Allied Capital Provides Additional Comment on Business Loan Express, LLC.

WASHINGTON -- Allied Capital Corporation (NYSE:ALD) today commented on the recent developments at Business Loan Express, LLC (BLX).

Allied Capital understands that BLX is working cooperatively with the Small Business Administration with respect to this matter. In particular, Allied Capital understands that BLX is working with the SBA so that it may remain a preferred lender in the SBA 7(a) program and retain the ability to sell loans into the secondary market. Allied Capital anticipates that BLX will abide by certain terms and conditions under which they will operate going forward in the program and Allied Capital will stand behind any financial commitments BLX makes to the SBA in this regard to prevent any loss due to fraud. Allied Capital is monitoring the situation and has retained an independent third party to work with BLX to conduct a review of BLX's internal control systems, with a focus on preventing fraud and further strengthening the company's operations.

Allied Capital recognizes the vital role that the SBA plays in helping America's small businesses grow and prosper. To that end, both Allied Capital and BLX pledge to provide full cooperation to investigators and members of Congress. Allied Capital supports BLX and their management and employees in furthering credit to small and minority-owned businesses.

Allied Capital's total investment in BLX was $284.9 million at value at September 30, 2006, or 6.2% of Allied Capital's assets. Allied Capital's investment in BLX is in the equity of the company and this investment at value compares to BLX's net book value at September 30, 2006, of $190 million. At December 31, 2006, BLX had outstanding borrowings under its line of credit of $322 million and BLX had estimated assets of approximately $600 million to support the borrowings on the line of credit.

BLX has a substantial cash flow stream from its residual interests and servicing assets and collected approximately $100 million in cash from its residual interests and servicing assets in fiscal 2006. If scheduled loan payments were to be received as stated in the loan agreements with no future losses or prepayments, BLX would receive future cash flows of over $1 billion over time. As of December 31, 2006, BLX had issued $56 million of standby letters of credit under its line of credit in connection with its term securitizations. In addition to the letters of credit issued by BLX, as of September 30, 2006, Allied Capital had also provided four standby letters of credit totaling $29.5 million in connection with four term securitizations completed by BLX. Allied Capital guarantees 50% of BLX's line of credit including letters of credit issued under the line.

BLX typically receives substantial collateral packages, including commercial real estate in conjunction with its lending activities. BLX will pursue the liquidation of collateral to recover its damages related to this matter. BLX has a portfolio of over 6,400 loans with a total serviced loan portfolio of approximately $2.7 billion. BLX has helped thousands of American small businesses through its lending activities. BLX has also made significant progress in building a conventional commercial real estate lending business outside of its SBA activities. Conventional loans originated in the quarter ended December 31, 2006, were approximately $75 million.

About Allied Capital

Allied Capital Corporation, a leading business development company with total assets of more than $4 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 $12 billion and employ more than 85,000 people.

Allied Capital provides flexible, competitive debt and equity capital for management and sponsor-led buyouts, recapitalizations, acquisitions and growth of middle market companies. Allied Capital's seamless, one-stop financing capabilities include first and second lien senior loans, unitranche debt, junior or mezzanine debt and equity.

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].

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.