1396440--3/10/2010--Main_Street_Capital

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RISKS RELATING TO ECONOMIC CONDITIONS The current state of the economy and financial markets increases the likelihood of adverse effects on our financial position and results of operations. Continued economic adversity could impair our portfolio companies' financial positions and operating results and affect the industries in which we invest, which could, in turn, harm our operating results. RISKS RELATING TO OUR BUSINESS AND STRUCTURE Our investment portfolio is and will continue to be recorded at fair value, with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our estimate of fair value and, as a result, there is and will continue to be uncertainty as to the value of our portfolio investments. Our financial condition and results of operations depends on our ability to effectively manage and deploy capital. We may face increasing competition for investment opportunities. We are dependent upon our key investment personnel for our future success. Our success depends on attracting and retaining qualified personnel in a competitive environment. Our business model depends to a significant extent upon strong referral relationships, and our inability to maintain or develop these relationships, as well as the failure of these relationships to generate investment opportunities, could adversely affect our business. We have a limited operating history as a BDC and as a RIC. Regulations governing our operation as a BDC will affect our ability to, and the way in which we raise additional capital. The Funds are licensed by the SBA, and therefore subject to SBA regulations. Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us. Assumed Return on Our Portfolio(1) (net of expenses) SBIC regulations limit the outstanding dollar amount of SBA-guaranteed debentures that may be issued by an SBIC or group of SBICs under common control. We may experience fluctuations in our quarterly results. Our Board of Directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse. We will be subject to corporate-level income tax if we are unable to qualify as a RIC under Subchapter M of the Code. We may not be able to pay you dividends, our dividends may not grow over time, and a portion of dividends paid to you may be a return of capital. We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income. We may in the future choose to pay dividends in our own stock, in which case you may be required to pay tax in excess of the cash you receive. Each of the Funds, as an SBIC, may be unable to make distributions to us that will enable us to meet or maintain RIC status, which could result in the imposition of an entity-level tax. Because we intend to distribute substantially all of our income to our stockholders to maintain our status as a RIC, we will continue to need additional capital to finance our growth, and regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital. Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock. Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy. Terrorist attacks, acts of war or natural disasters may affect any market for our common stock, impact the businesses in which we invest and harm our business, operating results and financial condition. RISKS RELATED TO OUR INVESTMENTS Our investments in portfolio companies involve higher levels of risk, and we could lose all or part of our investment. The lack of liquidity in our investments may adversely affect our business. We may not have the funds or ability to make additional investments in our portfolio companies. Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies. There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims. Second priority liens on collateral securing loans that we make to our portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us. We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer. We generally will not control our portfolio companies. Defaults by our portfolio companies will harm our operating results. Any unrealized losses we experience on our loan portfolio may be an indication of future realized losses, which could reduce our income available for distribution. Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity. Changes in interest rates may affect our cost of capital and net investment income. We may not realize gains from our equity investments. RISKS RELATING TO OUR COMMON STOCK Shares of closed-end investment companies, including BDCs, may trade at a discount to their net asset value. We may be unable to invest a significant portion of the net proceeds from an offering or from exiting an investment or other capital on acceptable terms, which could harm our financial condition and operating results. Our marketable securities and idle funds investments are subject to risks including risks similar to our portfolio company investments in the lower middle market. Investing in our common stock may involve an above average degree of risk. The market price of our common stock may be volatile and fluctuate significantly. Provisions of the Maryland General Corporation Law and our articles of incorporation and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.

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1396440--3/10/2010--Main_Street_Capital_CORP