UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 2020
o         Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission
File Number 		  Exact name of registrant as specified in its charter, address of principal executive
offices, telephone numbers and states or other jurisdictions of incorporation or organization 		  I.R.S. Employer
Identification Number
814-00832   New Mountain Finance Corporation   27-2978010
    787 Seventh Avenue, 48th Floor
New York, New York 10019
Telephone: (212) 720-0300
State of Incorporation: Delaware 		   
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, par value $0.01 per share NMFC The NASDAQ Global Select Market
5.75% Notes due 2023 NMFCL The NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ý
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock.
Description   Shares as of November 4, 2020
Common stock, par value $0.01 per share   96,827,342

Table of Contents
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2020
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Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
New Mountain Finance Corporation
 
Consolidated Statements of Assets and Liabilities
(in thousands, except shares and per share data)
(unaudited)
  September 30, 2020 December 31, 2019
Assets    
Investments at fair value    
Non-controlled/non-affiliated investments (cost of $2,298,918 and $2,619,408, respectively) $ 2,247,848  $ 2,613,801 
Non-controlled/affiliated investments (cost of $79,785 and $82,825, respectively) 55,769  73,527 
Controlled investments (cost of $599,584 and $449,308, respectively) 593,006  472,952 
Total investments at fair value (cost of $2,978,287 and $3,151,541, respectively) 2,896,623  3,160,280 
Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively) 21,422  21,422 
Cash and cash equivalents 68,664  48,574 
Interest and dividend receivable 33,568  31,800 
Receivable from unsettled securities sold 4,490  — 
Receivable from affiliates 513  277 
Other assets 7,211  3,702 
Total assets $ 3,032,491  $ 3,266,055 
Liabilities    
Borrowings
     Holdings Credit Facility $ 459,163  $ 661,563 
     Unsecured Notes 453,250  453,250 
     SBA-guaranteed debentures 300,000  225,000 
     DB Credit Facility 242,000  230,000 
     Convertible Notes 201,545  201,623 
     NMFC Credit Facility 150,500  188,500 
     Deferred financing costs (net of accumulated amortization of $31,939 and $28,390, respectively) (18,222) (17,640)
Net borrowings 1,788,236  1,942,296 
Payable for unsettled securities purchased —  1,780 
Management fee payable 19,988  10,298 
Incentive fee payable 13,531  7,646 
Interest payable 10,141  16,484 
Payable to affiliates 1,163  673 
Deferred tax liability 134  912 
Other liabilities 2,138  2,498 
Total liabilities 1,835,331  1,982,587 
Commitments and contingencies (See Note 9)    
Net assets    
Preferred stock, par value $0.01 per share, 2,000,000 shares authorized, none issued
—  — 
Common stock, par value $0.01 per share, 200,000,000 shares authorized, and 96,827,342 and 96,827,342 shares issued and outstanding, respectively 968  968 
Paid in capital in excess of par 1,287,853  1,287,853 
Accumulated overdistributed earnings (104,057) (5,353)
Total net assets of New Mountain Finance Corporation 1,184,764  1,283,468 
Non-controlling interest in New Mountain Net Lease Corporation
12,396  — 
Total net assets $ 1,197,160  $ 1,283,468 
Total liabilities and net assets $ 3,032,491  $ 3,266,055 
Number of shares outstanding 96,827,342  96,827,342 
Net asset value per share of New Mountain Finance Corporation $ 12.24  $ 13.26 
The accompanying notes are an integral part of these consolidated financial statements.
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New Mountain Finance Corporation
 
Consolidated Statements of Operations
(in thousands, except shares and per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Investment income
From non-controlled/non-affiliated investments:
Interest income (excluding Payment-in-kind ("PIK") interest income) $ 41,854  $ 50,096  $ 144,383  $ 140,602 
PIK interest income 2,547  1,356  6,464  3,325 
Non-cash dividend income 2,274  2,239  6,898  6,282 
Other income 1,497  3,599  4,085  7,694 
From non-controlled/affiliated investments:
Interest income (excluding PIK interest income) 781  659  1,963  1,979 
PIK interest income 217  392  (1,131) 1,109 
Dividend income 687  788  2,096  2,326 
Non-cash dividend income —  309  (3,418) 901 
Other income 427  342  1,002  934 
From controlled investments:
Interest income (excluding PIK interest income) 2,011  720  4,581  2,323 
PIK interest income 2,244  1,997  6,393  5,441 
Dividend income 8,107  7,661  24,061  23,383 
Non-cash dividend income 1,576  2,273  5,716  6,446 
Other income 1,299  163  2,479  505 
Total investment income 65,521  72,594  205,572  203,250 
Expenses
Incentive fee 7,135  7,792  21,857  21,642 
Management fee 12,877  12,687  39,869  35,302 
Interest and other financing expenses 18,077  21,830  59,500  61,695 
Administrative expenses 1,024  930  3,303  3,074 
Professional fees 731  834  2,605  2,486 
Other general and administrative expenses 442  492  1,383  1,302 
Total expenses 40,286  44,565  128,517  125,501 
Less: management and incentive fees waived (See Note 5) (3,341) (3,141) (10,067) (8,497)
Less: expenses waived and reimbursed (See Note 5) (589) —  (924) (335)
Net expenses 36,356  41,424  117,526  116,669 
Net investment income before income taxes 29,165  31,170  88,046  86,581 
Income tax expense 123  —  116  13 
Net investment income 29,042  31,170  87,930  86,568 
Net realized gains (losses):
Non-controlled/non-affiliated investments 30  349  (4,431) 439 
Non-controlled/affiliated investments 12  —  12  — 
Controlled investments 5  6  12  14 
New Mountain Net Lease Corporation —  —  812  — 
Net change in unrealized appreciation (depreciation):
Non-controlled/non-affiliated investments 21,410  (8,334) (67,407) 4,106 
Non-controlled/affiliated investments (1,111) (143) (14,718) (2,671)
Controlled investments 39,943  1,453  (8,278) 3,870 
Securities purchased under collateralized agreements to resell —  (1,332) —  (1,332)
New Mountain Net Lease Corporation —  —  (812) — 
Benefit for taxes 257  281  778  121 
Net realized and unrealized gains (losses) 60,546  (7,720) (94,032) 4,547 
Net increase (decrease) in net assets resulting from operations 89,588  23,450  (6,102) 91,115 
Less: Net increase in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation (1,398) —  (1,584) — 
Net increase (decrease) in net assets resulting from operations related to New Mountain Finance Corporation $ 88,190  $ 23,450  $ (7,686) $ 91,115 
Basic earnings (loss) per share $ 0.91  $ 0.27  $ (0.08) $ 1.11 
Weighted average shares of common stock outstanding - basic (See Note 11)
96,827,342  86,987,841  96,827,342  82,020,549 
Diluted earnings (loss) per share $ 0.82  $ 0.26  $ (0.08) $ 1.01 
Weighted average shares of common stock outstanding - diluted (See Note 11)
110,084,927  100,245,426  110,084,927  97,948,225 
Distributions declared and paid per share $ 0.30  $ 0.34  $ 0.94  $ 1.02 
The accompanying notes are an integral part of these consolidated financial statements.
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New Mountain Finance Corporation
 
Consolidated Statements of Changes in Net Assets
(in thousands, except shares and per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Increase (decrease) in net assets resulting from operations:
Net investment income $ 29,042  $ 31,170  $ 87,930  $ 86,568 
Net realized gains (losses) on investments and New Mountain Net Lease Corporation 47  355  (3,595) 453 
Net change in unrealized appreciation (depreciation) of investments and New Mountain Net Lease Corporation 60,242  (7,024) (91,215) 5,305 
Net change in unrealized depreciation of securities purchased under collateralized agreements to resell —  (1,332) —  (1,332)
Benefit for taxes 257  281  778  121 
Net increase (decrease) in net assets resulting from operations 89,588  23,450  (6,102) 91,115 
Less: Net increase in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation (1,398) —  (1,584) — 
Net increase (decrease) in net assets resulting from operations related to New Mountain Finance Corporation 88,190  23,450  (7,686) 91,115 
Capital transactions
Net proceeds from shares sold —  94,185  —  153,482 
Deferred offering costs —  (315) —  (544)
Distributions declared to stockholders from net investment income (29,049) (29,753) (91,018) (84,472)
Reinvestment of distributions —  795  —  3,429 
Total net (decrease) increase in net assets resulting from capital transactions (29,049) 64,912  (91,018) 71,895 
Net increase (decrease) in net assets 59,141  88,362  (98,704) 163,010 
New Mountain Finance Corporation net assets at the beginning of the period 1,125,623  1,080,917  1,283,468  1,006,269 
New Mountain Finance Corporation net assets at the end of the period 1,184,764  1,169,279  1,184,764  1,169,279 
Non-controlling interest in New Mountain Net Lease Corporation 12,396  —  12,396  — 
Net assets at the end of the period $ 1,197,160  $ 1,169,279  $ 1,197,160  $ 1,169,279 
Capital share activity
Shares sold —  6,900,000  —  11,212,500 
Shares issued from the reinvestment of distributions —  58,393  —  249,823 
Net increase in shares outstanding —  6,958,393  —  11,462,323 


The accompanying notes are an integral part of these consolidated financial statements.
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New Mountain Finance Corporation
 
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
September 30, 2020 September 30, 2019
Cash flows from operating activities
Net (decrease) increase in net assets resulting from operations $ (6,102) $ 91,115 
Adjustments to reconcile net decrease (increase) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realized losses (gains) on investments and New Mountain Net Lease Corporation
3,595  (453)
Net change in unrealized depreciation (appreciation) of investments and New Mountain Net Lease Corporation
91,215  (5,305)
Net change in unrealized depreciation of securities purchased under collateralized agreements to resell —  1,332 
Amortization of purchase discount
(7,942) (3,684)
Amortization of deferred financing costs
3,549  4,699 
Amortization of premium on Convertible Notes
(78) (83)
Non-cash investment income
(22,016) (22,075)
(Increase) decrease in operating assets:
Proceeds from sale of non-controlling interest in New Mountain Net Lease Corporation
11,315  — 
Purchase of investments and delayed draw facilities
(259,127) (827,462)
Proceeds from sales and paydowns of investments
480,333  207,785 
Cash received for purchase of undrawn portion of revolving credit or delayed draw facilities
296  195 
Cash paid for purchase of drawn portion of revolving credit facilities
(13,996) (338)
Cash paid on drawn revolvers
(43,952) (18,574)
Cash repayments on drawn revolvers
35,251  13,684 
Interest and dividend receivable
(1,768) (7,249)
Receivable from unsettled securities sold
(4,490) — 
Receivable from affiliates
(236) (298)
Other assets
(3,290) (1,054)
Increase (decrease) in operating liabilities:
Management fee payable 9,690  9,971 
Incentive fee payable 5,885  7,915 
Payable for unsettled securities purchased (1,780) 79,520 
Payable to affiliates 490  189 
Interest payable (6,343) (425)
Deferred tax liability (778) (121)
Other liabilities 400  (2,885)
Distributions related to non-controlling interest in New Mountain Net Lease Corporation (503) — 
Net cash flows provided by (used in) operating activities 269,618  (473,601)
Cash flows from financing activities
Net proceeds from shares sold —  153,482 
Distributions paid (91,018) (81,043)
Offering costs paid (203) (606)
Proceeds from Holdings Credit Facility 16,000  222,500 
Repayment of Holdings Credit Facility (218,400) (97,500)
Proceeds from Convertible Notes —  86,681 
Repayment of Convertible Notes —  (155,250)
Proceeds from Unsecured Notes —  116,500 
Proceeds from SBA-guaranteed debentures 75,000  19,000 
Proceeds from NMFC Credit Facility 97,000  268,500 
Repayment of NMFC Credit Facility (135,000) (190,000)
Proceeds from DB Credit Facility 67,000  232,000 
Repayment of DB Credit Facility (55,000) (87,000)
Proceeds from NMNLC Credit Facility —  10,600 
Deferred financing costs paid (4,907) (4,112)
Net cash flows (used in) provided by financing activities (249,528) 493,752 
Net increase in cash and cash equivalents 20,090  20,151 
Cash and cash equivalents at the beginning of the period 48,574  49,664 
Cash and cash equivalents at the end of the period $ 68,664  $ 69,815 
Supplemental disclosure of cash flow information
Cash interest paid $ 60,940  $ 58,037 
Income taxes paid 129  10 
Non-cash financing activities:
Value of shares reissued from repurchase program in connection with the distribution reinvestment plan $ —  $ 3,429 
Accrual for offering costs 80  49 
Accrual for deferred financing costs 11  19 

The accompanying notes are an integral part of these consolidated financial statements.
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New Mountain Finance Corporation
 
Consolidated Schedule of Investments
September 30, 2020
(in thousands, except shares)
(unaudited)
Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Non-Controlled/Non-Affiliated Investments
Funded Debt Investments - Canada
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)**
Healthcare Services Second lien (3)(10) 8.50% (L + 7.50%/M) 6/1/2018 6/8/2026 $ 28,613  $ 28,410  $ 26,810 
Second lien (8)(10) 8.50% (L + 7.50%/M) 6/1/2018 6/8/2026 7,500  7,450  7,027 
36,113  35,860  33,837  2.83  %
Wolfpack IP Co.**
Software First lien (2)(10) 7.00% (L + 6.00%/S) 6/14/2019 6/13/2025 9,091  9,016  9,091  0.76  %
Total Funded Debt Investments - Canada $ 45,204  $ 44,876  $ 42,928  3.59  %
Funded Debt Investments - United Arab Emirates
GEMS Menasa (Cayman) Limited**
Education First lien (8) 6.00% (L + 5.00%/S) 7/30/2019 7/31/2026 $ 22,451  $ 22,353  $ 21,806  1.82  %
Total Funded Debt Investments - United Arab Emirates $ 22,451  $ 22,353  $ 21,806  1.82  %
Funded Debt Investments - United Kingdom
Shine Acquisition Co. S.à.r.l / Boing US Holdco Inc.**
Consumer Services Second lien (2)(10) 8.50% (L + 7.50%/M) 9/25/2017 10/3/2025 $ 37,853  $ 37,690  $ 37,853 
Second lien (8)(10) 8.50% (L + 7.50%/M) 9/25/2017 10/3/2025 6,000  5,974  6,000 
43,853  43,664  43,853  3.66  %
Aston FinCo S.a r.l. / Aston US Finco, LLC**
Software Second lien (8)(10) 8.40% (L + 8.25%/M) 10/8/2019 10/8/2027 34,459  34,206  34,201  2.86  %
Total Funded Debt Investments - United Kingdom $ 78,312  $ 77,870  $ 78,054  6.52  %
Funded Debt Investments - United States
GS Acquisitionco, Inc.
Software First lien (2)(10) 6.75% (L + 5.75%/S) 8/7/2019 5/24/2024 $ 26,707  $ 26,575  $ 26,707 
First lien (2)(10) 6.75% (L + 5.75%/S) 8/7/2019 5/24/2024 26,016  25,875  26,016 
First lien (5)(10) 6.75% (L + 5.75%/S) 8/7/2019 5/24/2024 22,250  22,140  22,250 
First lien (3)(10) 6.75% (L + 5.75%/S) 8/7/2019 5/24/2024 12,681  12,605  12,681 
First lien (3)(10)(11) - Drawn 6.75% (L + 5.75%/S) 8/7/2019 5/24/2024 3,839  3,815  3,839 
91,493  91,010  91,493  7.64  %
PhyNet Dermatology LLC
Healthcare Services First lien (2)(10) 6.50% (L + 5.50%/M) 9/17/2018 8/16/2024 49,985  49,636  48,685 
First lien (3)(10) 6.50% (L + 5.50%/M) 9/17/2018 8/16/2024 27,927  27,678  27,201 
77,912  77,314  75,886  6.34  %
The accompanying notes are an integral part of these consolidated financial statements.
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New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Associations, Inc.
Business Services First lien (2)(10) 8.00% (L + 4.00% + 3.00% PIK/Q)* 7/30/2018 7/30/2024 $ 45,582  $ 45,390  $ 45,581 
First lien (8)(10) 8.00% (L + 4.00% + 3.00% PIK/Q)* 7/30/2018 7/30/2024 5,232  5,211  5,232 
First lien (2)(10)(11) - Drawn 8.34% (L + 4.00% + 3.00% PIK/Q)* 7/30/2018 7/30/2024 10,360  10,310  10,360 
First lien (2)(10)(11) - Drawn 7.00% (L + 6.00%/Q) 7/30/2018 7/30/2024 2,033  2,020  2,033 
63,207  62,931  63,206  5.28  %
ConnectWise, LLC
Software First lien (2)(10) 7.00% (L + 6.00%/Q) 11/26/2019 2/28/2025 55,193  54,896  54,851  4.58  %
CentralSquare Technologies, LLC
Software Second lien (3)(10) 7.65% (L + 7.50%/M) 8/15/2018 8/31/2026 47,838  47,345  45,049 
Second lien (8)(10) 7.65% (L + 7.50%/M) 8/15/2018 8/31/2026 7,500  7,423  7,063 
55,338  54,768  52,112  4.35  %
iCIMS, Inc.
Software First lien (8)(10) 7.50% (L + 6.50%/S) 9/12/2018 9/12/2024 41,636  41,323  41,656 
First lien (8)(10) 7.50% (L + 6.50%/S) 6/14/2019 9/12/2024 8,667  8,598  8,671 
50,303  49,921  50,327  4.21  %
Salient CRGT Inc.
Federal Services First lien (2)(10) 7.50% (L + 6.50%/S) 1/6/2015 2/28/2022 37,909  37,739  37,366 
First lien (8)(10) 7.50% (L + 6.50%/S) 6/6/2019 2/28/2022 12,954  12,666  12,769 
50,863  50,405  50,135  4.19  %
DCA Investment Holding, LLC
Healthcare Services First lien (8)(10) 6.29% (L + 5.25%/S) 4/16/2019 7/2/2021 20,367  20,257  19,164 
First lien (2)(10) 6.25% (L + 5.25%/S) 7/2/2015 7/2/2021 16,961  16,936  15,958 
First lien (8)(10) 6.25% (L + 5.25%/S) 12/20/2017 7/2/2021 8,823  8,795  8,302 
First lien (2)(10) 6.25% (L + 5.25%/S) 12/20/2017 7/2/2021 4,152  4,142  3,907 
First lien (3)(10)(11) - Drawn 6.25% (L + 5.25%/S) 7/2/2015 7/2/2021 2,056  2,036  1,935 
52,359  52,166  49,266  4.12  %
Frontline Technologies Group Holdings, LLC
Software First lien (4)(10) 6.75% (L + 5.75%/Q) 9/18/2017 9/18/2023 21,995  21,905  21,995 
First lien (2)(10) 6.75% (L + 5.75%/Q) 9/18/2017 9/18/2023 18,537  18,490  18,537 
First lien (2)(10) 6.75% (L + 5.75%/Q) 9/18/2017 9/18/2023 7,652  7,610  7,652 
48,184  48,005  48,184  4.03  %
The accompanying notes are an integral part of these consolidated financial statements.
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New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
NM GRC Holdco, LLC
Business Services First lien (2)(10) 8.50% (L + 6.00% + 1.50% PIK/Q)* 2/9/2018 2/9/2024 $ 38,318  $ 38,201  $ 35,751 
First lien (2)(10) 8.50% (L + 6.00% + 1.50% PIK/Q)* 2/9/2018 2/9/2024 10,650  10,615  9,937 
48,968  48,816  45,688  3.82  %
Brave Parent Holdings, Inc.
Software Second lien (5)(10) 7.65% (L + 7.50%/M) 4/17/2018 4/17/2026 22,500  22,413  22,397 
Second lien (2)(10) 7.65% (L + 7.50%/M) 4/17/2018 4/17/2026 16,624  16,493  16,547 
Second lien (8)(10) 7.65% (L + 7.50%/M) 4/17/2018 4/17/2026 6,000  5,953  5,972 
45,124  44,859  44,916  3.75  %
Integro Parent Inc.
Business Services First lien (2)(10) 6.75% (L + 5.75%/M) 10/9/2015 10/31/2022 34,617  34,520  34,617 
Second lien (8)(10) 10.25% (L + 9.25%/M) 10/9/2015 10/30/2023 10,000  9,951  10,000 
44,617  44,471  44,617  3.73  %
Quest Software US Holdings Inc.
Software Second lien (2)(10) 8.51% (L + 8.25%/Q) 5/17/2018 5/18/2026 43,697  43,354  43,640  3.65  %
Tenawa Resource Holdings LLC (14)
Tenawa Resource Management LLC
Specialty Chemicals & Materials First lien (3)(10) 10.50% (Base + 8.00%/Q) 5/12/2014 10/30/2024 38,700  38,656  38,700  3.23  %
CoolSys, Inc.
Industrial Services First lien (5) 7.00% (L + 6.00%/Q) 11/20/2019 11/20/2026 22,331  22,230  22,387 
First lien (2) 7.00% (L + 6.00%/Q) 11/20/2019 11/20/2026 10,322  10,275  10,348 
First lien (3) 7.00% (L + 6.00%/Q) 11/20/2019 11/20/2026 4,184  4,163  4,194 
36,837  36,668  36,929  3.09  %
Trader Interactive, LLC
Business Services First lien (2)(10) 7.50% (L + 6.50%/S) 6/15/2017 6/17/2024 31,687  31,555  31,687 
First lien (8)(10) 7.50% (L + 6.50%/S) 6/15/2017 6/17/2024 4,911  4,891  4,911 
36,598  36,446  36,598  3.06  %
Peraton Holding Corp. (fka MHVC Acquisition Corp.)
Federal Services First lien (2) 6.25% (L + 5.25%/Q) 4/25/2017 4/29/2024 36,623  36,517  36,348  3.04  %
KAMC Holdings, Inc
Business Services Second lien (2)(10) 8.26% (L + 8.00%/Q) 8/14/2019 8/13/2027 18,750  18,623  18,043 
Second lien (8)(10) 8.26% (L + 8.00%/Q) 8/14/2019 8/13/2027 18,750  18,623  18,043 
37,500  37,246  36,086  3.01  %
The accompanying notes are an integral part of these consolidated financial statements.
9
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Definitive Healthcare Holdings, LLC
Healthcare Information Technology First lien (8)(10) 6.50% (L + 5.50%/M) 8/7/2019 7/16/2026 $ 33,698  $ 33,555  $ 33,698 
First lien (3)(10)(11) - Drawn 6.50% (L + 5.50%/Q) 8/7/2019 7/16/2024 1,848  1,839  1,848 
35,546  35,394  35,546  2.97  %
Affinity Dental Management, Inc.
Healthcare Services First lien (2)(10) 10.25% (P + 7.00%/S) 9/15/2017 9/15/2023 26,290  26,246  23,364 
First lien (4)(10) 10.25% (P + 7.00%/S) 9/17/2019 9/15/2023 10,619  10,619  9,437 
First lien (3)(10)(11) - Drawn 10.25% (P + 7.00%/Q) 9/15/2017 3/15/2023 1,738  1,720  1,544 
38,647  38,585  34,345  2.87  %
Finalsite Holdings, Inc.
Software First lien (4)(10) 6.50% (L + 5.50%/Q) 9/28/2018 9/25/2024 22,050  21,932  22,050 
First lien (2)(10) 6.50% (L + 5.50%/Q) 9/28/2018 9/25/2024 10,891  10,833  10,891 
32,941  32,765  32,941  2.75  %
TDG Group Holding Company
Consumer Services First lien (2)(10) 5.44% (L + 5.25%/Q) 5/22/2018 5/31/2024 24,670  24,589  24,493 
First lien (8)(10) 5.44% (L + 5.25%/Q) 5/22/2018 5/31/2024 4,912  4,896  4,876 
First lien (2)(10) 5.44% (L + 5.25%/Q) 5/22/2018 5/31/2024 3,295  3,284  3,272 
32,877  32,769  32,641  2.73  %
GC Waves Holdings, Inc.**
Business Services First lien (5)(10) 6.75% (L + 5.75%/Q) 10/31/2019 10/31/2025 22,388  22,241  22,112 
First lien (2)(10) 6.75% (L + 5.75%/Q) 10/31/2019 10/31/2025 3,654  3,631  3,610 
First lien (3)(10)(11) - Drawn 6.75% (L + 5.75%/Q) 10/31/2019 10/31/2025 5,424  5,373  5,358 
31,466  31,245  31,080  2.60  %
Integral Ad Science, Inc.
Software First lien (8)(10) 8.25% (L + 6.00% + 1.25% PIK/S)* 7/19/2018 7/19/2024 27,099  26,904  27,302 
First lien (3)(10) 8.25% (L + 6.00% + 1.25% PIK/S)* 8/27/2019 7/19/2024 3,540  3,512  3,567 
30,639  30,416  30,869  2.58  %
Kaseya Inc.
Software First lien (8)(10) 8.09% (L + 4.00% + 3.00% PIK/S)* 5/9/2019 5/2/2025 28,011  27,789  28,291 
First lien (3)(10)(11) - Drawn 7.50% (L + 6.50%/S) 5/9/2019 5/2/2025 1,133  1,121  1,133 
First lien (3)(10)(11) - Drawn 8.06% (L + 4.00% + 3.00% PIK/S)* 5/9/2019 5/2/2025 636  630  642 
29,780  29,540  30,066  2.51  %
The accompanying notes are an integral part of these consolidated financial statements.
10
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Ansira Holdings, Inc.
Business Services First lien (8)(10) 7.50% (L + 6.50% PIK/S)* 12/19/2016 12/20/2024 $ 28,944  $ 28,882  $ 23,656 
First lien (3)(10) 7.50% (L + 6.50% PIK/S)* 12/19/2016 12/20/2024 7,311  7,298  5,975 
36,255  36,180  29,631  2.48  %
MRI Software LLC
Software First lien (5)(10) 6.50% (L + 5.50%/Q) 1/31/2020 2/10/2026 22,385  22,283  22,450 
First lien (3)(10) 6.50% (L + 5.50%/Q) 1/31/2020 2/10/2026 4,345  4,324  4,357 
First lien (2)(10) 6.50% (L + 5.50%/Q) 1/31/2020 2/10/2026 1,619  1,611  1,624 
28,349  28,218  28,431  2.37  %
Keystone Acquisition Corp.
Healthcare Services First lien (2) 6.25% (L + 5.25%/Q) 5/10/2017 5/1/2024 24,294  24,199  22,108 
Second lien (2)(10) 10.25% (L + 9.25%/Q) 5/10/2017 5/1/2025 4,500  4,470  4,495 
28,794  28,669  26,603  2.22  %
HS Purchaser, LLC / Help/Systems Holdings, Inc.
Software Second lien (5) 9.00% (L + 8.00%/Q) 11/14/2019 11/19/2027 22,500  22,388  22,275 
Second lien (2) 9.00% (L + 8.00%/Q) 11/14/2019 11/19/2027 4,208  4,169  4,166 
26,708  26,557  26,441  2.21  %
Confluent Health, LLC
Healthcare Services First lien (2) 5.15% (L + 5.00%/M) 6/21/2019 6/24/2026 27,156  27,040  26,138  2.18  %
Instructure, Inc. **
Software First lien (8)(10) 8.00% (L + 7.00%/Q) 3/24/2020 3/24/2026 24,150  24,010  24,001  2.00  %
AAC Holding Corp.
Education First lien (2)(10) 9.25% (L + 5.00% + 3.25% PIK/M)* 9/30/2015 9/30/2022 26,199  26,131  22,515  1.88  %
Astra Acquisition Corp.
Software First lien (5) 6.50% (L + 5.50%/M) 2/26/2020 3/1/2027 22,388  22,230  22,499  1.88  %
Convey Health Solutions, Inc.
Healthcare Services First lien (4)(10) 6.25% (L + 5.25%/Q) 9/9/2019 9/4/2026 22,275  22,056  22,275  1.86  %
Idera, Inc.
Software Second lien (4) 10.00% (L + 9.00%/S) 6/27/2019 6/28/2027 22,500  22,349  22,162  1.85  %
Avatar Topco, Inc. (23)
EAB Global, Inc.
Education Second lien (3)(10) 8.50% (L + 7.50%/Q) 11/17/2017 11/17/2025 13,950  13,799  13,950 
Second lien (8)(10) 8.50% (L + 7.50%/Q) 11/17/2017 11/17/2025 7,500  7,419  7,500 
21,450  21,218  21,450  1.79  %
Spring Education Group, Inc (fka SSH Group Holdings, Inc.)
Education Second lien (2) 8.47% (L + 8.25%/Q) 7/26/2018 7/30/2026 22,603  22,560  20,908  1.75  %
MED Parentco, LP
Healthcare Services Second lien (8)(10) 8.40% (L + 8.25%/M) 8/2/2019 8/30/2027 20,857  20,714  20,501  1.71  %
The accompanying notes are an integral part of these consolidated financial statements.
11
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Institutional Shareholder Services, Inc.
Business Services Second lien (3)(10) 8.72% (L + 8.50%/Q) 3/5/2019 3/5/2027 $ 20,372  $ 20,109  $ 20,372  1.70  %
YLG Holdings, Inc.
Business Services First lien (5)(10) 7.25% (L + 6.25%/S) 11/1/2019 10/31/2025 18,275  18,195  18,351 
First lien (5)(10)(11) - Drawn 7.25% (L + 6.25%/S) 11/1/2019 10/31/2025 1,910  1,901  1,918 
20,185  20,096  20,269  1.69  %
CRCI Longhorn Holdings, Inc.
Business Services Second lien (3) 7.40% (L + 7.25%/M) 8/2/2018 8/10/2026 14,349  14,305  13,272 
Second lien (8) 7.40% (L + 7.25%/M) 8/2/2018 8/10/2026 7,500  7,477  6,938 
21,849  21,782  20,210  1.69  %
TMK Hawk Parent, Corp.
Distribution & Logistics First lien (2) 4.50% (L + 3.50%/M) 6/24/2019 8/28/2024 16,779  14,705  9,844 
First lien (8) 4.50% (L + 3.50%/M) 10/23/2019 8/28/2024 16,183  13,672  9,494 
32,962  28,377  19,338  1.62  %
Xactly Corporation
Software First lien (4)(10) 8.25% (L + 7.25%/S) 7/31/2017 7/29/2022 19,047  18,958  19,047  1.59  %
DiversiTech Holdings, Inc.
Distribution & Logistics Second lien (2) 8.50% (L + 7.50%/Q) 5/18/2017 6/2/2025 12,000  11,920  11,610 
Second lien (8) 8.50% (L + 7.50%/Q) 5/18/2017 6/2/2025 7,500  7,450  7,256 
19,500  19,370  18,866  1.58  %
Bluefin Holding, LLC
Software Second lien (8)(10) 7.90% (L + 7.75%/M) 9/6/2019 9/6/2027 18,000  18,000  18,000  1.50  %
Bullhorn, Inc.
Software First lien (2)(10) 6.75% (L + 5.75%/Q) 9/24/2019 9/30/2026 17,045  16,935  17,045 
First lien (3)(10) 6.75% (L + 5.75%/Q) 9/24/2019 9/30/2026 353  351  353 
First lien (3)(10) 6.75% (L + 5.75%/Q) 9/24/2019 9/30/2026 282  280  282 
17,680  17,566  17,680  1.48  %
FR Arsenal Holdings II Corp.
Business Services First lien (2)(10) 8.25% (L + 7.25%/S) 9/29/2016 9/8/2022 18,213  18,135  17,528  1.46  %
The Kleinfelder Group, Inc.
Business Services First lien (4)(10) 5.75% (L + 4.75%/Q) 12/18/2018 11/29/2024 17,194  17,130  17,194  1.44  %
Kele Holdco, Inc.
Distribution & Logistics First lien (5)(10) 7.00% (L + 6.00%/M) 2/20/2020 2/20/2026 16,152  16,077  16,394  1.37  %
Hill International, Inc.**
Business Services First lien (2)(10) 6.75% (L + 5.75%/Q) 6/21/2017 6/21/2023 15,287  15,248  15,287  1.28  %
The accompanying notes are an integral part of these consolidated financial statements.
12
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Symplr Software Intermediate Holdings, Inc. (24)
Symplr Software, Inc. (fka Caliper Software, Inc.)
Healthcare Information Technology First lien (4)(10) 5.72% (L + 5.50%/Q) 11/30/2018 11/28/2025 $ 14,738  $ 14,651  $ 14,738 
First lien (2)(10) 5.72% (L + 5.50%/Q) 11/30/2018 11/28/2025 481  478  481 
15,219  15,129  15,219  1.27  %
Netsmart Inc. / Netsmart Technologies, Inc.
Healthcare Information Technology Second lien (2) 9.75% (P + 6.50%/Q) 4/18/2016 10/19/2023 15,000  14,814  15,000  1.25  %
CFS Management, LLC
Healthcare Services First lien (2)(10) 6.75% (L + 5.75%/S) 8/6/2019 7/1/2024 11,644  11,598  11,384 
First lien (3)(10) 6.75% (L + 5.75%/S) 8/6/2019 7/1/2024 3,468  3,451  3,391 
15,112  15,049  14,775  1.23  %
Bleriot US Bidco Inc.
Federal Services Second lien (2) 8.72% (L + 8.50%/Q) 10/24/2019 10/29/2027 15,000  14,862  14,588  1.22  %
BackOffice Associates Holdings, LLC
Business Services First lien (2)(10) 13.50% (L + 9.50% + 3.00% PIK/Q)* 8/25/2017 8/25/2023 13,175  13,114  13,175 
First lien (3)(10)(11) - Drawn 13.50% (L + 9.50% + 3.00% PIK/Q)* 8/25/2017 8/25/2023 914  906  914 
14,089  14,020  14,089  1.18  %
Coyote Buyer, LLC
Specialty Chemicals & Materials First lien (5)(10) 7.00% (L + 6.00%/Q) 3/13/2020 2/6/2026 14,114  14,049  14,044  1.17  %
Ministry Brands, LLC
Software First lien (2)(10) 5.00% (L + 4.00%/Q) 12/7/2016 12/2/2022 2,910  2,904  2,883 
Second lien (8)(10) 10.25% (L + 9.25%/S) 12/7/2016 6/2/2023 7,840  7,811  7,840 
Second lien (3)(10) 10.25% (L + 9.25%/S) 12/7/2016 6/2/2023 2,160  2,152  2,160 
First lien (3)(10)(11) - Drawn 6.00% (L + 5.00%/S) 12/7/2016 12/2/2022 575  572  570 
13,485  13,439  13,453  1.12  %
Alegeus Technologies Holding Corp.
Healthcare Services First lien (8)(10) 9.25% (L + 8.25%/Q) 9/5/2018 9/5/2024 13,444  13,395  13,290  1.11  %
Geo Parent Corporation
Business Services First lien (2)(10) 5.40% (L + 5.25%/M) 12/13/2018 12/19/2025 12,967  12,916  12,967  1.08  %
PaySimple, Inc.
Software First lien (2) 5.65% (L + 5.50%/M) 8/19/2019 8/23/2025 9,783  9,700  9,392 
First lien (2) 5.65% (L + 5.50%/M) 8/19/2019 8/23/2025 3,203  3,145  3,075 
12,986  12,845  12,467  1.04  %
Transcendia Holdings, Inc.
Packaging Second lien (8)(10) 9.00% (L + 8.00%/M) 6/28/2017 5/30/2025 14,500  14,365  12,231  1.02  %
The accompanying notes are an integral part of these consolidated financial statements.
13
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
OEConnection LLC
Business Services Second lien (2)(10) 8.40% (L + 8.25%/M) 9/25/2019 9/25/2027 $ 12,044  $ 11,934  $ 11,863  0.99  %
CHA Holdings, Inc.
Business Services Second lien (4)(10) 9.75% (L + 8.75%/Q) 4/3/2018 4/10/2026 7,012  6,957  7,012 
Second lien (3)(10) 9.75% (L + 8.75%/Q) 4/3/2018 4/10/2026 4,453  4,418  4,452 
11,465  11,375  11,464  0.96  %
Alert Holding Company, Inc. (15)
Appriss Holdings, Inc.
Business Services First lien (8)(10) 5.75% (L + 5.50%/M) 5/24/2019 5/29/2026 10,971  10,891  10,971 
First lien (3)(10)(11) - Drawn 5.65% (L + 5.50%/M) 5/24/2019 5/30/2025 460  455  460 
11,431  11,346  11,431  0.95  %
Apptio, Inc.
Software First lien (8)(10) 8.25% (L + 7.25%/S) 1/10/2019 1/10/2025 11,203  11,030  11,371  0.95  %
Castle Management Borrower LLC
Business Services First lien (2)(10) 7.50% (L + 6.50% PIK/Q)* 5/31/2018 2/15/2024 13,731  13,689  11,109  0.93  %
Vectra Co.
Business Products Second lien (8)(10) 7.40% (L + 7.25%/M) 2/23/2018 3/8/2026 10,788  10,758  10,672  0.89  %
Masergy Holdings, Inc.
Business Services Second lien (2)(10) 8.50% (L + 7.50%/Q) 12/14/2016 12/16/2024 10,500  10,463  10,500  0.88  %
PPVA Black Elk (Equity) LLC
Business Services Subordinated (3)(10) — 5/3/2013 — 14,500  14,500  10,354  0.86  %
Quartz Holding Company
Software Second lien (3)(10) 8.15% (L + 8.00%/M) 4/2/2019 4/2/2027 10,000  9,827  9,993  0.83  %
Stats Intermediate Holdings, LLC**
Business Services First lien (2) 5.40% (L + 5.25%/M) 5/22/2019 7/10/2026 9,925  9,819  9,801  0.82  %
Teneo Holdings, LLC
Business Services First lien (2) 6.25% (L + 5.25%/M) 7/15/2019 7/11/2025 9,900  9,736  9,578  0.80  %
VT Topco, Inc.
Business Services Second lien (4)(10) 7.15% (L + 7.00%/M) 8/14/2018 7/31/2026 10,000  9,980  9,481  0.79  %
Affordable Care Holding Corp.
Healthcare Services First lien (2)(10) 5.75% (L + 4.75%/Q) 3/18/2019 10/24/2022 9,820  9,702  9,303  0.78  %
AgKnowledge Holdings Company, Inc.
Business Services First lien (4)(10) 5.75% (L + 4.75%/S) 11/30/2018 7/21/2023 9,284  9,255  9,284  0.78  %
Zywave, Inc.
Software Second lien (4)(10) 10.00% (L + 9.00%/Q) 11/22/2016 11/17/2023 6,780  6,753  6,780 
Second lien (4)(10) 10.00% (L + 9.00%/Q) 12/3/2019 11/17/2023 600  596  600 
7,380  7,349  7,380  0.62  %
AG Parent Holdings, LLC
Healthcare Services First lien (2) 5.15% (L + 5.00%/M) 7/30/2019 7/31/2026 6,940  6,910  6,836  0.57  %
The accompanying notes are an integral part of these consolidated financial statements.
14
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Recorded Future, Inc.
Software First lien (8)(10) 7.25% (L + 6.25%/S) 8/26/2019 7/3/2025 $ 6,250  $ 6,224  $ 6,252 
First lien (3)(10)(11) - Drawn 7.25% (L + 6.25%/S) 8/26/2019 7/3/2025 500  498  500 
6,750  6,722  6,752  0.56  %
CP VI Bella Midco, LLC
Healthcare Services Second lien (3) 6.90% (L + 6.75%/M) 1/25/2018 12/29/2025 6,732  6,708  6,699  0.56  %
DealerSocket, Inc.
Software First lien (2)(10) 5.75% (L + 4.75%/S) 4/16/2018 4/26/2023 6,560  6,533  6,357  0.53  %
Restaurant Technologies, Inc.
Business Services Second lien (4) 6.65% (L + 6.50%/M) 9/24/2018 10/1/2026 6,722  6,708  6,285  0.52  %
DG Investment Intermediate Holdings 2, Inc. (aka Convergint Technologies Holdings, LLC)
Business Services Second lien (3) 7.50% (L + 6.75%/M) 1/29/2018 2/2/2026 6,732  6,708  6,228  0.52  %
Diligent Corporation
Software First lien (3)(10) 7.25% (L + 6.25%/S) 12/19/2018 8/4/2025 5,962  5,926  6,042  0.50  %
ADG, LLC
Healthcare Services Second lien (3)(10) 11.00% (L + 10.00% PIK/Q)* 10/3/2016 3/28/2024 5,743  5,700  3,658  0.31  %
Sphera Solutions, Inc.
Software First lien (2)(10) 8.00% (L + 7.00%/Q) 9/10/2019 6/14/2022 2,470  2,454  2,470  0.21  %
Education Management Corporation (13)
Education Management II LLC
Education First lien (2) 13.00% (L + 7.50%/M)(26) 1/5/2015 7/2/2020 300  292  — 
First lien (3) 13.00% (L + 7.50%/M)(26) 1/5/2015 7/2/2020 169  165  — 
First lien (2) 9.75% (L + 6.50%/Q)(26) 1/5/2015 7/2/2020 207  201  — 
First lien (3) 9.75% (L + 6.50%/Q)(26) 1/5/2015 7/2/2020 117  113  — 
First lien (2) 11.75% (P + 8.50%/M)(26) 1/5/2015 7/2/2020 141  116  — 
First lien (3) 11.75% (P + 8.50%/M)(26) 1/5/2015 7/2/2020 79  66  — 
First lien (2) 11.75% (P + 8.50%/M)(26) 1/5/2015 7/2/2020 4  3  — 
First lien (3) 11.75% (P + 8.50%/M)(26) 1/5/2015 7/2/2020 2  2  — 
1,019  958  —  —  %
PPVA Fund, L.P.
Business Services Collateralized Financing (26)(27) — 11/7/2014 — —  —  —  —  %
Total Funded Debt Investments - United States $ 2,085,054  $ 2,068,916  $ 2,017,244  168.51  %
Total Funded Debt Investments $ 2,231,021  $ 2,214,015  $ 2,160,032  180.44  %
The accompanying notes are an integral part of these consolidated financial statements.
15
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Equity - Hong Kong
Bach Special Limited (Bach Preference Limited)**
Education Preferred shares (3)(10)(22) — 9/1/2017 — 82,414  $ 8,162  $ 8,489  0.71  %
Total Shares - Hong Kong $ 8,162  $ 8,489  0.71  %
Equity - United States
Avatar Topco, Inc.(23)
Education Preferred shares (3)(10) — 11/17/2017 — 35,750  $ 50,641  $ 51,713  4.32  %
Symplr Software Intermediate Holdings, Inc. (24)
Healthcare Information Technology Preferred shares (4)(10) — 11/30/2018 — 7,500  9,282  9,394 
Preferred shares (3)(10) — 11/30/2018 — 2,586  3,200  3,239 
12,482  12,633  1.06  %
Tenawa Resource Holdings LLC (14)
QID NGL LLC
Specialty Chemicals & Materials Preferred shares (6)(10) — 10/30/2017 — 1,623,385  1,623  1,950 
Ordinary shares (6)(10) — 5/12/2014 — 5,290,997  5,291  5,324 
6,914  7,274  0.61  %
Alert Holding Company, Inc. (15)
Alert Intermediate Holdings I, Inc.
Business Services Preferred shares (3)(10) — 5/31/2019 — 6,111  7,017  7,109  0.59  %
Ancora Acquisition LLC
Education Preferred shares (9)(10) — 8/12/2013 — 372  83  158  0.01  %
Education Management Corporation (13)
Education Preferred shares (2) — 1/5/2015 — 3,331  200  — 
Preferred shares (3) — 1/5/2015 — 1,879  113  — 
Ordinary shares (2) — 1/5/2015 — 2,994,065  100  — 
Ordinary shares (3) — 1/5/2015 — 1,688,976  56  — 
469  —  —  %
Total Shares - United States $ 77,606  $ 78,887  6.59  %
Total Shares $ 85,768  $ 87,376  7.30  %
Warrants - United States
ASP LCG Holdings, Inc.
Education Warrants (3)(10) — 5/5/2014 5/5/2026 622  $ 37  $ 700  0.06  %
Total Warrants - United States $ 37  $ 700  0.06  %
Total Funded Investments $ 2,299,820  $ 2,248,108  187.80  %
The accompanying notes are an integral part of these consolidated financial statements.
16
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Unfunded Debt Investments - Canada
Wolfpack IP Co.**
Software First lien (3)(10)(11) - Undrawn — 6/14/2019 6/13/2025 $ 909  $ (9) $ —  —  %
Total Unfunded Debt Investments - Canada $ 909  $ (9) $ —  —  %
Unfunded Debt Investments - United States
Kaseya Inc.
Software First lien (3)(10)(11) - Undrawn — 5/9/2019 5/3/2021 $ 2,675  $ —  $ 27 
First lien (3)(10)(11) - Undrawn — 5/9/2019 5/2/2025 1,179  (12) — 
3,854  (12) 27  0.00  %
CoolSys, Inc.
Industrial Services First lien (3)(11) - Undrawn — 11/20/2019 11/19/2021 1,400  —  4  0.00  %
MRI Software LLC
Software First lien (3)(10)(11) - Undrawn — 1/31/2020 2/10/2022 1,141  —  3 
First lien (3)(10)(11) - Undrawn — 1/31/2020 2/10/2026 2,002  (10) — 
3,143  (10) 3  0.00  %
YLG Holdings, Inc.
Business Services First lien (5)(10)(11) - Undrawn — 11/1/2019 4/30/2021 468  —  2 
First lien (3)(10)(11) - Undrawn — 11/1/2019 10/31/2025 3,968  (20) — 
4,436  (20) 2  0.00  %
Recorded Future, Inc.
Software First lien (3)(10)(11) - Undrawn — 8/26/2019 1/3/2021 500  (3) — 
First lien (3)(10)(11) - Undrawn — 8/26/2019 7/3/2025 250  (1) — 
750  (4) —  —  %
Definitive Healthcare Holdings, LLC
Healthcare Information Technology First lien (3)(10)(11) - Undrawn — 8/7/2019 7/16/2021 7,391  —  —  —  %
Associations, Inc.
Business Services First lien (2)(10)(11) - Undrawn — 7/30/2018 7/30/2021 153  (1) —  —  %
AgKnowledge Holdings Company, Inc.
Business Services First lien (3)(10)(11) - Undrawn — 11/30/2018 7/21/2023 526  (3) —  —  %
The accompanying notes are an integral part of these consolidated financial statements.
17
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Alert Holding Company, Inc. (15)
Appriss Holdings, Inc.
Business Services First lien (3)(10)(11) - Undrawn — 5/24/2019 5/30/2025 $ 470  $ (5) $ —  —  %
Kele Holdco, Inc.
Distribution & Logistics First lien (3)(10)(11) - Undrawn — 2/20/2020 2/20/2026 1,799  (9) —  —  %
Wrike, Inc.
Software First lien (3)(10)(11) - Undrawn — 12/31/2018 12/31/2024 933  (9) —  —  %
Xactly Corporation
Software First lien (3)(10)(11) - Undrawn — 7/31/2017 7/29/2022 992  (10) —  —  %
GS Acquisitionco, Inc.
Software First lien (3)(10)(11) - Undrawn — 8/7/2019 5/24/2024 1,646  (10) —  —  %
Bullhorn, Inc.
Software First lien (3)(10)(11) - Undrawn — 9/24/2019 10/1/2021 781  (6) — 
First lien (3)(10)(11) - Undrawn — 9/24/2019 9/30/2026 852  (6) — 
1,633  (12) —  —  %
Trader Interactive, LLC
Business Services First lien (3)(10)(11) - Undrawn — 6/15/2017 6/15/2023 1,673  (13) —  —  %
Zywave, Inc.
Software First lien (2)(10)(11) - Undrawn — 11/22/2016 11/17/2022 2,000  (15) —  —  %
Integral Ad Science, Inc.
Software First lien (3)(10)(11) - Undrawn — 7/19/2018 7/19/2023 1,807  (18) —  —  %
Finalsite Holdings, Inc.
Software First lien (3)(10)(11) - Undrawn — 9/25/2018 9/25/2024 2,521  (19) —  —  %
Bluefin Holding, LLC
Software First lien (3)(10)(11) - Undrawn — 9/6/2019 9/6/2024 1,515  (23) —  —  %
iCIMS, Inc.
Software First lien (3)(10)(11) - Undrawn — 9/12/2018 9/12/2024 2,915  (29) —  —  %
Integro Parent Inc.
Business Services First lien (3)(10)(11) - Undrawn — 6/8/2018 4/30/2022 6,743  (34) —  —  %
Apptio, Inc.
Software First lien (3)(10)(11) - Undrawn — 1/10/2019 1/10/2025 2,066  (41) —  —  %
The accompanying notes are an integral part of these consolidated financial statements.
18
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
DCA Investment Holding, LLC
Healthcare Services First lien (3)(10)(11) - Undrawn — 7/2/2015 7/2/2021 $ 44  $ —  $ (3) (0.00) %
Ministry Brands, LLC
Software First lien (3)(10)(11) - Undrawn — 12/7/2016 12/2/2022 425  (2) (4) (0.00) %
Coyote Buyer, LLC
Specialty Chemicals & Materials First lien (3)(10)(11) - Undrawn — 3/13/2020 2/6/2025 1,013  (5) (5) (0.00) %
Instructure, Inc. **
Software First lien (3)(10)(11) - Undrawn — 3/24/2020 3/24/2026 2,036  (13) (13) (0.00) %
DealerSocket, Inc.
Software First lien (3)(10)(11) - Undrawn — 4/16/2018 4/26/2023 560  (4) (17) (0.00) %
ConnectWise, LLC
Software First lien (3)(10)(11) - Undrawn — 11/26/2019 2/28/2025 4,248  (27) (26) (0.00) %
TDG Group Holding Company
Consumer Services First lien (2)(10)(11) - Undrawn — 5/22/2018 5/31/2024 5,044  (25) (36) (0.00) %
Salient CRGT Inc.
Federal Services First lien (3)(10)(11) - Undrawn — 6/26/2018 11/29/2021 6,125  (490) (88) (0.01) %
GC Waves Holdings, Inc.**
Business Services First lien (3)(10)(11) - Undrawn — 10/31/2019 10/31/2025 3,951  (30) (49)
First lien (3)(10)(11) - Undrawn — 10/31/2019 11/1/2021 4,435  —  (55)
8,386  (30) (104) (0.01) %
Total Unfunded Debt Investments - United States $ 78,247  $ (893) $ (260) (0.03) %
Total Unfunded Debt Investments $ 79,156  $ (902) $ (260) (0.03) %
Total Non-Controlled/Non-Affiliated Investments $ 2,298,918  $ 2,247,848  187.77  %
The accompanying notes are an integral part of these consolidated financial statements.
19
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Non-Controlled/Affiliated Investments (28)
Funded Debt Investments - United States
Permian Holdco 1, Inc.
Permian Holdco 2, Inc.
Permian Holdco 3, Inc.
Energy First lien (3)(10) 14.75% (P + 6.50% + 5.00% PIK/M)* 6/14/2018 6/30/2022 $ 10,902  $ 10,902  $ 10,539 
First lien (3)(10) 11.00% (L + 10.00% PIK/M)* 7/23/2020 10/23/2020 2,295  2,295  2,295 
First lien (3)(10)(11) - Drawn 8.75% (P + 5.50%/M) 6/14/2018 6/30/2022 17,700  17,700  15,311 
Subordinated (3)(10) 18.00% PIK/Q (26)* 12/26/2018 6/30/2022 2,417  2,417  — 
Subordinated (3)(10) 14.00% PIK/Q (26)* 10/31/2016 10/15/2021 1,708  1,708  — 
Subordinated (3)(10) 14.00% PIK/Q (26)* 10/31/2016 10/15/2021 1,025  1,025  — 
36,047  36,047  28,145  2.35  %
Sierra Hamilton Holdings Corporation
Energy Second lien (3)(10) 15.00% PIK/Q* 9/12/2019 9/12/2023 907  891  816  0.07  %
Total Funded Debt Investments - United States $ 36,954  $ 36,938  $ 28,961  2.42  %
Equity - United States
NMFC Senior Loan Program I LLC**
Investment Fund Membership interest (3)(10) — 6/13/2014 — —  $ 23,000  $ 23,000  1.92  %
Sierra Hamilton Holdings Corporation
Energy Ordinary shares (2)(10) — 7/31/2017 — 25,000,000  11,501  3,706 
Ordinary shares (3)(10) — 7/31/2017 — 2,786,000  1,282  413 
12,783  4,119  0.34  %
Permian Holdco 1, Inc.
Energy Preferred shares (3)(10)(17)(26) — 10/31/2016 — 1,366,452  5,714  — 
Ordinary shares (3)(10) — 10/31/2016 — 1,366,452  1,350  — 
7,064  —  —  %
Total Shares - United States $ 42,847  $ 27,119  2.26  %
Total Funded Investments $ 79,785  $ 56,080  4.68  %
Unfunded Debt Investments - United States
Permian Holdco 3, Inc.
Energy First lien (3)(10)(11) - Undrawn — 6/14/2018 6/30/2022 $ 2,300  $ —  $ (311) (0.02) %
Total Unfunded Debt Investments - United States $ 2,300  $ —  $ (311) (0.02) %
Total Non-Controlled/Affiliated Investments $ 79,785  $ 55,769  4.66  %
The accompanying notes are an integral part of these consolidated financial statements.
20
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Controlled Investments (29)
Funded Debt Investments - United Kingdom
Edmentum Ultimate Holdings, LLC (16)
EducationCity Limited**
Education First lien (3)(10)(11) - Drawn 10.00%/S 1/24/2020 12/9/2021 $ 3,000  $ 3,000  $ 3,000  0.25  %
Total Funded Debt Investments - United Kingdom $ 3,000  $ 3,000  $ 3,000  0.25  %
Funded Debt Investments - United States
New LT Smile Holdings, LLC (25)
Benevis Holding Corp.
Healthcare Services First lien (2)(10) 7.32% (L + 6.32%/Q)(26) 3/15/2018 3/15/2024 $ 62,572  $ 62,572  $ 57,484 
First lien (8)(10) 7.32% (L + 6.32%/Q)(26) 3/15/2018 3/15/2024 15,352  15,352  14,104 
First lien (3)(10) 7.32% (L + 6.32%/Q)(26) 3/29/2019 3/15/2024 7,586  7,586  6,970 
First lien (3)(10) 11.00% (L + 10.00%/Q) 8/6/2020 11/5/2020 3,457  3,457  3,457 
88,967  88,967  82,015  6.85  %
Edmentum Ultimate Holdings, LLC (16)
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
Education First lien (2)(10) 9.50% (L + 4.50% + 4.00% PIK/Q)* 8/6/2018 6/9/2021 10,285  9,824  10,285 
First lien (3)(10)(11) - Drawn 10.00%/S 1/24/2020 12/9/2021 5,000  5,000  5,000 
Second lien (3)(10) 7.00% PIK/Q* 2/23/2018 12/9/2021 12,650  12,387  12,650 
Second lien (3)(10)(11) - Drawn 5.00% PIK/Q* 6/9/2015 12/9/2021 8,170  8,170  8,170 
Second lien (3)(10)(11) - Drawn 5.00% PIK/Q* 4/15/2020 12/9/2021 7,731  7,731  7,731 
Subordinated (3)(10) 8.50% PIK/Q* 6/9/2015 12/9/2021 5,678  5,677  5,678 
Subordinated (2)(10) 10.00% PIK/Q* 6/9/2015 12/9/2021 22,074  22,074  22,074 
Subordinated (3)(10) 10.00% PIK/Q* 6/9/2015 12/9/2021 5,430  5,430  5,430 
77,018  76,293  77,018  6.43  %
UniTek Global Services, Inc.
Business Services First lien (2)(10) 7.50% (L + 5.50% + 1.00% PIK/S)* 6/29/2018 8/20/2024 12,448  12,448  11,139 
First lien (3)(10) 7.50% (L + 5.50% + 1.00% PIK/S)* 3/16/2020 8/20/2024 10,266  9,591  9,186 
First lien (2)(10) 7.50% (L + 5.50% + 1.00% PIK/S)* 6/29/2018 8/20/2024 2,490  2,490  2,228 
First lien (3)(10) 7.50% (L + 5.50% + 1.00% PIK/S)* 6/29/2018 8/20/2024 716  581  640 
25,920  25,110  23,193  1.94  %
The accompanying notes are an integral part of these consolidated financial statements.
21
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
NHME Holdings Corp. (21)
National HME, Inc.
Healthcare Services Second lien (3)(10) 12.00% PIK/Q* 11/27/2018 5/27/2024 $ 18,088  $ 15,033  $ 13,114 
Second lien (3)(10) 12.00% PIK/Q* 11/27/2018 5/27/2024 9,996  9,251  8,746 
28,084  24,284  21,860  1.83  %
Total Funded Debt Investments - United States $ 219,989  $ 214,654  $ 204,086  17.05  %
Total Funded Debt Investments $ 222,989  $ 217,654  $ 207,086  17.30  %
Equity - Canada
NM APP Canada Corp.**
Net Lease Membership interest (7)(10) — 9/13/2016 — —  $ 7,345  $ 11,100  0.93  %
Total Shares - Canada $ 7,345  $ 11,100  0.93  %
Equity - United States
NMFC Senior Loan Program III LLC**
Investment Fund Membership interest (3)(10) — 5/4/2018 — —  $ 120,000  $ 120,000  10.02  %
NMFC Senior Loan Program II LLC**
Investment Fund Membership interest (3)(10) — 5/3/2016 — —  79,400  79,400  6.63  %
NM NL Holdings, L.P.**
Net Lease Membership interest (7)(10) — 6/20/2018 — —  44,070  49,589  4.14  %
UniTek Global Services, Inc.
Business Services Preferred shares (3)(10)(20) — 8/17/2018 — 9,948,967  9,949  8,272 
Preferred shares (3)(10)(20) — 8/29/2019 — 5,913,138  5,913  5,425 
Preferred shares (3)(10)(19) — 6/30/2017 — 18,099,536  18,100  12,250 
Preferred shares (2)(10)(18)(26) — 1/13/2015 — 29,326,545  26,946  2,789 
Preferred shares (3)(10)(18)(26) — 1/13/2015 — 8,104,462  7,447  771 
Ordinary shares (2)(10) — 1/13/2015 — 2,096,477  1,925  — 
Ordinary shares (3)(10) — 1/13/2015 — 1,993,749  532  — 
70,812  29,507  2.46  %
NM GLCR LP
Net Lease Membership interest (7)(10) — 2/1/2018 — —  14,750  26,464  2.21  %
NM CLFX LP
Net Lease Membership interest (7)(10) — 10/6/2017 — —  12,538  12,677  1.06  %
NM DRVT LLC
Net Lease Membership interest (7)(10) — 11/18/2016 — —  5,152  6,980  0.58  %
NM APP US LLC
Net Lease Membership interest (7)(10) — 9/13/2016 — —  5,080  6,886  0.58  %
The accompanying notes are an integral part of these consolidated financial statements.
22
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
NM YI, LLC
Net Lease Membership interest (7)(10) — 9/30/2019 — —  $ 6,272  $ 6,175  0.52  %
Edmentum Ultimate Holdings, LLC (16)
Education Ordinary shares (3)(10) — 6/9/2015 — 123,968  11  2,431 
Ordinary shares (2)(10) — 6/9/2015 — 107,143  9  2,101 
20  4,532  0.38  %
NHME Holdings Corp. (21)
Healthcare Services Ordinary shares (3)(10) — 11/27/2018 — 640,000  4,000  4,000  0.33  %
NM JRA LLC
Net Lease Membership interest (7)(10) — 8/12/2016 — —  2,043  3,784  0.32  %
NM KRLN LLC
Net Lease Membership interest (7)(10) — 11/15/2016 — —  8,227  940  0.08  %
NM GP Holdco, LLC**
Net Lease Membership interest (7)(10) — 6/20/2018 — —  452  496  0.04  %
New LT Smile Holdings, LLC(25)
Healthcare Services Ordinary shares (3)(10) — 6/5/2020 — 68  —  — 
Ordinary shares (8)(10) — 6/5/2020 — 136  —  — 
Ordinary shares (2)(10) — 6/5/2020 — 556  —  — 
—  —  —  %
Total Shares - United States $ 372,816  $ 351,430  29.36  %
Total Shares $ 380,161  $ 362,530  30.28  %
Warrants - United States
Edmentum Ultimate Holdings, LLC (16)
Education Warrants (3)(10) — 2/23/2018 5/5/2026 1,141,846  $ 769  $ 22,390  1.87  %
NHME Holdings Corp. (21)
Healthcare Services Warrants (3)(10) — 11/27/2018 — 160,000  1,000  1,000  0.08  %
Total Warrants - United States $ 1,769  $ 23,390  1.95  %
Total Funded Investments $ 599,584  $ 593,006  49.53  %
Unfunded Debt Investments - United States
New LT Smile Holdings, LLC (25)
Benevis Holding Corp.
Healthcare Services First lien (3)(10)(11) - Undrawn — 8/5/2020 11/5/2020 $ 10,371  $ —  $ —  —  %
The accompanying notes are an integral part of these consolidated financial statements.
23
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate (12) Acquisition Date Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares 		 Cost  Fair
Value 		Percent of Net
Assets
Edmentum Ultimate Holdings, LLC (16)
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
Education Second lien (3)(10)(11) - Undrawn — 4/15/2020 12/9/2021 $ 2,000  $ —  $ —  —  %
Total Unfunded Debt Investments - United States $ 12,371  $ —  $ —  —  %
Total Controlled Investments $ 599,584  $ 593,006  49.53  %
Total Investments $ 2,978,287  $ 2,896,623  241.96  %
(1)New Mountain Finance Corporation (the “Company”) generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.
(2)Investment is pledged as collateral for the Holdings Credit Facility, a revolving credit facility among the Company as Collateral Manager, New Mountain Finance Holdings, L.L.C. (“NMF Holdings”) as the Borrower, Wells Fargo Bank, National Association as the Administrative Agent, and Collateral Custodian. See Note 7. Borrowings, for details.
(3)Investment is pledged as collateral for the NMFC Credit Facility, a revolving credit facility among the Company as the Borrower and Goldman Sachs Bank USA as the Administrative Agent and the Collateral Agent and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A. as Lenders. See Note 7. Borrowings, for details.
(4)Investment is held in New Mountain Finance SBIC, L.P.
(5)Investment is held in New Mountain Finance SBIC II, L.P.
(6)Investment is held in NMF QID NGL Holdings, Inc.
(7)Investment is held in New Mountain Net Lease Corporation.
(8)Investment is pledged as collateral for the DB Credit Facility, a revolving credit facility among New Mountain Finance DB, L.L.C as the Borrower and Deutsche Bank AG, New York Branch as the Facility Agent. See Note 7. Borrowings, for details.
(9)Investment is held in NMF Ancora Holdings, Inc.
(10)The fair value of the Company's investment is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 4. Fair Value, for details.
(11)Par Value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net of the impact of paydowns and cash paid for drawn revolvers or delayed draws.
(12)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets daily (D), weekly (W), monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of September 30, 2020.
(13)The Company holds investments in Education Management Corporation and one related entity of Education Management Corporation. The Company holds series A-1 convertible preferred stock and common stock in Education Management Corporation and holds tranche A first lien term loans and a tranche B first lien term loan in Education Management II LLC, which is an indirect subsidiary of Education Management Corporation.
(14)The Company holds investments in two related entities of Tenawa Resource Holdings LLC. The Company holds 4.77% of the common units in QID NGL LLC (which at closing represented 98.1% of the ownership in the common units in Tenawa Resource Holdings LLC), class A preferred units in QID NGL LLC and a first lien investment in Tenawa Resource Management LLC, a wholly-owned subsidiary of Tenawa Resource Holdings LLC.
(15)The Company holds investments in two wholly-owned subsidiaries of Alert Holding Company, Inc. The Company holds a first lien term loan and a first lien revolver in Appriss Holdings, Inc. and preferred equity in Alert Intermediate Holdings I, Inc. The preferred equity is entitled to receive preferential dividends at a rate of L + 10.0% per annum.
(16)The Company holds investments in Edmentum Ultimate Holdings, LLC and its related entities. The Company holds subordinated notes, ordinary equity, and warrants in Edmentum Ultimate Holdings, LLC, holds a first lien promissory note in EducationCity Limited and holds a first lien term loan, first lien promissory note, second lien revolvers and a second lien term loan in Edmentum, Inc. and Archipelago Learning, Inc., which are wholly-owned subsidiaries of Edmentum Ultimate Holdings, LLC.
(17)The Company holds preferred equity in Permian Holdco 1, Inc. that is entitled to receive cumulative preferential dividends at a rate of 12.0% per annum payable in additional shares.
(18)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 13.5% per annum payable in additional shares.
(19)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 19.0% per annum payable in additional shares.
(20)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to received cumulative preferential dividends at a rate of 20.0% per annum payable in additional shares.
The accompanying notes are an integral part of these consolidated financial statements.
24
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

