Great Elm Capital Corp. (GECC): Business Model Canvas [Dec-2025 Updated]

You're digging into Great Elm Capital Corp. (GECC) to see exactly how this Business Development Company (BDC) consistently delivers that high-yield return you're after. Honestly, their model hinges on sourcing and underwriting senior secured debt for middle-market companies, managing an investment portfolio valued at about $\mathbf{\$325.1}$ million at fair value as of Q3 2025. The real juice comes from that $\mathbf{11.5\%}$ weighted average current yield on their debt investments, which funds their $\mathbf{\$0.37}$ per share quarterly distribution. It's all managed externally through Great Elm Capital Management, LLC, which is a key structural choice you need to see laid out. Dive below to map out the nine blocks of their engine-it's a precise blueprint for generating income in this space.

Great Elm Capital Corp. (GECC) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that let Great Elm Capital Corp. (GECC) operate its investment strategy, especially since the management structure is external. These partnerships are critical for deploying capital and managing the portfolio, so let's look at the hard numbers defining these ties as of late 2025.

External management agreement with Great Elm Capital Management, LLC (GECM)

The relationship with Great Elm Capital Management, LLC (GECM), a subsidiary of Great Elm Group, Inc. (GEG), is defined by the Investment Management Agreement. This structure means GECM earns fees for managing GECC's assets. Here's how the fee structure works:

• Base management fee is calculated at an annual rate of 1.50% per annum of Average Gross Assets (total assets excluding cash or cash equivalents but including assets purchased with leverage).
• The Incentive Fee has two parts: an Income Incentive Fee and a Capital Gains Incentive Fee.
• The Capital Gains Incentive Fee is 20% of the cumulative realized capital gains, less cumulative realized capital losses and unrealized capital depreciation, calculated from April 1, 2022.

This external management setup is key; it means GECM is directly incentivized by the asset base size and performance, so their success is tied to GECC's.

Strategic institutional investors like Poor Richard LLC/Booker Smith affiliate

Investor confidence is cemented through direct capital raises, like the one in August 2025. This partnership provides immediate balance sheet strength for new deployments.

Here are the specifics from that August 2025 transaction:

Also, Booker Smith joined the Great Elm Group, Inc. Board of Directors, bringing expertise in corporate credit and real estate, which directly supports GECC's investment verticals.

Counterparties in the CLO Formation Joint Venture (CLO JV)

The CLO Formation JV, LLC, is a major operational partnership for structured finance exposure. While specific counterparty names aren't always public, the scale of the JV's activity shows the depth of this relationship.

• As of June 30, 2025, the CLO JV held majority equity positions in three CLOs.
• These CLOs provided exposure to $1.1 billion of underlying assets.
• GECC received $4.3 million in cash distributions from the CLO JV during the second quarter ended June 30, 2025.

A new direct CLO equity position priced in March 2025 and closed in April 2025, with the first distribution expected in October 2025, indicating ongoing deal flow with the JV's structure. That's a definite near-term income driver.

Co-investors and syndication partners for club deals in corporate credit

When GECC enters club deals for corporate credit, they are partnering with other capital providers to take larger or more diversified positions. While the specific co-investors for every deal aren't itemized, the scale of GECC's direct corporate credit portfolio gives you a sense of the asset class where these partnerships occur.

As of the third quarter ended September 30, 2025, Great Elm Capital Corp.'s direct corporate credit exposure was:

These figures represent the portion of the portfolio where syndication partners are likely active to share risk and access deal flow. Finance: draft the Q4 2025 capital deployment forecast by next Tuesday.

Great Elm Capital Corp. (GECC) - Canvas Business Model: Key Activities

You're looking at the core engine of Great Elm Capital Corp. (GECC) as of late 2025. The key activities here are all about deploying capital smartly, managing the balance sheet efficiently, and growing the Specialty Finance arm.

Sourcing and underwriting secured debt for middle-market companies.

The primary activity is sourcing and underwriting debt, focusing heavily on secured positions for middle-market companies. This is where the day-to-day investment work happens. You want to see a high allocation to senior secured assets for downside protection; that's the playbook.

