McLean, VA: Gladstone Capital Corp. (NASDAQ: GLAD) announced today its Board of Directors has declared a third quarter cash dividend of $0.21 per share, payable on July 8, 2002 to shareholders of record on June 28, 2002.

Gladstone Capital offers a Dividend Reinvestment Plan (DRIP). For more information regarding this Plan, please visit our website at www.GladstoneCapital.com.

The company provides the estimated tax characteristics of its dividend on a quarterly basis and those estimates are subject to recharacterization. The current dividend is estimated to be a distribution of ordinary income. The actual tax characteristics will be reported to each shareholder on Form 1099 at the end of the tax year.

A spokesperson for the company said: "In the past two quarters we paid out more in dividends than we earned. With this dividend we are seeking to pay out less than we expect to earn for the quarter in order to make up for the prior dividends that were in excess of earnings. We would like to have declared a larger dividend for the third quarter but with some uncertainty still in the general economy we are maintaing our dividend payout rather than increasing it. We paid a first quarter cash dividend of $0.18 per share for the quarter ending December 31, 2001 and a second quarter dividend of $0.21 per share for the quarter ending March 31, 2002. This is a third dividend since going public. We hope the next dividend can be an increase over this one."

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.