(21)The Company holds ordinary shares and warrants in NHME Holdings Corp., as well as second lien term loans in National HME, Inc., a wholly-owned subsidiary of NHME Holdings Corp.
(22)The Company holds preferred equity in Bach Special Limited (Bach Preference Limited) that is entitled to receive cumulative preferential dividends at a rate of 12.25% per annum payable in additional shares.
(23)The Company holds preferred equity in Avatar Topco, Inc., and holds a second lien term loan investment in EAB Global, Inc., a wholly-owned subsidiary of Avatar Topco, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of L + 11.00% per annum.
(24)The Company holds preferred equity in Symplr Intermediate Holdings, Inc. and holds a first lien term loan investment in Symplr Software Inc, Inc. (fka Caliper Software, Inc.), a wholly-owned subsidiary of Symplr Software Intermediate Holdings, Inc. The preferred equity is entitled to receive preferential dividends at a rate of L + 10.50% per annum.
(25)The Company holds common equity in New LT Smile Holdings, LLC. and holds first lien term loans in Benevis Holding Corp., a wholly-owned subsidiary of New LT Smile Holdings, LLC.
(26)Investment or a portion of the investment is on non-accrual status. See Note 3. Investments, for details.
(27)The Company holds one security purchased under a collateralized agreement to resell on its Consolidated Statement of Assets and Liabilities with a cost basis of $30,000 and a fair value of $21,422 as of September 30, 2020. See Note 2. Summary of Significant Accounting Policies, for details.
(28)Denotes investments in which the Company is an “Affiliated Person”, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), due to owning or holding the power to vote 5.0% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of September 30, 2020 and December 31, 2019, along with transactions during the nine months ended September 30, 2020 in which the issuer was a non-controlled/affiliated investment, is as follows:
Portfolio Company Fair Value at December 31, 2019 Gross
Additions
(A) 		Gross
Redemptions
(B) 		Net
Realized
Gains
(Losses) 		Net Change In
Unrealized
Appreciation
(Depreciation) 		Fair Value at September 30, 2020 Interest
Income 		Dividend
Income 		Other
Income
NMFC Senior Loan Program I LLC $ 23,000  $ —  $ —  $ —  $ —  $ 23,000  $ —  $ 2,096  $ 781 
Permian Holdco 1, Inc. / Permian Holdco 2, Inc. / Permian Holdco 3, Inc. 40,621  (1,172) (1,350) —  (10,265) 27,834  548  (3,418) 195 
Sierra Hamilton Holdings Corporation 9,906  178  (696) 12  (4,453) 4,935  284  —  26 
Total Non-Controlled/Affiliated Investments $ 73,527  $ (994) $ (2,046) $ 12  $ (14,718) $ 55,769  $ 832  $ (1,322) $ 1,002 
(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, payment-in-kind ("PIK") interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)Gross redemptions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
The accompanying notes are an integral part of these consolidated financial statements.
25
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(in thousands, except shares)
(unaudited)

(29)    Denotes investments in which the Company is in “Control”, as defined in the 1940 Act, due to owning or holding the power to vote more than 25.0% of the outstanding voting securities of the investment. Fair value as of September 30, 2020 and December 31, 2019, along with transactions during the nine months ended September 30, 2020 in which the issuer was a controlled investment, is as follows:
Portfolio Company Fair Value at December 31, 2019 Gross
Additions
(A) 		Gross
Redemptions
(B) 		Net 
Realized
Gains
(Losses) 		Net Change In
Unrealized
Appreciation
(Depreciation) 		Fair Value at September 30, 2020 Interest
Income 		Dividend
Income 		Other
Income
Edmentum Ultimate Holdings, LLC/Edmentum Inc. $ 79,112  $ 20,245  $ (127) $ 10  $ 7,710  $ 106,940  $ 5,461  $ —  $ 955 
National HME, Inc./NHME Holdings Corp. 24,979  2,952  —  —  (1,071) 26,860  2,952  —  875 
New LT Smile Holdings, LLC / Benevis Holdings Corp. (C) —  67,101  (78) —  14,992  82,015  1,385  —  311 
NM APP CANADA CORP 10,774  —  —  —  326  11,100  —  705  — 
NM APP US LLC 6,834  —  —  —  52  6,886  —  491  — 
NM CLFX LP 12,723  —  —  —  (46) 12,677  —  1,179  — 
NM DRVT LLC 6,016  —  —  —  964  6,980  —  357  — 
NM JRA LLC 3,700  —  —  —  84  3,784  —  204  — 
NM GLCR LP 23,800  —  —  —  2,664  26,464  —  1,388  — 
NM KRLN LLC 2,379  717  —  —  (2,156) 940  —  —  — 
NM NL Holdings, L.P. 48,308  —  —  —  1,281  49,589  —  3,690  — 
NM GP Holdco, LLC 487  —  —  —  9  496  —  38  — 
NM YI LLC 6,339  —  —  —  (164) 6,175  —  462  — 
NMFC Senior Loan Program II LLC 79,400  —  —  —  —  79,400  —  6,723  — 
NMFC Senior Loan Program III LLC 100,000  20,000  —  —  —  120,000  —  8,824  — 
UniTek Global Services, Inc. 68,101  17,690  (168) 2  (32,923) 52,700  1,176  5,716  338 
Total Controlled Investments $ 472,952  $ 128,705  $ (373) $ 12  $ (8,278) $ 593,006  $ 10,974  $ 29,777  $ 2,479 
(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)Gross redemptions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
(C)Portfolio company moved into the controlled investment category from the non-controlled/non-affiliated investment category.
*    All or a portion of interest contains PIK interest.
**    Indicates assets that the Company deems to be “non-qualifying assets” under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70.0% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of September 30, 2020, 17.1% of the Company’s total assets are represented by investments at fair value that are considered non-qualifying assets.
The accompanying notes are an integral part of these consolidated financial statements.
26
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2020
(unaudited)

  September 30, 2020
Investment Type Percent of Total
Investments at Fair Value
First lien 57.40  %
Second lien 23.80  %
Subordinated 1.50  %
Equity and other 17.30  %
Total investments 100.00  %
 
  September 30, 2020
Industry Type Percent of Total
Investments at Fair Value
Software 26.83  %
Business Services 20.78  %
Healthcare Services 15.61  %
Education 8.79  %
Investment Fund (includes investments in joint ventures) 7.68  %
Net Lease 4.32  %
Federal Services 3.49  %
Healthcare Information Technology 2.71  %
Consumer Services 2.64  %
Specialty Chemicals & Materials 2.07  %
Distribution & Logistics 1.88  %
Industrial Services 1.28  %
Energy 1.13  %
Packaging 0.42  %
Business Products 0.37  %
Total investments 100.00  %
 
  September 30, 2020
Interest Rate Type Percent of Total
Investments at Fair Value
Floating rates 95.14  %
Fixed rates 4.86  %
Total investments 100.00  %

