Chicago Atlantic BDC, Inc.

What they do

LIEN is a closed-end, non-diversified management investment company that has elected BDC status under the 1940 Act and RIC tax treatment under Subchapter M. It invests in companies in highly complex and highly regulated industries underserved by other capital providers, primarily across the cannabis ecosystem. It targets first lien secured, fixed and floating rate debt with terms of two to four years, typically loans not rated or rated below investment grade. It is externally managed and administered by Chicago Atlantic BDC Advisers, LLC.

Revenue drivers

• Debt investment income — Interest on a portfolio described as 100% senior secured debt, with a weighted average yield on debt investments of 16.0% at June 30, 2026. Total investment income was $14.0 million in Q2 2026 and $16.7 million in Q1 2026.
• Cannabis-focused direct lending — The main stated focus is direct origination of loans to privately held cannabis companies, which management says are underserved by other capital providers. The portfolio held approximately $334.8 million at fair value across 37 portfolio companies at June 30, 2026.
• Equity and equity-related investments — The company expects to receive nominally priced equity warrants and may make direct equity investments alongside debt, with the portion of the portfolio that may include derivatives such as total return swaps.
• Other lending opportunities — Beyond cannabis, the company may invest in growth and technology companies, esoteric and asset-based lending, and liquidity solutions. Borrowers generally have up to $100 million of EBITDA and loans typically pay PRIME or SOFR plus a premium.

Recent performance

For the quarter ended June 30, 2026, total investment income was $14.0 million ($0.61 per share) and net investment income was $7.7 million ($0.34 per share), down from $16.7 million and $10.0 million, respectively, in Q1 2026. Net change in unrealized gains (losses) was $(1.6) million, and net increase in net assets resulting from operations was $6.1 million ($0.27 per share). Total assets fell to $344.0 million from $373.1 million at March 31, 2026, and net asset value per share declined to $13.26 from $13.33. Total net assets were $302.5 million, outstanding borrowings were $27.0 million, and the debt-to-equity ratio was 0.09x. Management attributed the decline in portfolio fair value primarily to repayments and amortization rather than credit deterioration or valuation markdowns.

Strategy

LIEN seeks to maximize risk-adjusted returns on equity by generating current income from debt investments and capital appreciation from equity and equity-related investments, primarily in secured debt of privately held businesses. Investment selection emphasizes first lien secured loans and the company says loans generally carry a complete set of financial maintenance covenants, though it may also invest in covenant-lite loans. The portfolio is currently 100% senior secured debt, and management cites no loans on non-accrual status and steady portfolio risk ratings. On May 11, 2026, the company filed a shelf registration statement that, once effective, would allow issuance of up to $500 million of securities including debt securities. The company is externally managed under an Investment Advisory Agreement re-approved by the Board on May 12, 2025; the expense limitation agreement that capped operating expenses at an annualized 2.15% of net assets expired on September 30, 2025 and was not renewed.

Risks

• Cannabis industry concentration — The portfolio is focused on cannabis companies, a highly regulated industry, so regulatory changes affecting cannabis borrowers could materially affect loan performance.
• Collateral limitations — Certain attractive assets of cannabis borrowers, such as cannabis licenses and cannabis inventory, may not be able to be used as collateral or transferred to the company.
• Below-investment-grade credit — Loans typically are not rated or are rated below investment grade, or 'high-yield'/'junk,' and may carry higher risk than debt rated above investment grade.
• Covenant-lite exposure — The company may invest in covenant-lite loans whose incurrence-based covenants may only be tested or breached following affirmative borrower action, giving fewer rights against a borrower and greater risk of loss.

Outlook

Management said the second quarter reflected continued portfolio strength and disciplined underwriting, and that the decline in portfolio fair value came primarily from repayments and amortization rather than credit deterioration or markdowns. The company reported $73.9 million of liquidity at June 30, 2026, including $0.9 million of cash and $73.0 million available on its $100.0 million senior credit facility. Management cited a pipeline of approximately $1.1 billion, noted that several anticipated fundings shifted into the third quarter due to transaction timing, and said it sees strong borrower demand. Subsequent to quarter end, one $25.0 million position was funded to a new portfolio company, and as of August 12, 2026 the company had $53.5 million outstanding on the facility and approximately $47.2 million of liquidity.