Saratoga Investment Funding II (SIF II), a wholly-owned subsidiary of Saratoga Investment, a business development company, closed a $50 million senior secured credit facility with Encina Lender Finance. The facility will be supported by loans held by SIF II and pledged to Encina under the terms of the credit agreement. The facility closed on Oct. 4. SIF II may request an increase in the commitment amount up to $75 million during the first two years of the facility.

The terms of the facility require a minimum drawn amount of $12.5 million at all times during the first six months, which increases to the greater of $25 million or 50% of the commitment amount in effect at any time thereafter. The term of the facility is three years. The interest rate on the borrowings under the facility is LIBOR plus 4%, with LIBOR having a floor of 0.75%.

Concurrently with the closing of this facility, all remaining amounts outstanding on Saratoga’s existing revolving credit facility with Madison Capital Funding were repaid and the facility terminated.

“We are pleased to close this credit facility with Encina, which provides the company with a great deal of flexibility as we assess our needs and seek to optimize our overall capital structure. Encina has been an excellent partner in this process and we appreciate the opportunity to establish this new relationship with them,” Christian L. Oberbeck, chairman and CEO of Saratoga Investment, said.

“Encina Lender Finance is pleased that Saratoga Investment has selected us as a key senior debt capital partner,” Luke Graham, CEO of Encina Lender Finance, said. “The company’s management team has a long and distinguished track record of success and we look forward to supporting them in achieving Saratoga Investment’s future goals and objectives.”