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

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   Nomad Buyer, Inc.
      Healthcare Services First lien (2) 6.74% (L + 5.00%/M) 8/3/2018 8/1/2025 $ 56,439  $ 54,867  $ 56,298  4.39  %
   GS Acquisitionco, Inc.
      Software First lien (2)(9) 7.55% (L + 5.75%/M) 8/7/2019 5/24/2024 26,894  26,738  26,725 
First lien (5)(9) 7.55% (L + 5.75%/M) 8/7/2019 5/24/2024 22,406  22,276  22,266 
First lien (3)(9)(10) - Drawn 7.55% (L + 5.75%/M) 8/7/2019 5/25/2024 3,720  3,698  3,697 
First lien (3)(9)(10) - Drawn 7.55% (L + 5.75%/M) 8/7/2019 5/25/2024 3,510  3,488  3,488 
56,530  56,200  56,176  4.38  %
   iCIMS, Inc.
      Software First lien (8)(9) 8.29% (L + 6.50%/M) 9/12/2018 9/12/2024 46,636  46,229  46,636 
First lien (8)(9) 8.29% (L + 6.50%/M) 6/14/2019 9/12/2024 8,667  8,587  8,667 
55,303  54,816  55,303  4.31  %
   ConnectWise, LLC
      Software First lien (2)(9) 7.94% (L + 6.00%/Q) 11/26/2019 2/28/2025 55,613  55,270  55,265  4.31  %
   CentralSquare Technologies, LLC
      Software Second lien (3) 9.30% (L + 7.50%/M) 8/15/2018 8/31/2026 47,838  47,297  45,087 
Second lien (8) 9.30% (L + 7.50%/M) 8/15/2018 8/31/2026 7,500  7,415  7,069 
55,338  54,712  52,156  4.06  %
   Dealer Tire, LLC
      Distribution & Logistics First lien (2) 7.30% (L + 5.50%/M) 12/4/2018 12/12/2025 51,386  50,251  51,577  4.02  %
   Salient CRGT Inc.
      Federal Services First lien (2) 8.29% (L + 6.50%/M) 1/6/2015 2/28/2022 39,312  39,049  37,445 
First lien (8) 8.29% (L + 6.50%/M) 6/6/2019 2/28/2022 13,434  12,987  12,795 
52,746  52,036  50,240  3.91  %
   NM GRC Holdco, LLC
      Business Services First lien (2)(9) 7.94% (L + 6.00%/Q) 2/9/2018 2/9/2024 38,346  38,206  38,346 
First lien (2)(9)(10) - Drawn 7.94% (L + 6.00%/Q) 2/9/2018 2/9/2024 10,658  10,616  10,658 
49,004  48,822  49,004  3.82  %
   Frontline Technologies Group Holdings, LLC
      Education First lien (4)(9) 7.55% (L + 5.75%/M) 9/18/2017 9/18/2023 22,162  22,050  22,162 
First lien (2)(9) 7.55% (L + 5.75%/M) 9/18/2017 9/18/2023 18,677  18,619  18,677 
First lien (2)(9) 7.55% (L + 5.75%/M) 9/18/2017 9/18/2023 7,710  7,658  7,710 
48,549  48,327  48,549  3.78  %
   Integro Parent Inc.
      Business Services First lien (2)(9) 7.54% (L + 5.75%/M) 10/9/2015 10/31/2022 35,024  34,892  35,024 
Second lien (8)(9) 11.04% (L + 9.25%/M) 10/9/2015 10/30/2023 10,000  9,941  10,000 
45,024  44,833  45,024  3.51  %
   Brave Parent Holdings, Inc.
      Software Second lien (5) 9.43% (L + 7.50%/Q) 4/17/2018 4/17/2026 22,500  22,404  21,825 
Second lien (2) 9.43% (L + 7.50%/Q) 4/17/2018 4/17/2026 16,624  16,480  16,125 
Second lien (8) 9.43% (L + 7.50%/Q) 4/17/2018 4/17/2026 6,000  5,948  5,820 
45,124  44,832  43,770  3.41  %
   Quest Software US Holdings Inc.
      Software Second lien (2) 10.18% (L + 8.25%/Q) 5/17/2018 5/18/2026 43,697  43,320  42,851  3.35  %
The accompanying notes are an integral part of these consolidated financial statements.
29
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   Symplr Software Intermediate Holdings, Inc. (23)
   Symplr Software, Inc. (fka Caliper Software, Inc.)
      Healthcare Information Technology First lien (2)(9) 7.94% (L + 6.00%/Q) 11/30/2018 11/28/2025 $ 25,561  $ 25,387  $ 25,561 
First lien (4)(9) 7.94% (L + 6.00%/Q) 11/30/2018 11/28/2025 14,850  14,752  14,850 
40,411  40,139  40,411  3.15  %
   Tenawa Resource Holdings LLC (13)
   Tenawa Resource Management LLC
      Energy First lien (3)(9) 10.50% (Base + 8.00%/Q) 5/12/2014 10/30/2024 39,000  38,950  39,000  3.04  %
   KAMC Holdings, Inc
      Business Services Second lien (2)(9) 9.91% (L + 8.00%/Q) 8/14/2019 8/13/2027 18,750  18,614  18,609 
Second lien (8)(9) 9.91% (L + 8.00%/Q) 8/14/2019 8/13/2027 18,750  18,614  18,609 
37,500  37,228  37,218  2.90  %
   Trader Interactive, LLC
      Business Services First lien (2)(9) 8.30% (L + 6.50%/M) 6/15/2017 6/17/2024 31,932  31,776  31,932 
First lien (8)(9) 8.30% (L + 6.50%/M) 6/15/2017 6/17/2024 4,949  4,925  4,949 
36,881  36,701  36,881  2.87  %
   Peraton Holding Corp. (fka MHVC Acquisition Corp.)
      Federal Services First lien (2) 7.05% (L + 5.25%/M) 4/25/2017 4/29/2024 36,907  36,781  36,745  2.86  %
   Apptio, Inc.
      Software First lien (8)(9) 8.96% (L + 7.25%/M) 1/10/2019 1/10/2025 34,076  33,473  33,394  2.60  %
   Definitive Healthcare Holdings, LLC
      Healthcare Information Technology First lien (8)(9) 8.40% (L + 5.50% + 1.00% PIK/Q)* 8/7/2019 7/16/2026 33,402  33,244  33,234  2.59  %
   Finalsite Holdings, Inc.
      Software First lien (4)(9) 6.93% (L + 5.00%/Q) 9/28/2018 9/25/2024 22,219  22,081  22,219 
First lien (2)(9) 6.93% (L + 5.00%/Q) 9/28/2018 9/25/2024 10,974  10,906  10,974 
33,193  32,987  33,193  2.59  %
   TDG Group Holding Company
      Consumer Services First lien (2)(9) 7.44% (L + 5.50%/Q) 5/22/2018 5/31/2024 24,860  24,763  24,860 
First lien (8)(9) 7.44% (L + 5.50%/Q) 5/22/2018 5/31/2024 4,950  4,931  4,950 
First lien (2)(9) 7.44% (L + 5.50%/Q) 5/22/2018 5/31/2024 3,321  3,307  3,321 
33,131  33,001  33,131  2.58  %
   CoolSys, Inc.
      Industrial Services First lien (5) 7.80% (L + 6.00%/M) 11/20/2019 11/20/2026 22,500  22,388  22,388 
First lien (2) 7.80% (L + 6.00%/M) 11/20/2019 11/20/2026 10,400  10,348  10,348 
32,900  32,736  32,736  2.55  %
   Ansira Holdings, Inc.
      Business Services First lien (8) 7.55% (L + 5.75%/M) 12/19/2016 12/20/2022 28,455  28,378  27,032 
First lien (3)(10) - Drawn 7.51% (L + 5.75%/M) 12/19/2016 12/20/2022 4,743  4,731  4,506 
33,198  33,109  31,538  2.46  %
The accompanying notes are an integral part of these consolidated financial statements.
30
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   DCA Investment Holding, LLC
      Healthcare Services First lien (2)(9) 7.19% (L + 5.25%/Q) 7/2/2015 7/2/2021 $ 17,095  $ 17,046  $ 17,095 
First lien (3)(9) 7.19% (L + 5.25%/Q) 12/20/2017 7/2/2021 8,890  8,834  8,890 
First lien (2)(9) 7.19% (L + 5.25%/Q) 12/20/2017 7/2/2021 4,184  4,163  4,184 
First lien (3)(9)(10) - Drawn 9.00% (P + 4.25%/Q) 7/2/2015 7/2/2021 608  602  608 
30,777  30,645  30,777  2.40  %
   Integral Ad Science, Inc.
      Software First lien (8)(9) 9.05% (L + 6.00% + 1.25% PIK/M)* 7/19/2018 7/19/2024 26,843  26,616  26,843 
First lien (3)(9) 9.05% (L + 6.00% + 1.25% PIK/M)* 8/27/2019 7/19/2024 3,507  3,474  3,507 
30,350  30,090  30,350  2.36  %
   Conservice, LLC
      Business Services First lien (2)(9) 7.05% (L + 5.25%/M) 1/3/2019 11/29/2024 25,311  25,202  25,184 
First lien (3)(9)(10) - Drawn 7.05% (L + 5.25%/M) 1/3/2019 11/29/2024 4,418  4,398  4,396 
29,729  29,600  29,580  2.30  %
   Kaseya Traverse Inc.
      Software First lien (8)(9) 8.72% (L + 5.50% + 1.00% PIK/S)* 5/9/2019 5/2/2025 27,525  27,274  27,250 
First lien (3)(9)(10) - Drawn 8.45% (L + 6.50%/Q) 5/9/2019 5/2/2025 1,321  1,308  1,308 
First lien (3)(9)(10) - Drawn 8.69% (L + 5.50% + 1.00% PIK/S)* 5/9/2019 5/2/2025 430  426  426 
29,276  29,008  28,984  2.26  %
   Clarkson Eyecare, LLC
      Healthcare Services First lien (2) 8.05% (L + 6.25%/M) 8/21/2019 4/2/2021 17,300  17,149  17,300 
First lien (2) 8.05% (L + 6.25%/M) 9/11/2019 4/2/2021 11,533  11,433  11,533 
28,833  28,582  28,833  2.25  %
   Keystone Acquisition Corp.
      Healthcare Services First lien (2) 7.19% (L + 5.25%/Q) 5/10/2017 5/1/2024 24,482  24,369  23,992 
Second lien (2) 11.19% (L + 9.25%/Q) 5/10/2017 5/1/2025 4,500  4,465  4,399 
28,982  28,834  28,391  2.21  %
   Sovos Brands Intermediate, Inc.
      Food & Beverage First lien (2) 6.80% (L + 5.00%/M) 11/16/2018 11/20/2025 27,957  27,834  27,957  2.18  %
   Affinity Dental Management, Inc.
      Healthcare Services First lien (4)(9) 8.07% (L + 6.00%/S) 9/17/2019 9/15/2023 10,945  10,945  10,945 
First lien (2)(9) 8.01% (L + 6.00%/S) 9/15/2017 9/15/2023 11,316  11,288  11,316 
First lien (3)(9) 8.00% (L + 6.00%/S) 9/15/2017 9/15/2023 5,224  5,194  5,224 
27,485  27,427  27,485  2.14  %
   Confluent Health, LLC
      Healthcare Services First lien (2) 6.80% (L + 5.00%/M) 6/21/2019 6/24/2026 27,363  27,233  27,363  2.13  %
   TMK Hawk Parent, Corp.
      Distribution & Logistics First lien (2) 5.30% (L + 3.50%/M) 6/24/2019 8/28/2024 16,908  14,483  13,865 
First lien (8) 5.30% (L + 3.50%/M) 10/23/2019 8/28/2024 16,308  13,388  13,373 
33,216  27,871  27,238  2.12  %
The accompanying notes are an integral part of these consolidated financial statements.
31
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   HS Purchaser, LLC / Help/Systems Holdings, Inc.
      Software Second lien (5) 9.80% (L + 8.00%/M) 11/14/2019 11/19/2027 $ 22,500  $ 22,380  $ 22,388 
Second lien (2) 9.80% (L + 8.00%/M) 11/14/2019 11/19/2027 4,208  4,166  4,187 
26,708  26,546  26,575  2.07  %
   GC Waves Holdings, Inc.**
      Business Services First lien (5)(9) 7.55% (L + 5.75%/M) 10/31/2019 10/31/2025 22,500  22,335  22,331 
First lien (2)(9) 7.55% (L + 5.75%/M) 10/31/2019 10/31/2025 3,673  3,646  3,645 
26,173  25,981  25,976  2.02  %
   Spring Education Group, Inc (fka SSH Group Holdings, Inc.)
      Education Second lien (2) 10.19% (L + 8.25%/Q) 7/26/2018 7/30/2026 24,533  24,476  24,488  1.91  %
   AAC Holding Corp.
      Education First lien (2)(9) 9.95% (L + 8.25%/M) 9/30/2015 9/30/2022 24,956  24,866  23,110  1.80  %
   Idera, Inc.
      Software Second lien (4) 10.80% (L + 9.00%/M) 6/27/2019 6/28/2027 22,500  22,338  22,612  1.76  %
   Convey Health Solutions, Inc.
      Healthcare Services First lien (4)(9) 6.94% (L + 5.25%/M) 9/9/2019 9/4/2026 22,444  22,200  22,191  1.73  %
   Avatar Topco, Inc. (22)
   EAB Global, Inc.
      Education Second lien (3) 9.49% (L + 7.50%/S) 11/17/2017 11/17/2025 13,950  13,782  13,950 
Second lien (8) 9.49% (L + 7.50%/S) 11/17/2017 11/17/2025 7,500  7,410  7,500 
21,450  21,192  21,450  1.67  %
   CRCI Longhorn Holdings, Inc.
      Business Services Second lien (3) 8.99% (L + 7.25%/M) 8/2/2018 8/10/2026 14,349  14,301  14,062 
Second lien (8) 8.99% (L + 7.25%/M) 8/2/2018 8/10/2026 7,500  7,475  7,350 
21,849  21,776  21,412  1.67  %
   National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)
      Healthcare Services Second lien (2) 10.30% (L + 8.50%/M) 2/5/2019 3/8/2027 21,051  20,609  20,999  1.64  %
   MED Parentco, LP
      Healthcare Services Second lien (8) 10.05% (L + 8.25%/M) 8/2/2019 8/30/2027 20,857  20,703  20,753  1.62  %
   Institutional Shareholder Services, Inc.
      Business Services Second lien (3) 10.44% (L + 8.50%/Q) 3/5/2019 3/5/2027 20,372  20,087  19,557  1.52  %
   DiversiTech Holdings, Inc.
      Distribution & Logistics Second lien (2) 9.44% (L + 7.50%/Q) 5/18/2017 6/2/2025 12,000  11,909  11,760 
Second lien (8) 9.44% (L + 7.50%/Q) 5/18/2017 6/2/2025 7,500  7,443  7,350 
19,500  19,352  19,110  1.49  %
   Xactly Corporation
      Software First lien (4)(9) 9.05% (L + 7.25%/M) 7/31/2017 7/29/2022 19,047  18,925  19,047  1.48  %
   FR Arsenal Holdings II Corp.
      Business Services First lien (2)(9) 9.19% (L + 7.25%/Q) 9/29/2016 9/8/2022 18,355  18,249  18,355  1.43  %
   YLG Holdings, Inc.
      Business Services First lien (5) 7.66% (L + 5.75%/Q) 11/1/2019 10/31/2025 18,413  18,323  18,321  1.43  %
   Geo Parent Corporation
      Business Services First lien (2) 7.05% (L + 5.25%/M) 12/13/2018 12/19/2025 18,364  18,282  18,318  1.43  %
   Bluefin Holding, LLC
      Software Second lien (8)(9) 9.64% (L + 7.75%/Q) 9/6/2019 9/6/2027 18,000  18,000  18,000  1.40  %
The accompanying notes are an integral part of these consolidated financial statements.
32
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   Bullhorn, Inc.
      Software First lien (2)(9) 7.44% (L + 5.50%/Q) 9/24/2019 10/1/2025 $ 17,174  $ 17,049  $ 17,045 
First lien (3)(9)(10) - Drawn 7.46% (L + 5.50%/Q) 9/24/2019 10/1/2025 284  282  282 
17,458  17,331  17,327  1.35  %
   The Kleinfelder Group, Inc.
      Business Services First lien (4)(9) 6.37% (L + 4.75%/W) 12/18/2018 11/29/2024 17,325  17,251  17,325  1.35  %
   TIBCO Software Inc.
      Software Subordinated (3) 11.38%/S 11/24/2014 12/1/2021 15,000  14,844  15,554  1.21  %
   Hill International, Inc.**
      Business Services First lien (2)(9) 7.55% (L + 5.75%/M) 6/21/2017 6/21/2023 15,405  15,356  15,405  1.20  %
   Bleriot US Bidco Inc.
      Federal Services Second lien (2) 10.44% (L + 8.50%/Q) 10/24/2019 10/29/2027 15,000  14,852  14,981  1.17  %
   Netsmart Inc. / Netsmart Technologies, Inc.
      Healthcare Information Technology Second lien (2) 9.30% (L + 7.50%/M) 4/18/2016 10/19/2023 15,000  14,774  14,925  1.16  %
   Pathway Vet Alliance LLC
      Consumer Services First lien (4)(9)(10) - Drawn 6.30% (L + 4.50%/M) 11/14/2019 12/20/2024 3,670  3,652  3,652 
First lien (3)(9)(10) - Drawn 6.30% (L + 4.50%/M) 11/14/2019 12/20/2024 1,223  1,217  1,217 
Second lien (4)(9)(10) - Drawn 10.30% (L + 8.50%/M) 11/14/2019 12/19/2025 7,547  7,490  7,490 
Second lien (3)(9)(10) - Drawn 10.30% (L + 8.50%/M) 11/14/2019 12/19/2025 2,516  2,497  2,497 
14,956  14,856  14,856  1.16  %
   Diligent Corporation
      Software First lien (2)(9) 7.56% (L + 5.50%/S) 10/30/2019 4/14/2022 6,842  6,777  6,842 
First lien (2)(9) 7.56% (L + 5.50%/S) 10/30/2019 4/14/2022 140  139  140 
First lien (3)(9)(10) - Drawn 7.54% (L + 5.50%/S) 12/19/2018 4/14/2022 7,431  7,391  7,431 
14,413  14,307  14,413  1.12  %
   Alegeus Technologies Holding Corp.
      Healthcare Services First lien (8)(9) 8.28% (L + 6.25%/Q) 9/5/2018 9/5/2024 13,444  13,388  13,444  1.05  %
   JAMF Holdings, Inc.
      Software First lien (8)(9) 8.91% (L + 7.00%/Q) 11/13/2017 11/11/2022 8,757  8,702  8,757 
First lien (2)(9) 8.91% (L + 7.00%/Q) 11/8/2019 11/11/2022 4,582  4,549  4,582 
13,339  13,251  13,339  1.04  %
   BackOffice Associates Holdings, LLC
      Business Services First lien (2)(9) 12.70% (L + 7.50% + 3.00% PIK/S)* 8/25/2017 8/25/2023 13,047  12,973  12,425 
First lien (3)(9)(10) - Drawn 12.68% (L + 7.50% + 3.00% PIK/Q)* 8/25/2017 8/25/2023 894  886  851 
13,941  13,859  13,276  1.03  %
   Castle Management Borrower LLC
      Business Services First lien (2)(9) 8.16% (L + 6.25%/Q) 5/31/2018 2/15/2024 13,217  13,166  13,217  1.03  %
The accompanying notes are an integral part of these consolidated financial statements.
33
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   Ministry Brands, LLC
      Software First lien (2)(9) 5.85% (L + 4.00%/M) 12/7/2016 12/2/2022 $ 2,932  $ 2,924  $ 2,932 
Second lien (8)(9) 11.08% (L + 9.25%/M) 12/7/2016 6/2/2023 7,840  7,804  7,840 
Second lien (3)(9) 11.08% (L + 9.25%/M) 12/7/2016 6/2/2023 2,160  2,150  2,160 
First lien (3)(9)(10) - Drawn 6.95% (L + 5.00%/Q) 12/7/2016 12/2/2022 200  199  200 
13,132  13,077  13,132  1.02  %
   Transcendia Holdings, Inc.
      Packaging Second lien (8)(9) 9.80% (L + 8.00%/M) 6/28/2017 5/30/2025 14,500  14,348  12,476  0.97  %
   OEConnection LLC
      Business Services Second lien (2)(9) 10.04% (L + 8.25%/M) 9/25/2019 9/25/2027 12,044  11,926  11,924  0.93  %
   CFS Management, LLC
      Healthcare Services First lien (2)(9) 7.95% (L + 5.75%/S) 8/6/2019 7/1/2024 11,733  11,678  11,674  0.91  %
   CHA Holdings, Inc.
      Business Services Second lien (4) 10.69% (L + 8.75%/Q) 4/3/2018 4/10/2026 7,012  6,952  7,082 
Second lien (3) 10.69% (L + 8.75%/Q) 4/3/2018 4/10/2026 4,453  4,415  4,497 
11,465  11,367  11,579  0.90  %
   Alert Holding Company, Inc. (14)
   Appriss Holdings, Inc.
      Business Services First lien (8) 7.44% (L + 5.50%/Q) 5/24/2019 5/29/2026 11,054  10,965  10,888  0.86  %
   PaySimple, Inc.
      Software First lien (2) 7.30% (L + 5.50%/M) 8/19/2019 8/25/2025 9,857  9,763  9,808 
First lien (3)(10) - Drawn 7.31% (L + 5.50%/M) 8/19/2019 8/25/2025 934  916  930 
10,791  10,679  10,738  0.84  %
   Vectra Co.
      Business Products Second lien (8) 9.05% (L + 7.25%/M) 2/23/2018 3/8/2026 10,788  10,754  10,518  0.82  %
   NorthStar Financial Services Group, LLC
      Software Second lien (5) 9.30% (L + 7.50%/M) 5/23/2018 5/25/2026 10,607  10,585  10,501  0.82  %
   PPVA Black Elk (Equity) LLC
      Business Services Subordinated (3)(9) — 5/3/2013 — 14,500  14,500  10,354  0.81  %
   Masergy Holdings, Inc.
      Business Services Second lien (2) 9.46% (L + 7.50%/Q) 12/14/2016 12/16/2024 10,500  10,458  10,264  0.80  %
   VT Topco, Inc.
      Business Services Second lien (4) 8.94% (L + 7.00%/Q) 8/14/2018 7/31/2026 10,000  9,978  10,025  0.78  %
   Quartz Holding Company
      Software Second lien (3) 9.71% (L + 8.00%/M) 4/2/2019 4/2/2027 10,000  9,813  9,975  0.78  %
   AG Parent Holdings, LLC
      Healthcare Services First lien (2) 6.91% (L + 5.00%/Q) 7/30/2019 7/31/2026 10,000  9,952  9,925  0.77  %
   Stats Intermediate Holdings, LLC**
      Business Services First lien (2) 7.30% (L + 5.25%/S) 5/22/2019 7/10/2026 10,000  9,881  9,775  0.76  %
   Affordable Care Holding Corp.
      Healthcare Services First lien (2) 6.59% (L + 4.75%/M) 3/18/2019 10/24/2022 9,897  9,738  9,649  0.75  %
   Teneo Holdings, LLC
      Business Services First lien (2) 6.99% (L + 5.25%/M) 7/15/2019 7/11/2025 9,975  9,788  9,476  0.74  %
   AgKnowledge Holdings Company, Inc.
      Business Services First lien (4) 6.55% (L + 4.75%/M) 11/30/2018 7/21/2023 9,355  9,318  9,332  0.73  %
The accompanying notes are an integral part of these consolidated financial statements.
34
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   Wrike, Inc.
      Software First lien (8)(9) 8.55% (L + 6.75%/M) 12/31/2018 12/31/2024 $ 9,067  $ 8,988  $ 9,067  0.71  %
   WD Wolverine Holdings, LLC
      Healthcare Services First lien (2) 7.30% (L + 5.50%/M) 2/22/2017 8/16/2022 9,014  8,859  9,014  0.70  %
   Amerijet Holdings, Inc.
      Distribution & Logistics First lien (4)(9) 9.80% (L + 8.00%/M) 7/15/2016 7/15/2021 7,674  7,653  7,674 
First lien (4)(9) 9.80% (L + 8.00%/M) 7/15/2016 7/15/2021 1,279  1,276  1,279 
8,953  8,929  8,953  0.70  %
   Zywave, Inc.
      Software Second lien (4)(9) 10.95% (L + 9.00%/Q) 11/22/2016 11/17/2023 6,980  6,946  6,980 
Second lien (4)(9) 10.84% (L + 9.00%/M) 12/3/2019 11/17/2023 600  596  600 
First lien (3)(9)(10) - Drawn 6.80% (L + 5.00%/M) 11/22/2016 11/17/2022 670  665  670 
8,250  8,207  8,250  0.64  %
   DealerSocket, Inc.
      Software First lien (2) 6.66% (L + 4.75%/Q) 4/16/2018 4/26/2023 6,610  6,576  6,544 
First lien (3)(10) - Drawn 7.05% (L + 5.25%/M) 4/16/2018 4/26/2023 168  167  166 
6,778  6,743  6,710  0.52  %
   Restaurant Technologies, Inc.
      Business Services Second lien (4) 8.30% (L + 6.50%/M) 9/24/2018 10/1/2026 6,722  6,707  6,705  0.52  %
   CP VI Bella Midco, LLC
      Healthcare Services Second lien (3) 8.55% (L + 6.75%/M) 1/25/2018 12/29/2025 6,732  6,705  6,657  0.52  %
   DG Investment Intermediate Holdings 2, Inc. (aka Convergint Technologies Holdings, LLC)
      Business Services Second lien (3) 8.55% (L + 6.75%/M) 1/29/2018 2/2/2026 6,732  6,705  6,530  0.51  %
   Recorded Future, Inc.
      Software First lien (8)(9) 8.55% (L + 6.75%/M) 8/26/2019 7/3/2025 6,250  6,220  6,219  0.48  %
   Solera LLC / Solera Finance, Inc.
      Software Subordinated (3) 10.50%/S 2/29/2016 3/1/2024 5,000  4,844  5,316  0.41  %
   ADG, LLC
      Healthcare Services Second lien (3)(9) 11.92% (L + 10.00%/S) 10/3/2016 3/28/2024 5,264  5,215  4,213  0.33  %
   Sphera Solutions, Inc.
      Software First lien (2)(9) 9.00% (L + 7.00%/Q) 9/10/2019 6/14/2022 2,489  2,466  2,464  0.19  %
   First American Payment Systems, L.P.
      Business Services First lien (2) 6.81% (L + 4.75%/Q) 1/3/2017 1/5/2024 2,034  2,021  2,020  0.16  %
The accompanying notes are an integral part of these consolidated financial statements.
35
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   Education Management Corporation (12)
   Education Management II LLC
      Education First lien (2) 10.25% (P + 5.50%/Q)(24) 1/5/2015 7/2/2020 $ 208  $ 202  $ 2 
First lien (3) 10.25% (P + 5.50%/Q)(24) 1/5/2015 7/2/2020 117  114  1 
First lien (2) 14.00% (P + 8.50%/M)(24) 1/5/2015 7/2/2020 300  292  — 
First lien (3) 14.00% (P + 8.50%/M)(24) 1/5/2015 7/2/2020 169  165  — 
First lien (2) 13.25% (P + 8.50%/M)(24) 1/5/2015 7/2/2020 142  117  — 
First lien (2) 13.25% (P + 8.50%/M)(24) 1/5/2015 7/2/2020 4  3  — 
First lien (3) 13.25% (P + 8.50%/M)(24) 1/5/2015 7/2/2020 80  66  — 
First lien (3) 13.25% (P + 8.50%/M)(24) 1/5/2015 7/2/2020 2  2  — 
1,022  961  3  —  %
   PPVA Fund, L.P.
      Business Services Collateralized Financing (24)(25) — 11/7/2014 — —  —  —  —  %
Total Funded Debt Investments - United States $ 2,408,610  $ 2,385,761  $ 2,375,987  185.12  %
Total Funded Debt Investments $ 2,565,531  $ 2,541,672  $ 2,530,242  197.14  %
Equity - Hong Kong
   Bach Special Limited (Bach Preference Limited)**
      Education Preferred shares (3)(9)(21) — 9/1/2017 — 75,184  $ 7,439  $ 7,518  0.59  %
Total Shares - Hong Kong $ 7,439  $ 7,518  0.59  %
Equity - United States
   Avatar Topco, Inc.
      Education Preferred shares (3)(9)(22) — 11/17/2017 — 35,750  $ 46,093  $ 47,165  3.67  %
   Symplr Software Intermediate Holdings, Inc.(23)
      Healthcare Information Technology Preferred shares (4)(9) — 11/30/2018 — 7,500  8,502  8,571 
Preferred shares (3)(9) — 11/30/2018 — 2,586  2,931  2,955 
11,433  11,526  0.90  %
   Tenawa Resource Holdings LLC (13)
   QID NGL LLC Ordinary shares (6)(9) — 5/12/2014 — 5,290,997  5,291  8,445 
      Energy Preferred shares (6)(9) — 10/30/2017 — 1,623,385  1,623  2,727 
6,914  11,172  0.87  %
   Alert Holding Company, Inc. (14)
   Alert Intermediate Holdings I, Inc.
      Business Services Preferred shares (3)(9) — 5/31/2019 — 6,111  6,459  6,452  0.50  %
The accompanying notes are an integral part of these consolidated financial statements.
36
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   Education Management Corporation(12)
      Education Preferred shares (2) — 1/5/2015 — 3,331  $ 200  $ — 
Preferred shares (3) — 1/5/2015 — 1,879  113  — 
Ordinary shares (2) — 1/5/2015 — 2,994,065  100  — 
Ordinary shares (3) — 1/5/2015 — 1,688,976  56  — 
469  —  —  %
Total Shares - United States $ 71,368  $ 76,315  5.94  %
Total Shares $ 78,807  $ 83,833  6.53  %
Warrants - United States
   ASP LCG Holdings, Inc.
      Education Warrants (3)(9) — 5/5/2014 5/5/2026 622  $ 37  $ 898  0.07  %
Total Warrants - United States $ 37  $ 898  0.07  %
Total Funded Investments $ 2,620,516  $ 2,614,973  203.74  %
Unfunded Debt Investments - Canada
   Wolfpack IP Co.**
      Software First lien (3)(9)(10) - Undrawn — 6/14/2019 6/13/2025 $ 909  $ (9) $ (9) (0.00) %
Total Unfunded Debt Investments - Canada $ 909  $ (9) $ (9) (0.00) %
Unfunded Debt Investments - United States
   NM GRC Holdco, LLC
      Business Services First lien (2)(9)(10) - Undrawn — 2/9/2018 2/9/2020 $ 771  $ (2) $ —  —  %
   Ministry Brands, LLC
      Software First lien (3)(9)(10) - Undrawn — 12/7/2016 12/2/2022 800  (4) —  —  %
   Wrike, Inc.
      Software First lien (3)(9)(10) - Undrawn — 12/31/2018 12/31/2024 933  (9) —  —  %
   Xactly Corporation
      Software First lien (3)(9)(10) - Undrawn — 7/31/2017 7/29/2022 992  (10) —  —  %
   Zywave, Inc.
      Software First lien (3)(9)(10) - Undrawn — 11/22/2016 11/17/2022 1,330  (10) —  —  %
   JAMF Holdings, Inc.
      Software First lien (3)(9)(10) - Undrawn — 11/13/2017 11/11/2022 1,086  (10) —  —  %
   Trader Interactive, LLC
      Business Services First lien (3)(9)(10) - Undrawn — 6/15/2017 6/15/2023 1,673  (13) —  —  %
The accompanying notes are an integral part of these consolidated financial statements.
37
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   DCA Investment Holding, LLC
      Healthcare Services First lien (3)(9)(10) - Undrawn — 4/16/2019 4/16/2021 $ 20,426  $ —  $ — 
First lien (3)(9)(10) - Undrawn — 7/2/2015 7/2/2021 1,492  (15) — 
21,918  (15) —  —  %
   Affinity Dental Management, Inc.
      Healthcare Services First lien (3)(9)(10) - Undrawn — 9/15/2017 3/15/2023 1,738  (17) —  —  %
   Integral Ad Science, Inc.
      Software First lien (3)(9)(10) - Undrawn — 7/19/2018 7/19/2023 1,807  (18) —  —  %
   Finalsite Holdings, Inc.
      Software First lien (3)(9)(10) - Undrawn — 9/25/2018 9/25/2024 2,521  (19) —  —  %
   TDG Group Holding Company
      Consumer Services First lien (3)(9)(10) - Undrawn — 5/22/2018 5/31/2024 5,044  (25) —  —  %
   iCIMS, Inc.
      Software First lien (3)(9)(10) - Undrawn — 9/12/2018 9/12/2024 2,915  (29) —  —  %
   Associations, Inc.
      Business Services First lien (3)(9)(10) - Undrawn — 7/30/2018 7/30/2021 3,161  (20) — 
First lien (3)(9)(10) - Undrawn — 7/30/2018 7/30/2024 2,033  (13) — 
5,194  (33) —  —  %
   Integro Parent Inc.
      Business Services First lien (3)(9)(10) - Undrawn — 6/8/2018 4/30/2022 6,743  (34) —  —  %
   Diligent Corporation
      Software First lien (3)(9)(10) - Undrawn — 12/19/2018 12/19/2020 5,977  (37) —  —  %
   PhyNet Dermatology LLC
      Healthcare Services First lien (3)(9)(10) - Undrawn — 9/17/2018 8/16/2020 17,077  (85) —  —  %
   AgKnowledge Holdings Company, Inc.
      Business Services First lien (3)(10) - Undrawn — 11/30/2018 7/21/2023 526  (3) (1) (0.00) %
   DealerSocket, Inc.
      Software First lien (3)(10) - Undrawn — 4/16/2018 4/26/2023 392  (3) (4) (0.00) %
The accompanying notes are an integral part of these consolidated financial statements.
38
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   Recorded Future, Inc.
      Software First lien (3)(9)(10) - Undrawn — 8/26/2019 1/3/2021 $ 500  $ (3) $ (3)
First lien (3)(9)(10) - Undrawn — 8/26/2019 7/3/2025 750  (4) (4)
1,250  (7) (7) (0.00) %
   PaySimple, Inc.
      Software First lien (3)(10) - Undrawn — 8/19/2019 8/24/2020 2,289  —  (11) (0.00) %
   Alert Holding Company, Inc. (14)
   Appriss Holdings, Inc.
      Business Services First lien (3)(10) - Undrawn — 5/24/2019 5/30/2025 930  (9) (14) (0.00) %
   Bullhorn, Inc.
      Software First lien (3)(9)(10) - Undrawn — 9/24/2019 10/1/2021 1,135  (9) (9)
First lien (3)(9)(10) - Undrawn — 9/24/2019 10/1/2025 852  (6) (6)
1,987  (15) (15) (0.00) %
   Bluefin Holding, LLC
      Software First lien (3)(10) - Undrawn — 9/6/2019 9/6/2024 1,515  (23) (15) (0.00) %
   CFS Management, LLC
      Healthcare Services First lien (3)(9)(10) - Undrawn — 8/6/2019 7/1/2024 3,468  (17) (17) (0.00) %
   Conservice, LLC
      Business Services First lien (3)(9)(10) - Undrawn — 1/3/2019 11/29/2024 1,360  (7) (7)
First lien (3)(9)(10) - Undrawn — 1/3/2019 6/30/2020 2,283  —  (11)
3,643  (7) (18) (0.00) %
   ConnectWise, LLC
      Software First lien (3)(9)(10) - Undrawn — 11/26/2019 2/28/2025 4,248  (27) (27) (0.00) %
   CoolSys, Inc.
      Industrial Services First lien (3)(10) - Undrawn — 11/20/2019 11/19/2021 5,600  —  (28) (0.00) %
   YLG Holdings, Inc.
      Business Services First lien (5)(10) - Undrawn — 11/1/2019 4/30/2021 2,381  —  (12)
First lien (3)(10) - Undrawn — 11/1/2019 10/31/2025 3,968  (20) (20)
6,349  (20) (32) (0.00) %
   Kaseya Traverse Inc.
      Software First lien (3)(9)(10) - Undrawn — 5/9/2019 5/3/2021 2,873  —  (29)
First lien (3)(9)(10) - Undrawn — 5/9/2019 5/2/2025 991  (10) (10)
3,864  (10) (39) (0.00) %
The accompanying notes are an integral part of these consolidated financial statements.
39
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   Apptio, Inc.
      Software First lien (3)(9)(10) - Undrawn — 1/10/2019 1/10/2025 $ 2,066  $ (41) $ (41) (0.00) %
   Definitive Healthcare Holdings, LLC
      Healthcare Information Technology First lien (3)(9)(10) - Undrawn — 8/7/2019 7/16/2021 7,391  —  (37)
First lien (3)(9)(10) - Undrawn — 8/7/2019 7/16/2024 1,848  (9) (9)
9,239  (9) (46) (0.01) %
   Pathway Vet Alliance LLC
      Consumer Services First lien (4)(9)(10) - Undrawn — 11/14/2019 10/11/2021 3,821  —  (19)
First lien (3)(9)(10) - Undrawn — 11/14/2019 10/11/2021 1,274  —  (6)
Second lien (4)(9)(10) - Undrawn — 11/14/2019 10/11/2021 7,453  —  (56)
Second lien (3)(9)(10) - Undrawn — 11/14/2019 10/11/2021 2,484  —  (19)
15,032  —  (100) (0.01) %
   GC Waves Holdings, Inc.**
      Business Services First lien (3)(9)(10) - Undrawn — 10/31/2019 11/1/2021 9,877  —  (74)
First lien (3)(9)(10) - Undrawn — 10/31/2019 10/31/2025 3,951  (30) (30)
13,828  (30) (104) (0.01) %
   Ansira Holdings, Inc.
      Business Services First lien (3)(10) - Undrawn — 12/19/2016 4/16/2020 2,437  (6) (122) (0.01) %
   GS Acquisitionco, Inc.
      Software First lien (3)(9)(10) - Undrawn — 8/7/2019 8/2/2021 35,103  —  (219)
First lien (3)(9)(10) - Undrawn — 8/7/2019 5/25/2024 1,975  (12) (12)
37,078  (12) (231) (0.02) %
   Salient CRGT Inc.
      Federal Services First lien (3)(10) - Undrawn — 6/26/2018 11/29/2021 6,125  (490) (291) (0.03) %
Total Unfunded Debt Investments - United States $ 200,385  $ (1,099) $ (1,163) (0.09) %
Total Unfunded Debt Investments $ 201,294  $ (1,108) $ (1,172) (0.09) %
Total Non-Controlled/Non-Affiliated Investments $ 2,619,408  $ 2,613,801  203.65  %
The accompanying notes are an integral part of these consolidated financial statements.
40
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
Non-Controlled/Affiliated Investments(26)
Funded Debt Investments - United States
   Permian Holdco 1, Inc.
   Permian Holdco 2, Inc.
   Permian Holdco 3, Inc.
      Energy First lien (3)(9) 14.28% (L + 7.50% + 5.00% PIK/Q)* 6/14/2018 6/30/2022 $ 10,523  $ 10,523  $ 10,523 
First lien (3)(9)(10) - Drawn 8.24% (L + 6.50%/M) 6/14/2018 6/30/2022 17,750  17,750  17,750 
Subordinated (3)(9) 18.00% PIK/Q* 12/26/2018 6/30/2022 2,876  2,876  2,732 
Subordinated (3)(9) 14.00% PIK/Q* 10/31/2016 10/15/2021 2,642  2,642  2,246 
Subordinated (3)(9) 14.00% PIK/Q* 10/31/2016 10/15/2021 1,361  1,361  1,157 
35,152  35,152  34,408  2.68  %
   Sierra Hamilton Holdings Corporation
      Energy Second lien (3)(9) 15.00% PIK/Q* 9/12/2019 9/12/2023 1,442  1,410  1,406  0.11  %
Total Funded Debt Investments - United States $ 36,594  $ 36,562  $ 35,814  2.79  %
Equity - United States
   NMFC Senior Loan Program I LLC**
      Investment Fund Membership interest (3)(9) — 6/13/2014 — —  $ 23,000  $ 23,000  1.80  %
   Sierra Hamilton Holdings Corporation
      Energy Ordinary shares (2)(9) — 7/31/2017 — 25,000,000  11,501  7,648 
Ordinary shares (3)(9) — 7/31/2017 — 2,786,000  1,281  852 
12,782  8,500  0.66  %
   Permian Holdco 1, Inc.
      Energy Preferred shares (3)(9)(16)(24) — 10/31/2016 — 1,987,848  9,131  6,013 
Ordinary shares (3)(9) — 10/31/2016 — 1,366,452  1,350  200 
10,481  6,213  0.48  %
Total Shares - United States $ 46,263  $ 37,713  2.94  %
Total Funded Investments $ 82,825  $ 73,527  5.73  %
Unfunded Debt Investments - United States
   Permian Holdco 3, Inc.
      Energy First lien (3)(9)(10) - Undrawn — 6/14/2018 6/30/2022 $ 2,250  $ —  $ —  —  %
Total Unfunded Debt Investments - United States $ 2,250  $ —  $ —  —  %
Total Non-Controlled/Affiliated Investments $ 82,825  $ 73,527  5.73  %
The accompanying notes are an integral part of these consolidated financial statements.
41
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
Controlled Investments(27)
Funded Debt Investments - United States
   Edmentum Ultimate Holdings, LLC (15)
   Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
      Education First lien (2) 10.43% (L + 4.50% + 4.00% PIK/Q)* 8/6/2018 6/9/2021 $ 10,112  $ 9,173  $ 10,112 
Second lien (3)(9) 7.00% PIK/Q* 2/23/2018 12/9/2021 11,999  11,579  11,999 
Second lien (3)(9)(10) - Drawn 5.00% PIK/Q* 6/9/2015 12/9/2021 7,586  7,586  7,586 
Subordinated (3)(9) 8.50% PIK/Q* 6/9/2015 12/9/2021 5,326  5,324  5,326 
Subordinated (2)(9) 10.00% PIK/Q* 6/9/2015 12/9/2021 20,476  20,476  19,333 
Subordinated (3)(9) 10.00% PIK/Q* 6/9/2015 12/9/2021 5,037  5,037  4,756 
60,536  59,175  59,112  4.61  %
   NHME Holdings Corp. (20)
   National HME, Inc.
      Healthcare Services Second lien (3)(9) 12.00% PIK/Q* 11/27/2018 5/27/2024 16,532  13,054  11,985 
Second lien (3)(9) 12.00% PIK/Q* 11/27/2018 5/27/2024 9,136  8,279  7,994 
25,668  21,333  19,979  1.56  %
   UniTek Global Services, Inc.
      Business Services First lien (2)(9) 8.41% (L + 5.50% + 1.00% PIK/Q)* 6/29/2018 8/20/2024 12,448  12,448  11,068 
First lien (2)(9) 8.41% (L + 5.50% + 1.00% PIK/Q)* 6/29/2018 8/20/2024 2,490  2,490  2,214 
14,938  14,938  13,282  1.03  %
Total Funded Debt Investments - United States $ 101,142  $ 95,446  $ 92,373  7.20  %
Equity - Canada
  NM APP Canada Corp.**
      Net Lease Membership interest (7)(9) — 9/13/2016 — —  $ 7,345  $ 10,774  0.84  %
Total Shares - Canada $ 7,345  $ 10,774  0.84  %
Equity - United States
   NMFC Senior Loan Program III LLC**
      Investment Fund Membership interest (3)(9) — 5/4/2018 — —  $ 100,000  $ 100,000  7.80  %
   NMFC Senior Loan Program II LLC**
      Investment Fund Membership interest (3)(9) — 5/3/2016 — —  79,400  79,400  6.20  %
The accompanying notes are an integral part of these consolidated financial statements.
42
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
   UniTek Global Services, Inc.
      Business Services Preferred shares (3)(9)(19) — 8/29/2019 — 3,492,227  3,492  3,347 
Preferred shares (3)(9)(19) — 8/17/2018 — 8,594,292  8,594  7,979 
Preferred shares (3)(9)(18) — 6/30/2017 — 15,747,272  15,747  13,909 
Preferred shares (2)(9)(17) — 1/13/2015 — 28,369,088  25,989  22,766 
Preferred shares (3)(9)(17) — 1/13/2015 — 7,839,866  7,182  6,292 
Ordinary shares (2)(9) — 1/13/2015 — 2,096,477  1,925  270 
Ordinary shares (3)(9) — 1/13/2015 — 1,993,749  532  256 
63,461  54,819  4.27  %
   NM NL Holdings, L.P.**
      Net Lease Membership interest (7)(9) — 6/20/2018 — —  44,070  48,308  3.76  %
   NM GLCR LP
      Net Lease Membership interest (7)(9) — 2/1/2018 — —  14,750  23,800  1.85  %
   NM CLFX LP
      Net Lease Membership interest (7)(9) — 10/6/2017 — —  12,538  12,723  0.99  %
   NM APP US LLC
      Net Lease Membership interest (7)(9) — 9/13/2016 — —  5,080  6,834  0.53  %
   NM YI, LLC
      Net Lease Membership interest (7)(9) — 9/30/2019 — —  6,272  6,339  0.49  %
   NM DRVT LLC
      Net Lease Membership interest (7)(9) — 11/18/2016 — —  5,152  6,016  0.46  %
   NHME Holdings Corp.(20)
      Healthcare Services Ordinary shares (3)(9) — 11/27/2018 — 640,000  4,000  4,000  0.31  %
   NM JRA LLC
      Net Lease Membership interest (7)(9) — 8/12/2016 — —  2,043  3,700  0.29  %
   Edmentum Ultimate Holdings, LLC (15)
      Education Ordinary shares (3)(9) — 6/9/2015 — 123,968  11  1,806 
Ordinary shares (2)(9) — 6/9/2015 — 107,143  9  1,561 
20  3,367  0.26  %
   NM KRLN LLC
      Net Lease Membership interest (7)(9) — 11/15/2016 — —  7,510  2,379  0.19  %
   NM GP Holdco, LLC**
      Net Lease Membership interest (7)(9) — 6/20/2018 — —  452  487  0.04  %
Total Shares - United States $ 344,748  $ 352,172  27.44  %
Total Shares $ 352,093  $ 362,946  28.28  %
The accompanying notes are an integral part of these consolidated financial statements.
43
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of
Investment 		Interest Rate (11) Acquisition Date Maturity/Expiration
Date 		Principal
Amount,
Par Value
or Shares 		Cost Fair Value Percent of
Net
Assets
Warrants - United States
   Edmentum Ultimate Holdings, LLC(15)
      Education Warrants (3)(9) — 2/23/2018 5/5/2026 1,141,846  $ 769  $ 16,633  1.29  %
   NHME Holdings Corp.(20)
      Healthcare Services Warrants (3)(9) — 11/27/2018 — 160,000  1,000  1,000  0.08  %
Total Warrants - United States $ 1,769  $ 17,633  1.37  %
Total Funded Investments $ 449,308  $ 472,952  36.85  %
Unfunded Debt Investments - United States
   Edmentum Ultimate Holdings, LLC (15)
   Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
      Education Second lien (3)(9)(10) - Undrawn — 6/9/2015 12/9/2021 $ 298  $ —  $ —  —  %
Total Unfunded Debt Investments - United States $ 298  $ —  $ —  —  %
Total Controlled Investments $ 449,308  $ 472,952  36.85  %
Total Investments $ 3,151,541  $ 3,160,280  246.23  %
(1)New Mountain Finance Corporation (the "Company") generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). These investments are generally subject to certain limitations on resale, and may be deemed to be "restricted securities" under the Securities Act.
(2)Investment is pledged as collateral for the Holdings Credit Facility, a revolving credit facility among the Company, as the Collateral Manager, New Mountain Finance Holdings, L.L.C. ("NMF Holdings") as the Borrower and Wells Fargo Bank, National Association as the Administrative Agent and Collateral Custodian. See Note 7. Borrowings, for details.
(3)Investment is pledged as collateral for the NMFC Credit Facility, a revolving credit facility among the Company as the Borrower and Goldman Sachs Bank USA as the Administrative Agent and the Collateral Agent and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A. as Lenders. See Note 7. Borrowings, for details.
(4)Investment is held in New Mountain Finance SBIC, L.P.
(5)Investment is held in New Mountain Finance SBIC II, L.P.
(6)Investment is held in NMF QID NGL Holdings, Inc.
(7)Investment is held in New Mountain Net Lease Corporation.
(8)Investment is pledged as collateral for the DB Credit Facility, a revolving credit facility among New Mountain Finance DB, L.L.C as the Borrower and Deutsche Bank AG, New York Branch as the Facility Agent. See Note 7. Borrowings, for details.
(9)The fair value of the Company's investment is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 4. Fair Value, for details.
(10)Par value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net of the impact of paydowns and cash paid for drawn revolvers or delayed draws.
(11)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets daily (D), weekly (W), monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of December 31, 2019.
(12)The Company holds investments in Education Management Corporation and one related entity of Education Management Corporation. The Company holds series A-1 convertible preferred stock and common stock in Education Management Corporation and holds tranche A first lien term loans and a tranche B first lien term loan in Education Management II LLC, which is an indirect subsidiary of Education Management Corporation.
(13)The Company holds investments in two related entities of Tenawa Resource Holdings LLC. The Company holds 4.77% of the common units in QID NGL LLC (which at closing represented 98.1% of the ownership in the common units in Tenawa Resource Holdings LLC), class A preferred units in QID NGL LLC and a first lien investment in Tenawa Resource Management LLC, a wholly-owned subsidiary of Tenawa Resource Holdings LLC.
The accompanying notes are an integral part of these consolidated financial statements.
44
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

(14)The Company holds investments in two wholly-owned subsidiaries of Alert Holding Company, Inc. The Company holds a first lien term loan and a first lien revolver in Appriss Holdings, Inc. and preferred equity in Alert Intermediate Holdings I, Inc. The preferred equity is entitled to receive preferential dividends at a rate of L + 10.0% per annum.
(15)The Company holds investments in Edmentum Ultimate Holdings, LLC and its related entities. The Company holds subordinated notes, ordinary equity and warrants in Edmentum Ultimate Holdings, LLC and holds a first lien term loan, second lien revolver and a second lien term loan in Edmentum, Inc. and Archipelago Learning, Inc., which are wholly-owned subsidiaries of Edmentum Ultimate Holdings, LLC.
(16)The Company holds preferred equity in Permian Holdco 1, Inc. that is entitled to receive cumulative preferential dividends at a rate of 12.0% per annum payable in additional shares.
(17)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 13.5% per annum payable in additional shares.
(18)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 19.0% per annum payable in additional shares.
(19)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to received cumulative preferential dividends at a rate of 20.0% per annum payable in additional shares.
(20)The Company holds ordinary shares and warrants in NHME Holdings Corp., as well as second lien term loans in National HME, Inc., a wholly-owned subsidiary of NHME Holdings Corp.
(21)The Company holds preferred equity in Bach Special Limited (Bach Preference Limited) that is entitled to receive cumulative preferential dividends at a rate of 12.25% per annum payable in additional shares.
(22)The Company holds preferred equity in Avatar Topco, Inc. and holds a second lien term loan investment in EAB Global, Inc., a wholly-owned subsidiary of Avatar Topco, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of L + 11.00% per annum.
(23)The Company holds preferred equity in Symplr Software Intermediate Holdings, Inc. and holds a first lien term loan investment in Symplr Software, Inc. (fka Caliper Software, Inc.), a wholly-owned subsidiary of Symplr Software Intermediate Holdings, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of L + 10.50% per annum.
(24)Investment or a portion of the investment is on non-accrual status. See Note 3. Investments, for details.
(25)The Company holds one security purchased under a collateralized agreement to resell on its Consolidated Statement of Assets and Liabilities with a cost basis of $30,000 and a fair value of $21,422 as of December 31, 2019. See Note 2. Summary of Significant Accounting Policies, for details.
(26)Denotes investments in which the Company is an “Affiliated Person”, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), due to owning or holding the power to vote 5.0% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of December 31, 2019 and December 31, 2018 along with transactions during the year ended December 31, 2019 in which the issuer was a non-controlled/affiliated investment is as follows:
Portfolio Company Fair Value at December 31, 2018 Gross
Additions (A) 		Gross
Redemptions
(B) 		Net
Realized
Gains
(Losses) 		Net Change In
Unrealized
Appreciation
(Depreciation) 		Fair Value at December 31, 2019 Interest
Income 		Dividend
Income 		Other
Income
NMFC Senior Loan Program I LLC $ 23,000  $ —  $ —  $ —  $ —  $ 23,000  $ —  $ 3,073  $ 1,142 
Permian Holdco 1, Inc. / Permian Holdco 2, Inc. / Permian Holdco 3, Inc. 41,966  3,077  (100) —  (4,322) 40,621  4,101  1,219  49 
Sierra Hamilton Holdings Corporation 12,527  1,410  —  —  (4,031) 9,906  65  —  45 
Total Non-Controlled/Affiliated Investments $ 77,493  $ 4,487  $ (100) $ —  $ (8,353) $ 73,527  $ 4,166  $ 4,292  $ 1,236 
(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, payment-in-kind (“PIK”) interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement at fair value of an existing portfolio company into this category from a different category.
(B)Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
(27)    Denotes investments in which the Company is in “Control”, as defined in the 1940 Act, due to owning or holding the power to vote more than 25.0% of the outstanding voting securities of the investment. Fair value as of December 31, 2019 and December 31, 2018 along with transactions during the year ended December 31, 2019 in which the issuer was a controlled investment, is as follows:
The accompanying notes are an integral part of these consolidated financial statements.
45
Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)

Portfolio Company Fair Value at December 31, 2018 Gross
Additions
(A) 		Gross
Redemptions
(B) 		Net 
Realized
Gains
(Losses) 		Net Change In
Unrealized
Appreciation
(Depreciation) 		Fair Value at December 31, 2019 Interest
Income 		Dividend
Income 		Other
Income
Edmentum Ultimate Holdings, LLC/Edmentum Inc. $ 45,011  $ 14,850  $ (3,129) $ 18  $ 22,380  $ 79,112  $ 5,781  $ —  $ 17 
National HME, Inc./NHME Holdings Corp. 22,722  3,501  —  —  (1,244) 24,979  3,501  —  — 
NM APP Canada, Corp. 9,727  —  —  —  1,047  10,774  —  920  — 
NM APP US LLC 5,912  —  —  —  922  6,834  —  527  — 
NM CLFX LP 12,770  —  —  —  (47) 12,723  —  1,550  — 
NM DRVT LLC 5,619  —  —  —  397  6,016  —  565  — 
NM JRA LLC 2,537  —  —  —  1,163  3,700  —  252  — 
NM GLCR LP 20,343  —  —  —  3,457  23,800  —  1,761  — 
NM KRLN LLC 4,205  —  —  —  (1,826) 2,379  —  832  — 
NM NL Holdings, L.P. 33,392  11,492  —  —  3,424  48,308  —  3,692  — 
NM GP Holdco, LLC 311  145  —  —  31  487  —  36  — 
NM YI, LLC —  6,272  —  —  67  6,339  —  240  — 
NMFC Senior Loan Program II LLC 79,400  —  —  —  —  79,400  —  11,116  — 
NMFC Senior Loan Program III LLC 78,400  21,600  —  —  —  100,000  —  10,520  — 
UniTek Global Services, Inc. 82,788  12,225  (151) —  (26,761) 68,101  1,246  8,918  600 
Total Controlled Investments $ 403,137  $ 70,085  $ (3,280) $ 18  $ 3,010  $ 472,952  $ 10,528  $ 40,929  $ 617 
(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)Gross redemptions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
*    All or a portion of interest contains PIK interest.
**    Indicates assets that the Company deems to be “non-qualifying assets” under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70.0% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of December 31, 2019, 14.5% of the Company’s total investments were non-qualifying assets.
The accompanying notes are an integral part of these consolidated financial statements.
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New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)



  December 31, 2019
Investment Type Percent of Total
Investments at Fair Value
First lien
57.01  %
Second lien 24.96  %
Subordinated 2.11  %
Equity and other 15.92  %
Total investments 100.00  %
 
  December 31, 2019
Industry Type Percent of Total
Investments at Fair Value
Software 24.22  %
Business Services 20.58  %
Healthcare Services 17.45  %
Education 9.04  %
Investment Funds (includes investments in joint ventures) 6.40  %
Net Lease 3.84  %
Distribution & Logistics 3.38  %
Federal Services 3.22  %
Energy 3.19  %
Healthcare Information Technology 3.17  %
Consumer Services 2.86  %
Industrial Services 1.03  %
Food & Beverage 0.89  %
Packaging 0.40  %
Business Products 0.33  %
Total investments 100.00  %
 
  December 31, 2019
Interest Rate Type Percent of Total
Investments at Fair Value
Floating rates 94.44  %
Fixed rates 5.56  %
Total investments 100.00  %

The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements of
New Mountain Finance Corporation
 
September 30, 2020
(in thousands, except share data)
(unaudited)
Note 1. Formation and Business Purpose
    New Mountain Finance Corporation (“NMFC” or the “Company”) is a Delaware corporation that was originally incorporated on June 29, 2010 and completed its initial public offering ("IPO") on May 19, 2011. NMFC is a closed-end, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). NMFC has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). NMFC is also registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Since NMFC’s IPO, and through September 30, 2020, NMFC raised approximately $893,183 in net proceeds from additional offerings of its common stock.
    New Mountain Finance Advisers BDC, L.L.C. (the “Investment Adviser”) is a wholly-owned subsidiary of New Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its affiliates, "New Mountain Capital") whose ultimate owners include Steven B. Klinsky and related and other vehicles. New Mountain Capital is a firm with a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, public equity and credit investment vehicles. The Investment Adviser manages the Company's day-to-day operations and provides it with investment advisory and management services. The Investment Adviser also manages other funds that may have investment mandates that are similar, in whole or in part, to the Company's. New Mountain Finance Administration, L.L.C. (the "Administrator”), a wholly-owned subsidiary of New Mountain Capital, provides the administrative services necessary to conduct the Company's day-to-day operations.
    The Company has established the following wholly-owned direct and indirect subsidiaries:
•New Mountain Finance Holdings, L.L.C. ("NMF Holdings" or the "Predecessor Operating Company") and New Mountain Finance DB, L.L.C. ("NMFDB"), whose assets are used to secure NMF Holdings’ credit facility and NMFDB’s credit facility, respectively;
•New Mountain Finance SBIC, L.P. ("SBIC I")  and New Mountain Finance SBIC II, L.P. ("SBIC II"), who have received licenses from the United States ("U.S.") Small Business Administration ("SBA") to operate as small business investment companies ("SBICs") under Section 301(c) of the Small Business Investment Act of 1958, as amended (the "1958 Act"), and their general partners, New Mountain Finance SBIC G.P., L.L.C. ("SBIC I GP"), and New Mountain Finance SBIC II G.P., L.L.C. ("SBIC II GP"), respectively;
•NMF Ancora Holdings Inc. ("NMF Ancora"), NMF QID Holdings, Inc. ("NMF QID") and NMF YP Holdings Inc. ("NMF YP"), which serve as tax blocker corporations by holding equity or equity-like investments in portfolio companies organized as limited liability companies (or other forms of pass-through entities); the Company consolidates its tax blocker corporations for accounting purposes but the tax blocker corporations are not consolidated for U.S. federal income tax purposes and may incur U.S. federal income tax expense as a result of their ownership of the portfolio companies; and
•New Mountain Finance Servicing, L.L.C. ("NMF Servicing"), which serves as the administrative agent on certain investment transactions.
    New Mountain Net Lease Corporation ("NMNLC") is a majority-owned consolidated subsidiary of the Company, which acquires commercial real estate properties that are subject to ‘‘triple net’’ leases has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a real estate investment trust, or REIT, within the meaning of Section 856(a) of the Code.
The Company’s investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. The first lien debt may include traditional first lien senior secured loans or unitranche loans. Unitranche loans combine characteristics of traditional first lien senior secured loans as well as second lien and subordinated loans. Unitranche loans will expose the Company to the risks associated with second lien and subordinated loans to the extent the Company invests in the “last out” tranche. In some cases, the Company’s investments may also include equity interests. The Company's primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after
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capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. Similar to the Company, SBIC I's and SBIC II's investment objectives are to generate current income and capital appreciation under the investment criteria used by the Company. However, SBIC I and SBIC II investments must be in SBA-eligible small businesses. The Company’s portfolio may be concentrated in a limited number of industries. As of September 30, 2020, the Company’s top five industry concentrations were software, business services, healthcare services, education and investment funds (which includes the Company's investments in its joint ventures).
Note 2. Summary of Significant Accounting Policies
Basis of accounting—The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, (“ASC 946”). NMFC consolidates its wholly-owned direct and indirect subsidiaries: NMF Holdings, NMFDB, NMF Servicing, SBIC I, SBIC I GP, SBIC II, SBIC II GP, NMF Ancora, NMF QID and NMF YP and its majority-owned consolidated subsidiary: NMNLC. For majority-owned consolidated subsidiaries, the third-party equity interest is referred to as non-controlling interest. The net income attributable to non-controlling interests for such subsidiaries is presented as “Net increase (decrease) in net assets resulting from operations related to non-controlling interest” in the Company’s Consolidated Statements of Operations. The portion of shareholders' equity that is attributable to non-controlling interests for such subsidiaries is presented as “Non-controlling interest”, a component of total equity, on the Company’s Consolidated Statements of Assets and Liabilities.
The Company’s consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of operations and financial condition for all periods presented. All intercompany transactions have been eliminated. Revenues are recognized when earned and expenses when incurred. The financial results of the Company’s portfolio investments are not consolidated in the financial statements.
The Company’s interim consolidated financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 6 or 10 of Regulation S-X. Accordingly, the Company’s interim consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial statements for the interim period, have been included. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending December 31, 2020.
Investments—The Company applies fair value accounting in accordance with GAAP. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are reflected on the Company’s Consolidated Statements of Assets and Liabilities at fair value, with changes in unrealized gains and losses resulting from changes in fair value reflected in the Company’s Consolidated Statements of Operations as “Net change in unrealized appreciation (depreciation) of investments” and realizations on portfolio investments reflected in the Company’s Consolidated Statements of Operations as “Net realized gains (losses) on investments”.
The Company values its assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, the Company’s board of directors is ultimately and solely responsible for determining the fair value of the portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where its portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. The Company’s quarterly valuation procedures are set forth in more detail below:
(1)Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.
(2)Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.
a.Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment’s par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and
b.For investments other than bonds, the Company looks at the number of quotes readily available and performs the following procedures:
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i.Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. The Company will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, the Company will use one or more of the methodologies outlined below to determine fair value.
ii.Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment’s par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).
(3)Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:
a.Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
b.Preliminary valuation conclusions will then be documented and discussed with the Company’s senior management;
c.If an investment falls into (3) above for four consecutive quarters and if the investment’s par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which the Company does not have a readily available market quotation will be reviewed by an independent valuation firm engaged by the Company’s board of directors; and
d.When deemed appropriate by the Company’s management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.
The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period and the fluctuations could be material.
    See Note 3. Investments, for further discussion relating to investments.
    New Mountain Net Lease Corporation
    NMNLC was formed to acquire commercial real estate properties that are subject to "triple net" leases. NMNLC's investments are disclosed on the Company's Consolidated Schedule of Investments as of September 30, 2020.
    
    On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11,315. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11,315 and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.


