TriLinc Brings In a Financial Advisor as Half Its Impact Credit Book Sits on Non-Accrual

Cash interest has all but stopped reaching the fund, leaving payment-in-kind accruals to carry reported investment income while unitholders wait on settlement proceeds.

August 14, 2026

TriLinc Global Impact Fund hired a financial advisor during the second quarter to help its board evaluate liquidity options — the clearest signal yet that the $272 million impact credit vehicle is weighing a path out rather than a path forward. The fund said it expects to provide an update in the coming months.

The engagement lands against a portfolio in which cash-paying credit has become the exception. Nineteen of the fund’s 28 portfolio companies were on non-accrual status at June 30, carrying an aggregate fair value of roughly $129.6 million, or 49.3 percent of total investments at fair value. The Watch List — TriLinc’s internal designation for positions with material performance weakness — held 21 investments representing 51.1 percent of portfolio fair value. Both measures improved modestly from year-end 2025, when non-accruals accounted for 51.3 percent and the Watch List 57.1 percent, but the movement owes largely to fair value marks rather than to borrowers returning to pay status.

Net asset value finished the quarter at $5.699 per unit, down from $5.714 at December 31, on net assets of $271.9 million. Total return based on net asset value was negative 0.26 percent for the six months, against a positive 1.17 percent a year earlier. Management attributed the largely flat NAV to improved cash flows at certain borrowers and moderating inflation across several jurisdictions, offset by geopolitical developments including the Russia-Ukraine war and instability in the Middle East.

Accruals are doing the work

The income statement is where the strain shows most plainly. Interest income for the second quarter came to $361,702, against $2.7 million a year earlier. Payment-in-kind interest income moved the other way, rising to $5.3 million from $4.8 million, and accounted for nearly all of the $5.6 million in total investment income reported for the quarter.

Over six months the pattern turns stranger still. Interest income was negative $602,126, which TriLinc traced to a first-quarter reassessment of the net realizable value of interest receivable tied to a single investment. Excluding that position, the fund said investment income for the half would have been approximately $11.0 million, against the $9.7 million actually reported and $13.7 million in the first half of 2025. PIK interest of $10.2 million exceeded reported total investment income for the period.

Interest receivable stood at $19.6 million at quarter-end, and TriLinc cautioned that a significant portion may not convert to cash in the short term — some positions carry a year or more of accrued interest, and certain term loans defer interest until maturity.

Expenses totaled $6.6 million for the half, down from $6.9 million, including $2.8 million of asset management fees and $3.0 million of professional fees. No incentive fees were earned in either period. Net investment income of $3.0 million was more than offset by $3.7 million of unrealized depreciation, producing a net decrease in net assets from operations of $719,154.

A portfolio in runoff

TriLinc made no new investments during the first six months and collected roughly $6.1 million from repayments and dispositions. The portfolio held at 28 companies, weighted toward senior secured term loans and participations, with convertible notes at 11.7 percent of fair value. The weighted average contractual yield on cost held at 13.5 percent — a figure that increasingly describes contractual entitlement rather than realized income.

Concentration remains pronounced. A single Mexican waste-to-fuels processor carried $78.1 million of principal at a 20 percent PIK rate, held at par, with the fund negotiating a maturity extension. Several of the largest positions carry maturity dates that have already passed, some as far back as mid-2023.

Individual credits illustrate the range of outcomes:

• PT Citra Labuantirta, an Indonesian cocoa processor, was formally placed into bankruptcy in April and has proceeded to auction, prompting a fair value decrease of roughly $2.0 million. The fund is its largest creditor and carries $8.4 million of accrued interest against the position.
• Grupo Surpapel, the Ecuadorian packaging borrower undone by the country’s drought-driven energy crisis, saw its lender group assign the syndicated debt to an Ecuadorian buyer in a transaction that closed on July 17, with first payment contingent on registration of the asset transfer and issuance of a bank guarantee.
• Five of the 21 Watch List positions trace back to International Investment Group, the sub-advisor the SEC charged with fraud in 2019 and whose co-founder pleaded guilty to securities fraud in 2021.

Unitholders remain in place

For advisors holding client positions, the practical facts have not moved. TriLinc has paid no regular monthly distributions since June 2023, apart from roughly $4.2 million in special distributions in February and March 2024. The $2,419 distributed during the second quarter related to prior-year payments the transfer agent had inadvertently omitted. Management again cautioned it may be unable to pay regular monthly distributions in coming quarters, and noted that NAV per unit is higher than it would be had distributions continued.

The unit repurchase program, suspended in April 2023, reopened in September 2024 solely for death and disability requests, and no units have been repurchased since. The mechanics explain why: the program is funded from distribution reinvestment proceeds, and with no distributions paid there is nothing to reinvest. No repurchase requests were fulfilled in either the current or prior-year period. The fund has issued no units since the first quarter of 2023, and $21.4 million remains available under the reinvestment plan.

Liquidity itself is thin. Cash stood at $388,302 at June 30 against six-month operating expenses of $6.6 million. TriLinc said it is realizing liquidity from investment settlements and expects several million dollars in the near term, earmarked for past and current accrued expenses. Multiple settlement agreements are expected to close and provide liquidity during 2026, though the fund offered no assurance on timing or receipt. Outstanding debt totaled $2.9 million, consisting solely of a repurchase obligation on a participation interest sold in 2022, for a debt-to-equity ratio of 1.1 percent.

The fund has a perpetual duration, but its board reviews the continuation of operations quarterly and retains discretion to pursue liquidation or an alternative transaction. The financial advisor’s mandate suggests that review has moved from routine to active. TriLinc last updated the market on its cumulative deployment and repayment record in a February portfolio disclosure, reporting approximately $283 million in portfolio assets and $903.1 million in aggregate repayments since inception.