Here's a snapshot of the corporate credit portfolio as of September 30, 2025:

The deployment pace in the third quarter of 2025 showed continued origination activity:

• Deployed approximately $56.6 million during Q3 2025.
• This deployment covered 36 new investments.
• The weighted average current yield on these new deals was 10.7%.

This focus on secured debt is central to their risk management strategy.

Active portfolio management, including monetizing non-yielding assets.

Managing the existing book means actively harvesting returns and cleaning up underperforming assets. This is crucial for maintaining the yield profile and freeing up capital for new, better opportunities.

In the third quarter of 2025, Great Elm Capital Corp. was busy monetizing assets:

• Monetized, in part or in full, 40 investments.
• Total proceeds from these monetizations were approximately $42.9 million.
• These sales/paydowns realized a weighted average current yield of 13.3%.
• Mandatory debt paydowns and redemptions accounted for $28.2 million of the total.

Honestly, the plan was to continue this cleanup, with management expecting to begin harvesting non-yielding assets in excess of $20 million as they moved into the final quarter of 2025. The total investment income for Q3 2025 was $10.6 million, though Net Investment Income (NII) was down to $2.4 million (or $0.20 per share) due to other factors like uneven CLO distributions.

Capital structure management, like refinancing the 8.75% GECCZ Notes.

You can't run a debt investment business without constantly optimizing the cost and maturity of your own liabilities. Great Elm Capital Corp. made significant moves here to lower borrowing costs.

The key action was retiring the high-cost debt:

• Successfully refinanced the 8.75% GECCZ Notes (due 2028).
• Redeemed all $40 million principal amount of the 8.75% Notes in September 2025.
• Issued $50 million principal amount of new 7.75% GECCG Notes (due 2030).
• An over-allotment option added another $7.5 million of the 7.75% Notes.

This refinancing effort saves approximately $0.4 million in annual cash interest expense, which translates to about $0.03 per share based on the share count as of September 30, 2025. Furthermore, the revolving credit facility was doubled in size, and its interest rate was reduced. As of September 30, 2025, total debt outstanding (par value) stood at $205.4 million, and the company had $0 drawn on its now $50.0 million available revolver.

Growing the Specialty Finance platform, including Great Elm Commercial Finance.

The Specialty Finance platform, overseen by Great Elm Specialty Finance (GESF), is a distinct growth vector. It involves building equity stakes in specialty finance companies (SFCs) to generate proprietary investment exposure.

Here are the figures for the Specialty Finance investment as of September 30, 2025:

The platform itself is scaling its operations. Great Elm Commercial Finance, rebranded in April 2025, saw its back leverage facility upsized by more than 20% in July 2025. This operational growth translated to increased distributions back to GECC; GESF increased its distribution to GECC to approximately $450,000 in Q3 2025, up from $120,000 in the prior quarter. Finance: draft 13-week cash view by Friday.

Great Elm Capital Corp. (GECC) - Canvas Business Model: Key Resources

You're looking at the core assets Great Elm Capital Corp. (GECC) relies on to execute its investment strategy. These aren't just line items; they are the engines of the business.

The most tangible resource is the investment base itself. As of the third quarter of 2025, Great Elm Capital Corp. held total investments valued at $325.1 million at fair value. This portfolio is heavily weighted toward corporate credit.

Access to capital markets is a critical, ongoing resource. Great Elm Capital Corp. actively manages its liability structure to fund these investments. In September 2025, the company executed a significant liability management transaction.

• Issued $50 million principal amount of 7.75% Notes due December 31, 2030 (GECCG), resulting in net proceeds of approximately $48.1 million.
• Redeemed all $40 million principal amount of the higher-cost 8.75% Notes due September 30, 2028 (GECCZ).
• Total debt outstanding (par value) stood at $205.4 million as of September 30, 2025.
• Pro forma for the over-allotment option on the new notes, the debt-to-equity ratio is approximately 1.5x.

Liquidity management is key to deploying capital opportunistically. Great Elm Capital Corp. bolstered its credit access in August 2025.

The revolving credit facility was amended to double the committed capacity, giving the firm immediate dry powder when needed. As of September 30, 2025, the firm had substantial liquidity available.