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Below is certain summarized property information for NMNLC as of September 30, 2020:
Lease Total Fair Value as of
Portfolio Company Tenant Expiration Date Location Square Feet September 30, 2020
NM NL Holdings LP / NM GP Holdco LLC Various Various Various Various 50,085 
NM GLCR LP Arctic Glacier U.S.A. 2/28/2038 CA 214 26,464 
NM CLFX LP Victor Equipment Company 8/31/2033 TX 423 12,677 
NM APP Canada, Corp. A.P. Plasman, Inc. 9/30/2031 Canada 436 11,100 
NM DRVT LLC FMH Conveyors, LLC 10/31/2031 AR 195 6,980 
NM APP US LLC Plasman Corp, LLC / A-Brite LP 9/30/2033 AL / OH 261 6,886 
NM YI, LLC Young Innovations, Inc. 10/31/2039 IL / MO 212 6,175 
NM JRA LLC J.R. Automation Technologies, LLC 1/31/2031 MI 88 3,784 
NM KRLN LLC None N/A MD 95 940 
$ 125,091 
    Collateralized agreements or repurchase financings—The Company follows the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral (“ASC 860”), when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of September 30, 2020 and December 31, 2019, the Company held one collateralized agreement to resell with a cost basis of $30,000 and $30,000, respectively, and a fair value of $21,422 and $21,422, respectively. The collateralized agreement to resell is on non-accrual. The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from the Company at the par value of the collateralized agreement. The private hedge fund has breached its agreement to repurchase the collateral under the collateralized agreement. The default by the private hedge fund did not release the collateral to the Company, and therefore, the Company does not have full rights and title to the collateral. A claim has been filed with the Cayman Islands joint official liquidators to resolve this matter. The joint official liquidators have recognized the Company’s contractual rights under the collateralized agreement. The Company continues to exercise its rights under the collateralized agreement and continues to monitor the liquidation process of the private hedge fund. The fair value of the collateralized agreement to resell is reflective of the increased risk of the position.
Cash and cash equivalents—Cash and cash equivalents include cash and short-term, highly liquid investments. The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and so near maturity that there is insignificant risk of changes in value. These securities have original maturities of three months or less. The Company did not hold any cash equivalents as of September 30, 2020 and December 31, 2019.
Revenue recognition
Sales and paydowns of investments:  Realized gains and losses on investments are determined on the specific identification method.
Interest and dividend income:  Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. The Company has loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer. For the three and nine months ended September 30, 2020, the Company recognized PIK and non-cash interest from investments of $5,008 and $11,726, respectively, and PIK and non-cash dividends from investments of $3,850 and $9,196, respectively. For the three and nine months ended September 30, 2019, the Company recognized PIK and non-cash interest from investments of $3,745 and $9,875, respectively, and PIK and non-cash dividends from investments of $4,821 and $13,629, respectively.
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Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible.
Non-accrual income:  Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment of the ultimate collectibility. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.
Other income:  Other income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees, management fees from a non-controlled/affiliated investment and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. Other income may also include fees from bridge loans. The Company may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received by the Company for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.
Interest and other financing expenses—Interest and other financing fees are recorded on an accrual basis by the Company. See Note 7. Borrowings, for details.
Deferred financing costs—The deferred financing costs of the Company consist of capitalized expenses related to the origination and amending of the Company’s borrowings. The Company amortizes these costs into expense over the stated life of the related borrowing. See Note 7. Borrowings, for details.
Deferred offering costs—The Company's deferred offering costs consist of fees and expenses incurred in connection with equity offerings and the filing of shelf registration statements. Upon the issuance of shares, offering costs are charged as a direct reduction to net assets. Deferred offering costs are included in other assets on the Company's Consolidated Statements of Assets and Liabilities.
Income taxes—The Company has elected to be treated, and intends to comply with the requirements to qualify annually, as a RIC under Subchapter M of the Code. As a RIC, the Company is not subject to U.S. federal income tax on the portion of taxable income and gains timely distributed to its stockholders.
To continue to qualify and be subject to tax as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing at least 90.0% of its investment company taxable income, as defined by the Code. Since U.S. federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes.
Differences between taxable income and the results of operations for financial reporting purposes may be permanent or temporary in nature. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for U.S. federal income tax purposes.
For U.S. federal income tax purposes, distributions paid to stockholders of the Company are reported as ordinary income, return of capital, long term capital gains or a combination thereof.
The Company will be subject to a 4.0% nondeductible U.S. federal excise tax on certain undistributed income unless the Company distributes, in a timely manner as required by the Code, an amount at least equal to the sum of (1) 98.0% of its respective net ordinary income earned for the calendar year and (2) 98.2% of its respective capital gain net income for the one-year period ending October 31 in the calendar year.
Certain consolidated subsidiaries of the Company are subject to U.S. federal and state income taxes. These taxable entities are not consolidated for U.S. federal income tax purposes and may generate income tax liabilities or assets from permanent and temporary differences in the recognition of items for financial reporting and U.S. federal income tax purposes.
For the three and nine months ended September 30, 2020, the Company recognized a total income tax benefit of approximately $134 and $662, respectively, for the Company’s consolidated subsidiaries. For the three and nine months ended September 30, 2020, the Company recorded current income tax expense of approximately $123 and $116, respectively, and deferred income tax benefit of approximately $257 and $778, respectively. For the three and nine months ended September 30, 2019, the Company recognized a total income tax benefit of approximately $281 and $108, respectively, for the Company’s
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consolidated subsidiaries. For the three and nine months ended September 30, 2019, the Company recorded current income tax expense of approximately $0 and $13, respectively, and deferred income tax benefit of approximately $281 and $121, respectively.
As of September 30, 2020 and December 31, 2019, the Company had $134 and $912, respectively, of deferred tax liabilities primarily relating to deferred taxes attributable to certain differences between the computation of income for U.S. federal income tax purposes as compared to GAAP.
Based on its analysis, the Company has determined that there were no uncertain income tax positions that do not meet the more likely than not threshold as defined by Accounting Standards Codification Topic 740 ("ASC 740") through December 31, 2019. The 2017 through 2019 tax years remain subject to examination by the U.S. federal, state, and local tax authorities.
Distributions—Distributions to common stockholders of the Company are recorded on the record date as set by the Company's board of directors. The Company intends to make distributions to its stockholders that will be sufficient to enable the Company to maintain its status as a RIC. The Company intends to distribute approximately all of its net investment income (see Note 5. Agreements) on a quarterly basis and substantially all of its taxable income on an annual basis, except that the Company may retain certain net capital gains for reinvestment.
The Company has adopted a dividend reinvestment plan that provides for reinvestment of any distributions declared on behalf of its stockholders, unless a stockholder elects to receive cash.
The Company applies the following in implementing the dividend reinvestment plan. If the price at which newly issued shares are to be credited to stockholders’ accounts is equal to or greater than 110.0% of the last determined net asset value of the shares, the Company will use only newly issued shares to implement its dividend reinvestment plan. Under such circumstances, the number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of the Company’s common stock on the Nasdaq Global Select Market LLC (the “NASDAQ”) on the distribution payment date. Market price per share on that date will be the closing price for such shares on the NASDAQ or, if no sale is reported for such day, the average of their electronically reported bid and ask prices.
If the price at which newly issued shares are to be credited to stockholders’ accounts is less than 110.0% of the last determined net asset value of the shares, the Company will either issue new shares or instruct the plan administrator to purchase shares in the open market to satisfy the additional shares required. Shares purchased in open market transactions by the plan administrator will be allocated to a stockholder based on the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market. The number of shares of the Company’s common stock to be outstanding after giving effect to payment of the distribution cannot be established until the value per share at which additional shares will be issued has been determined and elections of the Company’s stockholders have been tabulated.
Share repurchase program—On February 4, 2016, the Company's board of directors authorized a program for the purpose of repurchasing up to $50,000 worth of the Company's common stock (the "Repurchase Program"). Under the Repurchase Program, the Company was permitted, but was not obligated, to repurchase its outstanding common stock in the open market from time to time provided that it complied with the Company's code of ethics and the guidelines specified in Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including certain price, market volume and timing constraints. In addition, any repurchases were conducted in accordance with the 1940 Act. On December 31, 2019, the Company's board of directors extended the Company's Repurchase Program and the Company expects the Repurchase Program to be in place until the earlier of December 31, 2020 or until $50,000 of its outstanding shares of common stock have been repurchased. During the three and nine months ended September 30, 2020 and September 30, 2019, the Company did not repurchase any shares of the Company's common stock. The Company previously repurchased $2,948 of its common stock under the Repurchase Program.
Earnings per share—The Company’s earnings per share (“EPS”) amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Basic EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock outstanding during the period of computation. Diluted EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock assuming all potential shares had been issued, and its related net impact to net assets accounted for, and the additional shares of common stock were dilutive. Diluted EPS reflects the potential dilution, using the as-if-converted method for convertible debt, which could occur if all potentially dilutive securities were exercised.
Foreign securities—The accounting records of the Company are maintained in U.S. dollars. Investment securities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are
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translated into U.S. dollars based on the rate of exchange of such currencies on the respective dates of the transactions. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with “Net change in unrealized appreciation (depreciation)” and “Net realized gains (losses)” in the Company’s Consolidated Statements of Operations.
Investments denominated in foreign currencies may be negatively affected by movements in the rate of exchange between the U.S. dollar and such foreign currencies. This movement is beyond the control of the Company and cannot be predicted.
Use of estimates—The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Company’s consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Changes in the economic environment, financial markets, and other metrics used in determining these estimates could cause actual results to differ from the estimates used, and the differences could be material.
Dividend income recorded related to distributions received from flow-through investments is an accounting estimate based on the most recent estimate of the tax treatment of the distribution.
Note 3. Investments
At September 30, 2020, the Company’s investments consisted of the following:
Investment Cost and Fair Value by Type
  Cost Fair Value
First lien $ 1,708,860  $ 1,662,653 
Second lien 706,014  689,319 
Subordinated 52,831  43,536 
Equity and other 510,582  501,115 
Total investments $ 2,978,287  $ 2,896,623 
Investment Cost and Fair Value by Industry
  Cost Fair Value
Software $ 776,502  $ 777,207 
Business Services 665,117  601,907 
Healthcare Services 478,119  452,284 
Education 232,694  254,679 
Investment Fund (includes investments in joint ventures) 222,400  222,400 
Net Lease 105,929  125,091 
Federal Services 101,294  100,983 
Healthcare Information Technology 77,819  78,398 
Consumer Services 76,408  76,458 
Specialty Chemicals & Materials 59,614  60,013 
Distribution & Logistics 63,815  54,598 
Industrial Services 36,668  36,933 
Energy 56,785  32,769 
Packaging 14,365  12,231 
Business Products 10,758  10,672 
Total investments $ 2,978,287  $ 2,896,623 
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At December 31, 2019, the Company’s investments consisted of the following:
Investment Cost and Fair Value by Type
  Cost Fair Value
First lien $ 1,803,747  $ 1,801,615 
Second lien 796,921  788,868 
Subordinated 71,904  66,774 
Equity and other 478,969  503,023 
Total investments $ 3,151,541  $ 3,160,280 
Investment Cost and Fair Value by Industry
  Cost Fair Value
Software $ 764,875  $ 765,499 
Business Services 667,493  650,384 
Healthcare Services 552,499  551,471 
Education 267,064  285,781 
Investment Funds (includes investments in joint ventures) 202,400  202,400 
Net Lease 105,212  121,360 
Distribution & Logistics 106,403  106,878 
Federal Services 103,179  101,675 
Energy 105,689  100,699 
Healthcare Information Technology 99,581  100,050 
Consumer Services 91,474  90,424 
Industrial Services 32,736  32,708 
Food & Beverage 27,834  27,957 
Packaging 14,348  12,476 
Business Products 10,754  10,518 
Total investments $ 3,151,541  $ 3,160,280 

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

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

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

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    During the first quarter of 2018, the Company placed its first lien positions in Education Management II LLC ("EDMC") on non-accrual status as EDMC announced its intention to wind down and liquidate the business. As of September 30, 2020, the Company's investment in EDMC, which was placed on non-accrual status, represented an aggregate cost basis of $958, an aggregate fair value of $0 and total unearned interest income of $0 and $43 for the three and nine months then ended.
    As of September 30, 2020, the Company had unfunded commitments on revolving credit facilities and bridge facilities of $64,512 and $0, respectively. As of September 30, 2020, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of $29,315. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments as of September 30, 2020.
As of December 31, 2019, the Company had unfunded commitments on revolving credit facilities and bridge facilities of $66,061 and $0, respectively. As of December 31, 2019, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of $137,781. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments as of December 31, 2019.
PPVA Black Elk (Equity) LLC
On May 3, 2013, the Company entered into a collateralized securities purchase and put agreement (the “SPP Agreement”) with a private hedge fund. Under the SPP Agreement, the Company purchased twenty million Class E Preferred Units of Black Elk Energy Offshore Operations, LLC (“Black Elk”) for $20,000 with a corresponding obligation of the private hedge fund, PPVA Black Elk (Equity) LLC, to repurchase the preferred units for $20,000 plus other amounts due under the SPP Agreement. The majority owner of Black Elk was the private hedge fund. In August 2014, the Company received a payment of $20,540, the full amount due under the SPP Agreement.
In August 2017, a trustee (the “Trustee”) for Black Elk informed the Company that the Trustee intended to assert a fraudulent conveyance claim (the “Claim”) against the Company and one of its affiliates seeking the return of the $20,540 repayment. Black Elk filed a Chapter 11 bankruptcy petition pursuant to the United States Bankruptcy Code in August 2015. The Trustee alleged that individuals affiliated with the private hedge fund conspired with Black Elk and others to improperly use proceeds from the sale of certain Black Elk assets to repay, in August 2014, the private hedge fund’s obligation to the Company under the SPP Agreement. The Company was unaware of these claims at the time the repayment was received. The private hedge fund is currently in liquidation under the laws of the Cayman Islands.
On December 22, 2017, the Company settled the Trustee’s $20,540 Claim for $16,000 and filed a claim with the Cayman Islands joint official liquidators of the private hedge fund for $16,000 that is owed to the Company under the SPP Agreement. The SPP Agreement was restored and is in effect since repayment has not been made. The Company continues to exercise its rights under the SPP Agreement and continues to monitor the liquidation process of the private hedge fund. During the year ended December 31, 2018, the Company received a $1,500 payment from its insurance carrier in respect to the settlement. As of September 30, 2020 and December 31, 2019, the SPP Agreement has a cost basis of $14,500 and $14,500, respectively, and a fair value of $10,354 and $10,354, respectively, which is reflective of the higher inherent risk in this transaction.
NMFC Senior Loan Program I LLC
NMFC Senior Loan Program I LLC (“SLP I”) was formed as a Delaware limited liability company on May 27, 2014 and commenced operations on June 10, 2014. SLP I is a portfolio company held by the Company. SLP I is structured as a private investment fund, in which all of the investors are "qualified purchasers", as such term is defined in Section 2(a)(51) of the 1940 Act. Transfer of interests in SLP I are subject to restrictions and, as a result, interests are not readily marketable. SLP I operates under a limited liability company agreement (the “SLP I Agreement”) and will continue in existence until August 31, 2022, subject to earlier termination pursuant to certain terms of the SLP I Agreement. The term may be extended pursuant to certain terms of the SLP I Agreement. SLP I's re-investment period ended on August 31, 2020. SLP I invests in senior secured loans issued by companies within the Company’s core industry verticals. These investments are typically broadly syndicated first lien loans.
SLP I is capitalized with $93,000 of capital commitments and debt from a revolving credit facility and is managed by the Company. The Company’s capital commitment is $23,000, representing less than 25.0% ownership, with third party investors representing the remaining capital commitments. As of September 30, 2020, SLP I had total investments with an aggregate fair value of approximately $292,851, debt outstanding of $220,067 and capital that had been called and funded of $93,000. As of December 31, 2019, SLP I had total investments with an aggregate fair value of approximately $313,702, debt outstanding of $227,367 and capital that had been called and funded of $93,000. The Company’s investment in SLP I is disclosed on the Company’s Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.

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The Company, as an investment adviser registered under the Advisers Act, acts as the collateral manager to SLP I and is entitled to receive a management fee for its investment management services provided to SLP I. As a result, SLP I is classified as an affiliate of the Company. No management fee is charged on the Company's investment in SLP I in connection with the administrative services provided to SLP I. For the three and nine months ended September 30, 2020, the Company earned approximately $254 and $781, respectively, in management fees related to SLP I, which is included in other income. For the three and nine months ended September 30, 2019, the Company earned approximately $291 and $865, respectively, in management fees related to SLP I, which is included in other income. As of September 30, 2020 and December 31, 2019, approximately $513 and $277, respectively, of management fees related to SLP I was included in receivable from affiliates. For the three and nine months ended September 30, 2020, the Company earned approximately $687 and $2,096, respectively, of dividend income related to SLP I, which is included in dividend income. For the three and nine months ended September 30, 2019, the Company earned approximately $788 and $2,326, respectively, of dividend income related to SLP I, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $772 and $747, respectively, of dividend income related to SLP I was included in interest and dividend receivable.
NMFC Senior Loan Program II LLC
NMFC Senior Loan Program II LLC ("SLP II") was formed as a Delaware limited liability company on March 9, 2016 and commenced operations on April 12, 2016. SLP II is structured as a private joint venture investment fund between the Company and SkyKnight Income, LLC (“SkyKnight”) and operates under a limited liability company agreement (the "SLP II Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within the Company's core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP II, which has equal representation from the Company and SkyKnight. SLP II's investment period ended on April 12, 2020 and SLP II will continue in existence until April 12, 2022. The term may be extended for up to one year pursuant to certain terms of the SLP II Agreement.
    SLP II is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP II to call down on capital commitments requires approval by the board of managers of SLP II. As of September 30, 2020, the Company and SkyKnight have committed and contributed $79,400 and $20,600, respectively, of equity to SLP II. The Company’s investment in SLP II is disclosed on the Company’s Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.
    On April 12, 2016, SLP II entered into its revolving credit facility with Wells Fargo Bank, National Association, which matures on April 12, 2022 and bears interest at a rate of the London Interbank Offered Rate ("LIBOR") plus 1.60% per annum. As of September 30, 2020 and December 31, 2019, SLP II had total investments with an aggregate fair value of approximately $286,413 and $339,985, respectively, and debt outstanding under its credit facility of $204,470 and $246,870, respectively. As of September 30, 2020 and December 31, 2019, none of SLP II's investments were on non-accrual. Additionally, as of September 30, 2020 and December 31, 2019, SLP II had unfunded commitments in the form of delayed draws of $194 and $3,155, respectively. Below is a summary of SLP II's portfolio, along with a listing of the individual investments in SLP II's portfolio as of September 30, 2020 and December 31, 2019:
September 30, 2020 December 31, 2019
First lien investments (1) $ 300,199  $ 351,160 
Weighted average interest rate on first lien investments (2) 5.11  % 6.29  %
Number of portfolio companies in SLP II 34  37 
Largest portfolio company investment (1) $ 17,322  $ 17,456 
Total of five largest portfolio company investments (1) $ 78,225  $ 78,932 
(1)Reflects principal amount or par value of investment.
(2)Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.
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    The following table is a listing of the individual investments in SLP II's portfolio as of September 30, 2020:
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Funded Investments - First lien:
Access CIG, LLC Business Services  3.91% (L + 3.75%) 2/27/2025 $ 4,625  $ 4,609  $ 4,532 
ADG, LLC Healthcare Services  6.25 % (L + 2.50% + 2.75% PIK) 9/28/2023 16,412  16,335  14,876 
Advisor Group Holdings, Inc. Consumer Services  5.15% (L + 5.00%) 7/31/2026 4,962  4,920  4,815 
Bearcat Buyer, Inc. Healthcare Services  5.25% (L + 4.25%) 7/9/2026 90  89  90 
Bearcat Buyer, Inc. Healthcare Services  5.25% (L + 4.25%) 7/9/2026 1,368  1,363  1,368 
Bleriot US Bidco Inc. Federal Services  4.97% (L + 4.75%) 10/31/2026 1,345  1,332  1,335 
Bleriot US Bidco Inc. Federal Services  4.97% (L + 4.75%) 10/30/2026 8,605  8,528  8,546 
Brave Parent Holdings, Inc. Software  4.15% (L + 4.00%) 4/18/2025 3,662  3,652  3,622 
CentralSquare Technologies, LLC Software  3.90% (L + 3.75%) 8/29/2025 14,737  14,710  13,286 
CHA Holdings, Inc. Business Services  5.50% (L + 4.50%) 4/10/2025 2,031  2,023  1,899 
CHA Holdings, Inc. Business Services  5.50% (L + 4.50%) 4/10/2025 10,615  10,582  9,925 
CommerceHub, Inc. Software  3.65% (L + 3.50%) 5/21/2025 2,444  2,435  2,389 
Dealer Tire, LLC Distribution & Logistics  4.40% (L + 4.25%) 12/12/2025 7,444  7,427  7,295 
Drilling Info Holdings, Inc. Business Services  4.40% (L + 4.25%) 7/30/2025 14,646  14,598  14,139 
Edgewood Partners Holdings LLC Business Services  5.25% (L + 4.25%) 9/6/2024 7,375  7,320  7,117 
eResearchTechnology, Inc. Healthcare Services  5.50% (L + 4.50%) 2/4/2027 3,137  3,108  3,129 
Fastlane Parent Company, Inc. Distribution & Logistics  4.65% (L + 4.50%) 2/4/2026 3,447  3,392  3,328 
Greenway Health, LLC Software  4.75% (L + 3.75%) 2/16/2024 14,512  14,474  12,989 
Help/Systems Holdings, Inc. Software  5.75% (L + 4.75%) 11/19/2026 4,422  4,382  4,362 
Institutional Shareholder Services Inc. Business Services  4.72% (L + 4.50%) 3/5/2026 13,790  13,678  13,376 
Keystone Acquisition Corp. Healthcare Services  6.25% (L + 5.25%) 5/1/2024 5,238  5,208  4,767 
LSCS Holdings, Inc. Healthcare Services  4.47% (L + 4.25%) 3/17/2025 1,870  1,868  1,776 
LSCS Holdings, Inc. Healthcare Services  4.47% (L + 4.25%) 3/17/2025 7,243  7,236  6,881 
Market Track, LLC Business Services  5.25% (L + 4.25%) 6/5/2024 11,610  11,577  11,432 
Medical Solutions Holdings, Inc. Healthcare Services  5.50% (L + 4.50%) 6/14/2024 2,774  2,766  2,684 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 2,078  2,074  2,059 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 873  871  865 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 12,066  12,039  11,955 
Peraton Corp. (fka MHVC Acquisition Corp.) Federal Services  6.25% (L + 5.25%) 4/29/2024 10,159  10,130  10,083 
Premise Health Holding Corp. Healthcare Services  3.72% (L + 3.50%) 7/10/2025 1,362  1,357  1,318 
Project Accelerate Parent, LLC Business Services  5.25% (L + 4.25%) 1/2/2025 12,450  12,409  11,329 
PSC Industrial Holdings Corp. Industrial Services  4.98% (L + 3.75%) 10/11/2024 3,036  3,017  2,892 
Quest Software US Holdings Inc. Software  4.51% (L + 4.25%) 5/16/2025 14,737  14,685  14,467 
Salient CRGT Inc. Federal Services  7.50% (L + 6.50%) 2/28/2022 12,665  12,625  12,484 
Wirepath LLC Distribution & Logistics  4.22% (L + 4.00%) 8/5/2024 14,700  14,700  13,524 
WP CityMD Bidco LLC Healthcare Services  5.54% (L + 4.50%) 8/13/2026 5,432  5,384  5,413 
Wrench Group LLC Consumer Services  4.22% (L + 4.00%) 4/30/2026 5,935  5,883  5,816 
YI, LLC Healthcare Services  5.00% (L + 4.00%) 11/7/2024 14,687  14,679  12,851 
Zelis Cost Management Buyer, Inc. Healthcare Information Technology  4.90% (L + 4.75%) 9/30/2026 4,099  4,062  4,077 
Zywave, Inc. Software  6.00% (L + 5.00%) 11/17/2022 16,844  16,810  16,844 
Zywave, Inc. Software  6.00% (L + 5.00%) 11/17/2022 478  474  478 
Total Funded Investments $ 300,005  $ 298,811  $ 286,413 
Unfunded Investments - First lien:
Bearcat Buyer, Inc. Healthcare Services — 7/9/2021 $ 194  $ (1) $ — 
Total Unfunded Investments $ 194  $ (1) $ — 
Total Investments $ 300,199  $ 298,810  $ 286,413 
(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of September 30, 2020.
(2)Represents the fair value in accordance with Accounting Standards Codification Topic 820, Fair Value Measurement and Disclosures (“ASC 820”). The Company's board of directors does not determine the fair value of the investments held by SLP II.
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    The following table is a listing of the individual investments in SLP II's portfolio as of December 31, 2019:
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Funded Investments - First lien
Access CIG, LLC Business Services  5.44% (L + 3.75%) 2/27/2025 $ 9,833  $ 9,794  $ 9,841 
ADG, LLC Healthcare Services  7.17% (L + 4.75% + 0.50% PIK) 9/28/2023 16,074  15,980  15,813 
Advisor Group Holdings, Inc. Consumer Services  6.80% (L + 5.00%) 7/31/2026 5,000  4,952  4,972 
Bearcat Buyer, Inc. Healthcare Services  6.19% (L + 4.25%) 7/9/2026 1,379  1,372  1,372 
Bearcat Buyer, Inc. Healthcare Services  6.19% (L + 4.25%) 7/9/2026 90  90  90 
Bleriot US Bidco Inc. Federal Services  6.69% (L + 4.75%) 10/30/2026 8,649  8,563  8,746 
Brave Parent Holdings, Inc. Software  5.93% (L + 4.00%) 4/18/2025 15,267  15,222  15,045 
CentralSquare Technologies, LLC Software  5.55% (L + 3.75%) 8/29/2025 14,850  14,819  14,231 
CHA Holdings, Inc. Business Services  6.44% (L + 4.50%) 4/10/2025 10,697  10,658  10,683 
CHA Holdings, Inc. Business Services  6.44% (L + 4.50%) 4/10/2025 2,047  2,037  2,044 
CommerceHub, Inc. Software  5.30% (L + 3.50%) 5/21/2025 2,463  2,453  2,432 
Drilling Info Holdings, Inc. Business Services  6.05% (L + 4.25%) 7/30/2025 14,758  14,703  14,696 
Edgewood Partners Holdings LLC Business Services  6.05% (L + 4.25%) 9/6/2024 7,432  7,367  7,413 
Explorer Holdings, Inc. Healthcare Services  6.26% (L + 4.50%) 11/20/2026 3,145  3,113  3,171 
Fastlane Parent Company, Inc. Distribution & Logistics  6.44% (L + 4.50%) 2/4/2026 3,474  3,411  3,448 
Greenway Health, LLC Software  5.69% (L + 3.75%) 2/16/2024 14,625  14,578  13,053 
Help/Systems Holdings, Inc. Software  6.55% (L + 4.75%) 11/19/2026 4,444  4,400  4,428 
Idera, Inc. Software  6.30% (L + 4.50%) 6/28/2024 4,446  4,417  4,449 
Institutional Shareholder Services Inc. Business Services  6.44% (L + 4.50%) 3/5/2026 13,895  13,769  13,687 
Keystone Acquisition Corp. Healthcare Services  7.19% (L + 5.25%) 5/1/2024 5,278  5,243  5,173 
LSCS Holdings, Inc. Healthcare Services  6.31% (L + 4.25%) 3/17/2025 7,298  7,290  7,225 
LSCS Holdings, Inc. Healthcare Services  6.31% (L + 4.25%) 3/17/2025 1,884  1,882  1,865 
Market Track, LLC Business Services  6.18% (L + 4.25%) 6/5/2024 11,700  11,660  10,530 
MediaOcean, LLC Software  5.80% (L + 4.00%) 8/18/2025 7,392  7,372  7,410 
Medical Solutions Holdings, Inc. Healthcare Services  6.30% (L + 4.50%) 6/14/2024 2,795  2,786  2,791 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 12,160  12,124  12,160 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 2,095  2,089  2,095 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 880  877  880 
NorthStar Financial Services Group, LLC Software  5.30% (L + 3.50%) 5/25/2025 5,885  5,861  5,789 
Peraton Corp. (fka MHVC Acquisition Corp.) Federal Services  7.05% (L + 5.25%) 4/29/2024 10,237  10,203  10,193 
Premise Health Holding Corp. Healthcare Services  5.44% (L + 3.50%) 7/10/2025 1,372  1,367  1,358 
Project Accelerate Parent, LLC Business Services  5.99% (L + 4.25%) 1/2/2025 13,545  13,494  13,511 
PSC Industrial Holdings Corp. Industrial Services  5.49% (L + 3.75%) 10/11/2024 7,305  7,252  7,269 
Quest Software US Holdings Inc. Software  6.18% (L + 4.25%) 5/16/2025 14,850  14,790  14,739 
Salient CRGT Inc. Federal Services  8.29% (L + 6.50%) 2/28/2022 13,134  13,071  12,510 
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.) Education  6.19% (L + 4.25%) 7/30/2025 716  715  721 
Wirepath LLC Distribution & Logistics  5.94% (L + 4.00%) 8/5/2024 14,813  14,813  12,886 
WP CityMD Bidco LLC Healthcare Services  6.44% (L + 4.50%) 8/13/2026 15,000  14,855  15,038 
Wrench Group LLC Consumer Services  6.19% (L + 4.25%) 4/30/2026 4,478  4,435  4,488 
YI, LLC Healthcare Services  5.94% (L + 4.00%) 11/7/2024 14,801  14,791  13,839 
Zelis Cost Management Buyer, Inc. Healthcare I.T.  6.55% (L + 4.75%) 9/30/2026 10,363  10,261  10,427 
Zywave, Inc. Software  6.93% (L + 5.00%) 11/17/2022 16,975  16,930  16,975 
Zywave, Inc. Software  6.84% (L + 5.00%) 11/17/2022 481  477  481 
Total Funded Investments $ 348,005  $ 346,336  $ 339,967 
Unfunded Investments - First lien
Bearcat Buyer, Inc. Healthcare Services — 7/9/2021 $ 194  $ (1) $ (1)
Bleriot US Bidco Inc. Federal Services — 10/31/2020 1,351  (14) 15 
Premise Health Holding Corp. Healthcare Services — 7/10/2020 110  —  — 
Wrench Group LLC Consumer Services — 4/30/2021 1,500  —  4 
Total Unfunded Investments $ 3,155  $ (15) $ 18 
Total Investments $ 351,160  $ 346,321  $ 339,985 
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(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2019.
(2)Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP II.

    Below is certain summarized financial information for SLP II as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and September 30, 2019:
Selected Balance Sheet Information: September 30, 2020 December 31, 2019
Investments at fair value (cost of $298,810 and $346,321, respectively) $ 286,413  $ 339,985 
Cash and other assets 8,838  8,159 
Total assets $ 295,251  $ 348,144 
Credit facility $ 204,470  $ 246,870 
Deferred financing costs (758) (1,408)
Distribution payable 2,550  3,250 
Payable for unsettled securities purchased —  3,113 
Other liabilities 1,201  2,367 
Total liabilities 207,463  254,192 
Members' capital $ 87,788  $ 93,952 
Total liabilities and members' capital $ 295,251  $ 348,144 
Selected Statement of Operations Three Months Ended Nine Months Ended
 Information: September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest income $ 4,174  $ 6,013  $ 14,153  $ 18,581 
Other income —  31  70  89 
Total investment income 4,174  6,044  14,223  18,670 
Interest and other financing expenses 1,190  2,745  4,696  8,484 
Other expenses 98  129  360  408 
Total expenses 1,288  2,874  5,056  8,892 
Less: expenses waived and reimbursed —  —  —  (20)
Net expenses 1,288  2,874  5,056  8,872 
Net investment income 2,886  3,170  9,167  9,798 
Net realized gains (losses) on investments 3  116  (803) 377 
Net change in unrealized appreciation (depreciation) of investments 6,988  (2,371) (6,061) (1,311)
Net increase in members' capital $ 9,877  $ 915  $ 2,303  $ 8,864 
For the three and nine months ended September 30, 2020, the Company earned approximately $2,025 and $6,723, respectively, of dividend income related to SLP II, which is included in dividend income. For the three and nine months ended September 30, 2019, the Company earned approximately $2,581 and $8,536, respectively, of dividend income related to SLP II, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $2,025 and $2,581, respectively, of dividend income related to SLP II was included in interest and dividend receivable.
    The Company has determined that SLP II is an investment company under ASC 946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company other than a wholly-owned investment company subsidiary. Furthermore, Accounting Standards Codification Topic 810, Consolidation ("ASC 810"), concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate SLP II.
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NMFC Senior Loan Program III LLC
SLP III was formed as a Delaware limited liability company and commenced operations on April 25, 2018. SLP III is structured as a private joint venture investment fund between the Company and SkyKnight Income II, LLC (“SkyKnight II”) and operates under a limited liability company agreement (the "SLP III Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within the Company's core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP III, which has equal representation from the Company and SkyKnight II. SLP III has a five year investment period and will continue in existence until April 25, 2025. The investment period may be extended for up to one year pursuant to certain terms of the SLP III Agreement.
    SLP III is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III. As of September 30, 2020, the Company and SkyKnight II have committed and contributed $120,000 and $30,000, respectively, of equity to SLP III. The Company’s investment in SLP III is disclosed on the Company’s Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.
    On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A., which matures on May 2, 2023 and bears interest at a rate of LIBOR plus 1.70% per annum. Effective February 13, 2020, SLP III's revolving credit facility has a maximum borrowing capacity of $450,000. As of September 30, 2020 and December 31, 2019, SLP III had total investments with an aggregate fair value of approximately $526,230 and $475,198, respectively, and debt outstanding under its credit facility of $395,200 and $355,400, respectively. As of September 30, 2020 and December 31, 2019, none of SLP III's investments were on non-accrual. Additionally, as of September 30, 2020 and December 31, 2019, SLP III had unfunded commitments in the form of delayed draws of $8,775 and $10,608, respectively. Below is a summary of SLP III's portfolio, along with a listing of the individual investments in SLP III's portfolio as of September 30, 2020 and December 31, 2019:
September 30, 2020 December 31, 2019
First lien investments (1) $ 554,145  $ 493,787 
Weighted average interest rate on first lien investments (2) 4.63  % 5.95  %
Number of portfolio companies in SLP III 58  49 
Largest portfolio company investment (1) $ 23,787  $ 23,947 
Total of five largest portfolio company investments (1) $ 99,403  $ 99,906 
(1)Reflects principal amount or par value of investment.
(2)Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.
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    The following table is a listing of the individual investments in SLP III's portfolio as of September 30, 2020:
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Funded Investments - First lien
Access CIG, LLC Business Services  3.91% (L + 3.75%) 2/27/2025 $ 870  $ 870  $ 852 
Advisor Group Holdings, Inc. Consumer Services  5.15% (L + 5.00%) 7/31/2026 4,963  4,920  4,815 
Affordable Care Holding Corp. Healthcare Services  5.75% (L + 4.75%) 10/24/2022 5,917  5,858  5,605 
AG Parent Holdings, LLC Healthcare Services  5.15% (L + 5.00%) 7/31/2026 12,406  12,353  12,220 
Ascensus Specialties LLC Business Services  4.91% (L + 4.75%) 9/24/2026 9,925  9,881  9,578 
Aston FinCo S.a.r.l. / Aston US Finco, LLC Software  4.40% (L + 4.25%) 10/9/2026 5,970  5,917  5,895 
Astra Acquisition Corp. Software  6.50% (L + 5.50%) 3/1/2027 11,519  11,438  11,577 
BCPE Empire Holdings, Inc. Distribution & Logistics  4.15% (L + 4.00%) 6/11/2026 9,098  9,021  8,916 
BCPE Empire Holdings, Inc. Distribution & Logistics  4.15% (L + 4.00%) 6/11/2026 1,430  1,421  1,401 
Bearcat Buyer, Inc. Healthcare Services  5.25% (L + 4.25%) 7/9/2026 19,703  19,619  19,703 
Bearcat Buyer, Inc. Healthcare Services  5.25% (L + 4.25%) 7/9/2026 1,292  1,287  1,292 
Bleriot US Bidco Inc. Federal Services  4.97% (L + 4.75%) 10/31/2026 4,303  4,264  4,273 
Bleriot US Bidco Inc. Federal Services  4.97% (L + 4.75%) 10/31/2026 672  666  668 
Bluefin Holding, LLC Software  4.15% (L + 4.00%) 9/4/2026 9,925  9,795  9,925 
Bracket Intermediate Holding Corp. Healthcare Services  4.55% (L + 4.25%) 9/5/2025 14,700  14,645  14,443 
Brave Parent Holdings, Inc. Software  4.15% (L + 4.00%) 4/18/2025 11,246  11,217  11,123 
CentralSquare Technologies, LLC Software  3.90% (L + 3.75%) 8/29/2025 14,738  14,710  13,286 
Certara Holdco, Inc. Healthcare I.T.  3.72% (L + 3.50%) 8/15/2024 1,249  1,252  1,236 
CHA Holdings, Inc. Business Services  5.50% (L + 4.50%) 4/10/2025 980  980  916 
CommerceHub, Inc. Software  3.65% (L + 3.50%) 5/21/2025 14,663  14,611  14,333 
Covenant Surgical Partners, Inc. Healthcare Services  4.16% (L + 4.00%) 7/1/2026 9,900  9,816  9,133 
CRCI Longhorn Holdings, Inc. Business Services  3.64% (L + 3.50%) 8/8/2025 14,700  14,646  14,228 
Dealer Tire, LLC Distribution & Logistics  4.40% (L + 4.25%) 12/12/2025 9,925  9,902  9,727 
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC) Healthcare Services  4.75% (L + 3.75%) 6/6/2025 14,673  14,647  13,921 
Drilling Info Holdings, Inc. Business Services  4.40% (L + 4.25%) 7/30/2025 18,624  18,555  17,980 
Edgewood Partners Holdings LLC Business Services  5.25% (L + 4.25%) 9/6/2024 7,375  7,320  7,117 
eResearchTechnology, Inc. Healthcare Services  5.50% (L + 4.50%) 2/4/2027 3,921  3,885  3,912 
EyeCare Partners, LLC Healthcare Services  3.90% (L + 3.75%) 2/18/2027 12,101  12,087  11,448 
Fastlane Parent Company, Inc. Distribution & Logistics  4.65% (L + 4.50%) 2/4/2026 3,448  3,392  3,328 
Greenway Health, LLC Software  4.75% (L + 3.75%) 2/16/2024 14,557  14,565  13,029 
Heartland Dental, LLC Healthcare Services  3.65% (L + 3.50%) 4/30/2025 18,588  18,522  17,199 
Help/Systems Holdings, Inc. Software  5.75% (L + 4.75%) 11/19/2026 18,486  18,311  18,232 
Idera, Inc. Software  5.00% (L + 4.00%) 6/28/2024 5,529  5,509  5,467 
Institutional Shareholder Services Inc. Business Services  4.72% (L + 4.50%) 3/5/2026 985  977  955 
Kestra Advisor Services Holdings A, Inc. Business Services  4.40% (L + 4.25%) 6/3/2026 9,405  9,338  9,240 
LSCS Holdings, Inc. Healthcare Services  4.47% (L + 4.25%) 3/17/2025 2,634  2,618  2,502 
LSCS Holdings, Inc. Healthcare Services  4.47% (L + 4.25%) 3/17/2025 680  676  646 
Market Track, LLC Business Services  5.25% (L + 4.25%) 6/5/2024 4,741  4,737  4,668 
MED ParentCo, LP Healthcare Services  4.40% (L + 4.25%) 8/31/2026 10,298  10,214  9,818 
MED ParentCo, LP Healthcare Services  4.40% (L + 4.25%) 8/31/2026 1,807  1,792  1,723 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 4,514  4,502  4,472 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 873  871  865 
National Intergovernmental Purchasing Alliance Company Business Services  3.97% (L + 3.75%) 5/23/2025 8,724  8,720  8,571 
National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.) Healthcare Services  4.40% (L + 4.25%) 3/9/2026 8,901  8,901  8,823 
National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.) Healthcare Services  4.40% (L + 4.25%) 3/9/2026 406  406  403 
Navex Topco, Inc. Software  3.40% (L + 3.25%) 9/5/2025 18,255  18,118  17,844 
Navicure, Inc. Healthcare Services  4.75% (L + 4.00%) 10/22/2026 4,118  4,107  4,035 
Netsmart Technologies, Inc. Healthcare I.T.  6.00% (P + 2.75%) 4/19/2023 10,250  10,250  10,250 
Newport Group Holdings II, Inc. Business Services  3.72% (L + 3.50%) 9/12/2025 4,900  4,882  4,722 
Orion Advisor Solutions, Inc. Business Services  5.00% (L + 4.00%) 9/24/2027 5,250  5,198  5,219 
Outcomes Group Holdings, Inc. Healthcare Services  3.47% (L + 3.25%) 10/24/2025 3,409  3,402  3,341 
Pelican Products, Inc. Business Products  4.50% (L + 3.50%) 5/1/2025 4,888  4,879  4,688 
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Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Peraton Corp. (fka MHVC Acquisition Corp.) Federal Services  6.25% (L + 5.25%) 4/29/2024 15,312  15,262  15,197 
Premise Health Holding Corp. Healthcare Services  3.72% (L + 3.50%) 7/10/2025 13,619  13,569  13,177 
Project Accelerate Parent, LLC Business Services  5.25% (L + 4.25%) 1/2/2025 9,848  9,809  8,962 
Quest Software US Holdings Inc. Software  4.51% (L + 4.25%) 5/16/2025 14,737  14,685  14,467 
Ryan Specialty Group, LLC Business Services  4.00% (L + 3.25%) 9/1/2027 3,500  3,448  3,483 
Sierra Enterprises, LLC Food & Beverage  5.00% (L + 4.00%) 11/11/2024 2,437  2,435  2,255 
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.) Education  4.47% (L + 4.25%) 7/30/2025 12,214  12,193  11,580 
TIBCO Software Inc. Software  3.90% (L + 3.75%) 6/30/2026 7,673  7,655  7,500 
Unitek Acquisition, Inc. Business Services  7.50% (L + 5.50% + 1.00% PIK) 8/20/2024 3,325  2,700  2,975 
Unitek Acquisition, Inc. Business Services  7.50% (L + 5.50% + 1.00% PIK) 8/20/2024 665  540  595 
Wirepath LLC Distribution & Logistics  4.22% (L + 4.00%) 8/5/2024 17,170  17,171  15,798 
WP CityMD Bidco LLC Healthcare Services  5.50% (L + 4.50%) 8/13/2026 19,918  19,744  19,852 
VT Topco, Inc. Business Services  3.40% (L + 3.25%) 8/1/2025 2,802  2,802  2,676 
YI, LLC Healthcare Services  5.00% (L + 4.00%) 11/7/2024 9,716  9,710  8,501 
Total Funded Investments $ 545,370  $ 542,193  $ 526,581 
Unfunded Investments - First lien
BCPE Empire Holdings, Inc. Distribution & Logistics — 6/11/2021 369  (4) (7)
Bearcat Buyer, Inc. Healthcare Services — 7/9/2021 2,792  (14) — 
Covenant Surgical Partners, Inc. Healthcare Services — 7/1/2021 2,000  (20) (155)
EyeCare Partners, LLC Healthcare Services — 2/18/2022 2,838  —  (153)
MED ParentCo, LP Healthcare Services — 8/27/2021 776  (8) (36)
Total Unfunded Investments $ 8,775  $ (46) $ (351)
Total Investments $ 554,145  $ 542,147  $ 526,230 
(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of September 30, 2020.
(2)Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP III.
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    The following table is a listing of the individual investments in SLP III's portfolio as of December 31, 2019:
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Funded Investments - First lien
Access CIG, LLC Business Services  5.44% (L + 3.75%) 2/27/2025 $ 1,204  $ 1,204  $ 1,205 
Advisor Group Holdings, Inc. Consumer Services  6.80% (L + 5.00%) 7/31/2026 5,000  4,952  4,972 
Affordable Care Holding Corp. Healthcare Services  6.59% (L + 4.75%) 10/24/2022 5,963  5,884  5,814 
AG Parent Holdings, LLC Healthcare Services  6.91% (L + 5.00%) 7/31/2026 12,500  12,440  12,406 
Aston FinCo S.a r.l. / Aston US Finco, LLC Software  6.26% (L + 4.25%) 10/9/2026 6,000  5,941  5,970 
Ascensus Specialties LLC Business Services  6.44% (L + 4.75%) 9/24/2026 10,000  9,951  9,975 
BCPE Empire Holdings, Inc. Distribution & Logistics  5.80% (L + 4.00%) 6/11/2026 9,167  9,080  9,224 
BCPE Empire Holdings, Inc. Distribution & Logistics  5.80% (L + 4.00%) 6/11/2026 229  243  231 
Bearcat Buyer, Inc. Healthcare Services  6.19% (L + 4.25%) 7/9/2026 19,853  19,759  19,753 
Bearcat Buyer, Inc. Healthcare Services  6.19% (L + 4.25%) 7/9/2026 1,302  1,296  1,296 
Bleriot US Bidco Inc. Federal Services  6.69% (L + 4.75%) 10/30/2026 4,324  4,281  4,373 
Bluefin Holding, LLC Software  6.14% (L + 4.25%) 9/4/2026 10,000  9,855  9,900 
Bracket Intermediate Holding Corp. Healthcare Services  6.35% (L + 4.25%) 9/5/2025 14,813  14,750  14,775 
Brave Parent Holdings, Inc. Software  5.93% (L + 4.00%) 4/18/2025 14,775  14,732  14,560 
CentralSquare Technologies, LLC Software  5.55% (L + 3.75%) 8/29/2025 14,850  14,819  14,231 
Certara Holdco, Inc. Healthcare I.T.  5.44% (L + 3.50%) 8/15/2024 1,262  1,266  1,262 
CHA Holdings, Inc. Business Services  6.44% (L + 4.50%) 4/10/2025 987  987  986 
CommerceHub, Inc. Software  5.30% (L + 3.50%) 5/21/2025 14,775  14,716  14,590 
Covenant Surgical Partners, Inc. Healthcare Services  5.69% (L + 4.00%) 7/1/2026 9,975  9,881  9,913 
CRCI Longhorn Holdings, Inc. Business Services  5.19% (L + 3.50%) 8/8/2025 14,813  14,751  14,414 
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC) Healthcare Services  5.55% (L + 3.75%) 6/6/2025 14,786  14,755  14,737 
Drilling Info Holdings, Inc. Business Services  6.05% (L + 4.25%) 7/30/2025 18,766  18,688  18,688 
Edgewood Partners Holdings LLC Business Services  6.05% (L + 4.25%) 9/6/2024 7,432  7,367  7,413 
Explorer Holdings, Inc. Healthcare Services  6.25% (L + 4.50%) 11/20/2026 3,931  3,892  3,964 
Fastlane Parent Company, Inc. Distribution & Logistics  6.44% (L + 4.50%) 2/4/2026 3,474  3,411  3,448 
Greenway Health, LLC Software  5.69% (L + 3.75%) 2/16/2024 14,670  14,679  13,093 
Heartland Dental, LLC Healthcare Services  5.55% (L + 3.75%) 4/30/2025 18,317  18,243  18,248 
Help/Systems Holdings, Inc. Software  6.55% (L + 4.75%) 11/19/2026 5,556  5,500  5,535 
Idera, Inc. Software  6.30% (L + 4.50%) 6/28/2024 5,572  5,548  5,576 
Institutional Shareholder Services Inc. Business Services  6.44% (L + 4.50%) 3/5/2026 993  983  978 
Kestra Advisor Services Holdings A, Inc. Business Services  6.20% (L + 4.25%) 6/3/2026 9,476  9,402  9,477 
LSCS Holdings, Inc. Healthcare Services  6.31% (L + 4.25%) 3/17/2025 2,654  2,634  2,627 
LSCS Holdings, Inc. Healthcare Services  6.31% (L + 4.25%) 3/17/2025 685  680  678 
Market Track, LLC Business Services  6.18% (L + 4.25%) 6/5/2024 4,778  4,773  4,300 
MED ParentCo, LP Healthcare Services  6.05% (L + 4.25%) 8/31/2026 10,376  10,282  10,402 
MED ParentCo, LP Healthcare Services  6.05% (L + 4.25%) 8/31/2026 553  549  554 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 4,549  4,534  4,549 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 880  877  880 
National Intergovernmental Purchasing Alliance Company Business Services  5.69% (L + 3.75%) 5/23/2025 8,790  8,786  8,790 
Navex Topco, Inc. Software  5.05% (L + 3.25%) 9/5/2025 18,394  18,237  18,448 
Netsmart Technologies, Inc. Healthcare I.T.  5.55% (L + 3.75%) 4/19/2023 10,330  10,330  10,308 
Newport Group Holdings II, Inc. Business Services  5.65% (L + 3.75%) 9/12/2025 4,938  4,917  4,950 
NorthStar Financial Services Group, LLC Software  5.30% (L + 3.50%) 5/25/2025 11,770  11,723  11,579 
Outcomes Group Holdings, Inc. Healthcare Services  5.41% (L + 3.50%) 10/24/2025 6,435  6,421  6,344 
Pelican Products, Inc. Business Products  5.24% (L + 3.50%) 5/1/2025 4,925  4,915  4,531 
Peraton Corp. (fka MHVC Acquisition Corp.) Federal Services  7.05% (L + 5.25%) 4/29/2024 15,430  15,371  15,363 
Premise Health Holding Corp. Healthcare Services  5.44% (L + 3.50%) 7/10/2025 13,723  13,666  13,580 
Project Accelerate Parent, LLC Business Services  5.99% (L + 4.25%) 1/2/2025 9,924  9,878  9,899 
Quest Software US Holdings Inc. Software  6.18% (L + 4.25%) 5/16/2025 14,850  14,790  14,739 
Sierra Enterprises, LLC Food & Beverage  5.80% (L + 4.00%) 11/11/2024 2,456  2,454  2,447 
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.) Education  6.19% (L + 4.25%) 7/30/2025 14,812  14,782  14,905 
Wirepath LLC Distribution & Logistics  5.94% (L + 4.00%) 8/5/2024 17,302  17,302  15,053 
WP CityMD Bidco LLC Healthcare Services  6.44% (L + 4.50%) 8/13/2026 20,069  19,875  20,119 
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Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
YI, LLC Healthcare Services  5.94% (L + 4.00%) 11/7/2024 $ 9,791  9,784  9,155 
Total Funded Investments $ 483,179  $ 480,816  $ 475,207 
Unfunded Investments - First lien
BCPE Empire Holdings, Inc. Distribution & Logistics — 6/11/2021 $ 1,580  $ (16) $ 10 
Bearcat Buyer, Inc. Healthcare Services — 7/9/2021 2,792  (14) (14)
Bleriot US Bidco Inc. Federal Services — 10/31/2020 676  (7) 8 
Covenant Surgical Partners, Inc. Healthcare Services — 7/1/2021 2,000  (20) (13)
Heartland Dental, LLC Healthcare Services — 4/30/2020 413  —  (2)
MED ParentCo, LP Healthcare Services — 8/27/2021 2,044  (20) 5 
Premise Health Holding Corp. Healthcare Services — 7/10/2020 1,103  (3) (3)
Total Unfunded Investments $ 10,608  $ (80) $ (9)
Total Investments $ 493,787  $ 480,736  $ 475,198 
(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2019.
(2)Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP III.

