Allied Capital Establishes In-House Senior Loan Financing Group.

WASHINGTON -- Allied Capital Corporation (NYSE:ALD) announced today that it is expanding its senior loan capabilities with the launch of AC Finance, an in-house senior loan financing group focused on U.S. middle market companies. AC Finance will work with middle market companies and private equity sponsors to arrange senior debt financings.

"AC Finance is the next logical extension of Allied Capital's successful middle market private investment activities," said Bill Walton, CEO of Allied Capital. "As a subordinated debt and equity capital provider to the middle market, we have built strong, long-standing relationships with the private sponsor community. The launch of AC Finance will allow us to continue to strengthen those relationships by providing seamless, one-stop financing options to sponsors and companies."

Led by Managing Director James Fisher, AC Finance includes eight professionals. Jim is a 24-year veteran of the middle market leveraged finance business and former head of J.P. Morgan Chase's Middle Market Structured Finance Division. Jim and his team were most recently employed by Callidus Capital Finance, a subsidiary of Callidus Capital Management. Callidus Capital Management, a portfolio company of Allied Capital since late 2003, is a specialized asset management company focused on creating and managing leveraged loan and bond portfolios.

"We have been working closely with Jim Fisher and his underwriting team at Callidus on numerous financing transactions over the last two years," said Rob Long, Managing Director of Allied Capital. "By bringing this talented team on board, we can more readily address senior loan financing opportunities in the market and streamline the execution process for our partners. In addition, with the strength of the Allied Capital balance sheet, AC Finance will be positioned to lead more transactions and grow its market share."

About Allied Capital

Allied Capital Corporation, a leading business development company with total assets of more than $3 billion, has paid regular, quarterly cash dividends to shareholders since 1963. Allied Capital invests in the American entrepreneurial economy by providing capital to companies seeking a long-term financial partner and access to managerial resources often unavailable to smaller companies. Since its IPO in 1960, Allied Capital has provided long-term debt and equity financing to thousands of middle market companies. In serving its shareholders, Allied Capital helps build middle market businesses and support American jobs. The Company's private finance portfolio includes investments in over 100 companies that generate aggregate revenues of more than $10 billion and employ more than 90,000 people.

Headquartered in Washington, DC, Allied Capital offers shareholders the opportunity to participate in the private equity industry through an investment in the Company's New York Stock Exchange-listed stock, which is traded under the symbol ALD. For more information, please visit www.alliedcapital.com, call Allied Capital investor relations toll-free at [phone], or e-mail us at [e-mail]. All media inquiries should be directed to Stan Collender ([phone]) or Tom Gentile ([phone]) of Financial Dynamics.

Forward-Looking Statements

The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in Allied Capital's periodic filings with the Securities and Exchange Commission.