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    Skadden, Arps, Slate, Meagher & Flom llp

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Mr. Larry Greene

Division of Investment Management

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    Preliminary Merger Proxy Statement/Prospectus on Form N-14

(File No. 333-161764) (the “Form N-14”) filed on September 4, 2009

     Dear Mr. Greene:

     We are submitting this letter to respond to comments orally issued by the staff of the
Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the
“SEC”) on October 7, 2009 regarding the Form N-14, which includes the preliminary merger proxy
statement of Patriot Capital Funding, Inc. (“Patriot”) therein, filed by Prospect Capital
Corporation (“Prospect”) with the SEC on September 4, 2009 in connection with the proposed merger
of Patriot with and into Prospect.

     Prospect and Patriot have considered your comments and have authorized us to make on their
behalf the responses and amendments to the Form N-14 discussed below. These changes have been
reflected in Pre-Effective Amendment No. 1 to the Form N-14. For ease of reference, the Staff’s
comments are set forth below in italics and are followed by the responses of Prospect and/or
Patriot. The captions and page numbers we use below generally correspond to those used in the Form
N-14. Any capitalized terms used but not defined in this letter have the meaning given to them in
the Form N-14.

Mr. Larry Greene

October 12, 2009

Page 2

General

Comment:

    1.

    In the event that Prospect requests acceleration of the effective date of the
Form N-14 and/or Patriot requests clearance to mail the merger proxy statement
contained therein to its stockholders, each of Prospect and Patriot should provide the
standard representation to the Staff that they will not use the SEC’s comment process
as a defense in any securities related litigation against them.

    Response: Your comment is noted. Upon Prospect requesting acceleration of
the effective date of the Form N-14 and/or Patriot requesting clearance to mail the
merger proxy statement to its shareholders, each company will
acknowledge that: (1)
each is responsible for the adequacy and accuracy of the disclosure in the filing;
(2) Staff comments or changes to disclosure in response to Staff comments do not
foreclose the SEC from taking any action with respect to the filing; and (3) neither
company may assert Staff comments as a defense in any proceeding initiated by the
SEC or any person under the federal securities laws of the United
States.

Comment:

    2.

    Please accompany any future amendments to the Form N-14 with a cover letter or
other letter identifying the individual(s) to whom the SEC Staff may contact regarding
questions pertaining to the Form N-14.

    Response: Your comment is noted.

Comment:

    3.

    Please include the table required by Item 4(b) of Form N-14.

    Response: In response to your comment, we have included a Pro Forma
Capitalization Table on page 68 of Amendment No. 1 to the Registration Statement
on Form N-14.

Comment:

    4.

    Please add disclosure in the Form N-14 clarifying the fact that Patriot’s
separate existence will cease upon completion of the merger and that, in conjunction
therewith, it will have to take certain steps to deregister under the Securities
Exchange Act of 1934 and withdraw its election to be regulated as a business
development company under the Investment Company Act of 1940.

    Response: We have revised the section entitled “The Merger Proposal” to
include a new paragraph that discusses the fact that, following the merger, Patriot
will cease to exist as a separate entity and will delist its securities, deregister
unsold

Mr. Larry Greene

October 12, 2009

Page 3

    securities and withdraw its election to be treated as a business development
company.

Comment:

    5.

    Please ensure that the Form N-14 contains appropriate disclosure relating to
the services provided by Patriot to its shareholders (e.g., the availability of a
dividend reinvestment plan) and the services provided by Prospect to its shareholders
and highlight any services that will be lost.

    Response: We have reviewed the Form N-14 and believe that the services
provided by Patriot to its shareholders are comparable to the services provided by
Prospect to its shareholders and that the disclosure is adequate on this point. In
this vein we note that both Patriot and Prospect offer investors a dividend
reinvestment plan.

Comment:

    6.

    Please file the consent of FBR Capital Markets & Co. as an exhibit to the Form
N-14. Alternatively, please delete all references to FBR Capital Markets & Co. in the
Form N-14. If you elect to file the consent of FBR Capital Markets & Co. as an exhibit
to the Form N-14, please ensure that the disclosure required by Regulation S-X
accompanies the discussion of FBR Capital Markets & Co. in the Form N-14.