    Below is certain summarized financial information for SLP III as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and September 30, 2019:
Selected Balance Sheet Information: September 30, 2020 December 31, 2019
Investments at fair value (cost of $542,147 and $480,736) $ 526,230  $ 475,198 
Cash and other assets 14,005  12,836 
Receivable from unsettled securities sold 2,385  — 
Total assets $ 542,620  $ 488,034 
Credit facility $ 395,200  $ 355,400 
Deferred financing costs (2,322) (2,385)
Payable for unsettled securities purchased 9,384  8,166 
Distribution payable 4,000  3,650 
Other liabilities 2,396  3,736 
Total liabilities 408,658  368,567 
Members' capital $ 133,962  $ 119,467 
Total liabilities and members' capital $ 542,620  $ 488,034 
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Selected Statement of Operations Information: Three Months Ended Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest income $ 6,490  $ 7,268  $ 20,826  $ 19,828 
Other income 75  122  320  270 
Total investment income 6,565  7,390  21,146  20,098 
Interest and other financing expenses 2,516  3,770  9,593  10,511 
Other expenses 250  166  571  469 
Total expenses 2,766  3,936  10,164  10,980 
Less: expenses waived and reimbursed —  —  —  (22)
Net expenses 2,766  3,936  10,164  10,958 
Net investment income 3,799  3,454  10,982  9,140 
Net realized (losses) gains on investments (82) 100  (78) 170 
Net change in unrealized appreciation (depreciation) of investments 14,775  (1,800) (10,379) 1,855 
Net increase in members' capital $ 18,492  $ 1,754  $ 525  $ 11,165 
For the three and nine months ended September 30, 2020, the Company earned approximately $3,200 and $8,824, respectively, of dividend income related to SLP III, which is included in dividend income. For the three and nine months ended September 30, 2019, the Company earned approximately $2,680 and $7,600, respectively, of dividend income related to SLP III, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $3,200 and $2,920, respectively, of dividend income related to SLP III was included in interest and dividend receivable.
    The Company has determined that SLP III is an investment company under ASC 946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company other than a wholly-owned investment company subsidiary. Furthermore, ASC 810 concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate SLP III.
Unconsolidated Significant Subsidiaries
    In accordance with Regulation S-X Rule 10-01(b)(1), the Company evaluates its unconsolidated controlled portfolio companies as significant subsidiaries under this rule. On May 21, 2020, the SEC adopted rule amendments that will impact the requirement of BDCs and registered closed-end funds to disclose the financial statements of certain of its portfolio companies or of a fund that the investment company acquires (the "Final Rules"). The Final Rules adopt a new definition of “significant subsidiary” in Rule 1-02(w)(2) that will be applicable to the Company's determination of whether separate financial statements or summary financial information in such Company’s periodic reports for any portfolio company is required, which will (a) modify the investment test and income test, and (b) eliminate the asset test currently in the definition of “significant subsidiary” in Rule 1-02(w). The Final Rules will be effective on January 1, 2021, but, as permitted by the Final Rules, the Company elected to early adopt during the quarter ended June 30, 2020. As of September 30, 2020, the Company did not have any significant unconsolidated subsidiaries under Regulation S-X Rule 10-01(b)(1).
Investment Risk Factors
    First and second lien debt that the Company invests in is almost entirely rated below investment grade or may be unrated. Debt investments rated below investment grade are often referred to as “leveraged loans”, “high yield” or “junk” debt investments, and may be considered “high risk” compared to debt investments that are rated investment grade. These debt investments are considered speculative because of the credit risk of the issuers. Such issuers are considered more likely than investment grade issuers to default on their payments of interest and principal, and such risk of default could reduce the net asset value and income distributions of the Company. In addition, some of the Company’s debt investments will not fully amortize during their lifetime, which could result in a loss or a substantial amount of unpaid principal and interest due upon maturity. First and second lien debt may also lose significant market value before a default occurs. Furthermore, an active trading market may not exist for these first and second lien debt investments. This illiquidity may make it more difficult to value the debt.
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Subordinated debt is generally subject to similar risks as those associated with first and second lien debt, except that such debt is subordinated in payment and/or lower in lien priority. Subordinated debt is subject to the additional risk that the cash flow of the borrower and the property securing the debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured and unsecured obligations of the borrower.
The Company may directly invest in the equity of private companies or, in some cases, equity investments could be made in connection with a debt investment. Equity investments may or may not fluctuate in value, resulting in recognized realized gains or losses upon disposition.
The Company's financial condition and portfolio companies may be negatively impacted by the recent outbreak of the novel strain of coronavirus ("COVID-19"). On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, a national emergency was declared in the U.S. The ongoing spread of COVID-19 has had, and will continue to have, a material adverse impact on the U.S. and global economy as commercial activity and public perception have been negatively impacted by the outbreak. The ultimate extent to which the COVID-19 crisis will impact our financial condition and portfolio companies will depend on future developments affecting not only us, but also the entire U.S. and global economy, which are inherently uncertain, including, among others, new information that may emerge concerning the severity and rate of spread of the disease.
Note 4. Fair Value
Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes and ranks the inputs to valuation techniques used in measuring investments at fair value. The hierarchy classifies the inputs used in measuring fair value into three levels as follows:
Level I—Quoted prices (unadjusted) are available in active markets for identical investments and the Company has the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by ASC 820, the Company, to the extent that it holds such investments, does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.
Level II—Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following:
•Quoted prices for similar assets or liabilities in active markets;
•Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
•Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and
•Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.
Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.
The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.
The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period.





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The following table summarizes the levels in the fair value hierarchy that the Company’s portfolio investments fall into as of September 30, 2020:
  Total Level I Level II Level III
First lien $ 1,662,653  $ —  $ 167,616  $ 1,495,037 
Second lien 689,319  —  93,784  595,535 
Subordinated 43,536  —  —  43,536 
Equity and other 501,115  —  —  501,115 
Total investments $ 2,896,623  $ —  $ 261,400  $ 2,635,223 

The following table summarizes the levels in the fair value hierarchy that the Company’s portfolio investments fall into as of December 31, 2019:
  Total Level I Level II Level III
First lien $ 1,801,615  $ —  $ 263,192  $ 1,538,423 
Second lien 788,868  —  369,477  419,391 
Subordinated 66,774  —  20,870  45,904 
Equity and other 503,023  —  —  503,023 
Total investments $ 3,160,280  $ —  $ 653,539  $ 2,506,741 

The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended September 30, 2020, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2020:
  Total First Lien Second Lien Subordinated Equity and
other
Fair value, June 30, 2020 $ 2,702,692  $ 1,533,018  $ 665,894  $ 41,362  $ 462,418 
Total gains or losses included in earnings:  
Net realized gains on investments 233  220  13  —  — 
Net change in unrealized appreciation 64,266  27,610  10,852  1,368  24,436 
Purchases, including capitalized PIK and revolver fundings 
56,439  39,901  1,471  806  14,261 
Proceeds from sales and paydowns of investments (43,020) (31,505) (11,515) —  — 
Transfers into Level III(1) 6,871  6,871  —  —  — 
Transfers out of Level III(1) (152,258) (81,078) (71,180) —  — 
Fair Value, September 30, 2020 $ 2,635,223  $ 1,495,037  $ 595,535  $ 43,536  $ 501,115 
Unrealized appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period: $ 64,284  $ 27,628  $ 10,852  $ 1,368  $ 24,436 
(1)As of September 30, 2020, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.
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    The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended September 30, 2019, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2019:
  Total First Lien Second Lien Subordinated Equity and
other
Fair value, June 30, 2019 $ 2,028,442  $ 1,198,153  $ 330,396  $ 43,585  $ 456,308 
Total gains or losses included in earnings:          
Net realized gains on investments 15  15  —  —  — 
Net change in unrealized (depreciation) appreciation (3,165) 2,540  (4,108) 950  (2,547)
Purchases, including capitalized PIK and revolver fundings 410,626  271,086  91,898  980  46,662 
Proceeds from sales and paydowns of investments (94,158) (54,648) (39,510) —  — 
Transfers into Level III (1) 175,725  51,662  124,063  —  — 
Transfers out of Level III (1) (135,378) (17,181) (118,197) —  — 
Fair Value, September 30, 2019 $ 2,382,107  $ 1,451,627  $ 384,542  $ 45,515  $ 500,423 
Unrealized (depreciation) appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period: $ (3,317) $ 2,540  $ (4,260) $ 950  $ (2,547)
(1)As of September 30, 2019, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.

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

(1)As of September 30, 2020, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.
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The following table summarizes the changes in fair value of Level III portfolio investments for the nine months ended September 30, 2019, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2019:

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

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

Except as noted in the tables above, there were no other transfers in or out of Level I, II, or III during the three and nine months ended September 30, 2020 and September 30, 2019. Transfers into Level III occur as quotations obtained through pricing services are deemed not representative of fair value as of the balance sheet date and such assets are internally valued. As quotations obtained through pricing services are substantiated through additional market sources, investments are transferred out of Level III. In addition, transfers out of Level III and transfers into Level III occur based on the increase or decrease in the availability of certain observable inputs.
The Company invests in revolving credit facilities. These investments are categorized as Level III investments as these assets are not actively traded and their fair values are often implied by the term loans of the respective portfolio companies.
The Company generally uses the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. The Company typically determines the fair value of its performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company’s performance and associated financial risks. The following outlines additional details on the approaches considered:
Company Performance, Financial Review, and Analysis:  Prior to investment, as part of its due diligence process, the Company evaluates the overall performance and financial stability of the portfolio company. Post investment, the Company analyzes each portfolio company’s current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. The Company also attempts to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of its original investment thesis. This analysis is specific to each portfolio company. The Company leverages the knowledge gained from its original due diligence process, augmented by this subsequent monitoring, to continually refine its outlook for each of its portfolio companies and ultimately form the valuation of its investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, the Company will consider the pricing indicated by the external event to corroborate the private valuation.
    For debt investments, the Company may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of the Company’s debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, the Company may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value. After enterprise value coverage is demonstrated for the Company’s debt
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investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.
Market Based Approach:  The Company may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA) multiples of publicly traded comparable companies and comparable transactions. The Company considers numerous factors when selecting the appropriate companies whose trading multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. The Company may apply an average of various relevant comparable company EBITDA multiples to the portfolio company’s latest twelve month (“LTM”) EBITDA or projected EBITDA to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA multiple will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the market based approach as of September 30, 2020 and December 31, 2019, the Company used the relevant EBITDA multiple ranges set forth in the table below to determine the enterprise value of its portfolio companies. The Company believes these were reasonable ranges in light of current comparable company trading levels and the specific portfolio companies involved.
Income Based Approach: The Company also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security’s contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment’s expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach and a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes an average yield-to maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of September 30, 2020 and December 31, 2019, the Company used the discount ranges set forth in the table below to value investments in its portfolio companies.
The unobservable inputs used in the fair value measurement of the Company's Level III investments as of September 30, 2020 were as follows:
      Range
Type Fair Value as of September 30, 2020 Approach Unobservable Input Low High Weighted
Average
First lien $ 1,438,801  Market & income approach EBITDA multiple 5.0x 35.0x 14.0x
Revenue multiple 3.5x 11.0x 5.9x
  Discount rate 4.5  % 17.0  % 8.3  %
43,769  Market quote Broker quote N/A N/A N/A
12,467  Other N/A(1) N/A N/A N/A
Second lien 531,932  Market & income approach EBITDA multiple 7.0x 34.0x 15.1x
  Discount rate 6.8  % 21.7  % 9.5  %
48,603  Market quote Broker quote N/A N/A N/A
15,000  Other N/A(1) N/A N/A N/A
Subordinated 43,536  Market & income approach EBITDA multiple 9.0x 15.0x 12.0x
  Discount rate 10.2  % 35.0  % 18.0  %
Equity and other 500,257  Market & income approach EBITDA multiple 6.5x 19.5x 12.6x
  Discount rate 6.0  % 47.7  % 12.1  %
700  Black Scholes analysis Expected life in years 5.5  5.5  5.5 
    Volatility 52.3  % 52.3  % 52.3  %
    Discount rate 0.7  % 0.7  % 0.7  %
158  Other N/A(1) N/A N/A N/A
$ 2,635,223           
 
(1)Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.
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The unobservable inputs used in the fair value measurement of the Company's Level III investments as of December 31, 2019 were as follows:
      Range
Type Fair Value as of December 31, 2019 Approach Unobservable Input Low High Weighted
Average
First lien $ 1,239,847  Market & income approach EBITDA multiple 2.0x 35.0x 14.1x
  Revenue multiple 3.5x 11.0x 6.5x
Discount rate 6.3  % 14.8  % 8.6  %
298,576  Market quote Broker quote N/A N/A N/A
Second lien 196,494  Market & income approach EBITDA multiple 6.5x 32.0x 14.8x
  Revenue multiple 0.1x 1.3x 0.7x
Discount rate 8.6  % 20.4  % 11.6  %
222,897  Market quote Broker quote N/A N/A N/A
Subordinated 45,904  Market & income approach EBITDA multiple 5.5x 15.0x 10.7x
  Discount rate 10.2  % 35.0  % 18.8  %
Equity and other 502,125  Market & income approach EBITDA multiple 5.5x 19.5x 11.9x
  Revenue multiple 0.1x 1.3x 0.7x
Discount rate 6.2  % 57.4  % 13.8  %
898  Black Scholes analysis Expected life in years 6.3  6.3  6.3 
  Volatility 23.4  % 23.4  % 23.4  %
  Discount rate 1.8  % 1.8  % 1.8  %
$ 2,506,741           
Based on a comparison to similar BDC credit facilities, the terms and conditions of the Holdings Credit Facility, the NMFC Credit Facility and the DB Credit Facility (as defined in Note 7. Borrowings) are representative of market. The carrying values of the Holdings Credit Facility, NMFC Credit Facility and DB Credit Facility approximate fair value as of September 30, 2020, as the facilities are continually monitored and examined by both the borrower and the lender and are considered Level III. The carrying value of the SBA-guaranteed debentures, the 2016 Unsecured Notes, the 2017A Unsecured Notes, the 2018A Unsecured Notes, the 2018B Unsecured Notes and the 2019A Unsecured Notes (as defined in Note 7. Borrowings) approximate fair value as of September 30, 2020 based on a comparison of market interest rates for the Company’s borrowings and similar entities and are considered Level III. The fair value of the 2018 Convertible Notes and the 5.75% Unsecured Notes (as defined in Note 7. Borrowings) as of September 30, 2020 was $202,266 and $51,688, respectively, which was based on quoted prices and considered Level II. See Note 7. Borrowings, for details. The carrying value of the collateralized agreement approximates fair value as of September 30, 2020 and is considered Level III. The fair value of other financial assets and liabilities approximates their carrying value based on the short-term nature of these items.
Fair value risk factors—The Company seeks investment opportunities that offer the possibility of attaining substantial capital appreciation. Certain events particular to each industry in which the Company’s portfolio companies conduct their operations, as well as general economic, political and public health conditions (including the COVID-19 outbreak), may have a significant negative impact on the operations and profitability of the Company’s investments and/or on the fair value of the Company’s investments. The Company’s investments are subject to the risk of non-payment of scheduled interest or principal, resulting in a reduction in income to the Company and their corresponding fair valuations. Also, there may be risk associated with the concentration of investments in one geographic region or in certain industries. These events are beyond the control of the Company and cannot be predicted. Furthermore, the ability to liquidate investments and realize value is subject to uncertainties.
Note 5. Agreements
The Company entered into an investment advisory and management agreement (the “Investment Management Agreement”) with the Investment Adviser which was most recently re-approved by the Company's board of directors on February 6, 2020. Under the Investment Management Agreement, the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. For providing these services, the Investment Adviser receives a fee from the Company, consisting of two components—a base management fee and an incentive fee.
Pursuant to the Investment Management Agreement, the base management fee is calculated at an annual rate of 1.75% of the Company’s gross assets, which equals the Company’s total assets on the Consolidated Statements of Assets and
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Liabilities, less (i) the borrowings under the New Mountain Finance SPV Funding, L.L.C. Loan and Security Agreement, as amended and restated, dated October 27, 2010 (the "SLF Credit Facility") and (ii) cash and cash equivalents. The base management fee is payable quarterly in arrears, and is calculated based on the average value of the Company’s gross assets, which equals the Company’s total assets, as determined in accordance with GAAP, less the borrowings under the SLF Credit Facility and cash and cash equivalents at the end of each of the two most recently completed calendar quarters, and appropriately adjusted on a pro rata basis for any equity capital raises or repurchases during the current calendar quarter. The Company has not invested, and currently is not invested, in derivatives. To the extent the Company invests in derivatives in the future, the Company will use the actual value of the derivatives, as reported on the Consolidated Statements of Assets and Liabilities, for purposes of calculating its base management fee.
Since the IPO, the base management fee calculation has deducted the borrowings under the SLF Credit Facility. The SLF Credit Facility had historically consisted of primarily lower yielding assets at higher advance rates. As part of an amendment to the Company’s existing credit facilities with Wells Fargo Bank, National Association, the SLF Credit Facility merged with the NMF Holdings Loan and Security Agreement, as amended and restated, dated May 19, 2011, and formed the Holdings Credit Facility on December 18, 2014 (as defined in Note 7. Borrowings). The amendment merged the credit facilities and combined the amount of borrowings previously available. Post credit facility merger and to be consistent with the methodology since the IPO, the Investment Adviser will continue to waive management fees on the leverage associated with those assets held under revolving credit facilities that share the same underlying yield characteristics with investments leveraged under the legacy SLF Credit Facility, which as of September 30, 2020 and September 30, 2019 was approximately $634,090 and $777,563, respectively. The Investment Adviser cannot recoup management fees that the Investment Adviser has previously waived. For the three and nine months ended September 30, 2020, management fees waived were approximately $2,841 and $9,567, respectively. For the three and nine months ended September 30, 2019, management fees waived were approximately $3,141 and $8,497, respectively.
The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 20.0% of the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter, subject to a “preferred return”, or “hurdle”, and a “catch-up” feature. “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, upfront, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under an administration agreement, as amended and restated (the “Administration Agreement”), with the Administrator, and any interest expense and distributions paid on any issued and outstanding preferred stock (of which there are none as of September 30, 2020), but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, will be compared to a “hurdle rate” of 2.0% per quarter (8.0% annualized), subject to a “catch-up” provision measured as of the end of each calendar quarter. The hurdle rate is appropriately pro-rated for any partial periods. The calculation of the Company’s incentive fee with respect to the Pre-Incentive Fee Net Investment Income for each quarter is as follows:
•No incentive fee is payable to the Investment Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate of 2.0% (the “preferred return” or “hurdle”).
•100.0% of the Company’s Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than or equal to 2.5% in any calendar quarter (10.0% annualized) is payable to the Investment Adviser. This portion of the Company’s Pre-Incentive Fee Net Investment Income (which exceeds the hurdle rate but is less than or equal to 2.5%) is referred to as the “catch-up”. The catch-up provision is intended to provide the Investment Adviser with an incentive fee of 20.0% on all of the Company’s Pre-Incentive Fee Net Investment Income as if a hurdle rate did not apply when the Company’s Pre-Incentive Fee Net Investment Income exceeds 2.5% in any calendar quarter.
•20.0% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.5% in any calendar quarter (10.0% annualized) is payable to the Investment Adviser once the hurdle is reached and the catch-up is achieved.
For the three and nine months ended September 30, 2020, incentive fees waived were approximately $500 and $500, respectively. For the three and nine months ended September 30, 2019, no incentive fees were waived. The Investment Adviser cannot recoup incentive fees that the Investment Adviser has previously waived.
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The second part of the incentive fee will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement) and will equal 20.0% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fee.
In accordance with GAAP, the Company accrues a hypothetical capital gains incentive fee based upon the cumulative net realized capital gains and realized capital losses and the cumulative net unrealized capital appreciation and unrealized capital depreciation on investments held at the end of each period. Actual amounts paid to the Investment Adviser are consistent with the Investment Management Agreement and are based only on actual realized capital gains computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis from inception through the end of each calendar year as if the entire portfolio was sold at fair value.
The following table summarizes the management fees and incentive fees incurred by the Company for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
  September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Management fee $ 12,877  $ 12,687  $ 39,869  $ 35,302 
Less: management fee waiver (2,841) (3,141) (9,567) (8,497)
Total management fee 10,036  9,546  30,302  26,805 
Incentive fee, excluding accrued capital gains incentive fees $ 7,135  $ 7,792  $ 21,857  $ 21,642 
Less: incentive fee waiver (500) —  (500) — 
Total incentive fee 6,635  7,792  21,357  21,642 
Accrued capital gains incentive fees(1) $ —  $ —  $ —  $ — 
(1)As of September 30, 2020 and September 30, 2019, no actual capital gains incentive fee was owed under the Investment Management Agreement by the Company, as cumulative net realized capital gains did not exceed cumulative unrealized capital depreciation.
The Company has entered into the Administration Agreement with the Administrator under which the Administrator provides administrative services. The Administrator maintains, or oversees the maintenance of, the Company’s consolidated financial records, prepares reports filed with the United States Securities and Exchange Commission (the "SEC"), generally monitors the payment of the Company’s expenses and oversees the performance of administrative and professional services rendered by others. The Company will reimburse the Administrator for the Company’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to the Company under the Administration Agreement. Pursuant to the Administration Agreement and further restricted by the Company, the Administrator may, in its own discretion, submit to the Company for reimbursement some or all of the expenses that the Administrator has incurred on behalf of the Company during any quarterly period. As a result, the amount of expenses for which the Company will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to the Company for reimbursement in the future. However, it is expected that the Administrator will continue to support part of the expense burden of the Company in the near future and may decide to not calculate and charge through certain overhead related amounts as well as continue to cover some of the indirect costs. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three and nine months ended September 30, 2020, approximately $613 and $2,005, respectively, of indirect administrative expenses were included in administrative expenses of which $589 and $924, respectively, were waived by the Administrator. For the three and nine months ended September 30, 2019, approximately $599 and $1,993, respectively, of indirect administrative expenses were included in administrative expenses of which $0 and $335, respectively, were waived by the Administrator. As of September 30, 2020 and December 31, 2019, approximately $426 and $602, respectively, of indirect administrative expenses were included in payable to affiliates. For the three and nine months ended September 30, 2020, the reimbursement to the Administrator represented approximately 0.00% and 0.04%, respectively, of the Company's gross assets. For the three and nine months ended September 30, 2019, the reimbursement to the Administrator represented approximately 0.02% and 0.05%, respectively, of the Company's gross assets.
The Company, the Investment Adviser and the Administrator have also entered into a Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant the Company, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the “New Mountain” and the “New
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Mountain Finance” names. Under the Trademark License Agreement, as amended, subject to certain conditions, the Company, the Investment Adviser and the Administrator will have a right to use the “New Mountain” and “New Mountain Finance” names, for so long as the Investment Adviser or one of its affiliates remains the investment adviser of the Company. Other than with respect to this limited license, the Company, the Investment Adviser and the Administrator will have no legal right to the “New Mountain” or the “New Mountain Finance” names.
Note 6. Related Parties
The Company has entered into a number of business relationships with affiliated or related parties.
    The Company has entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.
The Company has entered into the Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges office space for the Company and provides office equipment and administrative services necessary to conduct their respective day-to-day operations pursuant to the Administration Agreement. The Company reimburses the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to the Company under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance and compliance functions, and the compensation of the Company’s chief financial officer and chief compliance officer and their respective staffs.
The Company, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant the Company, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the name “New Mountain” and “New Mountain Finance”.
The Company has adopted a formal code of ethics that governs the conduct of its officers and directors. These officers and directors also remain subject to the duties imposed by the 1940 Act and the Delaware General Corporation Law.
The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, to the Company’s investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for the Company or for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that the Company should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff and consistent with the Investment Adviser’s allocation procedures. On October 8, 2019, the SEC issued an exemptive order (the “Exemptive Order”), which superseded a prior order issued on December 18, 2017, which permits the Company to co-invest in portfolio companies with certain funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions of the Exemptive Order. Pursuant to the Exemptive Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Company's independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of the Company's stockholders and is consistent with its then-current investment objective and strategies.
On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.63 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11,315. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by the Company in exchange for a promissory note with a principal amount of $11,315 and a 7.0% interest rate, which was repaid by NMNLC to the Company on March 31, 2020.
On March 30, 2020, the Company entered into an unsecured revolving credit facility with NMF Investments III, L.L.C., an affiliate of the Investment Adviser, with a $30,000 maximum amount of revolver borrowings available and a maturity date of December 31, 2022. On May 4, 2020, the Company entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30,000 to $50,000. Refer to Note 7. Borrowings for discussion of the Unsecured Management Company Revolver (defined below).

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Note 7. Borrowings
As permitted by the Small Business Credit Availability Act (the “SBCA”) on June 8, 2018 the Company's shareholders approved the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act, as amended by the SBCA, which resulted in the reduction from 200.0% to 150.0% of the minimum asset coverage ratio applicable to the Company as of June 9, 2018 (which means the Company can borrow $2 for every $1 of its equity). As a result of the Company's exemptive relief received on November 5, 2014, the Company is permitted to exclude its SBA-guaranteed debentures from the 150.0% asset coverage ratio that the Company is required to maintain under the 1940 Act. The agreements governing the NMFC Credit Facility, the 2018 Convertible Notes and the Unsecured Notes (as defined below) contain certain covenants and terms, including a requirement that the Company not exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring additional indebtedness and a requirement that the Company not exceed a secured debt ratio of 0.70 to 1.00 at any time. As of September 30, 2020, the Company’s asset coverage ratio was 178.7%.
Holdings Credit Facility—On December 18, 2014, the Company entered into the Second Amended and Restated Loan and Security Agreement among the Company, as the Collateral Manager, NMF Holdings, as the Borrower, Wells Fargo Securities, LLC, as the Administrative Agent and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian (as amended from time to time, the "Holdings Credit Facility"). As of the most recent amendment on September 30, 2020, the maturity date of the Holdings Credit Facility is September 30, 2023, and the maximum facility amount is the lesser of $800,000 and the actual commitments of the lenders to make advances as of such date.
As of September 30, 2020, the maximum amount of revolving borrowings available under the Holdings Credit Facility is $745,000. Under the Holdings Credit Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0%, 67.5% or 70.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Bank, National Association. The Holdings Credit Facility is non-recourse to the Company and is collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Holdings Credit Facility are capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Holdings Credit Facility. The Holdings Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Holdings Credit Facility requires the Company to maintain a minimum asset coverage ratio of 150.0%. The covenants are generally not tied to mark to market fluctuations in the prices of NMF Holdings investments, but rather to the performance of the underlying portfolio companies.
    As of the most recent amendment on September 30, 2020, the Holdings Credit Facility bears interest at a rate of LIBOR plus 2.00% per annum for Broadly Syndicated Loans (as defined in the Fourth Amendment to the Loan and Security Agreement) and LIBOR plus 2.50% per annum for all other investments. Previously the Holdings Credit Facility bore interest at a rate of LIBOR plus 1.75% per annum for Broadly Syndicated Loans (as defined in the Second Amendment to the Loan and Security Agreement) and LIBOR plus 2.25% per annum for all other investments. The Holdings Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Fourth Amendment to the Loan and Security Agreement).
The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Holdings Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
  September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest expense $ 2,704  $ 6,528  $ 11,333  $ 19,218 
Non-usage fee $ 395  $ 163  $ 937  $ 449 
Amortization of financing costs $ 334  $ 722  $ 992  $ 2,103 
Weighted average interest rate 2.2  % 4.2  % 2.7  % 4.4  %
Effective interest rate 2.8  % 4.8  % 3.2  % 5.0  %
Average debt outstanding $ 488,815  $ 612,851  $ 551,059  $ 581,881 
As of September 30, 2020 and December 31, 2019, the outstanding balance on the Holdings Credit Facility was $459,163 and $661,563, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.
NMFC Credit Facility—The Senior Secured Revolving Credit Agreement, (as amended from time to time, and together with the related guarantee and security agreement, the "NMFC Credit Facility"), dated June 4, 2014, among the Company, as the Borrower, Goldman Sachs Bank USA, as the Administrative Agent and Collateral Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A., as Lenders, is structured as a senior secured revolving credit facility. The NMFC Credit Facility is guaranteed by certain of the Company's domestic
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subsidiaries and proceeds from the NMFC Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the NMFC Credit Facility is June 4, 2022.
As of September 30, 2020, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $188,500. The Company is permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Senior Secured Revolving Credit Agreement. All fees associated with the origination of the NMFC Credit Facility are capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the NMFC Credit Facility. The NMFC Credit Facility contains certain customary affirmative and negative covenants and events of default, including certain financial covenants related to asset coverage and liquidity and other maintenance covenants.
The NMFC Credit Facility generally bears interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charges a commitment fee, based on the unused facility amount multiplied by 0.375% per annum (as defined in the Senior Secured Revolving Credit Agreement).
    The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the NMFC Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
  September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest expense $ 899  $ 1,499  $ 3,960  $ 3,677 
Non-usage fee $ 55  $ 13  $ 96  $ 103 
Amortization of financing costs $ 35  $ 31  $ 103  $ 250 
Weighted average interest rate 2.7  % 4.8  % 3.4  % 4.9  %
Effective interest rate 3.0  % 4.9  % 3.6  % 5.4  %
Average debt outstanding $ 131,804  $ 123,777  $ 154,974  $ 99,405 
As of September 30, 2020 and December 31, 2019, the outstanding balance on the NMFC Credit Facility was $150,500 and $188,500, respectively, and NMFC was in compliance with the applicable covenants in the NMFC Credit Facility on such dates.
Unsecured Management Company Revolver—The Uncommitted Revolving Loan Agreement, (the "Unsecured Management Company Revolver"), dated March 30, 2020, by and between the Company, as the Borrower, and NMF Investments III, L.L.C., as Lender, an affiliate of the Investment Adviser, is structured as a discretionary unsecured revolving credit facility. The proceeds from the Unsecured Management Company Revolver may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the Unsecured Management Company Revolver is December 31, 2022. The Unsecured Management Company Revolver generally bears interest at a rate of 7.00% per annum (as defined in the Uncommitted Revolving Loan Agreement). On May 4, 2020, the Company entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30,000 to $50,000. As of September 30, 2020, the maximum amount of revolving borrowings available under the Unsecured Management Company Revolver was $50,000 and no borrowings were outstanding. For the three and nine months ended September 30, 2020, amortization of financing costs were $2 and $5, respectively.
    DB Credit Facility—The Loan Financing and Servicing Agreement (the "DB Credit Facility") dated December 14, 2018 and as amended from time to time, among NMFDB as the borrower, Deutsche Bank AG, New York Branch ("Deutsche Bank") as the facility agent, Lender and other agent from time to time party thereto and U.S. Bank National Association, as collateral agent and collateral custodian, is structured as a secured revolving credit facility and the maturity date is December 14, 2023.
    As of September 30, 2020, the maximum amount of revolving borrowings available under the DB Credit Facility was $280,000. The Company is permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Loan Financing and Servicing Agreement. The DB Credit Facility is non-recourse to the Company and is collateralized by all of the investments of NMFDB on an investment by investment basis. All fees associated with the origination of the DB Credit Facility are capitalized on the Company's Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the DB Credit Facility. The DB Credit Facility contains certain customary affirmative and negative covenants and events of default. The covenants are generally not tied to mark to market fluctuations in the prices of NMFDB investments, but rather to the performance of the underlying portfolio companies.
    The advances under the DB Credit Facility accrue interest at a per annum rate equal to the Applicable Margin plus the lender's Cost of Funds Rate. Prior to June 28, 2019, the "Applicable Margin" was equal to 2.85% during the Revolving Period
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and then increases by 0.20% during an Event of Default. Effective June 28, 2019, the Applicable Margin is equal to 2.60% during the Revolving Period and then increases by 0.20% during an Event of Default. The "Cost of Funds Rate" for a conduit lender is the lower of its commercial paper rate and the Base Rate plus 0.50%, and for any other lender is the Base Rate. The "Base Rate" is the three-months LIBOR Rate but may become an alternative base rate based on Deutsche Bank's base lending rate if certain LIBOR disruption events occur. The Company is also charged a non-usage fee, based on the unused facility amount multiplied by the Undrawn Fee Rate (as defined in the Loan Financing and Servicing Agreement) and a facility agent fee of 0.25% per annum on the total facility amount.The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the DB Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
  September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest expense(1) $ 1,722  $ 1,730  $ 6,659  $ 3,177 
Non-usage fee(1) $ 80  $ 62  $ 177  $ 183 
Amortization of financing costs $ 161  $ 100  $ 480  $ 256 
Weighted average interest rate 3.2  % 5.1  % 3.8  % 5.3  %
Effective interest rate 3.6  % 5.6  % 4.2  % 6.0  %
Average debt outstanding $ 216,761  $ 133,913  $ 233,401  $ 80,095 
(1)Interest expense includes the portion of the facility agent fee applicable to the drawn portion of the DB Credit Facility and non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the DB Credit Facility.
    As of September 30, 2020 and December 31, 2019, the outstanding balance on the DB Credit Facility was $242,000 and $230,000, respectively, and NMFDB was in compliance with the applicable covenants in the DB Credit Facility on such dates.
    NMNLC Credit Facility—The Revolving Credit Agreement (together with the related guarantee and security agreement, the “NMNLC Credit Facility”), dated September 21, 2018, among NMNLC, as the Borrower, and KeyBank National Association, as the Administrative Agent and Lender, was structured as a senior secured revolving credit facility and matured on September 23, 2020. The NMNLC Credit Facility was guaranteed by the Company and proceeds from the NMNLC Credit Facility were able to be used for funding of additional acquisition properties.
    The NMNLC Credit Facility bore interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charged a commitment fee, based on the unused facility amount multiplied by 0.15% per annum (as defined in the Revolving Credit Agreement).
For the three and nine months ended September 30, 2020, interest expense, non-usage fees and amortization of financing costs were $0 and $0, $10 and $33 and $0 and $11, respectively. For the three and nine months ended September 30, 2019, interest expense, non-usage fees and amortization of financing costs were $1 and $1, $11 and $34 and $28 and $84, respectively. The NMNLC Credit Facility matured on September 23, 2020. As of December 31, 2019, the outstanding balance on the NMNLC Credit Facility was $0 and NMNLC was in compliance with the applicable covenants in the NMNLC Credit Facility on such date.
Convertible Notes
    2014 Convertible Notes—On June 3, 2014, the Company closed a private offering of $115,000 aggregate principal amount of unsecured convertible notes (the “2014 Convertible Notes”), pursuant to an indenture, dated June 3, 2014 (the “2014 Indenture”). The 2014 Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). As of June 3, 2015, the restrictions under Rule 144A under the Securities Act were removed, allowing the 2014 Convertible Notes to be eligible and freely tradable without restrictions for resale pursuant to Rule 144(b)(1) under the Securities Act. On September 30, 2016, the Company closed a public offering of an additional $40,250 aggregate principal amount of the 2014 Convertible Notes. These additional 2014 Convertible Notes constituted a further issuance of, ranked equally in right of payment with, and formed a single series with the $115,000 aggregate principal amount of 2014 Convertible Notes that the Company issued on June 3, 2014.
    The 2014 Convertible Notes bore interest at an annual rate of 5.0%, payable semi-annually in arrears on June 15 and December 15 of each year, which commenced on December 15, 2014.
    On June 15, 2019, the Company's $155,250 aggregate principal amount of 2014 Convertible Notes matured and the Company repaid the outstanding principal and accrued but unpaid interest in cash.
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2018 Convertible Notes—On August 20, 2018, the Company closed a registered public offering of $100,000 aggregate principal amount of unsecured convertible notes (the “2018 Convertible Notes”), pursuant to an indenture, dated August 20, 2018, as supplemented by a first supplemental indenture thereto, dated August 20, 2018 (together the “2018A Indenture”). On August 30, 2018, in connection with the registered public offering, the Company issued an additional $15,000 aggregate principal amount of the 2018 Convertible Notes pursuant to the exercise of an overallotment option by the underwriter of the 2018 Convertible Notes. On June 7, 2019, the Company closed a registered public offering of an additional $86,250 aggregate principal amount of the 2018 Convertible Notes. These additional 2018 Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115,000 aggregate principal amount of 2018 Convertible Notes that the Company issued in August 2018.
    The 2018 Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on February 15 and August 15 of each year, which commenced on February 15, 2019. The 2018 Convertible Notes will mature on August 15, 2023 unless earlier converted, repurchased or redeemed pursuant to the terms of the 2018A Indenture. The Company may not redeem the 2018 Convertible Notes prior to May 15, 2023. On or after May 15, 2023, the Company may redeem the 2018 Convertible Notes for cash, in whole or from time to time in part, at its option at a redemption price, subject to an exception for redemption dates occurring after a record date but on or prior to the interest payment date, equal to the sum of (i) 100% of the principal amount of the 2018 Convertible Notes to be redeemed, (ii) accrued and unpaid interest thereon to, but excluding, the redemption date and (iii) a make-whole premium.
No sinking fund is provided for the 2018 Convertible Notes. Holders of 2018 Convertible Notes may, at their option, convert their 2018 Convertible Notes into shares of the Company’s common stock at any time on or prior to the close of business on the business day immediately preceding the maturity date of the 2018 Convertible Notes. In addition, if certain corporate events occur, holders of the 2018 Convertible Notes may require the Company to repurchase for cash all or part of their 2018 Convertible Notes at a repurchase price equal to 100.0% of the principal amount of the 2018 Convertible Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the repurchase date.
The 2018A Indenture contains certain covenants, including covenants requiring the Company to provide certain financial information to the holders of the 2018 Convertible Notes and the trustee if the Company ceases to be subject to the reporting requirements of the Exchange Act. The 2018A Indenture also includes additional financial covenants related to asset coverage. These covenants are subject to limitations and exceptions that are described in the 2018A Indenture.
The following table summarizes certain key terms related to the convertible features of the Company’s 2018 Convertible Notes as of September 30, 2020.
2018 Convertible Notes
Initial conversion premium 10.0  %
Initial conversion rate(1) 65.8762 
Initial conversion price $ 15.18 
Conversion premium at September 30, 2020 10.0  %
Conversion rate at September 30, 2020(1)(2) 65.8762 
Conversion price at September 30, 2020(2)(3) $ 15.18 
Last conversion price calculation date August 20, 2020
(1)Conversion rates denominated in shares of common stock per $1 principal amount of the 2018 Convertible Notes converted.
(2)Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.
(3)The conversion price in effect at September 30, 2020 was calculated on the last anniversary of the issuance and will be calculated again on the next anniversary, unless the exercise price shall have changed by more than 1.0% before the anniversary.
The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.34 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $13.80 per share. In no event will the total number of shares of common stock issuable upon conversion exceed 72.4637 per $1 principal amount. The Company has determined that the embedded conversion option in the 2018 Convertible Notes is not required to be separately accounted for as a derivative under GAAP.
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The 2018 Convertible Notes are unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness, if any, that is expressly subordinated in right of payment to the 2018 Convertible Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries and financing vehicles. As reflected in Note 11. Earnings Per Share, the issuance is considered part of the if-converted method for calculation of diluted earnings per share.
The following table summarizes the interest expense, amortization of financing costs and amortization of premium incurred on the Convertible Notes for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
  September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest expense $ 2,893  $ 2,893  $ 8,679  $ 10,066 
Amortization of financing costs $ 100  $ 99  $ 297  $ 696 
Amortization of premium $ (26) $ (26) $ (77) $ (83)
Weighted average interest rate 5.8  % 5.7  % 5.8  % 5.5  %
Effective interest rate 5.9  % 5.8  % 5.9  % 5.8  %
Average debt outstanding $ 201,250  $ 201,250  $ 201,250  $ 245,481 
As of September 30, 2020 and December 31, 2019, the outstanding balance on the Convertible Notes was $201,250 and $201,250, respectively, and NMFC was in compliance with the terms of the 2018A Indenture on such date.
Unsecured Notes
On May 6, 2016, the Company issued $50,000 in aggregate principal amount of five-year unsecured notes that mature on May 15, 2021 (the “2016 Unsecured Notes”), pursuant to a note purchase agreement, dated May 4, 2016, to an institutional investor in a private placement. On September 30, 2016, the Company entered into an amended and restated note purchase agreement (the "NPA") and issued an additional $40,000 in aggregate principal amount of 2016 Unsecured Notes to institutional investors in a private placement. On June 30, 2017, the Company issued $55,000 in aggregate principal amount of five-year unsecured notes that mature on July 15, 2022 (the "2017A Unsecured Notes"), pursuant to the NPA and a supplement to the NPA. On January 30, 2018, the Company issued $90,000 in aggregate principal amount of five year unsecured notes that mature on January 30, 2023 (the "2018A Unsecured Notes") pursuant to the NPA and a second supplement to the NPA. On July 5, 2018, the Company issued $50,000 in aggregate principal amount of five year unsecured notes that mature on June 28, 2023 (the "2018B Unsecured Notes") pursuant to the NPA and a third supplement to the NPA (the "Third Supplement"). On April 30, 2019, the Company issued $116,500 in aggregate principal amount of five year unsecured notes that mature on April 30, 2024 (the "2019A Unsecured Notes") pursuant to the NPA and a fourth supplement to the NPA. The NPA provides for future issuances of unsecured notes in separate series or tranches.
The 2016 Unsecured Notes bear interest at an annual rate of 5.313%, payable semi-annually on May 15 and November 15 of each year, which commenced on November 15, 2016. The 2017A Unsecured Notes bear interest at an annual rate of 4.760%, payable semi-annually on January 15 and July 15 of each year, which commenced on January 15, 2018. The 2018A Unsecured Notes bear interest at an annual rate of 4.870%, payable semi-annually on February 15 and August 15 of each year, which commenced on August 15, 2018. The 2018B Unsecured Notes bear interest at an annual rate of 5.360%, payable semi-annually on January 15 and July 15 of each year, which commenced on January 15, 2019. The 2019A Unsecured Notes bear interest at an annual rate of 5.494%, payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2019. These interest rates are subject to increase in the event that: (i) subject to certain exceptions, the underlying unsecured notes or the Company ceases to have an investment grade rating or (ii) the aggregate amount of the Company’s unsecured debt falls below $150,000.  In each such event, the Company has the option to offer to prepay the underlying unsecured notes at par, in which case holders of the underlying unsecured notes who accept the offer would not receive the increased interest rate. In addition, the Company is obligated to offer to prepay the underlying unsecured notes at par if the Investment Adviser, or an affiliate thereof, ceases to be the Company’s investment adviser or if certain change in control events occur with respect to the Investment Adviser. 
The NPA contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, an option to offer to prepay all or a portion of the unsecured notes under its governance at par (plus a make-whole amount, if applicable), affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a BDC under the 1940 Act and a RIC under the Code, minimum stockholders’ equity, minimum asset coverage ratio, and prohibitions on certain fundamental changes at the Company or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect,
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breach of covenant, cross-default under other indebtedness of the Company or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy. The Third Supplement includes additional financial covenants related to asset coverage as well as other terms.
On September 25, 2018, the Company closed a registered public offering of $50,000 in aggregate principal amount of five-year unsecured notes that mature on October 1, 2023 (the "5.75% Unsecured Notes" and together with the 2016 Unsecured Notes, 2017A Unsecured Notes, 2018A Unsecured Notes, 2018B Unsecured Notes and 2019A Unsecured Notes, the "Unsecured Notes") pursuant to an indenture, dated August 20, 2018, as supplemented by a second supplemental indenture thereto, dated September 25, 2018 (together, the "2018B Indenture"). On October 17, 2018, in connection with the registered public offering, the Company issued an additional $1,750 aggregate principal amount of the 5.75% Unsecured Notes pursuant to the exercise of an overallotment option by the underwriters of the 5.75% Unsecured Notes.
The 5.75% Unsecured Notes bear interest at an annual rate of 5.75%, payable quarterly on January 1, April 1, July 1 and October 1 of each year, which commenced on January 1, 2019. The 5.75% Unsecured Notes will mature on October 1, 2023 unless earlier redeemed. The 5.75% Unsecured Notes were listed on the NYSE and traded under the trading symbol “NMFX” until September 13, 2020. On September 14, 2020, the 5.75% Unsecured Notes began trading on the NASDAQ under the ticker symbol "NMFCL".
    The Company may redeem the 5.75% Unsecured Notes, in whole or in part, at any time, or from time to time, at its option on or after October 1, 2020, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption.
    No sinking fund is provided for the 5.75% Unsecured Notes and holders of the 5.75% Unsecured Notes have no option to have their 5.75% Unsecured Notes repaid prior to the stated maturity date.
    The 2018B Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements set forth in Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a) of the 1940 Act as may be applicable to the Company from time to time or any successor provisions, whether or not the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to the Company by the SEC and (ii) provide certain financial information to the holders of the 5.75% Unsecured Notes and the trustee if the Company ceases to be subject to the reporting requirements of the Exchange Act. The 2018B Indenture also includes additional financial covenants related to asset coverage. These covenants are subject to limitations and exceptions that are described in the 2018B Indenture.
The 2018B Indenture provides for customary events of default and further provides that the trustee or the holders of 25% in aggregate principal amount of the outstanding 5.75% Unsecured Notes may declare such 5.75% Unsecured Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period.
The Unsecured Notes are unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness, if any, that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries and financing vehicles.

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The following table summarizes the interest expense and amortization of financing costs incurred on the Unsecured Notes for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
  September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019(1)
Interest expense $ 5,960  $ 5,959  $ 17,879  $ 15,763 
Amortization of financing costs $ 320  $ 320  $ 955  $ 886 
Weighted average interest rate 5.3  % 5.2  % 5.3  % 5.2  %
Effective interest rate 5.5  % 5.5  % 5.5  % 5.5  %
Average debt outstanding $ 453,250  $ 453,250  $ 453,250  $ 402,041 
(1)For the nine months ended September 30, 2019, amounts reported include interest and amortization of financing costs related to the 2019A Unsecured Notes for the period from April 30, 2019 (issuance date of the 2019A Unsecured Notes) to September 30, 2019.
As of September 30, 2020 and December 31, 2019, the outstanding balance on the Unsecured Notes was $453,250 and $453,250, respectively, and the Company was in compliance with the terms of the NPA and the 2018B Indenture as of such dates, as applicable.
SBA-guaranteed debentures—On August 1, 2014 and August 25, 2017, respectively, SBIC I and SBIC II received licenses from the SBA to operate as SBICs.
The SBIC licenses allow SBICs to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse to the Company, interest only debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with ten year maturities. The SBA, as a creditor, will have a superior claim to the assets of SBIC I and SBIC II over the Company’s stockholders in the event SBIC I and SBIC II are liquidated or the SBA exercises remedies upon an event of default.
The maximum amount of borrowings available under current SBA regulations for a single licensee is $150,000 as long as the licensee has at least $75,000 in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing. In June 2018, legislation amended the 1958 Act by increasing the individual leverage limit from $150,000 to $175,000, subject to SBA approvals.
As of September 30, 2020 and December 31, 2019, SBIC I had regulatory capital of $75,000 and $75,000, respectively, and SBA-guaranteed debentures outstanding of $150,000 and $150,000, respectively. As of September 30, 2020 and December 31, 2019, SBIC II had regulatory capital of $75,000 and $64,500, respectively, and $150,000 and $75,000, respectively, of SBA-guaranteed debentures outstanding. The SBA-guaranteed debentures incur upfront fees of 3.435%, which consists of a 1.00% commitment fee and a 2.435% issuance discount, which are amortized over the life of the SBA-guaranteed debentures.

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The following table summarizes the Company’s SBA-guaranteed debentures as of September 30, 2020.
Issuance Date Maturity Date Debenture Amount Interest Rate SBA Annual Charge
Fixed SBA-guaranteed debentures(1):        
March 25, 2015 March 1, 2025 $ 37,500  2.517  % 0.355  %
September 23, 2015 September 1, 2025 37,500  2.829  % 0.355  %
September 23, 2015 September 1, 2025 28,795  2.829  % 0.742  %
March 23, 2016 March 1, 2026 13,950  2.507  % 0.742  %
September 21, 2016 September 1, 2026 4,000  2.051  % 0.742  %
September 20, 2017 September 1, 2027 13,000  2.518  % 0.742  %
March 21, 2018 March 1, 2028 15,255  3.187  % 0.742  %
Fixed SBA-guaranteed debentures(2):
September 19, 2018 September 1, 2028 15,000  3.548  % 0.222  %
September 25, 2019 September 1, 2029 19,000  2.283  % 0.222  %
March 25, 2020 March 1, 2030 41,000  2.078  % 0.222  %
March 25, 2020 March 1, 2030 24,000  2.078  % 0.275  %
September 23, 2020 September 1, 2030 51,000  1.034  % 0.275  %
Total SBA-guaranteed debentures   $ 300,000     
(1)SBA-guaranteed debentures are held in SBIC I.
(2)SBA-guaranteed debentures are held in SBIC II.
    Prior to pooling, the SBA-guaranteed debentures bear interest at an interim floating rate of LIBOR plus 0.30%. Once pooled, which occurs in March and September each year, the SBA-guaranteed debentures bear interest at a fixed rate that is set to the current 10-year treasury rate plus a spread at each pooling date.
The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest expense $ 2,080  $ 1,455  $ 5,963  $ 4,159 
Amortization of financing costs $ 253  $ 149  $ 706  $ 423 
Weighted average interest rate 2.8  % 3.3  % 2.8  % 3.3  %
Effective interest rate 3.1  % 3.6  % 3.2  % 3.6  %
Average debt outstanding $ 300,000  $ 176,565  $ 281,102  $ 168,897 
The SBIC program is designed to stimulate the flow of private investor capital into eligible smaller businesses, as defined by the SBA. Under SBA regulations, SBICs are subject to regulatory requirements, including making investments in SBA-eligible businesses, investing at least 25.0% of its investment capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, regulating the types of financing, prohibiting investments in smaller businesses with certain characteristics or in certain industries and requiring capitalization thresholds that limit distributions to the Company. SBICs are subject to an annual periodic examination by an SBA examiner to determine the SBIC’s compliance with the relevant SBA regulations and an annual financial audit of its financial statements that are prepared on a basis of accounting other than GAAP (such as ASC 820) by an independent auditor. As of September 30, 2020 and December 31, 2019, SBIC I and SBIC II were in compliance with SBA regulatory requirements.
    
