Exhibit 99.k.4


                        AMENDMENT TO EMPLOYMENT AGREEMENT

         THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "AMENDMENT"), is made and
entered into as of the 8th day of August, by and between GLADSTONE CAPITAL
CORPORATION, a Maryland corporation (the "COMPANY"), and DAVID GLADSTONE (the
"EXECUTIVE").

                                    RECITALS

     A.  The Company and the Executive are parties to an Employment Agreement,
dated as of July 23, 2001 (the "EMPLOYMENT AGREEMENT").

     B.  The Company and the Executive desire to amend the Employment Agreement
as hereinafter set forth.

                                    AGREEMENT

         In consideration of the premises and the terms and conditions set forth
in this Amendment, the parties agree as follows:

     1.  AMENDMENT TO EMPLOYMENT AGREEMENT.

         (a) Section 3(d) of the Employment Agreement is amended and restated
in its entirety to read as set forth on SCHEDULE A attached hereto.

     2.  EFFECTIVENESS.  This Amendment shall become effective immediately upon
execution by the Company and the Employee. Other than the amendment set forth
herein, the Employment Agreement shall remain in full force and effect.

                            [SIGNATURE PAGE FOLLOWS]





         IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.



                                      GLADSTONE CAPITAL CORPORATION



                                      By: /s/ TERRY L. BRUBAKER
                                          -----------------------------
                                          Terry L. Brubaker, President


                                      EXECUTIVE



                                          /s/ DAVID GLADSTONE
                                      ---------------------------------
                                      David Gladstone





                                   SCHEDULE A

                AMENDMENT TO SECTION 3(d) OF EMPLOYMENT AGREEMENT

(D) STOCK OPTIONS. Upon Board approval, the Executive shall receive an option to
purchase eight hundred thousand (800,000) shares of the Company's outstanding
Common Stock. These options will vest according to the following schedule: four
hundred thousand (400,000) shares subject to the option shall vest on the date
of the grant; and the remaining four hundred thousand (400,000) shall vest on
the first anniversary of the date of the grant. The purchase price for the
shares subject to the option shall be the fair market value of the shares on the
date of the grant. The option shall be an incentive stock option to the extent
permitted by law. Such options shall be subject to the Company's Amended and
Restated 2001 Equity Incentive Plan, as amended. The Executive may be required
to sign additional stock agreements as a condition for receiving the option, and
the option shall be subject to such agreements.

         The Executive is permitted to exercise his option before it is fully
vested. In the event the Executive elects to exercise his option early, the
stock he receives upon such exercise will be subject to the same vesting
schedule that was applicable to the option shares. The specific terms and
conditions of the transfer of such stock to the Executive shall be governed by
an "Early Exercise Stock Purchase Agreement" in a form approved by the Company.
Generally, until the Executive satisfies the vesting requirements, he may not
sell, assign or convey the shares of early exercised stock. The Company will
have the right to repurchase those early exercised shares at the original price
paid by the Executive for the shares, in the event the Executive's employment
terminates for any reason before such shares are vested.