    Response: We respectfully note that FBR Capital
Markets & Co. (“FBR”) is Patriot's
financial advisor and is not an accounting or law firm whose consent is required to be filed as an
exhibit to the Form N-14 pursuant to Item 16(11) or Item 16(12).  The fairness opinion of FBR is
being included as Annex B to Patriot's proxy statement to assist Patriot in satisfying its
disclosure obligations under Delaware law and not because it is required pursuant to Section 7 of
the Securities Act of 1933 and consequently, we do not believe that the consent of FBR is required
to be filed as an exhibit to the Form N-14 pursuant to  Item 16(14). Based on the foregoing, we do not
believe that any additional disclosure regarding FBR is required
pursuant to Regulation S-X.

Comment:

    7.

    Please include a copy of the legality opinion and tax opinion in a subsequent
filing. We will review these opinions when they are filed and may have comments.

    Response: Your comment is noted. The legality opinion
and the tax opinion will be filed by amendment prior to seeking effectiveness of the registration
statement on Form N-14.

Comment:.

    8.

    Please ensure that there is disclosure in the Form N-14 concerning the
financial interests of Patriot’s executive officers and board of directors with respect
to the merger.

Mr. Larry Greene

October 12, 2009

Page 4

    Response: We respectfully note that disclosure relating to the interests of
officers and directors of Patriot with respect to the merger is included in the
Summary Section on page 9 under the sub-heading, “Interests of Patriot’s Executive
officers and Directors in the Proposed Merger” and under the same sub-heading on
page 89 and in the risk factors under the heading “Certain executive officers and
directors of Patriot have interests in the completion of the proposed merger that
may differ from or conflict with the interests of Patriot
shareholders” on page 22.

Comment:

    9.

    Please supplementally address whether the $3.2 million termination fee Patriot
must pay to Prospect in certain circumstances is enforceable and whether such
termination fee raises any issues under Section 36 of the Investment Company Act of
1940.

    Response: We supplementally advise the Staff that termination fees of the
type included in the Merger Agreement have regularly been upheld by Delaware courts
and that the requirement that Patriot pay a termination fee in certain circumstances
is but one of several provisions designed to ensure that the Patriot Board of
Directors (the “Board”) will be deemed to have satisfied its fiduciary duties to
Patriot’s shareholders in connection with the merger.

    In short, the termination fee and so-called “fiduciary out” provisions of the Merger
Agreement provide the Board with the flexibility to accept a “superior proposal”
from a third party in certain circumstances in order to obtain for the Patriot
shareholders the best value reasonably available to them. For these purposes, a
“superior proposal” is generally defined as a legally binding, fully financed offer
with minimal contingencies that is both reasonably certain of being completed and
more favorable, from a financial perspective, to the Patriot shareholders than the
Prospect proposal.

    So long as certain substantive and procedural criteria are satisfied, the Board may
elect to cause Patriot to pay a $3.2 million termination fee to Prospect, terminate
the Merger Agreement, and enter into a definitive agreement with a third party who
makes a superior proposal. The termination fee payable to Prospect is designed to
compensate Prospect for its time and effort, legal and other fees and expenses, and
lost opportunity to complete the transaction. However, notwithstanding that the
termination fee would — mechanically — be paid by Patriot, the Merger Agreement
requires that the third party bidder provide Patriot with a deposit in an amount
equal to the termination fee. Thus, for all practical purposes the termination fee
would be paid by the third party, not by Patriot, and payment of the termination fee
would not impact the amount of consideration received by the Patriot shareholders.

Mr. Larry Greene

October 12, 2009

Page 5

    Termination fee provisions are common in merger agreements involving Delaware target
companies, and the level of the termination fee ultimately agreed to by the parties
(which represents approximately 3.7% of the equity value of the transaction as of
the date of signing), is consistent with the level of termination fees that have
withstood judicial scrutiny by the Delaware courts. For example, in analyzing the
fiduciary duties of directors of Delaware corporations as it relates to termination
fees, in recent years Delaware courts have upheld the following termination fees:
4.3% of the purchase price in In re The Topps Co. S’holders Litig. (Del. Ch. June
14, 2007); 3.75% of the purchase price in In re Toys “R” us, Inc. S’holder Litig.
(Del. Ch. June 24, 2005); and 3.5% of the equity value of the target company in In
re Lear Corp. S’holder Litig. (Del. Ch. June 15, 2007).