• Revolving Credit Facility capacity increased from $25.0 million to $50.0 million, with the potential to reach $90.0 million under certain circumstances.
• Availability on the Revolver was $50.0 million as of September 30, 2025, with $0 drawn.
• Cash and money market fund investments totaled approximately $24.3 million at the same date.

The management team's proprietary origination and credit expertise is the intangible resource that sources and vets these deals. This expertise dictates the quality of the $325.1 million portfolio and the weighted average current yield on the debt portfolio, which was 11.5% as of the end of Q3 2025. The team also managed to deploy approximately $56.6 million into 36 new investments during the quarter at a weighted average current yield of 10.7%. Finance: draft Q4 2025 liquidity projection by next Tuesday.

Great Elm Capital Corp. (GECC) - Canvas Business Model: Value Propositions

You're looking at what Great Elm Capital Corp. (GECC) offers its investors and borrowers-the core reasons they choose this Business Development Company (BDC) over others. It boils down to income, access to unique assets, and a focus on secured lending for middle-market firms.

High Current Income for Investors

The immediate draw for many is the consistent cash return. The Board of Directors approved a quarterly cash distribution of $0.37 per share for the quarter ending December 31, 2025. This level of distribution was maintained from the third quarter of 2025. To put that in perspective, based on the November 3, 2025 closing price of $7.48, that quarterly payout translates to an annualized yield of 19.8%. Even when measured against the Net Asset Value (NAV) per share of $10.01 as of September 30, 2025, the distribution represents a 14.8% annualized yield. This distribution level was an increase from earlier in the year, moving to $0.37 per share from $0.35 per share starting in Q1 2025.

Here's a quick look at the recent distribution history:

Access to Bespoke, Higher-Yield Investments

Great Elm Capital Corp. offers investors exposure to investments that are not easily accessible in the broader liquid credit markets. This is achieved through two key areas:

• Investment in the CLO JV (Collateralized Loan Obligation Joint Venture).
• Direct investment in Great Elm Specialty Finance.

As of September 30, 2025, CLO investments stood at approximately $52.3 million, making up 16.1% of the fair market value of total investments. The platform itself targets returns in the high teens to 20% over time. Furthermore, the Great Elm Specialty Finance segment, which includes asset-based lending and factoring, represented an investment of approximately $44.7 million as of September 30, 2025. The distribution from this segment to GECC was strong in the third quarter, increasing to about $450,000 from $120,000 the prior quarter. This focus is part of a strategy to increase the percentage of assets in specialty finance companies to a target of approximately 50%.

Flexible Capital Solutions for Middle-Market Companies

For companies needing capital, Great Elm Capital Corp. provides flexible solutions, generally targeting the middle market. You should know that Great Elm Capital Corp. typically defines middle market companies as those with an enterprise value between $100 million and $2 billion. The firm invests in debt instruments and also makes equity investments, sometimes between $3 million and $10 million in companies with revenues between $3 million and $75 million. This focus on the middle market is central to their direct lending approach.

Emphasis on Senior Secured Debt

The portfolio structure is designed for defense and risk adjustment by prioritizing secured debt. The strategy is to invest in secured and senior secured debt instruments. As of September 30, 2025, first lien loans made up 2/3 of the corporate portfolio. The corporate credit portion of the portfolio, which includes these debt investments, totaled approximately $189.3 million, representing 58.2% of the fair market value of total investments. The weighted average current yield on the entire debt portfolio as of that date was 11.5%. This emphasis on secured positions is a deliberate choice to enhance portfolio quality and maintain a focus on income-generating assets that offer sufficient downside protection.

Finance: draft 13-week cash view by Friday.

Great Elm Capital Corp. (GECC) - Canvas Business Model: Customer Relationships

You're looking at how Great Elm Capital Corp. (GECC) manages its two distinct sets of customers: the public shareholders who provide capital and the portfolio companies that receive it. The relationship management here is a balancing act between public market transparency and private deal-making intimacy.

