Main Street Capital (MAIN) risk factors, 2026 10-K

RISKS RELATED TO OUR BUSINESS AND STRUCTURE

1. 01Because our Investment Portfolio is recorded at fair value, there is and will continue to be uncertainty as to the value of our portfolio investments34% rewritten
2. 02Our financial condition and results of operations depends on our ability to effectively manage and deploy capital
3. 03We are subject to risks associated with the interest rate environment and changes in interest rates will affect our cost of capital, net investment income and the value of our investments
4. 04We face increasing competition for investment opportunities
5. 05We are dependent upon our key investment personnel for our future success26% rewritten
6. 06Our success depends on our ability to attract and retain qualified personnel in a competitive environment
7. 07Our business model depends to a significant extent upon strong referral relationships
8. 08Our Board of Directors may change our investment objective, operating policies, investment criteria and strategies without prior notice or stockholder approval, the effects of which may be adverse
9. 09We 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
10. 10We are subject to risks related to corporate social responsibility

RISKS RELATED TO OUR INVESTMENTS

1. 11The types of portfolio companies in which we invest involve significant risks and we could lose all or part of our investment
2. 12Economic recessions or downturns could impair our portfolio companies’ performance and certain material defaults by our portfolio companies could harm our operating results
3. 13Rising credit spreads could affect the value of our investments, and rising interest rates make it more difficult for portfolio companies to make periodic payments on their loans
4. 14Inflation could adversely affect the business, results of operations and financial condition of our portfolio companies
5. 15Changes to U.S. tariff, trade and economic policies may have a negative effect on our portfolio companies and, in turn, harm usnew
6. 16We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest
7. 17The lack of liquidity in our investments may adversely affect our business
8. 18We generally will not control our portfolio companies
9. 19Certain material defaults by our portfolio companies could harm our operating results
10. 20Any unrealized depreciation that we experience in our Investment Portfolio may be an indication of future realized losses, which could reduce our income and gains available for distribution21% rewritten
11. 21Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity
12. 22We may not have the funds or ability to make additional investments in our portfolio companies
13. 23There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims
14. 24We may not realize gains from our equity investments
15. 25We may be subject to risks associated with “covenant-lite” loans
16. 26Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments

RISKS RELATED TO LEVERAGE

1. 27Because 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
2. 28___________________________76% rewritten
3. 29(2)In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2025 total assets of at least 2.4%
4. 30Substantially all of our assets are subject to security interests under our senior securities, and if we default on our obligations under our senior securities, we may suffer adverse consequences, including foreclosure on our assets
5. 31We are subject to risks associated with any revolving credit facility that utilizes a Structured Subsidiary as our interests in any Structured Subsidiary are subordinated and we could be prevented from receiving cash on our equity interests from a Structured Subsidiary23% rewritten
6. 32The ability to sell investments held by a Structured Subsidiary is limited
7. 33We may invest in derivatives or other assets that expose us to certain risks, including market risk, liquidity risk and other risks similar to those associated with the use of leverage

RISKS RELATED TO OUR INVESTMENT MANAGEMENT ACTIVITIES

1. 34Our executive officers and employees, through the External Investment Manager, manage other investment funds that operate in the same or a related line of business as we do, and may invest in such funds, which may result in significant conflicts of interest48% rewritten
2. 35We, through the External Investment Manager, derive revenues from managing third-party funds pursuant to management agreements that may be terminated

RISKS RELATED TO BDCs

1. 36Operating under the constraints imposed on us as a BDC and RIC may hinder the achievement of our investment objectives
2. 37Failure to maintain our status as a BDC would reduce our operating flexibility
3. 38Regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital

RISKS RELATED TO OUR SECURITIES

1. 39Investing in our securities may involve a high degree of risk
2. 40Shares of closed-end investment companies, including BDCs such as us, may trade at a discount to their NAV per share
3. 41The market price of our securities may be volatile and fluctuate significantly
4. 42We may not be able to pay distributions to our stockholders, our distributions may not grow over time and a portion of distributions paid to our stockholders may be a return of capital
5. 43Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current NAV per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock
6. 44Our common stockholders’ interest in us will be diluted if we issue additional shares of common stock, which could reduce the overall value of their investmentnew
7. 45Provisions of the Maryland General Corporation Law and our articles of amendment and restatement and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock
8. 46We may in the future determine to issue preferred stock, which could adversely affect the market value of our common stock
9. 47Our credit ratings may not reflect all risks of an investment in our debt securitiesnew
10. 48Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stocknew

RISKS RELATED TO OUR SBIC FUNDS

1. 49We, through the Funds, issue debt securities guaranteed by the SBA and sold in the capital markets. As a result of its guarantee of the debt securities, the SBA has fixed dollar claims on the assets of the Funds that are superior to the claims of our securities holders
2. 50The Funds are licensed by the SBA, and therefore subject to SBIC regulations
3. 51Each 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
4. 52We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code
5. 53We may have difficulty paying the distributions required to maintain RIC tax treatment under the Code if we recognize income before or without receiving cash representing such income
6. 54We 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
7. 55Stockholders may have current tax liability on dividends they elect to reinvest in our common stock but would not receive cash from such dividends to pay such tax liability
8. 56Legislative or regulatory tax changes could adversely affect our stockholders
9. 57Events outside of our control, including public health crises, supply chain disruptions and inflation, could negatively affect us and our portfolio companies and the results of our operations
10. 58Market conditions may materially and adversely affect debt and equity capital markets in the U.S. and abroad, which may have a negative impact on our business and operations
11. 59The failure in cybersecurity systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively
12. 60We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends
13. 61Failure to comply with applicable laws or regulations and changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy
14. 62Uncertainty about presidential administration initiatives could negatively impact our business, financial condition and results of operations
15. 63We may experience fluctuations in our operating results
16. 64Technological innovations and industry disruptions may negatively impact us
17. 65We are subject to risks associated with artificial intelligence and machine learning technology