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Leverage risk factors—The Company utilizes and may utilize leverage to the maximum extent permitted by the law for investment and other general business purposes. The Company's lenders will have fixed dollar claims on certain assets that are superior to the claims of the Company's common stockholders, and the Company would expect such lenders to seek recovery against these assets in the event of a default. The use of leverage also magnifies the potential for gain or loss on amounts invested. Leverage may magnify interest rate risk (particularly on the Company's fixed-rate investments), which is the risk that the prices of portfolio investments will fall or rise if market interest rates for those types of securities rise or fall. As a result, leverage may cause greater changes in the Company's net asset value. Similarly, leverage may cause a sharper decline in the Company's income than if the Company had not borrowed. Such a decline could negatively affect the Company's ability to make distributions to its stockholders. Leverage is generally considered a speculative investment technique. The Company's ability to service any debt incurred will depend largely on financial performance and will be subject to prevailing economic conditions and competitive pressures.
Note 8. Regulation
The Company has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a RIC under Subchapter M of the Code. In order to continue to qualify and be subject to tax as a RIC, among other things, the Company is required to timely distribute to its stockholders at least 90.0% of investment company taxable income, as defined by the Code, for each year. The Company, among other things, intends to make and will continue to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal, state, and local income taxes (excluding excise taxes which may be imposed under the Code).
Additionally, as a BDC, the Company must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70.0% of its total assets are qualifying assets (with certain limited exceptions). In addition, the Company must offer to make available to all eligible portfolio companies managerial assistance.
Note 9. Commitments and Contingencies
In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company may also enter into future funding commitments such as revolving credit facilities, bridge financing commitments or delayed draw commitments. As of September 30, 2020, the Company had unfunded commitments on revolving credit facilities of $64,512, no outstanding bridge financing commitments and other future funding commitments of $29,315. As of December 31, 2019, the Company had unfunded commitments on revolving credit facilities of $66,061, no outstanding bridge financing commitments and other future funding commitments of $137,781. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments.
The Company also had revolving borrowings available under the Holdings Credit Facility, the DB Credit Facility, the NMFC Credit Facility and the Unsecured Management Company Revolver as of September 30, 2020 and revolver borrowings available under the Holdings Credit Facility, the DB Credit Facility and the NMNLC Credit Facility as of December 31, 2019. See Note 7. Borrowings, for details.
The Company may from time to time enter into financing commitment letters. As of September 30, 2020 and December 31, 2019, the Company had commitment letters to purchase investments in the aggregate par amount of $0 and $34,248, respectively, which could require funding in the future.
COVID-19 Developments
On March 11, 2020 the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. As of the nine months ended September 30, 2020 and subsequent to September 30, 2020, COVID-19 has had a significant impact on the U.S. economy and the Company. The Company has experienced a significant reduction in its net asset value as of September 30, 2020 as compared to its net asset value as of December 31, 2019, due to an increase in unrealized depreciation of its investment portfolio resulting from decreases in fair value of investments. These decreases were attributable to the impact of the COVID-19 pandemic on the markets.
The extent of the continued impact of the COVID-19 pandemic on the financial performance of our current and future investments will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions and the impact of COVID-19 on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. To the extent the Company’s portfolio companies continue to be adversely impacted by the effects of the COVID-19 pandemic, the Company may experience a material adverse impact on the its future net investment income, the fair value of its portfolio investments, its financial condition and the results of operations and financial condition of its portfolio companies.
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Note 10. Net Assets
The table below illustrates the effect of certain transactions on the net asset accounts of the Company during the nine months ended September 30, 2020:
Accumulated Overdistributed Earnings
  Common Stock Paid in
Capital in
Excess 		Accumulated
Net Investment 		Accumulated Net Realized 
(Losses)  		Net 
Unrealized
Appreciation 		Total Net Assets Non-
Controlling
Interest in 		Total
  Shares Par Amount of Par Income Gains (Depreciation) of NMFC NMNLC Net Assets
Net assets at December 31, 2019 96,827,342  $ 968  $ 1,287,853  $ 91,333  $ (85,448) $ (11,238) $ 1,283,468  $ —  $ 1,283,468 
Distributions declared —  —  —  (32,921) —  —  (32,921) —  (32,921)
Purchase of non-controlling interest in NMNLC —  —  —  —  —  —  —  11,315  11,315 
Net increase (decrease) in net assets resulting from operations —  —  —  31,305  114  (203,776) (172,357) (65) (172,422)
Net assets at March 31, 2020 96,827,342  $ 968  $ 1,287,853  $ 89,717  $ (85,334) $ (215,014) $ 1,078,190  $ 11,250  $ 1,089,440 
Distributions declared —  —  —  (29,048) —  —  (29,048) (258) (29,306)
Net increase (decrease) in net assets resulting from operations —  —  —  27,327  (3,756) 52,910  76,481  251  76,732 
Net assets at June 30, 2020 96,827,342  $ 968  $ 1,287,853  $ 87,996  $ (89,090) $ (162,104) $ 1,125,623  $ 11,243  $ 1,136,866 
Distributions declared —  —  —  (29,049) —  —  (29,049) (245) (29,294)
Net increase (decrease) in net assets resulting from operations —  —  —  28,779  47  59,364  88,190  1,398  89,588 
Net assets at September 30, 2020 96,827,342  $ 968  $ 1,287,853  $ 87,726  $ (89,043) $ (102,740) $ 1,184,764  $ 12,396  $ 1,197,160 











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The table below illustrates the effect of certain transactions on the net asset accounts of the Company during the nine months ended September 30, 2019:
Accumulated Overdistributed Earnings
  Common Stock Paid in
Capital in 		Accumulated
Net Investment 		Accumulated Net Realized  Net 
Unrealized
Appreciation 		Total
  Shares Par Amount Excess of Par Income (Losses) Gains (Depreciation) Net Assets
Net assets at December 31, 2018 76,106,372  $ 761  $ 1,035,629  $ 61,975  $ (86,338) $ (5,758) $ 1,006,269 
Issuances of common stock 4,413,058  44  60,617  —  —  —  60,661 
Deferred offering costs —  —  (229) —  —  —  (229)
Distributions declared —  —  —  (27,342) —  —  (27,342)
Net increase in net assets resulting from operations —  —  —  27,450  46  16,424  43,920 
Net assets at March 31, 2019 80,519,430  $ 805  $ 1,096,017  $ 62,083  $ (86,292) $ 10,666  $ 1,083,279 
Issuances of common stock 90,872  1 1,269  —  —  —  1,270 
Distributions declared —  —  —  (27,377) —  —  (27,377)
Net increase (decrease) in net assets resulting from operations —  —  —  27,948  52  (4,255) 23,745 
Net assets at June 30, 2019 80,610,302  $ 806  $ 1,097,286  $ 62,654  $ (86,240) $ 6,411  $ 1,080,917 
Issuances of common stock 6,958,393  70  94,910  —  —  —  94,980 
Deferred offering costs —  —  (315) —  —  —  (315)
Distributions declared —  —  —  (29,753) —  —  (29,753)
Net increase (decrease) in net assets resulting from operations —  —  —  31,170  355  (8,075) 23,450 
Net assets at September 30, 2019 87,568,695  $ 876  $ 1,191,881  $ 64,071  $ (85,885) $ (1,664) $ 1,169,279 
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Note 11. Earnings Per Share
The following information sets forth the computation of basic and diluted net increase (decrease) in the Company’s net assets per share resulting from operations for the three and nine months ended September 30, 2020 and September 30, 2019:
  Three Months Ended Nine Months Ended
  September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Earnings (loss) per share—basic        
Numerator for basic earnings (loss) per share: $ 88,190  $ 23,450  $ (7,686) $ 91,115 
Denominator for basic weighted average share: 96,827,342  86,987,841  96,827,342  82,020,549 
Basic earnings (loss) per share: $ 0.91  $ 0.27  $ (0.08) $ 1.11 
Earnings (loss) per share—diluted(1)    
Numerator for increase (decrease) in net assets per share $ 88,190  $ 23,450  $ (7,686) $ 91,115 
Adjustment for interest on Convertible Notes and incentive fees, net 2,314  2,314  6,943  8,053 
Numerator for diluted earnings (loss) per share: $ 90,504  $ 25,764  $ (743) $ 99,168 
Denominator for basic weighted average share 96,827,342  86,987,841  96,827,342  82,020,549 
Adjustment for dilutive effect of Convertible Notes 13,257,585  13,257,585  13,257,585  15,927,676 
Denominator for diluted weighted average share 110,084,927  100,245,426  110,084,927  97,948,225 
Diluted earnings (loss) per share: $ 0.82  $ 0.26  $ (0.08) $ 1.01 
(1)In applying the if-converted method, conversion is not assumed for purposes of computing diluted earnings per share if the effect would be anti-dilutive. For the nine months ended September 30, 2020 there was anti-dilution. For the three months ended September 30, 2020 and the three and nine months ended September 30, 2019, there was no anti-dilution.
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Note 12. Financial Highlights
The following information sets forth the Company's financial highlights for the nine months ended September 30, 2020 and September 30, 2019.
  Nine Months Ended
  September 30, 2020 September 30, 2019
Per share data(1):    
Net asset value, January 1, 2020 and January 1, 2019, respectively $ 13.26  $ 13.22 
Net investment income 0.90  1.06 
Net realized and unrealized (losses) gains(2) (0.98) 0.09 
Total net (decrease) increase (0.08) 1.15 
Distributions declared to stockholders from net investment income (0.94) (1.02)
Net asset value, September 30, 2020 and September 30, 2019, respectively $ 12.24  $ 13.35 
Per share market value, September 30, 2020 and September 30, 2019, respectively $ 9.56  $ 13.63 
Total return based on market value(3) (22.30) % 16.60  %
Total return based on net asset value(4) (0.06) % 8.86  %
Shares outstanding at end of period 96,827,342  87,568,695 
Average weighted shares outstanding for the period 96,827,342  82,020,549 
Average net assets for the period $ 1,162,509  $ 1,111,191 
Ratio to average net assets:    
Net investment income 10.10  % 10.42  %
Total expenses, before waivers/reimbursements 14.78  % 15.10  %
Total expenses, net of waivers/reimbursements 13.52  % 14.04  %
Average debt outstanding—Holdings Credit Facility $ 551,059  $ 581,881 
Average debt outstanding—Unsecured Notes 453,250  402,041 
Average debt outstanding—Convertible Notes 201,250  245,481 
Average debt outstanding—SBA-guaranteed debentures 281,102  168,897 
Average debt outstanding—NMFC Credit Facility 154,974  99,405 
Average debt outstanding—DB Credit Facility 233,401  80,095 
Average debt outstanding—NMNLC Credit Facility —  39 
Asset coverage ratio(5) 178.65  % 171.14  %
Portfolio turnover 9.12  % 7.63  %
(1)Per share data is based on weighted average shares outstanding for the respective period (except for distributions declared to stockholders, which is based on actual rate per share).
(2)Includes the accretive effect of common stock issuances per share, which for the nine months ended September 30, 2020 and September 30, 2019 were $0.00 and $0.03, respectively.
(3)Total return is calculated assuming a purchase of common stock at the opening of the first day of the year and a sale on the closing of the last business day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at prices obtained under the Company’s dividend reinvestment plan.
(4)Total return is calculated assuming a purchase at net asset value on the opening of the first day of the year and a sale at net asset value on the last day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at the net asset value on the last day of the respective quarter.
(5)On November 5, 2014, the Company received exemptive relief from the SEC allowing the Company to modify the asset coverage requirement to exclude the SBA-guaranteed debentures from this calculation.
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Note 13. Recent Accounting Standards Updates
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the impact of the optional guidance on the Company's consolidated financial statements and disclosures. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the quarter ended September 30, 2020.
In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, after adoption, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis. The Company is in the process of evaluating the impact that this guidance will have on its consolidated financial statements.
Note 14. Subsequent Events
    
On October 28, 2020, the Company’s board of directors declared a fourth quarter 2020 distribution of $0.30 per share payable on December 30, 2020 to holders of record as of December 16, 2020.


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IMAGE0A011A.JPG
 
Deloitte & Touche LLP
 
30 Rockefeller Plaza
New York, NY 10112
USA
 
Tel:    212 492 4000
Fax:   212 489 1687
www.deloitte.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Results of Review of Interim Financial Information

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

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

Basis for Review Results

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

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


/s/ DELOITTE & TOUCHE LLP

November 4, 2020




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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations
    The information in management's discussion and analysis of financial condition and results of operations relates to New Mountain Finance Corporation, including its wholly-owned direct and indirect subsidiaries (collectively, "we", "us", "our", "NMFC" or the "Company").
Forward-Looking Statements
    The information contained in this section should be read in conjunction with the financial data and consolidated financial statements and notes thereto appearing elsewhere in this report. Some of the statements in this report (including in the following discussion) constitute forward-looking statements, which relate to future events or our future performance or our financial condition. The forward-looking statements contained in this section involve a number of risks and uncertainties, including:
•statements concerning the impact of a protracted decline in the liquidity of credit markets;
•the general economy, including the impact of interest and inflation rates, and the COVID-19 pandemic on the industries in which we invest;
•our future operating results, our business prospects, the adequacy of our cash resources and working capital, and the impact of the COVID-19 pandemic thereon;
•the ability of our portfolio companies to achieve their objectives and the impact of COVID-19 pandemic thereon;
•our ability to make investments consistent with our investment objectives, including with respect to the size, nature and terms of our investments;
•the ability of New Mountain Finance Advisers BDC, L.L.C. (the "Investment Adviser") or its affiliates to attract and retain highly talented professionals;
•actual and potential conflicts of interest with the Investment Adviser and New Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its affiliates, "New Mountain Capital") whose ultimate owners include Steven B. Klinsky and related and other vehicles; and
•the risk factors set forth in Item 1A.—Risk Factors contained in our annual report on Form 10-K for the year ended December 31, 2019 and in this quarterly report on Form 10-Q.
Forward-looking statements are identified by their use of such terms and phrases such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “project”, “seek”, “should”, “target”, “will”, “would” or similar expressions. Actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth in Item 1A.—Risk Factors contained in our annual report on Form 10-K for the year ended December 31, 2019 and in this quarterly report on Form 10-Q.
    We have based the forward-looking statements included in this report on information available to us on the date of this report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the United States Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview
    We are a Delaware corporation that was originally incorporated on June 29, 2010 and completed our initial public offering ("IPO") on May 19, 2011. We are a closed-end, non-diversified management investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). We have elected to be treated, and intend to comply with the requirements to continue to qualify annually, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). NMFC is also registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). Since our IPO, and through September 30, 2020, we raised approximately $893.2 million in net proceeds from additional offerings of our common stock.
    The Investment Adviser is a wholly-owned subsidiary of New Mountain Capital. New Mountain Capital is a firm with a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, public equity and credit investment vehicles. The Investment Adviser manages our day-to-day operations and provides us with investment advisory and management services. The Investment Adviser also manages other
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funds that may have investment mandates that are similar, in whole or in part, to ours. New Mountain Finance Administration, L.L.C. (the "Administrator”), a wholly-owned subsidiary of New Mountain Capital, provides the administrative services necessary to conduct our day-to-day operations.
    We have established the following wholly-owned direct and indirect subsidiaries:
•New Mountain Finance Holdings, L.L.C. ("NMF Holdings" or the "Predecessor Operating Company") and New Mountain Finance DB, L.L.C. ("NMFDB"), whose assets are used to secure NMF Holdings’ credit facility and NMFDB’s credit facility, respectively;
•New Mountain Finance SBIC, L.P. ("SBIC I")  and New Mountain Finance SBIC II, L.P. ("SBIC II"), who have received licenses from the United States ("U.S.") Small Business Administration ("SBA") to operate as small business investment companies ("SBICs") under Section 301(c) of the Small Business Investment Act of 1958, as amended (the "1958 Act") and their general partners, New Mountain Finance SBIC G.P., L.L.C. ("SBIC I GP") and New Mountain Finance SBIC II G.P., L.L.C. ("SBIC II GP"), respectively;
•NMF Ancora Holdings Inc. ("NMF Ancora"), NMF QID Holdings, Inc. ("NMF QID") and NMF YP Holdings Inc. ("NMF YP"), which serve as tax blocker corporations by holding equity or equity-like investments in portfolio companies organized as limited liability companies (or other forms of pass-through entities); we consolidate our tax blocker corporations for accounting purposes but the tax blocker corporations are not consolidated for U.S. federal income tax purposes and may incur income tax expense as a result of their ownership of the portfolio companies; and
•New Mountain Finance Servicing, L.L.C. ("NMF Servicing"), which serves as the administrative agent on certain investment transactions.
    New Mountain Net Lease Corporation ("NMNLC") is a majority-owned consolidated subsidiary of ours, which acquires commercial real estate properties that are subject to ‘‘triple net’’ leases has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a real estate investment trust, or REIT, within the meaning of Section 856(a) of the Code.
    Our investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. The first lien debt may include traditional first lien senior secured loans or unitranche loans. Unitranche loans combine characteristics of traditional first lien senior secured loans as well as second lien and subordinated loans. Unitranche loans will expose us to the risks associated with second lien and subordinated loans to the extent we invest in the “last out” tranche. In some cases, our investments may also include equity interests.
    Our primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. Similar to us, SBIC I's and SBIC II's investment objectives are to generate current income and capital appreciation under our investment criteria. However, SBIC I's and SBIC II's investments must be in SBA-eligible small businesses. Our portfolio may be concentrated in a limited number of industries. As of September 30, 2020, our top five industry concentrations were software, business services, healthcare services, education and investment funds (which includes our investments in our joint ventures).
As of September 30, 2020, our net asset value was approximately $1,184.8 million and our portfolio had a fair value of approximately $2,896.6 million in 105 portfolio companies, with a weighted average yield to maturity at cost for income producing investments ("YTM at Cost") of approximately 8.6% and a weighted average yield to maturity at cost for all investments ("YTM at Cost for Investments") of approximately 7.8%. The YTM at Cost calculation assumes that all investments, including secured collateralized agreements, not on non-accrual are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. The YTM at Cost for Investments calculation assumes that all investments, including secured collateralized agreements, are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. YTM at Cost and YTM at Cost for Investments calculations exclude the impact of existing leverage. YTM at Cost and YTM at Cost for Investments use the London Interbank Offered Rate ("LIBOR") curves at each quarter's end date. The actual yield to maturity may be higher or lower due to the future selection of the LIBOR contracts by the individual companies in our portfolio or other factors.
Recent Developments
    On October 28, 2020, our board of directors declared a fourth quarter 2020 distribution of $0.30 per share payable on December 30, 2020 to holders of record as of December 16, 2020.
    

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COVID-19 Developments

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

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

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

Critical Accounting Policies
    The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.
Basis of Accounting
    We consolidate our wholly-owned direct and indirect subsidiaries: NMF Holdings, NMF Servicing, NMFDB, SBIC I, SBIC I GP, SBIC II, SBIC II GP, NMF Ancora, NMF QID and NMF YP and our majority-owned consolidated subsidiary, NMNLC. We are an investment company following accounting and reporting guidance as described in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, ("ASC 946").
Valuation and Leveling of Portfolio Investments
    At all times consistent with GAAP and the 1940 Act, we conduct a valuation of assets, which impacts our net asset value.
    We value our assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, our board of directors is ultimately and solely responsible for determining the fair value of our portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where our portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. Our quarterly valuation procedures are set forth in more detail below:
(1)Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.
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(2)Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.
a.Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and
b.For investments other than bonds, we look at the number of quotes readily available and perform the following procedures:
i.Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. We will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, we will use one or more of the methodologies outlined below to determine fair value;
ii.Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).
(3)Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:
a.Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
b.Preliminary valuation conclusions will then be documented and discussed with our senior management;
c.If an investment falls into (3) above for four consecutive quarters and if the investment's par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our board of directors; and
d.When deemed appropriate by our management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.
    For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.
    The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period and the fluctuations could be material.
    GAAP fair value measurement guidance classifies the inputs used in measuring fair value into three levels as follows:
    Level I—Quoted prices (unadjusted) are available in active markets for identical investments and we have the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), we, to the extent that we hold such investments, do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.
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    Level II—Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following:
•Quoted prices for similar assets or liabilities in active markets;
•Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
•Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and
•Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.
    Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.
    The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.
    The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period.
    The following table summarizes the levels in the fair value hierarchy that our portfolio investments fall into as of September 30, 2020:
(in thousands) Total Level I Level II Level III
First lien $ 1,662,653  $ —  $ 167,616  $ 1,495,037 
Second lien 689,319  —  93,784  595,535 
Subordinated 43,536  —  —  43,536 
Equity and other 501,115  —  —  501,115 
Total investments $ 2,896,623  $ —  $ 261,400  $ 2,635,223 
    We generally use the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. We typically determine the fair value of our performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company's performance and associated financial risks. The following outlines additional details on the approaches considered:
    Company Performance, Financial Review, and Analysis:  Prior to investment, as part of our due diligence process, we evaluate the overall performance and financial stability of the portfolio company. Post investment, we analyze each portfolio company's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. We also attempt to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of our original investment thesis. This analysis is specific to each portfolio company. We leverage the knowledge gained from our original due diligence process, augmented by this subsequent monitoring, to continually refine our outlook for each of our portfolio companies and ultimately form the valuation of our investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, we will consider the pricing indicated by the external event to corroborate the private valuation.
    For debt investments, we may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of our debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, we may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value. After enterprise value coverage is demonstrated for our debt investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.
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Market Based Approach:  We may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA) multiples of publicly traded comparable companies and comparable transactions. We consider numerous factors when selecting the appropriate companies whose trading multiples are used to value our portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. We may apply an average of various relevant comparable company EBITDA multiples to the portfolio company's latest twelve month ("LTM") EBITDA or projected EBITDA to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA multiple will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the market based approach as of September 30, 2020, we used the relevant EBITDA multiple ranges set forth in the table below to determine the enterprise value of our portfolio companies. We believe these were reasonable ranges in light of current comparable company trading levels and the specific portfolio companies involved.
Income Based Approach:  We also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security's contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment's expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach and a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes an average yield-to maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of September 30, 2020, we used the discount ranges set forth in the table below to value investments in our portfolio companies.
The unobservable inputs used in the fair value measurement of our Level III investments as of September 30, 2020 were as follows:
(in thousands)     Range
Type Fair Value as of September 30, 2020 Approach Unobservable Input Low High Weighted
Average
First lien $ 1,438,801  Market & income approach EBITDA multiple 5.0x 35.0x 14.0x
Revenue multiple 3.5x 11.0x 5.9x
  Discount rate 4.5  % 17.0  % 8.3  %
43,769  Market quote Broker quote N/A N/A N/A
12,467  Other N/A(1) N/A N/A N/A
Second lien 531,932  Market & income approach EBITDA multiple 7.0x 34.0x 15.1x
  Discount rate 6.8  % 21.7  % 9.5  %
48,603  Market quote Broker quote N/A N/A N/A
15,000  Other N/A(1) N/A N/A N/A
Subordinated 43,536  Market & income approach EBITDA multiple 9.0x 15.0x 12.0x
  Discount rate 10.2  % 35.0  % 18.0  %
Equity and other 500,257  Market & income approach EBITDA multiple 6.5x 19.5x 12.6x
  Discount rate 6.0  % 47.7  % 12.1  %
700  Black Scholes analysis Expected life in years 5.5  5.5  5.5 
    Volatility 52.3  % 52.3  % 52.3  %
    Discount rate 0.7  % 0.7  % 0.7  %
158  Other N/A(1) N/A N/A N/A
$ 2,635,223           
(1)Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.

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NMFC Senior Loan Program I LLC
    NMFC Senior Loan Program I LLC ("SLP I") was formed as a Delaware limited liability company on May 27, 2014 and commenced operations on June 10, 2014. SLP I is a portfolio company held by us. SLP I is structured as a private investment fund, in which all of the investors are "qualified purchasers", as such term is defined in section 2(a)(51) of the 1940 Act. Transfer of interests in SLP I is subject to restrictions and, as a result, such interests are not readily marketable. SLP I operates under a limited liability company agreement (the "SLP I Agreement") and will continue in existence until August 31, 2022, subject to earlier termination pursuant to certain terms of the SLP I Agreement. The term may be extended pursuant to certain terms of the SLP I Agreement. SLP I's re-investment period ended on August 31, 2020. SLP I invests in senior secured loans issued by companies within our core industry verticals. These investments are typically broadly syndicated first lien loans.
    SLP I is capitalized with $93.0 million of capital commitments and debt from a revolving credit facility and is managed by us. Our capital commitment is $23.0 million, representing less than 25.0% ownership, with third party investors representing the remaining capital commitments. As of September 30, 2020, SLP I had total investments with an aggregate fair value of approximately $292.9 million, debt outstanding of $220.1 million and capital that had been called and funded of $93.0 million. As of December 31, 2019, SLP I had total investments with an aggregate fair value of approximately $313.7 million, debt outstanding of $227.4 million and capital that had been called and funded of $93.0 million. Our investment in SLP I is disclosed on our Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.
    We, as an investment adviser registered under the Advisers Act, act as the collateral manager to SLP I and are entitled to receive a management fee for our investment management services provided to SLP I. As a result, SLP I is classified as our affiliate. No management fee is charged on our investment in SLP I in connection with the administrative services provided to SLP I. For the three and nine months ended September 30, 2020, we earned approximately $0.3 million and $0.8 million, respectively, in management fees related to SLP I, which is included in other income. For the three and nine months ended September 30, 2019, we earned approximately $0.3 million and $0.9 million, respectively, in management fees related to SLP I, which is included in other income. As of September 30, 2020 and December 31, 2019, approximately $0.5 million and $0.3 million, respectively, of management fees related to SLP I was included in receivable from affiliates. For the three and nine months ended September 30, 2020, we earned approximately $0.7 million and $2.1 million, respectively, of dividend income related to SLP I, which is included in dividend income. For the three and nine months ended September 30, 2019, we earned approximately $0.8 million and $2.3 million, respectively, of dividend income related to SLP I, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $0.8 million and $0.7 million, respectively, of dividend income related to SLP I was included in interest and dividend receivable.
NMFC Senior Loan Program II LLC
    NMFC Senior Loan Program II LLC ("SLP II") was formed as a Delaware limited liability company on March 9, 2016 and commenced operations on April 12, 2016. SLP II is structured as a private joint venture investment fund between us and SkyKnight Income, LLC (“SkyKnight”) and operates under a limited liability company agreement (the "SLP II Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP II, which has equal representation from us and SkyKnight. SLP II's investment period ended on April 12, 2020 and SLP II will continue in existence until April 12, 2022. The term may be extended for up to one year pursuant to certain terms of the SLP II Agreement.
    SLP II is capitalized with equity contributions which were called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP II to call down on capital commitments requires approval by the board of managers of SLP II. As of September 30, 2020, we and SkyKnight have committed and contributed $79.4 million and $20.6 million, respectively, of equity to SLP II. Our investment in SLP II is disclosed on our Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.
    
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On April 12, 2016, SLP II entered into its revolving credit facility with Wells Fargo Bank, National Association, which matures on April 12, 2022 and bears interest at a rate of the LIBOR plus 1.60% per annum. As of September 30, 2020 and December 31, 2019, SLP II had total investments with an aggregate fair value of approximately $286.4 million and $340.0 million, respectively, and debt outstanding under its credit facility of $204.5 million and $246.9 million, respectively. As of September 30, 2020 and December 31, 2019, none of SLP II's investments were on non-accrual. Additionally, as of September 30, 2020 and December 31, 2019, SLP II had unfunded commitments in the form of delayed draws of $0.2 million and $3.2 million, respectively. Below is a summary of SLP II's portfolio, along with a listing of the individual investments in SLP II's portfolio as of September 30, 2020 and December 31, 2019:
(in thousands) September 30, 2020 December 31, 2019
First lien investments (1) $ 300,199  351,160 
Weighted average interest rate on first lien investments (2) 5.11  % 6.29  %
Number of portfolio companies in SLP II 34  37 
Largest portfolio company investment (1) $ 17,322  17,456 
Total of five largest portfolio company investments (1) $ 78,225  78,932 
(1)Reflects principal amount or par value of investments.
(2)Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.

    
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The following table is a listing of the individual investments in SLP II's portfolio as of September 30, 2020:
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Funded Investments - First lien: (in thousands) (in thousands) (in thousands)
Access CIG, LLC Business Services  3.91% (L + 3.75%) 2/27/2025 $ 4,625  $ 4,609  $ 4,532 
ADG, LLC Healthcare Services  6.25 % (L + 2.50% + 2.75% PIK) 9/28/2023 16,412  16,335  14,876 
Advisor Group Holdings, Inc. Consumer Services  5.15% (L + 5.00%) 7/31/2026 4,962  4,920  4,815 
Bearcat Buyer, Inc. Healthcare Services  5.25% (L + 4.25%) 7/9/2026 90  89  90 
Bearcat Buyer, Inc. Healthcare Services  5.25% (L + 4.25%) 7/9/2026 1,368  1,363  1,368 
Bleriot US Bidco Inc. Federal Services  4.97% (L + 4.75%) 10/31/2026 1,345  1,332  1,335 
Bleriot US Bidco Inc. Federal Services  4.97% (L + 4.75%) 10/30/2026 8,605  8,528  8,546 
Brave Parent Holdings, Inc. Software  4.15% (L + 4.00%) 4/18/2025 3,662  3,652  3,622 
CentralSquare Technologies, LLC Software  3.90% (L + 3.75%) 8/29/2025 14,737  14,710  13,286 
CHA Holdings, Inc. Business Services  5.50% (L + 4.50%) 4/10/2025 2,031  2,023  1,899 
CHA Holdings, Inc. Business Services  5.50% (L + 4.50%) 4/10/2025 10,615  10,582  9,925 
CommerceHub, Inc. Software  3.65% (L + 3.50%) 5/21/2025 2,444  2,435  2,389 
Dealer Tire, LLC Distribution & Logistics  4.40% (L + 4.25%) 12/12/2025 7,444  7,427  7,295 
Drilling Info Holdings, Inc. Business Services  4.40% (L + 4.25%) 7/30/2025 14,646  14,598  14,139 
Edgewood Partners Holdings LLC Business Services  5.25% (L + 4.25%) 9/6/2024 7,375  7,320  7,117 
eResearchTechnology, Inc. Healthcare Services  5.50% (L + 4.50%) 2/4/2027 3,137  3,108  3,129 
Fastlane Parent Company, Inc. Distribution & Logistics  4.65% (L + 4.50%) 2/4/2026 3,447  3,392  3,328 
Greenway Health, LLC Software  4.75% (L + 3.75%) 2/16/2024 14,512  14,474  12,989 
Help/Systems Holdings, Inc. Software  5.75% (L + 4.75%) 11/19/2026 4,422  4,382  4,362 
Institutional Shareholder Services Inc. Business Services  4.72% (L + 4.50%) 3/5/2026 13,790  13,678  13,376 
Keystone Acquisition Corp. Healthcare Services  6.25% (L + 5.25%) 5/1/2024 5,238  5,208  4,767 
LSCS Holdings, Inc. Healthcare Services  4.47% (L + 4.25%) 3/17/2025 1,870  1,868  1,776 
LSCS Holdings, Inc. Healthcare Services  4.47% (L + 4.25%) 3/17/2025 7,243  7,236  6,881 
Market Track, LLC Business Services  5.25% (L + 4.25%) 6/5/2024 11,610  11,577  11,432 
Medical Solutions Holdings, Inc. Healthcare Services  5.50% (L + 4.50%) 6/14/2024 2,774  2,766  2,684 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 2,078  2,074  2,059 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 873  871  865 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 12,066  12,039  11,955 
Peraton Corp. (fka MHVC Acquisition Corp.) Federal Services  6.25% (L + 5.25%) 4/29/2024 10,159  10,130  10,083 
Premise Health Holding Corp. Healthcare Services  3.72% (L + 3.50%) 7/10/2025 1,362  1,357  1,318 
Project Accelerate Parent, LLC Business Services  5.25% (L + 4.25%) 1/2/2025 12,450  12,409  11,329 
PSC Industrial Holdings Corp. Industrial Services  4.98% (L + 3.75%) 10/11/2024 3,036  3,017  2,892 
Quest Software US Holdings Inc. Software  4.51% (L + 4.25%) 5/16/2025 14,737  14,685  14,467 
Salient CRGT Inc. Federal Services  7.50% (L + 6.50%) 2/28/2022 12,665  12,625  12,484 
Wirepath LLC Distribution & Logistics  4.22% (L + 4.00%) 8/5/2024 14,700  14,700  13,524 
WP CityMD Bidco LLC Healthcare Services  5.54% (L + 4.50%) 8/13/2026 5,432  5,384  5,413 
Wrench Group LLC Consumer Services  4.22% (L + 4.00%) 4/30/2026 5,935  5,883  5,816 
YI, LLC Healthcare Services  5.00% (L + 4.00%) 11/7/2024 14,687  14,679  12,851 
Zelis Cost Management Buyer, Inc. Healthcare Information Technology  4.90% (L + 4.75%) 9/30/2026 4,099  4,062  4,077 
Zywave, Inc. Software  6.00% (L + 5.00%) 11/17/2022 16,844  16,810  16,844 
Zywave, Inc. Software  6.00% (L + 5.00%) 11/17/2022 478  474  478 
Total Funded Investments $ 300,005  $ 298,811  $ 286,413 
Unfunded Investments - First lien:
Bearcat Buyer, Inc. Healthcare Services — 7/9/2021 $ 194  $ (1) $ — 
Total Unfunded Investments $ 194  $ (1) $ — 
Total Investments $ 300,199  $ 298,810  $ 286,413 
(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of September 30, 2020.
(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP II.
        

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The following table is a listing of the individual investments in SLP II's portfolio as of December 31, 2019:
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Funded Investments - First lien (in thousands) (in thousands) (in thousands)
Access CIG, LLC Business Services  5.44% (L + 3.75%) 2/27/2025 $ 9,833  $ 9,794  $ 9,841 
ADG, LLC Healthcare Services  7.17% (L + 4.75% + 0.50% PIK) 9/28/2023 16,074  15,980  15,813 
Advisor Group Holdings, Inc. Consumer Services  6.80% (L + 5.00%) 7/31/2026 5,000  4,952  4,972 
Bearcat Buyer, Inc. Healthcare Services  6.19% (L + 4.25%) 7/9/2026 1,379  1,372  1,372 
Bearcat Buyer, Inc. Healthcare Services  6.19% (L + 4.25%) 7/9/2026 90  90  90 
Bleriot US Bidco Inc. Federal Services  6.69% (L + 4.75%) 10/30/2026 8,649  8,563  8,746 
Brave Parent Holdings, Inc. Software  5.93% (L + 4.00%) 4/18/2025 15,267  15,222  15,045 
CentralSquare Technologies, LLC Software  5.55% (L + 3.75%) 8/29/2025 14,850  14,819  14,231 
CHA Holdings, Inc. Business Services  6.44% (L + 4.50%) 4/10/2025 10,697  10,658  10,683 
CHA Holdings, Inc. Business Services  6.44% (L + 4.50%) 4/10/2025 2,047  2,037  2,044 
CommerceHub, Inc. Software  5.30% (L + 3.50%) 5/21/2025 2,463  2,453  2,432 
Drilling Info Holdings, Inc. Business Services  6.05% (L + 4.25%) 7/30/2025 14,758  14,703  14,696 
Edgewood Partners Holdings LLC Business Services  6.05% (L + 4.25%) 9/6/2024 7,432  7,367  7,413 
Explorer Holdings, Inc. Healthcare Services  6.26% (L + 4.50%) 11/20/2026 3,145  3,113  3,171 
Fastlane Parent Company, Inc. Distribution & Logistics  6.44% (L + 4.50%) 2/4/2026 3,474  3,411  3,448 
Greenway Health, LLC Software  5.69% (L + 3.75%) 2/16/2024 14,625  14,578  13,053 
Help/Systems Holdings, Inc. Software  6.55% (L + 4.75%) 11/19/2026 4,444  4,400  4,428 
Idera, Inc. Software  6.30% (L + 4.50%) 6/28/2024 4,446  4,417  4,449 
Institutional Shareholder Services Inc. Business Services  6.44% (L + 4.50%) 3/5/2026 13,895  13,769  13,687 
Keystone Acquisition Corp. Healthcare Services  7.19% (L + 5.25%) 5/1/2024 5,278  5,243  5,173 
LSCS Holdings, Inc. Healthcare Services  6.31% (L + 4.25%) 3/17/2025 7,298  7,290  7,225 
LSCS Holdings, Inc. Healthcare Services  6.31% (L + 4.25%) 3/17/2025 1,884  1,882  1,865 
Market Track, LLC Business Services  6.18% (L + 4.25%) 6/5/2024 11,700  11,660  10,530 
MediaOcean, LLC Software  5.80% (L + 4.00%) 8/18/2025 7,392  7,372  7,410 
Medical Solutions Holdings, Inc. Healthcare Services  6.30% (L + 4.50%) 6/14/2024 2,795  2,786  2,791 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 12,160  12,124  12,160 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 2,095  2,089  2,095 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 880  877  880 
NorthStar Financial Services Group, LLC Software  5.30% (L + 3.50%) 5/25/2025 5,885  5,861  5,789 
Peraton Corp. (fka MHVC Acquisition Corp.) Federal Services  7.05% (L + 5.25%) 4/29/2024 10,237  10,203  10,193 
Premise Health Holding Corp. Healthcare Services  5.44% (L + 3.50%) 7/10/2025 1,372  1,367  1,358 
Project Accelerate Parent, LLC Business Services  5.99% (L + 4.25%) 1/2/2025 13,545  13,494  13,511 
PSC Industrial Holdings Corp. Industrial Services  5.49% (L + 3.75%) 10/11/2024 7,305  7,252  7,269 
Quest Software US Holdings Inc. Software  6.18% (L + 4.25%) 5/16/2025 14,850  14,790  14,739 
Salient CRGT Inc. Federal Services  8.29% (L + 6.50%) 2/28/2022 13,134  13,071  12,510 
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.) Education  6.19% (L + 4.25%) 7/30/2025 716  715  721 
Wirepath LLC Distribution & Logistics  5.94% (L + 4.00%) 8/5/2024 14,813  14,813  12,886 
WP CityMD Bidco LLC Healthcare Services  6.44% (L + 4.50%) 8/13/2026 15,000  14,855  15,038 
Wrench Group LLC Consumer Services  6.19% (L + 4.25%) 4/30/2026 4,478  4,435  4,488 
YI, LLC Healthcare Services  5.94% (L + 4.00%) 11/7/2024 14,801  14,791  13,839 
Zelis Cost Management Buyer, Inc. Healthcare I.T.  6.55% (L + 4.75%) 9/30/2026 10,363  10,261  10,427 
Zywave, Inc. Software  6.93% (L + 5.00%) 11/17/2022 16,975  16,930  16,975 
Zywave, Inc. Software  6.84% (L + 5.00%) 11/17/2022 481  477  481 
Total Funded Investments $ 348,005  $ 346,336  $ 339,967 
Unfunded Investments - First lien
Bearcat Buyer, Inc. Healthcare Services — 7/9/2021 $ 194  $ (1) $ (1)
Bleriot US Bidco Inc. Federal Services — 10/31/2020 1,351  (14) 15 
Premise Health Holding Corp. Healthcare Services — 7/10/2020 110  —  — 
Wrench Group LLC Consumer Services — 4/30/2021 $ 1,500  $ —  $ 4 
Total Unfunded Investments 3,155  (15) 18 
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Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Total Investments $ 351,160  $ 346,321  $ 339,985 
(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2019.
(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP II.

