use the name “Garrison.” Under this agreement, we will have a right to use the Garrison name, for so long as Garrison Capital Advisers or one of its affiliates remains our investment adviser. The License Agreement is terminable by either party at any time in its sole discretion upon 60 days prior written notice and is also terminable by Garrison Investment Group LP in the case of certain events of non-compliance. Other than with respect to this limited license, we will have no legal right to the “Garrison” name.

Formation Transactions

Certain open-ended funds affiliated with our investment adviser contributed 100% of the stock of Garrison Capital CLO Ltd., which in turn owns all of the Subordinated Notes, to us as of December 31, 2010 in exchange for $80.6 million in fair value of units in Garrison Capital LLC. An independent third-party valuation firm was engaged to provide positive assurance regarding the fair value of the Subordinated Notes that were contributed to us as of the date of such contribution.

Immediately prior to the completion of this offering, Garrison Capital LLC intends to convert into a Delaware corporation, Garrison Capital Inc., and all of the outstanding units in Garrison Capital LLC will be converted into     shares of common stock in Garrison Capital Inc. As part of the BDC Conversion, the existing members of Garrison Capital LLC will receive an aggregate of     shares of our common stock in exchange for the     limited liability company interests they own in Garrison Capital LLC, representing an estimated equivalent price of $     per share based on the fair value of the assets contributed by such members in connection with our formation, as determined by our board of directors.

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CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS

Immediately after giving effect to the BDC Conversion and prior to the completion of this offering and the Concurrent Private Placement, there will be     shares of common stock outstanding and     stockholders of record. At that time, we will have no other shares of capital stock outstanding. The following table sets forth certain ownership information with respect to our common stock for those persons who directly or indirectly own, control or hold with the power to vote, 5% or more of our outstanding common stock and all officers and directors, as a group.

Percentage of common stock outstanding

Immediately prior to this offering (1) and Concurrent Private Placement (2)

Immediately after this offering (3) and Concurrent Private Placement (2)

Name and address (4)

Type of ownership

Shares owned

Percentage

Shares owned

Percentage

Garrison Investment Group LP (5)

Beneficial

%

Garrison Capital Advisers LLC

Record

%

Joseph Tansey (6)

Beneficial

%

Steven Stuart (6)

Beneficial

%

Rafael Astruc

Beneficial

%

Brian Chase

Beneficial

%

Julian Weldon

Beneficial

%

All officers and directors as a group (9 persons)

%

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The following table sets forth the dollar range of our equity securities beneficially owned by each of our directors after giving effect to the Concurrent Private Placement. We are not part of a “family of investment companies,” as that term is defined in the 1940 Act.

Name of Director		Dollar Range of Equity Securities in Garrison Capital (1)
Independent Directors
Interested Directors
Joseph Tansey
Steven Stuart
Rafael Astruc