Mickey Schleien: That’s really, really helpful, Ed. And if I could follow that up. You mentioned the, I don’t remember what you want to call it frothiness in the upper middle market, but let’s just say a very active upper middle market. I mean part of your playbook is to invest in companies that will grow and succeed. And I imagine some of your portfolio companies have done that pretty well and could look to potentially refinance into the upper middle market. How concerned are you about that refinancing risk in your portfolio?
Ed Ross: Not terribly. I mean those are investments. I think you’re exactly right. We have some companies, and we continue to support those companies that are performing extremely well. And could they get refinanced at lower rates at some point in time in the future and the next 12 months or what have you. And the answer to that is yes. I think — at the same time, we add a lot of value to portfolio of companies. We’ve got strong relationships, but they’re built on trust and adding value. And so — but your point is a good one. That is a part of the market today. And so it is our expectation that there’ll be some of that activity, whether it’s Q3 or Q4 or into next year. That’s a piece of the puzzle for sure. It’s not alarming to us. It’s just — it’s part of the equation.
Mickey Schleien: I understand. And my last question regarding balance sheet leverage. You’re still below your target, which I believe is debt to equity of $0.8 million to up $1.1 million. I understand that, that takes into account a lot of different moving parts. But with the discussion you just had about pressure on portfolio yields, are you hoping to increasing balance sheet leverage to continue to deliver financial performance at the BDC?
Ed Ross: Great question, Mickey. The answer to that is yes. We’re trying to do what makes sense for our shareholders on a long-term basis. As you know, there’s been some turmoil in the debt markets here recently in particular, the unsecured and the treasury markets, which impact those markets. We do have other ways to access capital, right? We have our revolver, which has a strong liquidity position. And then we also have the ability to increase the size of the revolver. I’d say look at our capital structure, the revolver is probably smallish in nature relative to most other BDCs. So — and then we have the SBIC application that we obviously applied for that in December, and we knew it was going to take a while. We were told that.
And that continued — we continue to be in the queue there. But that will be part of the equation for us as well. So the answer is yes, absolutely. But we’re trying to do it in a methodical manner and do what’s right for our shareholders over the long term. If that makes sense.
Operator: The next question will come from Bryce Rowe with B. Riley.
Bryce Rowe: I wanted to maybe follow up just on those comments you made, Ed, about the SBA license and maybe expanding the credit facility, maybe any color around where you’d like to see the credit facility go in terms of commitment. And then I think last quarter, you talked about the SBA license, the newer one, maybe being in place by the middle of this year. Is that still your expectation from a timing perspective?
Ed Ross: I think the SBA license is a tough one. I think the — I think the SBA, they told us it was going to take a while, and it’s just hard to predict. I think June, if I sit here today where I don’t have any real new information, I’d say, hey, that’s a little aggressive. I do think things are moving along, but timing is very tough to predict and probably June is a little aggressive. I would assume Q3 or Q4 at this point. From a credit facility perspective, I don’t know that we have a specific target, but I will say that we are looking to — we’re thinking about as we sit here today, increasing the size of the facility. And I think that makes sense. And going back to strategy from a capital structure perspective, I think diversity is important.
So having secured piece of the puzzle is important, have an unsecured being a large piece of it, and that includes SBIC debentures. I mean all of those are pieces of the puzzle that we like. And I think we’ve got an ability to increase leverage in all 3 areas. It’s just a matter of kind of picking the time, if you will.
Bryce Rowe: Okay. Okay. I wanted to maybe follow up on that adjective to use spotty in terms of kind of quality that you’re seeing in the market today what does that mean in particular?
Ed Ross: For us, we’re looking for a pretty high quality, high free cash flow, generally high multiple meaning EBITDA multiple transactions, so high value-add businesses. And in terms of the stars aligning where the sponsor wins and we’re well positioned, there’s just less of those opportunities this quarter relative to last quarter. And so it’s just — it’s a little bit is just mix. And I do think luck’s not the right word, but sometimes it’s just good fortune things kind of fall in place and other times, they don’t as much. But we are being very, very careful. We’re looking at the cream of the crop from a quality — asset quality perspective, and there are fewer of those companies out there. And then if we don’t have the right equation, if you will, whether the sponsor doesn’t win or we don’t have the right financing facility, then maybe that transaction doesn’t happen.
And so that’s just the quality for us has been at a very important marker always. But we’re sticking to our knitting and really focusing on those types of businesses and hopefully, that’s helpful, but that’s really what I’m getting at.
Bryce Rowe: Yes. Yes. Maybe 1 here on credit quality. Any way to kind of quantify where leverage in the portfolio is weighted average leverage and what you’re seeing from a kind of a weighted average loan-to-value perspective at this point, too?