    Below is certain summarized financial information for SLP II as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and September 30, 2019:
Selected Balance Sheet Information: September 30, 2020 December 31, 2019
(in thousands) (in thousands)
Investments at fair value (cost of $298,810 and $346,321, respectively) $ 286,413  $ 339,985 
Cash and other assets 8,838  8,159 
Total assets $ 295,251  $ 348,144 
Credit facility $ 204,470  $ 246,870 
Deferred financing costs (758) (1,408)
Distribution payable 2,550  3,250 
Payable for unsettled securities purchased —  3,113 
Other liabilities 1,201  2,367 
Total liabilities 207,463  254,192 
Members' capital $ 87,788  $ 93,952 
Total liabilities and members' capital $ 295,251  $ 348,144 
Selected Statement of Operations Information: Three Months Ended Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
(in thousands) (in thousands) (in thousands) (in thousands)
Interest income $ 4,174  $ 6,013  $ 14,153  $ 18,581 
Other income —  31  70  89 
Total investment income 4,174  6,044  14,223  18,670 
Interest and other financing expenses 1,190  2,745  4,696  8,484 
Other expenses 98  129  360  408 
Total expenses 1,288  2,874  5,056  8,892 
Less: expenses waived and reimbursed —  —  —  (20)
Net expenses 1,288  2,874  5,056  8,872 
Net investment income 2,886  3,170  9,167  9,798 
Net realized gains (losses) on investments 3  116  (803) 377 
Net change in unrealized appreciation (depreciation) of investments 6,988  (2,371) (6,061) (1,311)
Net increase in members' capital $ 9,877  $ 915  $ 2,303  $ 8,864 
    For the three and nine months ended September 30, 2020, we earned approximately $2.0 million and $6.7 million, respectively, of dividend income related to SLP II, which is included in dividend income. For the three and nine months ended September 30, 2019, we earned approximately $2.5 million and $8.5 million, respectively, of dividend income related to SLP II, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $2.0 million and $2.6 million, respectively, of dividend income related to SLP II was included in interest and dividend receivable.
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    We have determined that SLP II is an investment company under ASC 946; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly-owned investment company subsidiary. Furthermore, Accounting Standards Codification Topic 810, Consolidation ("ASC 810"), concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, we do not consolidate SLP II.
NMFC Senior Loan Program III LLC
    NMFC Senior Loan Program III LLC ("SLP III") was formed as a Delaware limited liability company and commenced operations on April 25, 2018. SLP III is structured as a private joint venture investment fund between us and SkyKnight Income II, LLC (“SkyKnight II”) and operates under a limited liability company agreement (the "SLP III Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP III, which has equal representation from us and SkyKnight II. SLP III has a five year investment period and will continue in existence until April 25, 2025. The investment period may be extended for up to one year pursuant to certain terms of the SLP III Agreement.
    SLP III is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III. As of September 30, 2020, we and SkyKnight II have committed and contributed $120.0 million and $30.0 million, respectively, of equity to SLP III. Our investment in SLP III is disclosed on our Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019.
    On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A., which matures on May 2, 2023 and bears interest at a rate of LIBOR plus 1.70% per annum. Effective February 13, 2020, SLP III's revolving credit facility has a maximum borrowing capacity of $450.0 million. As of September 30, 2020 and December 31, 2019, SLP III had total investments with an aggregate fair value of approximately $526.2 million and $475.2 million, respectively, and debt outstanding under its credit facility of $395.2 million and $355.4 million, respectively. As of September 30, 2020 and December 31, 2019, none of SLP III's investments were on non-accrual. Additionally, as of September 30, 2020 and December 31, 2019, SLP III had unfunded commitments in the form of delayed draws of $8.8 million and $10.6 million, respectively. Below is a summary of SLP III's portfolio, along with a listing of the individual investments in SLP III's portfolio as of September 30, 2020 and December 31, 2019:    
(in thousands) September 30, 2020 December 31, 2019
First lien investments (1) $ 554,145  493,787 
Weighted average interest rate on first lien investments (2) 4.63  % 5.95  %
Number of portfolio companies in SLP III 58  49 
Largest portfolio company investment (1) $ 23,787  23,947 
Total of five largest portfolio company investments (1) $ 99,403  99,906 
(1)Reflects principal amount or par value of investment.
(2)Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.
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    The following table is a listing of the individual investments in SLP III's portfolio as of September 30, 2020:
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Funded Investments - First lien ( in thousands) ( in thousands) ( in thousands)
Access CIG, LLC Business Services  3.91% (L + 3.75%) 2/27/2025 $ 870  $ 870  $ 852 
Advisor Group Holdings, Inc. Consumer Services  5.15% (L + 5.00%) 7/31/2026 4,963  4,920  4,815 
Affordable Care Holding Corp. Healthcare Services  5.75% (L + 4.75%) 10/24/2022 5,917  5,858  5,605 
AG Parent Holdings, LLC Healthcare Services  5.15% (L + 5.00%) 7/31/2026 12,406  12,353  12,220 
Ascensus Specialties LLC Business Services  4.91% (L + 4.75%) 9/24/2026 9,925  9,881  9,578 
Aston FinCo S.a.r.l. / Aston US Finco, LLC Software  4.40% (L + 4.25%) 10/9/2026 5,970  5,917  5,895 
Astra Acquisition Corp. Software  6.50% (L + 5.50%) 3/1/2027 11,519  11,438  11,577 
BCPE Empire Holdings, Inc. Distribution & Logistics  4.15% (L + 4.00%) 6/11/2026 9,098  9,021  8,916 
BCPE Empire Holdings, Inc. Distribution & Logistics  4.15% (L + 4.00%) 6/11/2026 1,430  1,421  1,401 
Bearcat Buyer, Inc. Healthcare Services  5.25% (L + 4.25%) 7/9/2026 19,703  19,619  19,703 
Bearcat Buyer, Inc. Healthcare Services  5.25% (L + 4.25%) 7/9/2026 1,292  1,287  1,292 
Bleriot US Bidco Inc. Federal Services  4.97% (L + 4.75%) 10/31/2026 4,303  4,264  4,273 
Bleriot US Bidco Inc. Federal Services  4.97% (L + 4.75%) 10/31/2026 672  666  668 
Bluefin Holding, LLC Software  4.15% (L + 4.00%) 9/4/2026 9,925  9,795  9,925 
Bracket Intermediate Holding Corp. Healthcare Services  4.55% (L + 4.25%) 9/5/2025 14,700  14,645  14,443 
Brave Parent Holdings, Inc. Software  4.15% (L + 4.00%) 4/18/2025 11,246  11,217  11,123 
CentralSquare Technologies, LLC Software  3.90% (L + 3.75%) 8/29/2025 14,738  14,710  13,286 
Certara Holdco, Inc. Healthcare I.T.  3.72% (L + 3.50%) 8/15/2024 1,249  1,252  1,236 
CHA Holdings, Inc. Business Services  5.50% (L + 4.50%) 4/10/2025 980  980  916 
CommerceHub, Inc. Software  3.65% (L + 3.50%) 5/21/2025 14,663  14,611  14,333 
Covenant Surgical Partners, Inc. Healthcare Services  4.16% (L + 4.00%) 7/1/2026 9,900  9,816  9,133 
CRCI Longhorn Holdings, Inc. Business Services  3.64% (L + 3.50%) 8/8/2025 14,700  14,646  14,228 
Dealer Tire, LLC Distribution & Logistics  4.40% (L + 4.25%) 12/12/2025 9,925  9,902  9,727 
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC) Healthcare Services  4.75% (L + 3.75%) 6/6/2025 14,673  14,647  13,921 
Drilling Info Holdings, Inc. Business Services  4.40% (L + 4.25%) 7/30/2025 18,624  18,555  17,980 
Edgewood Partners Holdings LLC Business Services  5.25% (L + 4.25%) 9/6/2024 7,375  7,320  7,117 
eResearchTechnology, Inc. Healthcare Services  5.50% (L + 4.50%) 2/4/2027 3,921  3,885  3,912 
EyeCare Partners, LLC Healthcare Services  3.90% (L + 3.75%) 2/18/2027 12,101  12,087  11,448 
Fastlane Parent Company, Inc. Distribution & Logistics  4.65% (L + 4.50%) 2/4/2026 3,448  3,392  3,328 
Greenway Health, LLC Software  4.75% (L + 3.75%) 2/16/2024 14,557  14,565  13,029 
Heartland Dental, LLC Healthcare Services  3.65% (L + 3.50%) 4/30/2025 18,588  18,522  17,199 
Help/Systems Holdings, Inc. Software  5.75% (L + 4.75%) 11/19/2026 18,486  18,311  18,232 
Idera, Inc. Software  5.00% (L + 4.00%) 6/28/2024 5,529  5,509  5,467 
Institutional Shareholder Services Inc. Business Services  4.72% (L + 4.50%) 3/5/2026 985  977  955 
Kestra Advisor Services Holdings A, Inc. Business Services  4.40% (L + 4.25%) 6/3/2026 9,405  9,338  9,240 
LSCS Holdings, Inc. Healthcare Services  4.47% (L + 4.25%) 3/17/2025 2,634  2,618  2,502 
LSCS Holdings, Inc. Healthcare Services  4.47% (L + 4.25%) 3/17/2025 680  676  646 
Market Track, LLC Business Services  5.25% (L + 4.25%) 6/5/2024 4,741  4,737  4,668 
MED ParentCo, LP Healthcare Services  4.40% (L + 4.25%) 8/31/2026 10,298  10,214  9,818 
MED ParentCo, LP Healthcare Services  4.40% (L + 4.25%) 8/31/2026 1,807  1,792  1,723 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 4,514  4,502  4,472 
Ministry Brands, LLC Software  5.00% (L + 4.00%) 12/2/2022 873  871  865 
National Intergovernmental Purchasing Alliance Company Business Services  3.97% (L + 3.75%) 5/23/2025 8,724  8,720  8,571 
National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.) Healthcare Services  4.40% (L + 4.25%) 3/9/2026 8,901  8,901  8,823 
National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.) Healthcare Services  4.40% (L + 4.25%) 3/9/2026 406  406  403 
Navex Topco, Inc. Software  3.40% (L + 3.25%) 9/5/2025 18,255  18,118  17,844 
Navicure, Inc. Healthcare Services  4.75% (L + 4.00%) 10/22/2026 4,118  4,107  4,035 
Netsmart Technologies, Inc. Healthcare I.T.  6.00% (P + 2.75%) 4/19/2023 10,250  10,250  10,250 
Newport Group Holdings II, Inc. Business Services  3.72% (L + 3.50%) 9/12/2025 4,900  4,882  4,722 
Orion Advisor Solutions, Inc. Business Services  5.00% (L + 4.00%) 9/24/2027 5,250  5,198  5,219 
Outcomes Group Holdings, Inc. Healthcare Services  3.47% (L + 3.25%) 10/24/2025 3,409  3,402  3,341 
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Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Pelican Products, Inc. Business Products  4.50% (L + 3.50%) 5/1/2025 4,888  4,879  4,688 
Peraton Corp. (fka MHVC Acquisition Corp.) Federal Services  6.25% (L + 5.25%) 4/29/2024 15,312  15,262  15,197 
Premise Health Holding Corp. Healthcare Services  3.72% (L + 3.50%) 7/10/2025 13,619  13,569  13,177 
Project Accelerate Parent, LLC Business Services  5.25% (L + 4.25%) 1/2/2025 9,848  9,809  8,962 
Quest Software US Holdings Inc. Software  4.51% (L + 4.25%) 5/16/2025 14,737  14,685  14,467 
Ryan Specialty Group, LLC Business Services  4.00% (L + 3.25%) 9/1/2027 3,500  3,448  3,483 
Sierra Enterprises, LLC Food & Beverage  5.00% (L + 4.00%) 11/11/2024 2,437  2,435  2,255 
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.) Education  4.47% (L + 4.25%) 7/30/2025 12,214  12,193  11,580 
TIBCO Software Inc. Software  3.90% (L + 3.75%) 6/30/2026 7,673  7,655  7,500 
Unitek Acquisition, Inc. Business Services  7.50% (L + 5.50% + 1.00% PIK) 8/20/2024 3,325  2,700  2,975 
Unitek Acquisition, Inc. Business Services  7.50% (L + 5.50% + 1.00% PIK) 8/20/2024 665  540  595 
Wirepath LLC Distribution & Logistics  4.22% (L + 4.00%) 8/5/2024 17,170  17,171  15,798 
WP CityMD Bidco LLC Healthcare Services  5.50% (L + 4.50%) 8/13/2026 19,918  19,744  19,852 
VT Topco, Inc. Business Services  3.40% (L + 3.25%) 8/1/2025 2,802  2,802  2,676 
YI, LLC Healthcare Services  5.00% (L + 4.00%) 11/7/2024 9,716  9,710  8,501 
Total Funded Investments $ 545,370  $ 542,193  $ 526,581 
Unfunded Investments - First lien
BCPE Empire Holdings, Inc. Distribution & Logistics — 6/11/2021 $ 369  $ (4) (7)
Bearcat Buyer, Inc. Healthcare Services — 7/9/2021 2,792  (14) — 
Covenant Surgical Partners, Inc. Healthcare Services — 7/1/2021 2,000  (20) (155)
EyeCare Partners, LLC Healthcare Services — 2/18/2022 2,838  —  (153)
MED ParentCo, LP Healthcare Services — 8/27/2021 776  (8) (36)
Total Unfunded Investments $ 8,775  $ (46) $ (351)
Total Investments $ 554,145  $ 542,147  $ 526,230 
(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of September 30, 2020.
(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP III.
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    The following table is a listing of the individual investments in SLP III's portfolio as of December 31, 2019:
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
Funded Investments - First lien (in thousands) (in thousands) (in thousands)
Access CIG, LLC Business Services  5.44% (L + 3.75%) 2/27/2025 $ 1,204  $ 1,204  $ 1,205 
Advisor Group Holdings, Inc. Consumer Services  6.80% (L + 5.00%) 7/31/2026 5,000  4,952  4,972 
Affordable Care Holding Corp. Healthcare Services  6.59% (L + 4.75%) 10/24/2022 5,963  5,884  5,814 
AG Parent Holdings, LLC Healthcare Services  6.91% (L + 5.00%) 7/31/2026 12,500  12,440  12,406 
Aston FinCo S.a r.l. / Aston US Finco, LLC Software  6.26% (L + 4.25%) 10/9/2026 6,000  5,941  5,970 
Ascensus Specialties LLC Business Services  6.44% (L + 4.75%) 9/24/2026 10,000  9,951  9,975 
BCPE Empire Holdings, Inc. Distribution & Logistics  5.80% (L + 4.00%) 6/11/2026 9,167  9,080  9,224 
BCPE Empire Holdings, Inc. Distribution & Logistics  5.80% (L + 4.00%) 6/11/2026 229  243  231 
Bearcat Buyer, Inc. Healthcare Services  6.19% (L + 4.25%) 7/9/2026 19,853  19,759  19,753 
Bearcat Buyer, Inc. Healthcare Services  6.19% (L + 4.25%) 7/9/2026 1,302  1,296  1,296 
Bleriot US Bidco Inc. Federal Services  6.69% (L + 4.75%) 10/30/2026 4,324  4,281  4,373 
Bluefin Holding, LLC Software  6.14% (L + 4.25%) 9/4/2026 10,000  9,855  9,900 
Bracket Intermediate Holding Corp. Healthcare Services  6.35% (L + 4.25%) 9/5/2025 14,813  14,750  14,775 
Brave Parent Holdings, Inc. Software  5.93% (L + 4.00%) 4/18/2025 14,775  14,732  14,560 
CentralSquare Technologies, LLC Software  5.55% (L + 3.75%) 8/29/2025 14,850  14,819  14,231 
Certara Holdco, Inc. Healthcare I.T.  5.44% (L + 3.50%) 8/15/2024 1,262  1,266  1,262 
CHA Holdings, Inc. Business Services  6.44% (L + 4.50%) 4/10/2025 987  987  986 
CommerceHub, Inc. Software  5.30% (L + 3.50%) 5/21/2025 14,775  14,716  14,590 
Covenant Surgical Partners, Inc. Healthcare Services  5.69% (L + 4.00%) 7/1/2026 9,975  9,881  9,913 
CRCI Longhorn Holdings, Inc. Business Services  5.19% (L + 3.50%) 8/8/2025 14,813  14,751  14,414 
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC) Healthcare Services  5.55% (L + 3.75%) 6/6/2025 14,786  14,755  14,737 
Drilling Info Holdings, Inc. Business Services  6.05% (L + 4.25%) 7/30/2025 18,766  18,688  18,688 
Edgewood Partners Holdings LLC Business Services  6.05% (L + 4.25%) 9/6/2024 7,432  7,367  7,413 
Explorer Holdings, Inc. Healthcare Services  6.25% (L + 4.50%) 11/20/2026 3,931  3,892  3,964 
Fastlane Parent Company, Inc. Distribution & Logistics  6.44% (L + 4.50%) 2/4/2026 3,474  3,411  3,448 
Greenway Health, LLC Software  5.69% (L + 3.75%) 2/16/2024 14,670  14,679  13,093 
Heartland Dental, LLC Healthcare Services  5.55% (L + 3.75%) 4/30/2025 18,317  18,243  18,248 
Help/Systems Holdings, Inc. Software  6.55% (L + 4.75%) 11/19/2026 5,556  5,500  5,535 
Idera, Inc. Software  6.30% (L + 4.50%) 6/28/2024 5,572  5,548  5,576 
Institutional Shareholder Services Inc. Business Services  6.44% (L + 4.50%) 3/5/2026 993  983  978 
Kestra Advisor Services Holdings A, Inc. Business Services  6.20% (L + 4.25%) 6/3/2026 9,476  9,402  9,477 
LSCS Holdings, Inc. Healthcare Services  6.31% (L + 4.25%) 3/17/2025 2,654  2,634  2,627 
LSCS Holdings, Inc. Healthcare Services  6.31% (L + 4.25%) 3/17/2025 685  680  678 
Market Track, LLC Business Services  6.18% (L + 4.25%) 6/5/2024 4,778  4,773  4,300 
MED ParentCo, LP Healthcare Services  6.05% (L + 4.25%) 8/31/2026 10,376  10,282  10,402 
MED ParentCo, LP Healthcare Services  6.05% (L + 4.25%) 8/31/2026 553  549  554 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 4,549  4,534  4,549 
Ministry Brands, LLC Software  5.85% (L + 4.00%) 12/2/2022 880  877  880 
National Intergovernmental Purchasing Alliance Company Business Services  5.69% (L + 3.75%) 5/23/2025 8,790  8,786  8,790 
Navex Topco, Inc. Software  5.05% (L + 3.25%) 9/5/2025 18,394  18,237  18,448 
Netsmart Technologies, Inc. Healthcare I.T.  5.55% (L + 3.75%) 4/19/2023 10,330  10,330  10,308 
Newport Group Holdings II, Inc. Business Services  5.65% (L + 3.75%) 9/12/2025 4,938  4,917  4,950 
NorthStar Financial Services Group, LLC Software  5.30% (L + 3.50%) 5/25/2025 11,770  11,723  11,579 
Outcomes Group Holdings, Inc. Healthcare Services  5.41% (L + 3.50%) 10/24/2025 6,435  6,421  6,344 
Pelican Products, Inc. Business Products  5.24% (L + 3.50%) 5/1/2025 4,925  4,915  4,531 
Peraton Corp. (fka MHVC Acquisition Corp.) Federal Services  7.05% (L + 5.25%) 4/29/2024 15,430  15,371  15,363 
Premise Health Holding Corp. Healthcare Services  5.44% (L + 3.50%) 7/10/2025 13,723  13,666  13,580 
Project Accelerate Parent, LLC Business Services  5.99% (L + 4.25%) 1/2/2025 9,924  9,878  9,899 
Quest Software US Holdings Inc. Software  6.18% (L + 4.25%) 5/16/2025 14,850  14,790  14,739 
Sierra Enterprises, LLC Food & Beverage  5.80% (L + 4.00%) 11/11/2024 2,456  2,454  2,447 
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.) Education  6.19% (L + 4.25%) 7/30/2025 14,812  14,782  14,905 
Wirepath LLC Distribution & Logistics  5.94% (L + 4.00%) 8/5/2024 17,302  17,302  15,053 
WP CityMD Bidco LLC Healthcare Services  6.44% (L + 4.50%) 8/13/2026 20,069  19,875  20,119 
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Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
YI, LLC Healthcare Services  5.94% (L + 4.00%) 11/7/2024 $ 9,791  $ 9,784  $ 9,155 
Total Funded Investments $ 483,179  $ 480,816  $ 475,207 
Unfunded Investments - First lien
BCPE Empire Holdings, Inc. Distribution & Logistics — 6/11/2021 $ 1,580  $ (16) $ 10 
Bearcat Buyer, Inc. Healthcare Services — 7/9/2021 2,792  (14) (14)
Bleriot US Bidco Inc. Federal Services — 10/31/2020 676  (7) 8 
Covenant Surgical Partners, Inc. Healthcare Services — 7/1/2021 2,000  (20) (13)
Heartland Dental, LLC Healthcare Services — 4/30/2020 413  —  (2)
MED ParentCo, LP Healthcare Services — 8/27/2021 2,044  (20) 5 
Premise Health Holding Corp. Healthcare Services — 7/10/2020 1,103  (3) (3)
Total Unfunded Investments $ 10,608  $ (80) $ (9)
Total Investments $ 493,787  $ 480,736  $ 475,198 
(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2019.
(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP III.

    Below is certain summarized financial information for SLP III as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and September 30, 2019:
Selected Balance Sheet Information: September 30, 2020 December 31, 2019
(in thousands) (in thousands)
Investments at fair value (cost of $542,147 and $480,736) $ 526,230  $ 475,198 
Cash and other assets 14,005  12,836 
Receivable from unsettled securities sold 2,385  — 
Total assets $ 542,620  $ 488,034 
Credit facility $ 395,200  $ 355,400 
Deferred financing costs (2,322) (2,385)
Payable for unsettled securities purchased 9,384  8,166 
Distribution payable 4,000  3,650 
Other liabilities 2,396  3,736 
Total liabilities 408,658  368,567 
Members' capital $ 133,962  $ 119,467 
Total liabilities and members' capital $ 542,620  $ 488,034 
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Selected Statement of Operations Information: Three Months Ended Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
(in thousands) (in thousands) (in thousands) (in thousands)
Interest income $ 6,490  $ 7,268  $ 20,826  $ 19,828 
Other income 75  122  320  270 
Total investment income 6,565  7,390  21,146  20,098 
Interest and other financing expenses 2,516  3,770  9,593  10,511 
Other expenses 250  166  571  469 
Total expenses 2,766  3,936  10,164  10,980 
Less: expenses waived and reimbursed —  —  —  (22)
Net expenses 2,766  3,936  10,164  10,958 
Net investment income 3,799  3,454  10,982  9,140 
Net realized (losses) gains on investments (82) 100  (78) 170 
Net change in unrealized appreciation (depreciation) of investments 14,775  (1,800) (10,379) 1,855 
Net increase in members' capital $ 18,492  $ 1,754  $ 525  $ 11,165 

    For the three and nine months ended September 30, 2020, we earned approximately $3.2 million and $8.8 million of dividend income related to SLP III, which is included in dividend income. For the three and nine months ended September 30, 2019, we earned approximately $2.7 million and $7.6 million of dividend income related to SLP III, which is included in dividend income. As of September 30, 2020 and December 31, 2019, approximately $3.2 million and $2.9 million, respectively, of dividend income related to SLP III was included in interest and dividend receivable.
    We have determined that SLP III is an investment company under ASC 946; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly-owned investment company subsidiary. Furthermore, ASC 810 concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, we do not consolidate SLP III.
New Mountain Net Lease Corporation
     NMNLC was formed to acquire commercial real estate properties that are subject to "triple net" leases. NMNLC's investments are disclosed on our Consolidated Schedule of Investments as of September 30, 2020.
    On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.
    

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Below is certain summarized property information for NMNLC as of September 30, 2020:
Lease Total Fair Value as of
Portfolio Company Tenant Expiration Date Location Square Feet September 30, 2020
(in thousands) (in thousands)
NM NL Holdings LP / NM GP Holdco LLC Various Various Various Various $ 50,085 
NM GLCR LP Arctic Glacier U.S.A. 2/28/2038 CA 214 26,464 
NM CLFX LP Victor Equipment Company 8/31/2033 TX 423 12,677 
NM APP Canada, Corp. A.P. Plasman, Inc. 9/30/2031 Canada 436 11,100 
NM DRVT LLC FMH Conveyors, LLC 10/31/2031 AR 195 6,980 
NM APP US LLC Plasman Corp, LLC / A-Brite LP 9/30/2033 AL / OH 261 6,886 
NM YI, LLC Young Innovations, Inc. 10/31/2039 IL / MO 212 6,175 
NM JRA LLC J.R. Automation Technologies, LLC 1/31/2031 MI 88 3,784 
NM KRLN LLC None N/A MD 95 940 
$ 125,091 
Collateralized agreements or repurchase financings
    We follow the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral, (“ASC 860”) when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of September 30, 2020 and December 31, 2019, we held one collateralized agreement to resell with a cost basis of $30.0 million and $30.0 million, respectively, and a fair value of $21.4 million and $21.4 million, respectively. The collateralized agreement to resell is on non-accrual. The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from us at the par value of the collateralized agreement. The private hedge fund has breached its agreement to repurchase the collateral under the collateralized agreement. The default by the private hedge fund did not release the collateral to us, therefore, we do not have full rights and title to the collateral. A claim has been filed with the Cayman Islands joint official liquidators to resolve this matter. The joint official liquidators have recognized our contractual rights under the collateralized agreement. We continue to exercise our rights under the collateralized agreement and continue to monitor the liquidation process of the private hedge fund. The fair value of the collateralized agreement to resell is reflective of the increased risk of the position.
PPVA Black Elk (Equity) LLC
    On May 3, 2013, we entered into a collateralized securities purchase and put agreement (the “SPP Agreement”) with a private hedge fund. Under the SPP Agreement, we purchased twenty million Class E Preferred Units of Black Elk Energy Offshore Operations, LLC (“Black Elk”) for $20.0 million with a corresponding obligation of the private hedge fund, PPVA Black Elk (Equity) LLC, to repurchase the preferred units for $20.0 million plus other amounts due under the SPP Agreement. The majority owner of Black Elk was the private hedge fund. In August 2014, we received a payment of $20.5 million, the full amount due under the SPP Agreement.
    In August 2017, a trustee (the “Trustee”) for Black Elk informed us that the Trustee intended to assert a fraudulent conveyance claim (the “Claim”) against us and one of its affiliates seeking the return of the $20.5 million repayment. Black Elk filed a Chapter 11 bankruptcy petition pursuant to the United States Bankruptcy Code in August 2015. The Trustee alleged that individuals affiliated with the private hedge fund conspired with Black Elk and others to improperly use proceeds from the sale of certain Black Elk assets to repay, in August 2014, the private hedge fund’s obligation to us under the SPP Agreement. We were unaware of these claims at the time the repayment was received. The private hedge fund is currently in liquidation under the laws of the Cayman Islands.
    On December 22, 2017, we settled the Trustee’s $20.5 million Claim for $16.0 million and filed a claim with the Cayman Islands joint official liquidators of the private hedge fund for $16.0 million that is owed to us under the SPP Agreement. The SPP Agreement was restored and is in effect since repayment has not been made. We continue to exercise our rights under the SPP Agreement and continue to monitor the liquidation process of the private hedge fund. During the year
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ended December 31, 2018, we received a $1.5 million payment from our insurance carrier in respect to the settlement. As of September 30, 2020 and December 31, 2019, the SPP Agreement has a cost basis of $14.5 million and $14.5 million, respectively, and a fair value of $10.4 million and $10.4 million, respectively, which is reflective of the higher inherent risk in this transaction.
Revenue Recognition
    Sales and paydowns of investments:  Realized gains and losses on investments are determined on the specific identification method.
    Interest and dividend income:  Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. We have loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer. For the three and nine months ended September 30, 2020, we recognized PIK and non-cash interest from investments of approximately $5.0 million and $11.7 million, respectively, and PIK and non-cash dividends from investments of approximately $3.8 million and $9.2 million, respectively. For the three and nine months ended September 30, 2019, we recognized PIK and non-cash interest from investments of approximately $3.8 million and $9.9 million, respectively, and PIK and non-cash dividends from investments of approximately $4.8 million and $13.6 million, respectively.
    Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible.
    Non-accrual income:  Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment of the ultimate collectibility. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.
    Other income:  Other income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees, management fees from a non-controlled/affiliated investment and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. Other income may also include fees from bridge loans. We may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.
Monitoring of Portfolio Investments
    We monitor the performance and financial trends of our portfolio companies on at least a quarterly basis. We attempt to identify any developments within the portfolio company, the industry or the macroeconomic environment that may alter any material element of our original investment strategy.
    We use an investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in the portfolio. We use a four-level numeric rating scale as follows:
•Investment Rating 1—Investment is performing materially above expectations;
•Investment Rating 2—Investment is performing materially in-line with expectations. All new loans are rated 2 at initial purchase;
•Investment Rating 3—Investment is performing materially below expectations, where the risk of loss has materially increased since the original investment; and
•Investment Rating 4—Investment is performing substantially below expectations and risks have increased substantially since the original investment. Payments may be delinquent. There is meaningful possibility that we will not recoup our original cost basis in the investment and may realize a substantial loss upon exit.

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    The following table shows the distribution of our investments and securities purchased under collateralized agreements to resell on the 1 to 4 investment rating scale at fair value as of September 30, 2020:
(in millions) As of September 30, 2020
Investment Rating Cost Percent Fair Value Percent
Investment Rating 1 $ 212.1  7.1  % $ 213.0  7.3  %
Investment Rating 2 2,425.3  80.6  % 2,444.5  83.8  %
Investment Rating 3 216.5 7.2  % 174.4  6.0  %
Investment Rating 4 154.4  5.1  % 86.1  2.9  %
  $ 3,008.3  100.0  % $ 2,918.1  100.0  %
    As of September 30, 2020, all investments in our portfolio had an Investment Rating of 1 or 2 with the exception of eight portfolio companies that had an Investment Rating of 3 and six portfolio companies that had an Investment Rating of 4.
During the second quarter of 2020, we placed a portion of our first lien positions in Benevis Holding Corp. on non-accrual status with an investment rating of 4 due to its ongoing restructuring, which included the filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas on August 3, 2020. As of September 30, 2020, our investment in Benevis Holding Corp., which was placed on non-accrual status, had an aggregate cost basis of $42.8 million, an aggregate fair value of $39.3 million and total unearned interest income of $0.8 million and $1.6 million for the three and nine months then ended.
    During the second quarter of 2020, our subordinated position in Permian Holdco 3, Inc. was placed on non-accrual status and had an investment rating of 4. Our subordinated positions in Permian Holdco 2, Inc. and preferred shares in Permian Holdco 1, Inc. remain on non-accrual status with an investment rating of 4 due to its ongoing restructuring, which included the filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on July 19, 2020. As of September 30, 2020, our common shares in Permian Holdco 1, Inc. and first lien position in Permian Holdco 3, Inc. had an investment rating of 4. As of September 30, 2020, our investments in Permian Holdco 1, Inc., Permian Holdco 2, Inc. and Permian Holdco 3, Inc., on non-accrual had an aggregate cost basis of $10.9 million and an aggregate fair value of $0.0 million. As of September 30, 2020, our investments in Permian Holdco 1, Inc., Permian Holdco 2, Inc. and Permian Holdco 3, Inc. with an investment rating of 4 had an aggregate cost basis of $23.1 million and an aggregate fair value of $10.5 million. During the three months ended March 31, 2020, we reversed $3.4 million of previously recorded PIK dividends related to our investment in Permian Holdco 1, Inc. as we believe these PIK dividends will ultimately not be collectible. During the three months ended June 30, 2020, we reversed $2.0 million of previously recorded PIK interest related to our investments in Permian Holdco 2, Inc. as we believe this PIK interest will ultimately not be collectible.

    During the first quarter of 2020, we placed our investment in our junior preferred shares of UniTek Global Services, Inc. on non-accrual status and the investment had a rating of 4. As of September 30, 2020, our investment had an aggregate cost basis of $34.4 million, an aggregate fair value of $3.6 million and total unearned dividend income $1.3 million and $2.6 million of for the three and nine months then ended.
    During the first quarter of 2018, we placed our first lien positions in Education Management II LLC on non-accrual status as the portfolio company announced its intention to wind down and liquidate the business. Our first lien positions and our preferred and common shares in Education Management Corporation ("EDMC") had an investment rating of 4. As of September 30, 2020, our investment in EDMC, with an Investment Rating of 4, had an aggregate cost basis of $1.4 million, an aggregate fair value of $0.0 million and total unearned interest income of $0.0 million and $0.0 million for the three and nine months ended.
    Since March 31, 2020, our investment in NM KRLN LLC had an investment rating of 4. As of September 30, 2020, NM KRLN LLC had an aggregate cost basis of $8.2 million and an aggregate fair value of $0.9 million.
    Since December 31, 2019, our subordinated position in PPVA Black Elk (Equity) LLC had an investment rating of 4. As of September 30, 2020, our investment in this security had an aggregate cost basis of $14.5 million and an aggregate fair value of $10.4 million.
    During the year ended December 31, 2019, our security purchased under collateralized agreements to resell was placed on non-accrual and the investment had an Investment Rating of 4. As of September 30, 2020, our investment in this security had an aggregate cost basis of $30.0 million and an aggregate fair value of $21.4 million.
    In response to the continuing impact of the outbreak of the COVID-19 pandemic and its impact on the overall market environment and the health of our portfolio companies, we performed a company-by-company evaluation of the anticipated impact of COVID-19. The evaluation process consisted of dialogue with sponsors and portfolio companies to understand
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COVID-19’s impact on each portfolio company, the portfolio company’s response to any disruption, the level of sponsor support, and the current and projected financial and liquidity position of the portfolio company. Based on this evaluation, we assigned each portfolio company a “Risk Rating” of red, orange, yellow and green, with red reflecting a portfolio company with the potential for the most severe impact, due to the COVID-19 pandemic, and green reflecting the least. We will continue to monitor our portfolio companies and provide support to their management teams where possible. The following table shows the Risk Rating of our portfolio companies as of September 30, 2020:
(in millions)
As of September 30, 2020
Risk Rating Cost Percent Fair Value Percent
Red $ 96.6  3.2  % $ 66.4  2.3  %
Orange 250.9  8.4  % 183.7  6.3  %
Yellow 238.8  7.9  % 214.2  7.3  %
Green 2,422.0  80.5  % 2,453.7  84.1  %
  $ 3,008.3  100.0  % $ 2,918.0  100.0  %
Portfolio and Investment Activity
    The fair value of our investments was approximately $2,896.6 million in 105 portfolio companies at September 30, 2020 and approximately $3,160.3 million in 114 portfolio companies at December 31, 2019.
    The following table shows our portfolio and investment activity for the nine months ended September 30, 2020 and September 30, 2019:
  Nine Months Ended
(in millions) September 30, 2020 September 30, 2019
New investments in 25 and 52 portfolio companies, respectively $ 272.8  $ 827.6 
Debt repayments in existing portfolio companies 277.2  141.6 
Sales of securities in 16 and 7 portfolio companies, respectively 214.5  66.2 
Change in unrealized appreciation on 41 and 46 portfolio companies, respectively 21.8  41.7 
Change in unrealized depreciation on 75 and 66 portfolio companies, respectively (113.0) (36.4)
Recent Accounting Standards Updates
    See Item 1.—Financial Statements—Note 13. Recent Accounting Standards for details on recent accounting standards updates.
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Results of Operations for the Three Months Ended September 30, 2020 and September 30, 2019
Revenue
  Three Months Ended
(in thousands) September 30, 2020 September 30, 2019
Total interest income $ 49,654  $ 55,220 
Total dividend income 12,644  13,270 
Other income 3,223  4,104 
Total investment income $ 65,521  $ 72,594 
    Our total investment income decreased by approximately $7.1 million, or (10)%, for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019. For the three months ended September 30, 2020, total investment income of approximately $65.5 million consisted of approximately $43.0 million in cash interest from investments, approximately $5.0 million in PIK and non-cash interest from investments, approximately $0.3 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $1.4 million, approximately $8.8 million in cash dividends from investments, approximately $3.8 million in PIK and non-cash dividends from investments and approximately $3.2 million in other income. Our interest income decreased by approximately $5.6 million during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019 which was primarily attributable to lower LIBOR rates on invested balances in 2020. Our dividend income for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019 remained relatively flat. Other income during the three months ended September 30, 2020, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront, consent and amendment fees received from 9 different portfolio companies and management fees from a non-controlled affiliated portfolio company.

Operating Expenses
  Three Months Ended
(in thousands) September 30, 2020 September 30, 2019
Management fee $ 12,877  $ 12,687 
Less: management fee waiver (2,841) (3,141)
Total management fee 10,036  9,546 
Incentive fee 7,135  7,792 
Less: incentive fee waiver (500) — 
Total incentive fee 6,635  7,792 
Interest and other financing expenses 18,077  21,830 
Administrative expenses 1,024  930 
Professional fees 731  834 
Other general and administrative expenses 442  492 
Total expenses 36,945  41,424 
Less: expenses waived and reimbursed (589) — 
Net expenses before income taxes 36,356  41,424 
Income tax expense 123  — 
Net expenses after income taxes $ 36,479  $ 41,424 
    Our total net operating expenses decreased by approximately $4.9 million for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019. Our management fee increased by approximately $0.5 million, net of a management fee waiver, and our incentive fee decreased by approximately $1.2 million, net of an incentive fee waiver, for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019. The increase in management fees was attributable to larger invested balances while the incentive fee decreased due to lower investment income driven by decreasing LIBOR rates in 2020 and an incentive fee waiver by the Investment Adviser.
    Interest and other financing expenses decreased by approximately $3.8 million during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019, primarily due to lower rates on our floating rate borrowings. Our total professional fees, administrative expenses and total other general and administrative expenses for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019 decreased by
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approximately $0.6 million, which was primarily attributable to the Administrator's waiver of indirect administrative expenses during the quarter ended September 30, 2020.
Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)
  Three Months Ended
(in thousands) September 30, 2020 September 30, 2019
Net realized gains on investments $ 47  $ 355 
Net change in unrealized appreciation (depreciation) of investments 60,242  (7,024)
Net change in unrealized depreciation securities purchased under collateralized agreements to resell —  (1,332)
Benefit for taxes 257  281 
Net realized and unrealized gains (losses) $ 60,546  $ (7,720)
    Our net realized and unrealized gains resulted in a net gain of approximately $60.5 million for the three months ended September 30, 2020 compared to net realized gains and unrealized losses resulting in a net loss of approximately $7.7 million for the same period in 2019. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net gain for the three months ended September 30, 2020 was primarily driven by the overall increase in market prices of our investments during the period due to the partial recovery of the market from the impact of the COVID-19 pandemic. The provision for income taxes was attributable to equity investments that are held as of September 30, 2020 in three of our corporate subsidiaries. The net loss for the three months ended September 30, 2019 was primarily driven by the overall decrease in market prices of our investments during the period.
Results of Operations for the Nine Months Ended September 30, 2020 and September 30, 2019
Revenue
  Nine Months Ended
(in thousands) September 30, 2020 September 30, 2019
Total interest income $ 162,653  $ 154,779 
Total dividend income 35,353  39,338 
Other income 7,566  9,133 
Total investment income $ 205,572  $ 203,250 
    Our total investment income increased by approximately $2.3 million, or 1%, for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019. For the nine months ended September 30, 2020, total investment income of approximately $205.6 million consisted of approximately $141.8 million in cash interest from investments, approximately $11.7 million in PIK and non-cash interest from investments, approximately $1.3 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $7.9 million, approximately $26.2 million in cash dividends from investments, approximately $9.2 million in PIK and non-cash dividends from investments and approximately $7.5 million in other income. The increase in interest income of approximately $7.9 million during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 was primarily due to increased interest income which is attributable to larger invested balances. Our larger invested balances were driven by higher drawn balances on our SBA-guaranteed debentures and revolving credit facilities and proceeds from the July 2019 and October 2019 public offerings of our common stock, all of which contributed to the origination of new investments. The decrease in dividend income for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 was primarily due to the reversal of approximately $3.4 million of previously recorded PIK dividends related to our preferred shares in Permian Holdco 1, Inc., which was deemed to no longer be collectible. Other income during the nine months ended September 30, 2020, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront, consent and amendment fees received from 21 different portfolio companies and management fees from a non-controlled affiliated portfolio company.

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Operating Expenses
  Nine Months Ended
(in thousands) September 30, 2020 September 30, 2019
Management fee $ 39,869  $ 35,302 
Less: management fee waiver (9,567) (8,497)
Total management fee 30,302  26,805 
Incentive fee 21,857  21,642 
Less: incentive fee waiver (500) — 
Total incentive fee 21,357  21,642 
Interest and other financing expenses 59,500  61,695 
Administrative expenses 3,303  3,074 
Professional fees 2,605  2,486 
Other general and administrative expenses 1,383  1,302 
Total expenses 118,450  117,004 
Less: expenses waived and reimbursed (924) (335)
Net expenses before income taxes 117,526  116,669 
Income tax expense 116  13 
Net expenses after income taxes $ 117,642  $ 116,682 
    Our total net operating expenses increased by approximately $1.0 million for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019. Our management fee increased by approximately $3.5 million, net of a management fee waiver, and our incentive fee decreased by approximately $0.3 million, net of an incentive fee waiver, for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019. The increase in management fees was attributable to larger invested balances, driven by our use of leverage from our revolving credit facilities and SBA-guaranteed debentures and proceeds from our July 2019 and October 2019 public offerings of our common stock used to originate new investments.
    Interest and other financing expenses decreased by approximately $2.2 million during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, primarily due to lower LIBOR rates on our floating rate borrowings. Our total professional fees, administrative expenses and total other general and administrative expenses for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 remained relatively flat.
Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)
  Nine Months Ended
(in thousands) September 30, 2020 September 30, 2019
Net realized (losses) gains on investments $ (3,595) $ 453 
Net change in unrealized (depreciation) appreciation of investments (91,215) 5,305 
Net change in unrealized depreciation securities purchased under collateralized agreements to resell —  (1,332)
Benefit for taxes 778  121 
Net realized and unrealized (losses) gains $ (94,032) $ 4,547 
    Our net realized and unrealized losses resulted in a net loss of approximately $94.0 million for the nine months ended September 30, 2020 compared to net realized and unrealized gains resulting in a net gain of approximately $4.5 million for the same period in 2019. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the nine months ended September 30, 2020 was primarily driven by the overall decrease in market prices of our investments during the period due to the impact of the COVID-19 pandemic. The provision for income taxes was attributable to equity investments that are held as of September 30, 2020 in three of our corporate subsidiaries. The net gain for the nine months ended September 30, 2019 was primarily driven by the overall increase in market prices of our investments during the period.
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Liquidity and Capital Resources
    The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate purposes.
    Since our IPO, and through September 30, 2020, we raised approximately $893.2 million in net proceeds from additional offerings of common stock.
    Our liquidity is generated and generally available through advances from the revolving credit facilities, from cash flows from operations, and, we expect, through periodic follow-on equity offerings. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including unsecured debt and/or debt securities convertible into common stock. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. As permitted by the Small Business Credit Availability Act (the “SBCA”) on June 8, 2018 our shareholders approved the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act, as amended by the SBCA, which resulted in the reduction from 200.0% to 150.0% of the minimum asset coverage ratio applicable to us as of June 9, 2018. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 150.0% after such borrowing (which means we can borrow $2 for every $1 of our equity). As a result of our exemptive relief received on November 5, 2014, we are permitted to exclude our SBA-guaranteed debentures from the 150.0% asset coverage ratio that the we are required to maintain under the 1940 Act. The agreements governing the NMFC Credit Facility, the 2018 Convertible Notes and the Unsecured Notes (as defined below) contain certain covenants and terms, including a requirement that we not exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring additional indebtedness and a requirement that we not exceed a secured debt ratio of 0.70 to 1.00 at any time. As of September 30, 2020, our asset coverage ratio was 178.7% as compared to 177.7% as of June 30, 2020.
    At September 30, 2020 and December 31, 2019, we had cash and cash equivalents of approximately $68.7 million and $48.6 million, respectively. Our cash provided by (used in) operating activities during the nine months ended September 30, 2020 and September 30, 2019 was approximately $269.6 million and $(473.6) million, respectively. We expect that all current liquidity needs will be met with cash flows from operations and other activities.
Borrowings
    Holdings Credit Facility—On December 18, 2014, we entered into the Second Amended and Restated Loan and Security Agreement among us, as the Collateral Manager, NMF Holdings, as the Borrower, Wells Fargo Securities, LLC, as the Administrative Agent and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian (as amended from time to time, the "Holdings Credit Facility"). As of the most recent amendment on September 30, 2020, the maturity date of the Holdings Credit Facility is September 30, 2023, and the maximum facility amount is the lesser of $800.0 million and the actual commitments of the lenders to make advances as of such date.
    As of September 30, 2020, the maximum amount of revolving borrowings available under the Holdings Credit Facility is $745.0 million. Under the Holdings Credit Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0%, 67.5% or 70.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Bank, National Association. The Holdings Credit Facility is non-recourse to us and is collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Holdings Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Holdings Credit Facility. The Holdings Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Holdings Credit Facility requires us to maintain a minimum asset coverage ratio of 150.0%. The covenants are generally not tied to mark to market fluctuations in the prices of NMF Holdings investments, but rather to the performance of the underlying portfolio companies.
    As of the most recent amendment on September 30, 2020, the Holdings Credit Facility bears interest at a rate of LIBOR plus 2.00% per annum for Broadly Syndicated Loans (as defined in the Fourth Amendment to the Loan and Security Agreement) and LIBOR plus 2.50% per annum for all other investments. Previously the Holdings Credit Facility bore interest at a rate of LIBOR plus 1.75% per annum for Broadly Syndicated Loans (as defined in the Second Amended and Restated Loan and Security Agreement) and LIBOR plus 2.25% per annum for all other investments. The Holdings Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Fourth Amendment to the Loan and Security Agreement).
    
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    The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Holdings Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
(in millions) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest expense $ 2.7  $ 6.5  $ 11.3  $ 19.2 
Non-usage fee $ 0.4  $ 0.1  $ 0.9  $ 0.4 
Amortization of financing costs $ 0.3  $ 0.7  $ 1.0  $ 2.1 
Weighted average interest rate 2.2  % 4.2  % 2.7  % 4.4  %
Effective interest rate 2.8  % 4.8  % 3.2  % 5.0  %
Average debt outstanding $ 488.8  $ 612.9  $ 551.1  $ 581.9 
As of September 30, 2020 and December 31, 2019, the outstanding balance on the Holdings Credit Facility was $459.2 million and $661.6 million, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.
    NMFC Credit Facility—The Senior Secured Revolving Credit Agreement, (as amended from time to time, and together with the related guarantee and security agreement, the "NMFC Credit Facility"), dated June 4, 2014, among us, as the Borrower, Goldman Sachs Bank USA, as the Administrative Agent and Collateral Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A., as Lenders, is structured as a senior secured revolving credit facility. The NMFC Credit Facility is guaranteed by certain of our domestic subsidiaries and proceeds from the NMFC Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the NMFC Credit Facility is June 4, 2022.
    As of September 30, 2020, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $188.5 million. We are permitted to borrow at various advance rates depending on the type of portfolio investment as outlined in the related Senior Secured Revolving Credit Agreement. All fees associated with the origination of the NMFC Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the NMFC Credit Facility. The NMFC Credit Facility contains certain customary affirmative and negative covenants and events of default, including certain financial covenants related to the asset coverage and liquidity and other maintenance covenants.
    The NMFC Credit Facility generally bears interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charges a commitment fee, based on the unused facility amount multiplied by 0.375% per annum (as defined in the Senior Secured Revolving Credit Agreement).
    The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the NMFC Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended   Nine Months Ended
(in millions) September 30, 2020   September 30, 2019   September 30, 2020 September 30, 2019
Interest expense $ 0.9  $ 1.5  $ 4.0  $ 3.7 
Non-usage fee $ 0.1  $ —  (1) $ 0.1  $ 0.1 
Amortization of financing costs $ —  (2) $ 0.1  $ 0.1  $ 0.3 
Weighted average interest rate 2.7  % 4.8  % 3.4  % 4.9  %
Effective interest rate 3.0  % 4.9  % 3.6  % 5.4  %
Average debt outstanding $ 131.8  $ 123.8  $ 155.0  $ 99.4 
(1)For the three months ended September 30, 2019, the total non-usage fees were less than $50.0 thousand.
(2)For the three months ended September 30, 2020, the total amortization of financing costs were less than $50.0 thousand.
    As of September 30, 2020 and December 31, 2019, the outstanding balance on the NMFC Credit Facility was $150.5 million and $188.5 million, respectively, and NMFC was in compliance with the applicable covenants in the NMFC Credit Facility on such dates.
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    DB Credit Facility—The Loan Financing and Servicing Agreement (the "DB Credit Facility") dated December 14, 2018 and as amended from time to time, among NMFDB as the borrower, Deutsche Bank AG, New York Branch ("Deutsche Bank") as the facility agent, Lender and other agent from time to time party thereto and U.S. Bank National Association, as collateral agent and collateral custodian, is structured as a secured revolving credit facility and matures on December 14, 2023.
    As of September 30, 2020, the maximum amount of revolving borrowings available under the DB Credit Facility was $280.0 million. We are permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Loan Financing and Servicing Agreement. The DB Credit Facility is non-recourse to us and is collateralized by all of the investments of NMFDB on an investment by investment basis. All fees associated with the origination of the DB Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the DB Credit Facility. The DB Credit Facility contains certain customary affirmative and negative covenants and events of default. The covenants are generally not tied to mark to market fluctuations in the prices of NMFDB investments, but rather to the performance of the underlying portfolio companies.
    The advances under the DB Credit Facility accrue interest at a per annum rate equal to the Applicable Margin plus the lender's Cost of Funds Rate. The "Applicable Margin" is equal to 2.85% during the Revolving Period and then increases by 0.20% during an Event of Default. The "Cost of Funds Rate" for a conduit lender is the lower of its commercial paper rate and the Base Rate plus 0.50%, and for any other lender is the Base Rate. The "Base Rate" is the three-months LIBOR Rate but may become an alternative base rate based on Deutsche Bank's base lending rate if certain LIBOR disruption events occur. We are also charged a non-usage fee, based on the unused facility amount multiplied by the Undrawn Fee Rate (as defined in the Loan Financing and Servicing Agreement).
    The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the DB Credit Facility for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
(in millions) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest expense(1) $ 1.8  $ 1.8  $ 6.7  $ 3.2 
Non-usage fee(1) $ 0.1  $ 0.1  $ 0.2  $ 0.2 
Amortization of financing costs $ 0.2  $ 0.1  $ 0.5  $ 0.3 
Weighted average interest rate 3.2  % 5.1  % 3.8  % 5.3  %
Effective interest rate 3.6  % 5.6  % 4.2  % 6.0  %
Average debt outstanding $ 216.8  $ 133.9  $ 233.4  $ 80.1 
(1)Interest expense includes the portion of the facility agent fee applicable to the drawn portion of the DB Credit Facility and non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the DB Credit Facility.
    As of September 30, 2020 and December 31, 2019, the outstanding balance on the DB Credit Facility was $242.0 million and $230.0 million, respectively, and NMFDB was in compliance with the applicable covenants in the DB Credit Facility on such date.
    Unsecured Management Company Revolver—The Uncommitted Revolving Loan Agreement, (the "Unsecured Management Company Revolver"), dated March 30, 2020, by and between us, as the Borrower, and NMF Investments III, L.L.C., as Lender, an affiliate of the Investment Adviser, is structured as a discretionary unsecured revolving credit facility. The proceeds from the Unsecured Management Company Revolver may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the Unsecured Management Company Revolver is December 31, 2022. The Unsecured Management Company Revolver generally bears interest at a rate of 7.00% per annum (as defined in the Uncommitted Revolving Loan Agreement). On May 4, 2020, we entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30.0 million to $50.0 million. As of September 30, 2020, the maximum amount of revolving borrowings available under the Unsecured Management Company Revolver was $50.0 million and no borrowings were outstanding. For the three and nine months ended September 30, 2020, amortization of financing costs were each less than $50.0 thousand, respectively.
    NMNLC Credit Facility—The Revolving Credit Agreement (together with the related guarantee and security agreement, the “NMNLC Credit Facility”), dated September 21, 2018, among NMNLC, as the Borrower, and KeyBank National Association, as the Administrative Agent and Lender, was structured as a senior secured revolving credit facility and
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matured on September 23, 2020. The NMNLC Credit Facility was guaranteed by us and proceeds from the NMNLC Credit Facility were able to be used for funding of additional acquisition properties.
    The NMNLC Credit Facility bore interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charged a commitment fee, based on the unused facility amount multiplied by 0.15% per annum (as defined in the Revolving Credit Agreement).
    For the three and nine months ended September 30, 2020, interest expense, non-usage fees and amortization of financing costs were each less than $50.0 thousand. For the three months ended September 30, 2019, interest expense, non-usage fees and amortization of financing costs were each less than $50.0 thousand. For the nine months ended September 30, 2019, interest expense and non-usage fees were each less than $50.0 thousand and amortization of financing costs was $0.1 million. The NMNLC Credit Facility matured on September 23, 2020. As of December 31, 2019, the outstanding balance on the NMNLC Credit Facility was $0 and NMNLC was in compliance with the applicable covenants in the NMNLC Credit Facility on such date.
    Convertible Notes
    2014 Convertible Notes—On June 3, 2014, we closed a private offering of $115.0 million aggregate principal amount of unsecured convertible notes (the “2014 Convertible Notes”), pursuant to an indenture, dated June 3, 2014 (the “2014 Indenture”). The 2014 Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). As of June 3, 2015, the restrictions under Rule 144A under the Securities Act were removed, allowing the 2014 Convertible Notes to be eligible and freely tradable without restrictions for resale pursuant to Rule 144(b)(1) under the Securities Act. On September 30, 2016, we closed a public offering of an additional $40.3 million aggregate principal amount of the 2014 Convertible Notes. These additional 2014 Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115.0 million aggregate principal amount of 2014 Convertible Notes that we issued on June 3, 2014.
    The 2014 Convertible Notes bore interest at an annual rate of 5.0%, payable semi-annually in arrears on June 15 and December 15 of each year, which commenced on December 15, 2014.
    On June 15, 2019, our $155.3 million aggregate principal amount of 2014 Convertible Notes matured and we repaid the outstanding principal and accrued but unpaid interest in cash.
    2018 Convertible Notes—On August 20, 2018, we closed a registered public offering of $100.0 million aggregate principal amount of unsecured convertible notes (the “2018 Convertible Notes” and together with the 2014 Convertible Notes, the "Convertible Notes"), pursuant to an indenture, dated August 20, 2018, as supplemented by a first supplemental indenture thereto, dated August 20, 2018 (together the “2018A Indenture”). On August 30, 2018, in connection with the registered public offering, we issued an additional $15.0 million aggregate principal amount of the 2018 Convertible Notes pursuant to the exercise of an overallotment option by the underwriter of the 2018 Convertible Notes. On June 7, 2019, we closed a registered public offering of an additional $86.3 million aggregate principal amount of the 2018 Convertible Notes. These additional 2018 Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115.0 million aggregate principal amount of 2018 Convertible Notes that we issued in August 2018.
    The 2018 Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on February 15 and August 15 of each year. The 2018 Convertible Notes will mature on August 15, 2023 unless earlier converted, repurchased or redeemed pursuant to the terms of the 2018A Indenture. We may not redeem the 2018 Convertible Notes prior to May 15, 2023. On or after May 15, 2023, we may redeem the 2018 Convertible Notes for cash, in whole or from time to time in part, at our option at a redemption price, subject to an exception for redemption dates occurring after a record date but on or prior to the interest payment date, equal to the sum of (i) 100% of the principal amount of the 2018 Convertible Notes to be redeemed, (ii) accrued and unpaid interest thereon to, but excluding, the redemption date and (iii) a make-whole premium.
    No sinking fund is provided for the 2018 Convertible Notes. Holders of 2018 Convertible Notes may, at their option, convert their 2018 Convertible Notes into shares of our common stock at any time on or prior to the close of business on the business day immediately preceding the maturity date of the 2018 Convertible Notes. In addition, if certain corporate events occur, holders of the 2018 Convertible Notes may require us to repurchase for cash all or part of their 2018 Convertible Notes at a repurchase price equal to 100.0% of the principal amount of the 2018 Convertible Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the repurchase date.
    The 2018A Indenture contains certain covenants, including covenants requiring us to provide certain financial information to the holders of the 2018 Convertible Notes and the trustee if we cease to be subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). The 2018A Indenture also includes additional financial covenants related to our asset coverage ratio. These covenants are subject to limitations and exceptions that are described in the 2018A Indenture.
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    The following table summarizes certain key terms related to the convertible features of our 2018 Convertible Notes as of September 30, 2020.
2018 Convertible Notes
Initial conversion premium 10.0  %
Initial conversion rate(1) 65.8762 
Initial conversion price $ 15.18 
Conversion premium at September 30, 2020 10.0  %
Conversion rate at September 30, 2020(1)(2) 65.8762 
Conversion price at September 30, 2020(2)(3) $ 15.18 
Last conversion price calculation date August 20, 2020
(1)Conversion rates denominated in shares of common stock per $1.0 thousand principal amount of the 2018 Convertible Notes converted.
(2)Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.
(3)The conversion price in effect at September 30, 2020 was calculated on the last anniversary of the issuance and will be calculated again on the next anniversary, unless the exercise price shall have changed by more than 1.0% before the anniversary.
    The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.34 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $13.80 per share. In no event will the total number of shares of common stock issuable upon conversion exceed 72.4637 per $1 principal amount. We have determined that the embedded conversion option in the 2018 Convertible Notes is not required to be separately accounted for as a derivative under GAAP.
    The 2018 Convertible Notes are unsecured obligations and rank senior in right of payment to our existing and future indebtedness, if any, that is expressly subordinated in right of payment to the 2018 Convertible Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries and financing vehicles. As reflected in Item 1. - Financial Statements - Note 11. Earnings Per Share, the issuance is considered part of the if-converted method for calculation of diluted earnings per share.
    The following table summarizes the interest expense, amortization of financing costs and amortization of premium incurred on the Convertible Notes for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
(in millions) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest expense $ 2.9  $ 2.9  $ 8.7  $ 10.1 
Amortization of financing costs $ 0.1  $ 0.1  $ 0.3  $ 0.7 
Amortization of premium $ —  (1) $ —  (1) $ (0.1) $ (0.1)
Weighted average interest rate 5.8  % 5.7  % 5.8  % 5.5  %
Effective interest rate 5.9  % 5.8  % 5.9  % 5.8  %
Average debt outstanding $ 201.3  $ 201.3  $ 201.3  $ 245.5 
(1)For the three months ended September 30, 2020 and September 30, 2019, the amortization of premium was less than $50.0 thousand.
    As of September 30, 2020 and December 31, 2019, the outstanding balance on the Convertible Notes was $201.2 million and $201.2 million, respectively, and NMFC was in compliance with the terms of the 2018A Indenture on such date.

