SAR (Saratoga Investment Corp.) Expands Valley Credit Facility to $110 Million
View the SAR Dividend Stock Profile
Saratoga Investment expanded its Valley National Bank credit facility on October 8, 2026, raising available borrowings from $85 million to $110 million. It disclosed the change in an October 9 filing.
The agreement also permits requests to increase the facility to $135 million during its first two years, subject to conditions and a fee. That further increase is an option, not money already committed.
Saratoga lends to businesses and earns interest. A larger facility can help it finance more loans, but shareholders benefit only when the income from those loans exceeds borrowing costs, fees and other expenses. We welcome useful lending capacity while keeping our attention on what reaches shareholders per share.
The bank also allowed more concentration in the loans backing this facility. The healthcare limit rose from 25% to 35%, and the limit for the three largest borrowers rose from 30% to 35%, using the agreement’s collateral-value definitions. These are limits on permitted exposure, not a report that Saratoga has already reached them. More flexibility also makes the performance of larger borrowers worth watching closely.
The latest earnings explain why more borrowing room alone is not enough. For the quarter ended August 31, Saratoga reported $0.46 per share of adjusted net investment income against $0.75 in dividends. Adjusted net investment income is the company’s measure of income after expenses, with an adjustment for temporary overlapping borrowing costs. The gap was $0.29 per share.
We remain cautious about dividend support. The facility expansion is a new financing step, not a new earnings result. The next quarterly report should show whether additional lending produces more income per share after costs. Stronger borrower performance and a wider margin between lending income and financing costs would help. Growth that adds little to that margin would leave the dividend question unresolved.
Sources
- October 9 credit-facility filing
- October 8 amendment and facility conditions
- August-quarter financial results released October 6
This article is general information, not personalized investment advice. Fly High Investing may hold securities discussed in this article.