Transactional and transparent relationship with public shareholders via NASDAQ

For the public shareholders trading on NASDAQ, the relationship is primarily transactional, built on clear, regular disclosures of financial health. You see this in the commitment to the dividend, even when earnings dip. For instance, the Board approved a quarterly cash distribution of $0.37 per share for the quarter ending December 31, 2025. This distribution equated to a 14.8% annualized dividend yield based on the September 30, 2025, Net Asset Value (NAV) per share of $10.01. Still, the market sees the volatility; the NAV per share had dropped from $12.10 to $10.01 as of September 30, 2025, largely due to unrealized losses on First Brands investments. The company's total investment income for that quarter was $10.6 million. The relationship is also transparent about capital structure, noting total debt outstanding was approximately $205.4 million as of September 30, 2025, while cash and money market securities stood at about $24.3 million. Furthermore, the board authorized a new share repurchase program for up to $10 million of common shares, a direct action aimed at supporting shareholder value.

Here's a quick look at the ownership structure as of mid-2025, showing who is holding the stock:

High-touch, direct relationship with portfolio companies for debt origination

When it comes to the portfolio companies, the relationship shifts to be very hands-on, especially for debt origination. Great Elm Capital Corp. sources these transactions directly with issuers, which is the definition of a high-touch approach. This focus is evident in the portfolio composition as of September 30, 2025. The corporate credit portfolio held 64 debt investments totaling approximately $189.3 million, which made up 58.2% of the fair market value of total investments. The direct relationship also involves active portfolio management, as seen by the monetization of 40 investments during the third quarter for about $42.9 million, with debt paydowns yielding an average of 14.3%. Management is actively working to prune the book, expecting to harvest non-yielding assets in excess of $20 million to redeploy into new, cash-generating deals. This direct engagement is necessary to manage risk and secure the income stream that supports the public dividend.

Regular investor communication through quarterly earnings calls and presentations

Keeping the public informed requires a schedule of regular, formal check-ins. Great Elm Capital Corp. uses quarterly earnings calls and accompanying presentations to bridge the gap between private investment activity and public market expectations. For example, the Q3 2025 financial results were discussed on a conference call held on November 5, 2025, at 8:30 a.m. ET. The company provided an accompanying slide presentation to help investors digest the figures, such as the drop in Net Investment Income (NII) to $2.4 million, or $0.20 per share, from $5.9 million in the prior quarter. Management used these calls to explain the drivers, like uneven CLO joint venture distributions and the lack of a preference share dividend, while also setting expectations for recovery in Q4 2025. This structured communication is how Great Elm Capital Corp. maintains credibility with its diverse investor base.

• The Q3 2025 earnings call provided details on the 23.81% negative surprise in EPS versus forecasts.
• The company raised approximately $27 million of equity during Q3 2025 to strengthen the balance sheet.
• An affiliate of Booker Smith purchased 1.3 million shares of common stock for $15.0 million in August 2025.

Finance: draft 13-week cash view by Friday.

Great Elm Capital Corp. (GECC) - Canvas Business Model: Channels

You're looking at how Great Elm Capital Corp. (GECC) gets its services and capital to the market, which for a Business Development Company (BDC) means both where its stock trades and how it sources its investments. This is all about market access, both for raising funds and deploying capital into Specialty Finance deals.

NASDAQ Stock Exchange for Common Stock (GECC) and Publicly Traded Notes

Great Elm Capital Corp. common stock trades on the NASDAQ-GM under the ticker GECC. This is the primary public market channel for equity investors. As of late 2025 reporting, the 52 Week High/Low for the common stock was $11.455/$7.18, with a Market Cap reported at $59,523,347. The company also utilizes the public debt markets to raise capital through unsecured notes, which are also listed on NASDAQ. For instance, the 7.75% Notes due December 31, 2030, trade under the symbol GECCG. The September 2025 offering of these notes raised approximately $48.1 million in net proceeds. You can see the structure of their publicly traded debt instruments as of September 30, 2025, in the table below.

Total debt outstanding as of September 30, 2025, was approximately $205.4 million. The annualized dividend on the common stock was reported at $1.48, equating to a Current Yield of 19.4% based on a previous price point.

Direct Origination Efforts for New Specialty Finance Investments

The channel for deploying capital is largely managed through its subsidiary, Great Elm Specialty Finance (GESF), which oversees Specialty Finance investments, acquisitions, partnerships, and direct origination opportunities. This platform is focused on building equity stakes across the Continuum of Lending. The corporate portfolio, as of September 30, 2025, comprised over $220 million of investments. A key focus area is senior secured debt, with first lien loans making up 2/3 of the corporate portfolio on that date. The operational channel for asset-based lending (ABL) was rebranded as Great Elm Commercial Finance in the first quarter of 2025. The direct origination success is reflected in the distributions received by GECC; for example, Great Elm Specialty Finance increased its distribution to GECC to approximately $450,000 in the third quarter of 2025, up from $120,000 the prior quarter.