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Unsecured Notes
    On May 6, 2016, we issued $50.0 million in aggregate principal amount of five-year unsecured notes that mature on May 15, 2021 (the “2016 Unsecured Notes”), pursuant to a note purchase agreement, dated May 4, 2016, to an institutional investor in a private placement. On September 30, 2016, we entered into an amended and restated note purchase agreement (the "NPA") and issued an additional $40.0 million in aggregate principal amount of 2016 Unsecured Notes to institutional investors in a private placement. On June 30, 2017, we issued $55.0 million in aggregate principal amount of five-year unsecured notes that mature on July 15, 2022 (the "2017A Unsecured Notes"), pursuant to the NPA and a supplement to the NPA. On January 30, 2018, we issued $90.0 million in aggregate principal amount of five year unsecured notes that mature on January 30, 2023 (the "2018A Unsecured Notes") pursuant to the NPA and a second supplement to the NPA. On July 5, 2018, we issued $50.0 million in aggregate principal amount of five year unsecured notes that mature on June 28, 2023 (the "2018B Unsecured Notes") pursuant to the NPA and a third supplement to the NPA (the "Third Supplement"). On April 30, 2019, we issued $116.5 million in aggregate principal amount of five year unsecured notes that mature on April 30, 2024 (the "2019A Unsecured Notes") pursuant to the NPA and a fourth supplement to the NPA. The NPA provides for future issuances of unsecured notes in separate series or tranches.
    The 2016 Unsecured Notes bear interest at an annual rate of 5.313%, payable semi-annually on May 15 and November 15 of each year. The 2017A Unsecured Notes bear interest at an annual rate of 4.760%, payable semi-annually on January 15 and July 15 of each year. The 2018A Unsecured Notes bear interest at an annual rate of 4.870%, payable semi-annually on February 15 and August 15 of each year. The 2018B Unsecured Notes bear interest at an annual rate of 5.360%, payable semi-annually on January 15 and July 15 of each year. These interest rates are subject to increase in the event that: (i) subject to certain exceptions, the underlying unsecured notes or we cease to have an investment grade rating or (ii) the aggregate amount of our unsecured debt falls below $150.0 million.  In each such event, we have the option to offer to prepay the underlying unsecured notes at par, in which case holders of the underlying unsecured notes who accept the offer would not receive the increased interest rate. In addition, we are obligated to offer to prepay the underlying unsecured notes at par if the Investment Adviser, or an affiliate thereof, ceases to be our investment adviser or if certain change in control events occur with respect to the Investment Adviser. 
    The NPA contains customary terms and conditions for unsecured notes issued, including, without limitation, an option to offer to prepay all or a portion of the unsecured notes under its governance at par (plus a make-whole amount if applicable), affirmative and negative covenants such as information reporting, maintenance of our status as a BDC under the 1940 Act and a RIC under the Code, minimum stockholders’ equity, minimum asset coverage ratio, and prohibitions on certain fundamental changes at NMFC or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of NMFC or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy. The Third Supplement includes additional financial covenants related to asset coverage as well as other terms.
    On September 25, 2018, we closed a registered public offering of $50.0 million in aggregate principal amount of five-year unsecured notes that mature on October 1, 2023 (the "5.75% Unsecured Notes", together with the 2016 Unsecured Notes, 2017A Unsecured Notes, 2018A Unsecured Notes and 2018B Unsecured Notes, the "Unsecured Notes"), pursuant to an indenture, dated August 20, 2018, as supplemented by a second supplemental indenture thereto, dated September 25, 2018 (together, the "2018B Indenture"). On October 17, 2018, in connection with the registered public offering, we issued an additional $1.8 million aggregate principal amount of the 5.75% Unsecured Notes pursuant to the exercise of an overallotment option by the underwriters of the 5.75% Unsecured Notes.
    The 5.75% Unsecured Notes bear interest at an annual rate of 5.75%, payable quarterly on January 1, April 1, July 1 and October 1 of each year. The 5.75% Unsecured Notes will mature on October 1, 2023 unless earlier redeemed. The 5.75% Unsecured Notes were listed on the New York Stock Exchange and traded under the trading symbol “NMFX” until September 13, 2020. On September 14, 2020, the 5.75% Unsecured Notes began trading on the Nasdaq Global Select Market LLC under the ticker symbol "NMFCL".
    We may redeem the 5.75% Unsecured Notes, in whole or in part, at any time, or from time to time, at our option on or after October 1, 2020, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption.
    No sinking fund is provided for the 5.75% Unsecured Notes and holders of the 5.75% Unsecured Notes have no option to have their 5.75% Unsecured Notes repaid prior to the stated maturity date.
    The 2018B Indenture contains certain covenants, including covenants requiring us to (i) comply with the asset coverage requirements set forth in Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a) of the 1940 Act as may be
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applicable to us from time to time or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to us by the SEC and (ii) provide certain financial information to the holders of the 5.75% Unsecured Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. The 2018B Indenture also includes additional financial covenants related to asset coverage. These covenants are subject to limitations and exceptions that are described in the 2018B Indenture.
    The 2018B Indenture provides for customary events of default and further provides that the trustee or the holders of 25% in aggregate principal amount of the outstanding 5.75% Unsecured Notes may declare such 5.75% Unsecured Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period.
    The Unsecured Notes are unsecured obligations and rank senior in right of payment to our existing and future indebtedness, if any, that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries and financing vehicles.
    The following table summarizes the interest expense and amortization of financing costs incurred on the Unsecured Notes for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
(in millions) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019(1)
Interest expense $ 6.0  $ 6.0  $ 17.9  $ 15.8 
Amortization of financing costs $ 0.4  $ 0.3  $ 1.0  $ 0.9 
Weighted average interest rate 5.3  % 5.2  % 5.3  % 5.2  %
Effective interest rate 5.5  % 5.5  % 5.5  % 5.5  %
Average debt outstanding $ 453.3  $ 453.3  $ 453.3  $ 402.0 
(1)For the nine months ended September 30, 2019, amounts reported include interest and amortization of financing costs related to the 2019A Unsecured Notes for the period from April 30, 2019 (issuance date of the 2019A Unsecured Notes) to September 30, 2019.
    As of September 30, 2020 and December 31, 2019, the outstanding balance on the Unsecured Notes was $453.3 million and $453.3 million, respectively, and we were in compliance with the terms of the NPA and the 2018B Indenture as of such dates, as applicable.
    SBA-guaranteed debentures—On August 1, 2014 and August 25, 2017, respectively, SBIC I and SBIC II received SBIC licenses from the SBA to operate as SBICs.
    The SBIC license allows SBICs to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse to us, interest only debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with ten year maturities. The SBA, as a creditor, will have a superior claim to the assets of SBIC I and SBIC II over our stockholders in the event SBIC I and SBIC II are liquidated or the SBA exercises remedies upon an event of default.
    The maximum amount of borrowings available under current SBA regulations for a single licensee is $150.0 million as long as the licensee has at least $75.0 million in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing. In June 2018, legislation amended the 1958 Act by increasing the individual leverage limit from $150.0 million to $175.0 million, subject to SBA approvals.
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    As of September 30, 2020 and December 31, 2019, SBIC I had regulatory capital of $75.0 million and $75.0 million, respectively, and SBA-guaranteed debentures outstanding of $150.0 million and $150.0 million, respectively. As of September 30, 2020 and December 31, 2019, SBIC II had regulatory capital of $75.0 million and $64.5 million, respectively, and $150.0 million and $75.0 million, respectively, of SBA-guaranteed debentures outstanding. The SBA-guaranteed debentures incur upfront fees of 3.435%, which consists of a 1.00% commitment fee and a 2.435% issuance discount, which are amortized over the life of the SBA-guaranteed debentures. The following table summarizes our SBA-guaranteed debentures as of September 30, 2020.
(in millions)
Issuance Date Maturity Date Debenture Amount Interest Rate SBA Annual Charge
Fixed SBA-guaranteed debentures(1):        
March 25, 2015 March 1, 2025 $ 37.5  2.517  % 0.355  %
September 23, 2015 September 1, 2025 37.5  2.829  % 0.355  %
September 23, 2015 September 1, 2025 28.8  2.829  % 0.742  %
March 23, 2016 March 1, 2026 13.9  2.507  % 0.742  %
September 21, 2016 September 1, 2026 4.0  2.051  % 0.742  %
September 20, 2017 September 1, 2027 13.0  2.518  % 0.742  %
March 21, 2018 March 1, 2028 15.3  3.187  % 0.742  %
Fixed SBA-guaranteed debentures(2):
September 19, 2018 September 1, 2028 15.0  3.548  % 0.222  %
September 25, 2019 September 1, 2029 19.0  2.283  % 0.222  %
March 25, 2020 March 1, 2030 41.0  2.078  % 0.222  %
March 25, 2020 March 1, 2030 24.0  2.078  % 0.275  %
September 23, 2020 September 1, 2030 51.0  1.034  % 0.275  %
Total SBA-guaranteed debentures   $ 300.0     
(1)SBA-guaranteed debentures are held in SBIC I.
(2)SBA-guaranteed debentures are held in SBIC II.
    Prior to pooling, the SBA-guaranteed debentures bear interest at an interim floating rate of LIBOR plus 0.30%. Once pooled, which occurs in March and September each year, the SBA-guaranteed debentures bear interest at a fixed rate that is set to the current 10-year treasury rate plus a spread at each pooling date.
    The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three and nine months ended September 30, 2020 and September 30, 2019.
  Three Months Ended Nine Months Ended
(in millions) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Interest expense $ 2.1  $ 1.5  $ 6.0  $ 4.2 
Amortization of financing costs $ 0.2  $ 0.1  $ 0.7  $ 0.4 
Weighted average interest rate 2.8  % 3.3  % 2.8  % 3.3  %
Effective interest rate 3.1  % 3.6  % 3.2  % 3.6  %
Average debt outstanding $ 300.0  $ 176.6  $ 281.1  $ 168.9 
    The SBIC program is designed to stimulate the flow of private investor capital into eligible smaller businesses, as defined by the SBA. Under SBA regulations, SBICs are subject to regulatory requirements, including making investments in SBA-eligible businesses, investing at least 25.0% of its investment capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, regulating the types of financing, prohibiting investments in small businesses with certain characteristics or in certain industries and requiring capitalization thresholds that limit distributions to us. SBICs are subject to an annual periodic examination by an SBA examiner to determine the SBIC's compliance with the relevant SBA regulations and an annual financial audit of its financial statements that are prepared on a basis of accounting other than GAAP (such as ASC 820) by an independent auditor. As of September 30, 2020 and December 31, 2019, SBIC I and SBIC II were in compliance with SBA regulatory requirements.

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Off-Balance Sheet Arrangements
    We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of September 30, 2020 and December 31, 2019, we had outstanding commitments to third parties to fund investments totaling $93.8 million and $203.8 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.
    We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future. As of September 30, 2020 and December 31, 2019, we had commitment letters to purchase investments in an aggregate par amount of $0 and $34.2 million, respectively. As of September 30, 2020 and December 31, 2019, we had not entered into any bridge financing commitments which could require funding in the future.
Contractual Obligations
    A summary of our significant contractual payment obligations as of September 30, 2020 is as follows:
  Contractual Obligations Payments Due by Period
(in millions) Total Less than
1 Year 		1 - 3 Years 3 - 5 Years More than
5 Years
Holdings Credit Facility(1) $ 459.2  $ —  $ 459.2  $ —  $ — 
Unsecured Notes(2) 453.3  90.0  195.0  168.3  — 
SBA-guaranteed debentures(3) 300.0  —  —  103.8  196.2 
DB Credit Facility(4) 242.0  —  —  242.0  — 
Convertible Notes(5) 201.2  —  201.2  —  — 
NMFC Credit Facility(6) 150.5  —  150.5  —  — 
Total Contractual Obligations $ 1,806.2  $ 90.0  $ 1,005.9  $ 514.1  $ 196.2 
(1)Under the terms of the $745.0 million Holdings Credit Facility, all outstanding borrowings under that facility ($459.2 million as of September 30, 2020) must be repaid on or before September 30, 2023. As of September 30, 2020, there was approximately $285.8 million of possible capacity remaining under the Holdings Credit Facility.
(2)$90.0 million of the 2016 Unsecured Notes will mature on May 15, 2021 unless earlier repurchased, $55.0 million of the 2017A Unsecured Notes will mature on July 15, 2022 unless earlier repurchased, $90.0 million of the 2018A Unsecured Notes will mature on January 30, 2023 unless earlier repurchased, $50.0 million of the 2018B Unsecured Notes will mature on June 28, 2023 unless earlier repurchased, $51.8 million of the 5.75% Unsecured Notes will mature on October 1, 2023 unless earlier repurchased and $116.5 million of the 2019A Unsecured Notes will mature on April 30, 2024 unless earlier repurchased.
(3)Our SBA-guaranteed debentures will begin to mature on March 1, 2025.
(4)Under the terms of the $280.0 million DB Credit Facility, all outstanding borrowings under that facility ($242.0 million as of September 30, 2020) must be repaid on or before December 14, 2023. As of September 30, 2020, there was approximately $38.0 million of possible capacity remaining under the DB Credit Facility.
(5)The 2018 Convertible Notes will mature on August 15, 2023 unless earlier converted or repurchased at the holder's option or redeemed by us.
(6)Under the terms of the $188.5 million NMFC Credit Facility, all outstanding borrowings under that facility ($150.5 million as of September 30, 2020) must be repaid on or before June 4, 2022. As of September 30, 2020, there was approximately $38.0 million of available capacity remaining under the NMFC Credit Facility.

    We have entered into an investment management and advisory agreement (the "Investment Management Agreement") with the Investment Adviser in accordance with the 1940 Act. Under the Investment Management Agreement, the Investment Adviser has agreed to provide us with investment advisory and management services. We have agreed to pay for these services (1) a management fee and (2) an incentive fee based on our performance.
    We have also entered into the administration agreement, as amended and restated (the "Administration Agreement") with the Administrator. Under the Administration Agreement, the Administrator has agreed to arrange office space for us and provide office equipment and clerical, bookkeeping and record keeping services and other administrative services necessary to conduct our respective day-to-day operations. The Administrator has also agreed to maintain, or oversee the maintenance of, our financial records, our reports to stockholders and reports filed with the SEC.
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    If any of the contractual obligations discussed above are terminated, our costs under any new agreements that are entered into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under the Investment Management Agreement and the Administration Agreement.
Distributions and Dividends
    Distributions declared and paid to stockholders for the nine months ended September 30, 2020 totaled approximately $91.0 million.
    The following table reflects cash distributions, including dividends and returns of capital, if any, per share that have been declared by our board of directors for the two most recent fiscal years and the current fiscal year to date:
Fiscal Year Ended Date Declared Record Date Payment Date Per Share
Amount (1)
December 31, 2020
Third Quarter July 29, 2020 September 16, 2020 September 30, 2020 $ 0.30 
Second Quarter April 29, 2020 June 16, 2020 June 30, 2020 0.30 
First Quarter February 19, 2020 March 13, 2020 March 27, 2020 0.34 
$ 0.94 
December 31, 2019
Fourth Quarter November 4, 2019 December 13, 2019 December 27, 2019 $ 0.34 
Third Quarter August 1, 2019 September 13, 2019 September 27, 2019 0.34 
Second Quarter May 1, 2019 June 14, 2019 June 28, 2019 0.34 
First Quarter February 22, 2019 March 15, 2019 March 29, 2019 0.34 
$ 1.36 
December 31, 2018
Fourth Quarter November 1, 2018 December 14, 2018 December 28, 2018 $ 0.34 
Third Quarter August 1, 2018 September 14, 2018 September 28, 2018 0.34 
Second Quarter May 2, 2018 June 15, 2018 June 29, 2018 0.34 
First Quarter February 21, 2018 March 15, 2018 March 29, 2018 0.34 
$ 1.36 
(1)Tax characteristics of all distributions paid are reported to stockholders on Form 1099 after the end of the calendar year. For the years ended December 31, 2019 and December 31, 2018, total distributions were $117.4 million and $103.4 million, respectively, of which the distributions were comprised of approximately 72.01% and 83.74%, respectively, of ordinary income, 0.00% and 0.00%, respectively, of long-term capital gains and approximately 27.99% and 16.26%, respectively, of a return of capital. Future quarterly distributions, if any, will be determined by our board of directors.
    We intend to pay quarterly distributions to our stockholders in amounts sufficient to maintain our status as a RIC. We intend to distribute approximately all of our net investment income on a quarterly basis and substantially all of our taxable income on an annual basis, except that we may retain certain net capital gains for reinvestment.
    We maintain an "opt out" dividend reinvestment plan on behalf of our common stockholders, pursuant to which each of our stockholders' cash distributions will be automatically reinvested in additional shares of common stock, unless the stockholder elects to receive cash. See Item 1— Financial Statements—Note 2. Summary of Significant Accounting Policies for additional details regarding our dividend reinvestment plan.
Related Parties
    We have entered into a number of business relationships with affiliated or related parties, including the following:
•We have entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.
•We have entered into the Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges our office space and provides office equipment and administrative
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services necessary to conduct our respective day-to-day operations pursuant to the Administration Agreement. We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to us under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance, and compliance functions, and the compensation of our chief financial officer and chief compliance officer and their respective staffs. Pursuant to the Administration Agreement and further restricted by us, the Administrator may, in its own discretion, submit to us for reimbursement some or all of the expenses that the Administrator has incurred on our behalf during any quarterly period. As a result, the amount of expenses for which we will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to us for reimbursement in the future. However, it is expected that the Administrator will continue to support part of our expense burden in the near future and may decide to not calculate and charge through certain overhead related amounts as well as continue to cover some of the indirect costs. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three and nine months ended September 30, 2020 approximately $0.6 million and $2.0 million, respectively, of indirect administrative expenses were included in administrative expenses, of which approximately $0.6 million and $0.9 million, respectively, were waived by the Administrator. As of September 30, 2020, approximately $0.4 million of indirect administrative expenses were included in payable to affiliates. For the three and nine months ended September 30, 2020, the reimbursement to the Administrator represented approximately 0.00% and 0.04%, respectively, of our gross assets.
•We, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant us, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the name "New Mountain" and "New Mountain Finance".
    In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors, which is available on our website at http://www.newmountainfinance.com. These officers and directors also remain subject to the duties imposed by the 1940 Act and the Delaware General Corporation Law.
    The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, to our investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser's allocation procedures. On October 8, 2019, the SEC issued an exemptive order (the “Exemptive Order”), which superseded a prior order issued on December 18, 2017, which permits us to co-invest in portfolio companies with certain funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions of the Exemptive Order. Pursuant to the Exemptive Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment objective and strategies.
    On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.
    On March 30, 2020, we entered into an unsecured revolving credit facility with NMF Investments III, L.L.C., an affiliate of the Investment Adviser, with a $30.0 million maximum amount of revolver borrowings available and a maturity date of December 31, 2022. On May 4, 2020, we entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30.0 million to $50.0 million. Refer to Borrowings for discussion of the Unsecured Management Company Revolver.
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Item 3.     Quantitative and Qualitative Disclosures About Market Risk
    We are subject to certain financial market risks, such as interest rate fluctuations. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the securities that we hold. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. In addition, in a prolonged low interest rate environment, including a reduction of LIBOR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results. During the nine months ended September 30, 2020, certain of the loans held in our portfolio had floating interest rates. As of September 30, 2020, approximately 94.74% of investments at fair value (excluding investments on non-accrual, unfunded debt investments and non-interest bearing equity investments) represent floating-rate investments with a LIBOR floor (includes investments bearing prime interest rate contracts) and approximately 5.26% of investments at fair value represent fixed-rate investments. Additionally, our senior secured revolving credit facilities are also subject to floating interest rates and are currently paid based on floating LIBOR rates.
    The following table estimates the potential changes in net cash flow generated from interest income and expenses, should interest rates increase by 100, 200 or 300 basis points, or decrease by 25 basis points. Interest income is calculated as revenue from interest generated from our portfolio of investments held on September 30, 2020. Interest expense is calculated based on the terms of our outstanding revolving credit facilities, convertible notes and unsecured notes. For our floating rate credit facilities, we use the outstanding balance as of September 30, 2020. Interest expense on our floating rate credit facilities is calculated using the interest rate as of September 30, 2020, adjusted for the hypothetical changes in rates, as shown below. The base interest rate case assumes the rates on our portfolio investments remain unchanged from the actual effective interest rates as of September 30, 2020. These hypothetical calculations are based on a model of the investments in our portfolio, held as of September 30, 2020, and are only adjusted for assumed changes in the underlying base interest rates. In addition, in a prolonged low interest rate environment, including a reduction of LIBOR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results.
    Actual results could differ significantly from those estimated in the table.
Change in Interest Rates Estimated
Percentage
Change in Interest
Income Net of
Interest Expense (unaudited)
-25 Basis Points 0.21  %
Base Interest Rate —  %
+100 Basis Points 2.35  %
+200 Basis Points 13.79  %
+300 Basis Points 25.23  %


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Item 4.     Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures 
As of September 30, 2020 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
(b)Changes in Internal Controls Over Financial Reporting
Management has not identified any change in our internal control over financial reporting that occurred during the quarter ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
The terms “we”, “us”, “our” and the “Company” refers to New Mountain Finance Corporation and its consolidated subsidiaries.
Item 1.    Legal Proceedings
    We, and our consolidated subsidiaries, the Investment Adviser and the Administrator are not currently subject to any material pending legal proceedings as of September 30, 2020. From time to time, we or our consolidated subsidiaries may be a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition or results of operations.
Item 1A. Risk Factors
    In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which could materially affect our business, financial condition and/or operating results, including the Risk Factor titled "Recent legislation allows us to incur additional leverage, which could increase the risk of investing in our securities". The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. Other than as set forth below, there have been no material changes during the nine months ended September 30, 2020 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019.

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

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

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

This outbreak is having, and any future outbreaks could have, an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things. As of the date of this 10-Q, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on us and our portfolio companies. Any potential impact
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to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio companies’ operating results.

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

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

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

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

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

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

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

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

In past economic downturns, such as the financial crisis in the United States that began in mid-2007 and during other times of extreme market volatility, many commercial banks and other financial institutions stopped lending or significantly curtailed their lending activity. In addition, in an effort to stem losses and reduce their exposure to segments of the economy deemed to be high risk, some financial institutions limited routine refinancing and loan modification transactions and even reviewed the terms of existing facilities to identify bases for accelerating the maturity of existing lending facilities. If these conditions recur, for example as a result of the COVID-19 pandemic, it may be difficult for us to obtain desired financing to finance the growth of our investments on acceptable economic terms, or at all.

So far, the COVID-19 pandemic has resulted in, and until fully resolved is likely to continue to result in, among other things, increased draws by borrowers on revolving lines of credit and increased requests by borrowers for amendments, modifications and waivers of their credit agreements to avoid default or change payment terms, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans. In addition, the duration and
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effectiveness of responsive measures implemented by governments and central banks cannot be predicted. The commencement, continuation, or cessation of government and central bank policies and economic stimulus programs, including changes in monetary policy involving interest rate adjustments or governmental policies, may contribute to the development of or result in an increase in market volatility, illiquidity and other adverse effects that could negatively impact the credit markets and the Company.

If we are unable to consummate credit facilities on commercially reasonable terms, our liquidity may be reduced significantly. If we are unable to repay amounts outstanding under any facility we may enter into and are declared in default or are unable to renew or refinance any such facility, it would limit our ability to initiate significant originations or to operate our business in the normal course. These situations may arise due to circumstances that we may be unable to control, such as inaccessibility of the credit markets, a severe decline in the value of the U.S. dollar, a further economic downturn or an operational problem that affects third parties or us, and could materially damage our business. Moreover, we are unable to predict when economic and market conditions may become more favorable. Even if such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our business.

There is uncertainty surrounding potential legal, regulatory and policy changes by new presidential administrations in the United States that may directly affect financial institutions and the global economy.

The presidential election occurred on November 3, 2020. Changes in federal policy, including tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which lead to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities. The nature, timing and economic and political effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain pending the results of the presidential election. Uncertainty surrounding future changes may adversely affect our operating environment and therefore our business, financial condition, results of operations and growth prospects.

Changes relating to the LIBOR calculation process may adversely affect the value of our portfolio of LIBOR-indexed, floating-rate debt securities.

LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in floating-rate loans we extend to portfolio companies such that the interest due to us pursuant to a term loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR. In the recent past, concerns have been publicized that some of the member banks surveyed by the British Bankers’ Association (“BBA”) in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivative positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are ongoing.

Actions by the ICE Benchmark Administration, regulators or law enforcement agencies as a result of these or future events, may result in changes to the manner in which LIBOR is determined. Potential changes, or uncertainty related to such potential changes may adversely affect the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate debt securities. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or the value of our portfolio of LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us.

On July 27, 2017, the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. In addition, on March 25, 2020, the FCA stated that although the central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed, the outbreak of COVID-19 has impacted the timing of many firms’ transition planning, and the FCA will continue to assess the impact of the COVID-19 pandemic on transition timelines and update the marketplace as soon as possible. It is unclear if after 2021 LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. We have exposure to LIBOR, including in financial instruments that mature after 2021. Our exposure arises from the value of our portfolio of LIBOR-indexed, floating-rate debt securities.

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In the United States, the Federal Reserve Board and the Federal Reserve Bank of New York, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by Treasury securities called the Secured Overnight Financing Rate (“SOFR”). The Federal Reserve Bank of New York began publishing SOFR in April 2018. Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the future of LIBOR at this time is uncertain, including whether the COVID-19 pandemic will have further effect on LIBOR transition plans.

The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for or value of any LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. If LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established. In the event that the LIBOR Rate is no longer available or published on a current basis or no longer made available or used for determining the interest rate of loans, our administrative agent that manages our loans will generally select a comparable successor rate; provided that (i) to the extent a comparable or successor rate is approved by the administrative agent, the approved rate shall be applied in a manner consistent with market practice; and (ii) to the extent such market practice is not administratively feasible for the administrative agent, such approved rate shall be applied as otherwise reasonably determined by the administrative agent.

If the current period of capital market disruption and instability continues for an extended period of time, there is a risk that investors in our equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital.

We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, including the COVID-19 pandemic described above. For example, if the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories in the jurisdictions, including the United States, affected by the COVID-19 pandemic were to continue for an extended period of time it could result in reduced cash flows to us from our existing portfolio companies, which could reduce cash available for distribution to our stockholders. If we violate certain covenants under our existing or future credit facilities or other leverage, we may be limited in our ability to make distributions. If we declare a distribution and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution payments. To the extent we make distributions to stockholders that include a return of capital, such portion of the distribution essentially constitutes a return of the stockholder’s investment. Although such return of capital may not be taxable, such distributions would generally decrease a stockholder’s basis in our common stock and may therefore increase such stockholder’s tax liability for capital gains upon the future sale of such stock. A return of capital distribution may cause a stockholder to recognize a capital gain from the sale of our common stock even if the stockholder sells its shares for less than the original purchase price.

Due to the COVID-19 pandemic or other disruptions in the economy, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur US federal excise tax in order preserve cash and maintain flexibility. 

    As a BDC, we are not required to make any distributions to shareholders other than in connection with our election to be taxed as a RIC under subchapter M of the Code.  In order to maintain our tax treatment as a RIC, we must distribute to shareholders for each taxable year at least 90.0% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses).  If we qualify for taxation as a RIC, we generally will not be subject to corporate-level U.S. federal income tax on our investment company taxable income and net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) that we timely distribute to shareholders.  We will be subject to a 4.0% US federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year, and (iii) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no federal income tax. 

    Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year.  In particular, if we pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, the dividend will be treated for all US federal tax purposes as if it were paid on December 31 of the current year.  In addition, under the Code, we may pay dividends, referred to
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as “spillover dividends,” that are paid during the following taxable year that will allow us to maintain our qualification for taxation as a RIC and eliminate our liability for corporate-level U.S. federal income tax.  Under these spillover dividend procedures, we may defer distribution of income earned during the current year until December of the following year.  For example, we may defer distributions of income earned during 2020 until as late as December 31, 2021.  If we choose to pay a spillover dividend, we will incur the 4% U.S. federal excise tax on some or all of the distribution.

    Due to the COVID-19 pandemic or other disruptions in the economy, we anticipate that we may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility.  For example, we anticipate that we will not be able to increase our dividends.  In addition, we may reduce our dividends and/or defer our dividends to the following taxable year.  If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4.0% U.S. federal excise tax on such amounts.  To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our common stock as discussed below under “We may in the future choose to pay dividends in our own common stock, in which case you may be required to pay tax in excess of the cash you receive.”

We may in the future choose to pay dividends in our own common stock, in which case you may be required to pay tax in excess of the cash you receive.

We may distribute taxable dividends that are payable in part in our common stock. In accordance with certain applicable U.S. Department of Treasury regulations and published guidance issued by the Internal Revenue Service, a publicly offered RIC may treat a distribution of its own stock as fulfilling the RIC distribution requirements if each shareholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all shareholders must be at least 20.0% (which has been temporarily reduced to 10% for distributions declared on or after April 1, 2020, and on or before December 31, 2020) of the aggregate declared distribution. If too many shareholders elect to receive cash, the cash available for distribution must be allocated among the shareholders electing to receive cash (with the balance of the distribution paid in stock). In no event will any shareholder, electing to receive cash, receive less than the lesser of (a) the portion of the distribution such shareholder has elected to receive in cash or (b) an amount equal to his or her entire distribution times the percentage limitation on cash available for distribution. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. Taxable shareholders receiving such dividends will be required to include the amount of the dividends as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. shareholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. shareholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to non-U.S. shareholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock. In addition, if a significant number of our shareholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.

Due to the recent COVID-19 pandemic, shares of BDCs have traded below their respective net asset values ("NAV"). If our shares of common stock trade at a discount from NAV, it could limit our ability to raise equity capital.
    As a result of the COVID-19 pandemic, the stocks of BDCs as an industry, including shares of our common stock, have traded below NAV, at or near historic lows as a result of concerns over liquidity, leverage restrictions and distribution requirements. If our common stock trades below its NAV, we will generally not be able to issue additional shares of our common stock at its market price without first obtaining the approval for such issuance from our stockholders and our independent directors. If additional funds are not available to us, we could be forced to curtail or cease our new lending and investment activities, and our NAV could decrease and our level of distributions could be impacted.

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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
    We did not engage in unregistered sales of equity securities during the nine months ended September 30, 2020.
Issuer Purchases of Equity Securities
Dividend Reinvestment Plan
    During the nine months ended September 30, 2020, as part of our dividend reinvestment plan for our common stockholders, our dividend reinvestment plan administrator purchased 248,201 shares of our common stock for $2.0 million in the open market in order to satisfy the reinvestment portion of our distribution. The following table outlines purchases by our dividend reinvestment plan administrator of our common stock for this purpose during the nine months ended September 30, 2020.
(in thousands, except shares and per share data) Total Number of Weighted Average Price Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the
Period Shares Purchased Paid Per Share or Programs Plans or Programs
January 2020 —  $ —  —  $ — 
February 2020 —  —  —  — 
March 2020 133,539  6.75  —  — 
April 2020 12,551  6.76  —  — 
May 2020 —  —  —  — 
June 2020 —  —  —  — 
July 2020 102,111  9.52 
August 2020 —  —  —  — 
September 2020 —  —  —  — 
Total 248,201  $ 7.89  —  — 

Stock Repurchase Program
    On February 4, 2016, our board of directors authorized a program for the purpose of repurchasing up to $50.0 million worth of our common stock (the "Repurchsae Program"). Under the Repurchase Program, we were permitted, but were not obligated to, repurchase our outstanding common stock in the open market from time to time, provided that we complied with our code of ethics and the guidelines specified in Rule 10b-18 of the Exchange Act, including certain price, market volume and timing constraints. In addition, any repurchases were conducted in accordance with the 1940 Act. On December 31, 2019, our board of directors extended our Repurchase Program and we expect the Repurchase Program to be in place until the earlier of December 31, 2020 or until $50.0 million of outstanding shares of common stock have been repurchased. We did not repurchase any shares of our common stock under the Repurchase Program during the quarter ended September 30, 2020.
Item 3.     Defaults Upon Senior Securities
    None.
Item 4.    Mine Safety Disclosures
    Not applicable.
Item 5.    Other Information
    None.
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Item 6.     Exhibits
(a)Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the United States Securities and Exchange Commission:
Exhibit
Number 		Description
3.1(a)
3.1(b)
3.2 
3.3 
4.1 
10.1 
10.2 
31.1 
31.2 
32.1 
32.2 
(1)Previously filed in connection with New Mountain Finance Holdings, L.L.C.’s registration statement on Form N-2 Pre-Effective Amendment No. 3 (File Nos. 333-168280 and 333-172503) filed on May 9, 2011.
(2)Previously filed in connection with New Mountain Finance Corporation’s quarterly report on Form 10-Q filed on August 11, 2011.
(3)Previously filed in connection with New Mountain Finance Corporation and New Mountain Finance AIV Holdings Corporation report on Form 8-K filed on August 25, 2011.
(4)Previously filed in connection with New Mountain Finance Corporation's report on Form 8-K filed on April 3, 2019.
(5)Previously filed in connection with New Mountain Finance Corporation's report on Form 8-K filed on October 6, 2020.
*    Filed herewith.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 4, 2020.
  NEW MOUNTAIN FINANCE CORPORATION
   
  By: /s/ ROBERT A. HAMWEE
    Robert A. Hamwee
    Chief Executive Officer
    (Principal Executive Officer), and Director
   
  By: /s/ SHIRAZ Y. KAJEE
    Shiraz Y. Kajee
    Chief Financial Officer
    (Principal Financial and Accounting Officer)
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EXHIBIT 10.2

AMENDED AND RESTATED DIVIDEND REINVESTMENT PLAN
OF
NEW MOUNTAIN FINANCE CORPORATION

New Mountain Finance Corporation, a Delaware corporation (the “Corporation”), hereby adopts the following plan (the “Plan”) with respect to net investment income dividends and capital gains distributions declared by its Board of Directors on shares of its Common Stock, par value $0.01 per share (the “Common Stock”).

1. Unless a stockholder specifically elects to receive cash as set forth below, all net investment income dividends and all capital gains distributions hereafter declared by the Board of Directors shall be payable in shares of the Common Stock of the Corporation, and no action shall be required on such stockholder’s part to receive a distribution in stock.

2. Such net investment income dividends and capital gains distributions shall be payable on such date or dates as may be fixed from time to time by the Board of Directors to stockholders of record at the close of business on the record date(s) established by the Board of Directors for the net investment income dividend and/or capital gains distribution involved.

3. The Corporation shall use only newly-issued shares of its Common Stock to implement the Plan if the price at which newly-issued shares are to be credited is equal to or greater than 110% of the last determined net asset value of the shares. The number of shares to be issued to a stockholder shall be determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of the Corporation’s Common Stock at the close of regular trading on The Nasdaq Global Select Market LLC on the valuation date fixed by the Board of Directors for such distribution. Market price per share on that date shall be the closing price for such shares as reported on The Nasdaq Global Select Market LLC or, if no sale is reported for such day, at the average of their electronically-reported bid and asked prices.

4. If the Corporation declares a distribution to stockholders, the Corporation may instruct the Plan Administrator, as defined below, not to credit accounts with newly-issued shares and instead to buy shares in the market if the price at which newly-issued shares are to be credited does not exceed 110% of the last determined net asset value of the shares. Shares purchased in open market transactions by the Plan Administrator shall be allocated to each Participant, as defined below, based upon the average purchase price, excluding any brokerage charges or other charges, of all shares of Common Stock purchased with respect to the applicable distribution.

5. A stockholder may elect from time to time to receive his or its net investment income dividends and capital gains distributions in cash. To exercise this option, such stockholder shall notify American Stock Transfer and Trust Company, LLC, the plan administrator and the Corporation’s transfer agent and registrar (referred to as the “Plan Administrator”), in writing or through the internet at www.amstock.com or the toll free number (888) 333-0212 so that such notice is received by the Plan Administrator no later than three days prior to the payment date fixed by the Board of Directors for the net investment income dividend and/or capital gains distribution. If the request to terminate participation in the Plan is received less than three days prior to the payment date then that dividend will be reinvested, but all subsequent dividends on all balances will be paid out in cash. Such election shall remain in effect (without the requirement to confirm the election) until the stockholder shall notify the Plan Administrator in writing of such stockholder’s withdrawal of the election, which notice shall be delivered to the Plan Administrator no later than three days prior to the payment date fixed by the Board of Directors for the next net investment income dividend and/or capital gains distribution by the Corporation.

6. The Plan Administrator will set up an account for shares acquired pursuant to the Plan for each stockholder who has not so elected to receive dividends and distributions in cash (each a “Participant”). The Plan Administrator will hold each Participant’s shares, together with the shares of other Participants, in non-certificated form in the Plan Administrator’s name or that of its nominee. Upon request by a Participant, received in writing or through the internet at www.amstock.com or the toll free number (888) 333-0212 at any time, the Plan Administrator will, instead of crediting shares to and/or carrying shares in a Participant’s account, issue, to the Participant, a certificate registered in the Participant’s name for the number of whole shares payable to the


Participant and a check for any fractional share less a transaction fee of the lesser of (i) $15.00 and (ii) the price of the fractional share.

7. The Plan Administrator will confirm to each Participant each acquisition made pursuant to the Plan as soon as practicable but not later than 30 business days after the date thereof. Although each Participant may from time to time have an undivided fractional interest (computed to three decimal places) in a share of Common Stock of the Corporation, no certificates for a fractional share will be issued. However, dividends and distributions on fractional shares will be credited to each Participant’s account. In the event of termination of a Participant’s account under the Plan, the Plan Administrator will adjust for any such undivided fractional interest in cash at the market value of the Corporation’s shares at the time of termination.

8. The Plan Administrator will forward to each Participant any Corporation related proxy solicitation materials and each Corporation report or other communication to stockholders, and will vote any shares held by it under the Plan in accordance with the instructions set forth on proxies returned by Participants to the Corporation or the Plan Administrator.

9. In the event that the Corporation makes available to its stockholders rights to purchase additional shares or other securities, the shares held by the Plan Administrator for each Participant under the Plan will be added to any other shares held by the Participant in certificated form in calculating the number of rights to be issued to the Participant.

10. The Plan Administrator’s service fee, if any, and expenses for administering the Plan will be paid for by the Corporation for all purchases made.

11. Each Participant may terminate his or its account under the Plan by so notifying the Plan Administrator via its website at www.amstock.com, by filling out the transaction request form located at the bottom of his or its statement and sending it to the Plan Administrator at American Stock Transfer and Trust Company LLC, P.O. Box 922, Wall Street Station, New York, NY, 10269-0560, Attn: Plan Administration Department, or by calling the Plan Administrator at (888) 333-0212. Such termination will be effective immediately if the Participant’s notice is received by the Plan Administrator more than three days prior to any dividend or distribution payment date. If notice to terminate the Participant’s account is received less than three days prior to a payment date then that dividend or distribution will be reinvested, but all subsequent dividends and distributions will be paid out in cash on all balances. The Plan may be terminated by the Corporation upon notice in writing mailed to each Participant at least 30 days prior to any record date for the payment of any dividend or distribution by the Corporation. Upon any termination, the Plan Administrator will cause a certificate or certificates to be issued for the full shares held for the Participant under the Plan and a cash adjustment for any fractional share to be delivered to the Participant without charge to the Participant. If a Participant elects by his or its written or telephonic or internet notice to the Plan Administrator to have the Plan Administrator sell part or all of his or its shares and remit the proceeds to the Participant, the Plan Administrator is authorized to deduct a $15.00 transaction fee plus a $0.10 per share brokerage commission from the proceeds.

12. These terms and conditions may be amended or supplemented by the Corporation at any time but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing to each Participant appropriate written notice at least 30 days prior to the effective date thereof. The amendment or supplement shall be deemed to be accepted by each Participant unless, prior to the effective date thereof, the Plan Administrator receives written notice of the termination of the Participant’s account under the Plan. Any such amendment may include an appointment by the Plan Administrator in its place and stead of a successor agent under these terms and conditions, with full power and authority to perform all or any of the acts to be performed by the Plan Administrator under these terms and conditions so long as such appointment is approved by the Corporation. Upon any such appointment of any agent for the purpose of receiving dividends and distributions, the Corporation will be authorized to pay to such successor agent, for each Participant’s account, all dividends and distributions payable on shares of the Corporation held in the Participant’s name or under the Plan for retention or application by such successor agent as provided in these terms and conditions.

13. Unless otherwise stated herein, all correspondence concerning the Plan shall be directed to the Plan Administrator by mail at American Stock Transfer and Trust Company LLC, P.O. Box 922, Wall Street Station, New York, NY 10269-0560, or by calling the Plan Administrator, telephonically at (888) 333-0212.



14. The Plan Administrator will at all times act in good faith and use its best efforts within reasonable limits to ensure its full and timely performance of all services to be performed by it under this Plan and to comply with applicable law, but assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by the Plan Administrator’s negligence, bad faith, or willful misconduct or that of its employees or agents.

15. These terms and conditions shall be governed by the laws of the State of New York, without regard to the conflicts of law principles thereof, to the extent such principles would require or permit the application of the laws of another jurisdiction.



EXHIBIT 31.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
 
I, Robert A. Hamwee, Chief Executive Officer of New Mountain Finance Corporation, certify that:
 
1.I have reviewed this quarterly report on Form 10-Q of New Mountain Finance Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Dated this 4th day of November, 2020
/s/ ROBERT A. HAMWEE  
Robert A. Hamwee  



EXHIBIT 31.2
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER
 
I, Shiraz Y. Kajee, Chief Financial Officer of New Mountain Finance Corporation, certify that:
 
1.I have reviewed this quarterly report on Form 10-Q of New Mountain Finance Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Dated this 4th day of November, 2020
/s/ SHIRAZ Y. KAJEE  
Shiraz Y. Kajee  



EXHIBIT 32.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
 
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)
 
In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2020 (the “Report”) of New Mountain Finance Corporation (the “Registrant”), as filed with the United States Securities and Exchange Commission on the date hereof, I, Robert A. Hamwee, the Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:
 
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
 
/s/ ROBERT A. HAMWEE  
   
Name: Robert A. Hamwee  
Date: November 4, 2020  



EXHIBIT 32.2
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER
 
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)
 
In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2020 (the “Report”) of New Mountain Finance Corporation (the “Registrant”), as filed with the United States Securities and Exchange Commission on the date hereof, I, Shiraz Y. Kajee, the Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:
 
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
 
/s/ SHIRAZ Y. KAJEE  
   
Name: Shiraz Y. Kajee  
Date: November 4, 2020