Allied Capital Lauds Decision of Federal Court in Georgia to Dismiss Lawsuit by Shortsellers.

WASHINGTON -- Allied Capital Corporation (NYSE:ALD) issued the following statement today regarding the dismissal by the federal District Court in Georgia of a False Claims Act case against Business Loan Express (BLX), an Allied Capital portfolio company:

Allied Capital Corporation is pleased to announce that on December 19, the United States District Court for the Northern District of Georgia dismissed all claims in an action filed under the federal False Claims Act (FCA) against BLX, its current Chairman, and others. The action was brought by Greenlight Capital, Inc., a hedge fund controlled by David Einhorn, and James Brickman. Both Greenlight and Brickman have been shortsellers of Allied Capital's shares. Thus, as the Court noted, "Brickman and Greenlight Capital stand to benefit from any decrease in the price of Allied Capital stock that may result from this lawsuit."

Greenlight and Brickman pursued their claim even though the United States Government chose not to do so. The District Court dismissed the case in its entirety and with prejudice because the allegations in the complaint failed to state a claim under the False Claims Act. As the Court noted, the plaintiffs' allegations represented nothing more than publicly available information, recycled and repackaged. That type of pleading does not satisfy the jurisdictional requirements of the FCA.

The District Court's 21-page opinion cited and followed recent case law from the United States Supreme Court, the United States Court of Appeals for the Eleventh Circuit, and other courts. The disappointed plaintiffs, Einhorn and Brickman, have publicly attacked the Judge who dismissed their complaint, stating that she "fundamentally misconstrued" the law and relied on a "technicality." Allied Capital believes that the Judge correctly relied on settled case law from the highest Court in the country, rather than on a shortseller's mischaracterization of legal precedent.

Shortsellers of Allied Capital shares, including David Einhorn and his allies, have for many years been making false and unsubstantiated claims of wrongdoing against Allied Capital and BLX. So far, every court that has ever examined the shortseller claims has rejected them. They were rejected by the United States Court for the Southern District of New York in 2003, by the Superior Court of the District Columbia in July 2007, and now by the United States District Court in Georgia.

About Allied Capital

Allied Capital is a leading business development company (BDC) in the U.S. that invests private debt and equity capital in middle market businesses nationwide. Founded in 1958 and operating as a public company since 1960, Allied Capital has paid consistent or increasing regular, quarterly cash dividends annually to shareholders since 1963.

Allied Capital provides long-term debt and equity capital for management and sponsor-led buyouts, and for recapitalizations, acquisitions and growth of middle market companies. Allied Capital's one-stop financing capabilities include first and second lien senior loans, unitranche debt, junior or subordinated debt and equity. Allied Capital seeks to invest in stable, less cyclical companies that produce significant free cash flow and high returns on invested capital. At September 30, 2007, the Company's private finance portfolio included investments in 110 companies that currently generate aggregate revenues of over $13 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 its New York Stock Exchange-listed stock. Allied Capital invests in the American entrepreneurial economy by providing long-term capital and access to managerial resources often unavailable to middle market companies. For more information, please visit www.alliedcapital.com, call Allied Capital investor relations toll-free at [phone], or e-mail us at [e-mail].

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 filings with the Securities and Exchange Commission.