Here are some key metrics related to the deployment channel as of the end of Q3 2025:

• Net Assets (NAV) per share as of September 30, 2025: $10.01.
• Cash and money market fund investments as of September 30, 2025: approximately $24.3 million.
• Availability under the Revolving Credit Facility (Revolver) as of September 30, 2025: $50.0 million.
• The Revolver facility size was increased to $50 million from $25 million in August 2025.

Investment Banks and Brokers for Capital Raising and Debt Issuance

Investment banks and brokers serve as crucial intermediaries for Great Elm Capital Corp. when accessing public capital markets for both equity and debt issuance. For the September 2025 offering of 7.75% Notes due 2030 (GECCG), the company utilized a syndicate of established financial institutions. The joint book-running managers were Lucid Capital Markets, LLC and Piper Sandler & Co. The co-managers included Clear Street LLC, InspereX LLC, and Janney Montgomery Scott LLC. This channel is also used for equity raises; for example, an August 2025 equity issuance raised $15 million by issuing approximately 1.3 million shares at $11.65 per share. Overall in the third quarter of 2025, GECC generated net proceeds of approximately $27 million from total equity issuances of approximately 2.4 million shares.

Investor Relations Website for SEC Filings and Financial Data

The Investor Relations website acts as the direct, self-service channel for stakeholders to access official regulatory documents and performance data. The primary website address is www.greatelmcc.com. Investors can find SEC filings under the Financials section. The latest major filing available reflecting late 2025 performance is the Form 10-Q dated November 04, 2025, covering the third quarter ended September 30, 2025. The company also provides a direct email contact for distribution list sign-ups: investorrelations@greatelmcap.com. The Q3 2025 earnings call was hosted on November 5, 2025. You can review the official filings for detailed transaction data, such as the Form 424B5 dated September 04, 2025, related to the notes offering.

Great Elm Capital Corp. (GECC) - Canvas Business Model: Customer Segments

You're looking at the specific groups Great Elm Capital Corp. (GECC) directs its investment efforts toward as of late 2025. This isn't about the general market; it's about who actually receives the capital or provides the funding base.

Retail and institutional investors seeking high-yield BDC exposure are the equity holders of Great Elm Capital Corp. (GECC). As of September 30, 2025, the company had approximately 14.0 million shares outstanding. The Board maintained the quarterly cash distribution at $0.37 per share for the fourth quarter of 2025. This distribution equated to a 14.8% annualized dividend yield on the September 30, 2025, net asset value (NAV) of $10.01 per share.

The core lending focus is on middle-market companies needing financing, primarily through direct corporate credit investments. As of September 30, 2025, Great Elm Capital Corp. (GECC) held 64 debt investments in corporate credit, valued at approximately $189.3 million at fair value, which was 58.2% of total investments. First lien loans comprised 2/3 of the corporate portfolio as of that date. The weighted average current yield on the entire debt portfolio stood at 11.5% as of September 30, 2025.

Institutional partners in the Collateralized Loan Obligation (CLO) market provide exposure to broadly syndicated first lien loans. CLO investments represented approximately $52.3 million, or 16.1% of the fair market value of total investments on September 30, 2025. The CLO joint venture targets returns in the high teens to 20% over time.

Small-to-medium businesses (SMBs) served by Great Elm Specialty Finance represent a distinct segment. The total investment in Great Elm Specialty Finance was approximately $44.7 million as of September 30, 2025. This allocation included two debt investments of $31.3 million and one equity investment of $13.4 million. The underlying businesses served by the Specialty Finance arm, such as those financed through Sterling, typically have annual sales between $3 Million and $100 Million.

