McLean, VA: Gladstone Capital Corp. (NASDAQ: GLAD) announced today that at its annual shareholders meeting, Anthony Parker was reelected to the board of directors for a second term. At the shareholders meeting, Ernst & Young was approved as the auditors for the year ending 9-30-2002.

After the shareholders meeting management answered some questions about the current year's operations. A composite of some of those responses is provided below:

Question: What is the outlook for loan closings in the quarter ending March 31, 2002 and June 30, 2002?
Answer: Gladstone Capital is going to have a very poor quarter in loan closings for March 31, 2002. The company is very disappointed with the results and we know the shareholders will also be very disappointed. This will make us miss the earnings estimates for the quarter ending March 31, 2002 by a substantial amount, but we should still make the estimates for the year ending September 30, 2002. The closings for June 30, 2002 should be strong. We have a good number of cash deposits paid by businesses for the commitment letters issued during the quarter, and those commitments should result in loans closed in the quarter ending June 30, 2002. We are working on the legal documents for a number of loan closings and those should close in the quarter ending June 30, 2002, not the quarter ending March 31, 2002. We hope the quarter ending March 31, 2002 will be the last poor quarter for loan closings.

Question: What caused the poor performance in the quarter ending March 31st?
Answer: During the quarter ending December 31, 2001 we did not make many new commitments because we worried about the poor economy and we worried that there would be another terrorist attack that would upset the economy even further. Some commitments we had made before 9/11, we decided not to go forward with because of the economy. So we began the quarter ending March 31, 2002 with few commitments in the pipeline. When the economy turned down after September 11th, we played it safe by not making commitments. As it turned out, that was the wrong strategy. During this quarter that ends March 31st, we have been very active making new commitments and believe we have a solid backlog of commitments that should result in a substantial number of loans closed in the quarter ending June 30, 2002. Because of the poor closings in this current quarter, it is as though we lost four or five months from our original plan. Our very cautious approach to the economic downturn has cost us in the short run. But if investors liked the story back in August 2001, we should now be in a position to make that plan happen.

Question: Is Gladstone Capital like Allied Capital (NYSE: ALD)?
Answer: No, Gladstone Capital is not like Allied Capital as it is today. Gladstone Capital is somewhat like Allied Capital of some years ago. Gladstone Capital today is more like the Allied Capital of the 1980Ís. As Allied entered the 1990Ís it was made up of five public companies and three private funds. Risk were spread around to different entities. Investors could pick the risk/reward profile they liked in different funds, or they could buy a basket of all the Allied funds. By having different entities a loss in one fund would not affect the other funds. All those entities came together in one company in 1997. Gladstone Capital is investing in senior and senior subordinated loans. We donÍt have any ñBî tranches of CMBS in real estate like Allied and we have no exposure to SBA guaranteed loans. We have no investments in venture capital partnerships. So Gladstone Capital is not like the Allied Capital you see today.

For further information contact Harry Brill or David Gladstone at 703-286-7000.

This press release may include statements that may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements with regard to the future performance of the Company. Words such as "believes" and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on the Company's current plans that are believed to be reasonable as of the date of this press release. Factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements include, among others, those factors listed under the caption "Risk factors" of the Company's prospectus dated August 23, 2001, as filed with the Securities and Exchange Commission on August 24, 2001. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.