Here is a quick look at how the investment portfolio was allocated as of September 30, 2025:

The deployment activity shows the ongoing engagement with these segments:

• During the quarter ended September 30, 2025, Great Elm Capital Corp. (GECC) deployed approximately $56.6 million into 36 investments.
• The weighted average current yield on investments deployed during that quarter was 10.7%.
• The company monetized, in part or in full, 40 investments for approximately $42.9 million during the same quarter.

Finance: draft 13-week cash view by Friday.

Great Elm Capital Corp. (GECC) - Canvas Business Model: Cost Structure

You're looking at the direct costs Great Elm Capital Corp. (GECC) incurs to run its investment management platform, which is heavily influenced by its debt load and its external management structure. These costs are key because they directly reduce the Net Investment Income (NII) available for shareholders.

The most significant recurring cost is the interest expense tied to the capital structure. As of September 30, 2025, Great Elm Capital Corp. had total debt outstanding (par value) of approximately $205.4 million. This debt is comprised of several senior notes, including the 5.875% notes due June 2026, 8.50% notes due April 2029, 8.125% notes due December 2029, and the new 7.75% notes due December 2030. The company noted that in Q3 2025, elevated expenses were associated with the baby bond refinancing, which involved redeeming the 8.75% GECCZ Notes and issuing the new 7.75% GECCG Notes.

The external management arrangement with Great Elm Group (GEG) creates a variable cost structure based on performance and asset growth. For the full fiscal year ended June 30, 2025, GEG collected incentive fees totaling approximately $4.1 million from Great Elm Capital Corp., a 52% increase from the prior year due to strong investment performance.

General operating expenses, which cover the day-to-day running of the investment portfolio, are also material. You can see the components of these costs, which are paid to the external manager, in the table below, using the latest available quarterly data points for specific line items:

• Management fees for Q2 2025 were $1.278 million.
• Administration fees for Q2 2025 were $0.383 million.
• Professional services for Q1 2025 were $0.424 million.
• Custody fees for Q2 2025 were $0.037 million.

Costs related to capital raises are distinct from ongoing operating expenses, though they can temporarily elevate the expense base. The capital raise in Q3 2025 involved generating $27 million in net proceeds from equity issuances. The company specifically mentioned that total expenses in Q3 2025 were elevated due to costs associated with the baby bond refinancing.

Great Elm Capital Corp. (GECC) - Canvas Business Model: Revenue Streams

You're looking at the core ways Great Elm Capital Corp. (GECC) brings in money, which is mostly through lending and investments, as of their latest reported numbers in late 2025.

Total Investment Income (TII) for the quarter ended September 30, 2025, was reported at $10.6 million. This figure is the aggregate of interest earned, dividends, and realized gains from the various assets on the balance sheet.

A significant, though variable, component of this income comes from the CLO Joint Venture (CLO JV). GECC received cash distributions from the CLO JV totaling $1.5 million for the quarter ending September 30, 2025. This was lower than the $4.3 million received in the preceding quarter, Q2 2025. Also, note that the TII in the prior quarter benefited from a $2.1 million distribution on preference shares from an insurance-related investment, which was not present in the Q3 2025 results.

The primary engine remains interest income from the debt portfolio. As of September 30, 2025, the weighted average current yield on Great Elm Capital Corp.'s debt portfolio stood at 11.5%.

Income also flows from equity investments, including the Specialty Finance platform, Great Elm Specialty Finance (GESF). As of September 30, 2025, the investment in GESF represented approximately $44.7 million at fair value, which included $13.4 million in equity exposure.

Here's a quick look at how the revenue-generating assets and key yield metrics stacked up at the end of Q3 2025:

You should keep an eye on the composition of the debt portfolio, as it directly impacts the stability of the interest income stream. The structure of the debt investments shows a clear preference for floating rates, which helps manage interest rate risk.

• Floating rate instruments comprised approximately 67% of the fair market value of debt investments as of September 30, 2025.
• Fixed rate debt investments had a weighted average maturity of 2.8 years as of September 30, 2025.
• The Company deployed approximately $56.6 million into 36 new investments during the quarter at a weighted average current yield of 10.7%.

Also, remember that income from equity investments can include capital gains, which are inherently less predictable than the contractual interest payments from debt. For instance, the prior quarter's TII was boosted by a one-time $2.1 million preference share distribution that didn't repeat in Q3 2025.

Finance: draft 13-week cash view by Friday.