    In the present case, the level of the termination fee, as well as the related
“fiduciary out” provisions, were the subject of extensive negotiation between
Patriot and Prospect. Had the Board not agreed to the termination fee required by
Prospect, the Board would have been precluded under the Merger Agreement from
accepting a third party offer that was superior to the Prospect proposal. The Board
did not believe that such a complete “lock-up” was in the best interests of the
Patriot shareholders. In addition, in approving the Merger Agreement (including the
termination fee and the related “fiduciary out” provisions), the Board considered a
number of other factors, including the following:

    •

    Patriot’s dire financial condition and the possibility that Patriot would
run out of cash in the relatively near future unless a strategic partner was
found;

    •

    the fact Patriot had publicly announced that it was evaluating strategic
alternatives;

    •

    the extensive evaluation process undertaken by the Board in seeking those
strategic alternatives;

    •

    the financial terms of the Prospect proposal;

    •

    the likelihood that the Prospect transaction would be consummated in a
timely manner;

    •

    the opinion of Patriot’s financial advisor as to the fairness of the merger
consideration; and

    •

    the terms of the other proposals submitted, particularly as to the
consideration offered and the timing and certainty of closing.

    In view of the foregoing, the termination fee agreed to by the Board is consistent
with recent Delaware case law regarding the fiduciary duties of directors of
Delaware corporations and, the Board believes, in light of all the facts and
circumstances, is fair to, and in the best interests of, the shareholders of
Patriot. As a result, the Company believes that the termination fee is enforceable
and consistent with the fiduciary duties of the Board under Delaware law and Section
36 of the Investment Company Act of 1940.

Mr. Larry Greene

October 12, 2009

Page 6

Comment:

    10.

    Please include a glossary to the Form N-14 setting forth the names of the
entities that are mentioned throughout the Form N-14.

    Response: We respectfully disagree that the abbreviations used in the proxy
statement/prospectus are confusing to investors and require a Glossary. We believe
that the inclusion of a Glossary would be counter to the Plain English rules
promulgated by the Commission. In fact, Rule 421(b)(3) of Regulation C under the
Securities Act of 1933 specifically directs registrants to:

    avoid frequent reliance on glossaries or defined terms as the
primary means of explaining information in the prospectus.
Define terms in a glossary or other section of the document
only if the meaning is unclear from the context. Use a
glossary only if it facilitates understanding of the
disclosure.

    We believe that the defined terms used in the N-14 that relate to the various
parties are all clear from their context since they include a part of their name or
a variant relating to their name (i.e., Patriot, Prospect, FBR, Sutherland, BMO and
Young Conaway). None of the parties are referred to by a generic description, such
as Company or Acquiror. Other defined terms in the proxy statement/prospectus, such
as RIC and BDC, are commonly understood terms that
are not confusing to investors. The Plain English Handbook, on page 31,
specifically states that widely understood industry terms (i.e., REIT) can safely be
used without creating confusion to investors. We further note that the Staff has
particularly found glossaries to be helpful in debt registration statements where a
significant amount of disclosure revolves around numerous defined terms that come
straight from an Indenture or some other document that defines the characteristics
of the security being offered. Since Prospect is offering common stock to Patriot
shareholders, we do not believe that the proxy statement/prospectus presents the
same issues.

Comment:

    11.

    Please explain to us whether going concern disclosure or undertaking by
Prospect is required. Also, please make sure that going concern issues regarding
Patriot are adequately disclosed.

    Response: We respectfully submit that the merger will not have any going
concern effect on Prospect and therefore including such disclosure or undertaking is
unnecessary. In this regard, it should be noted that Prospect’s current revolving
credit facility does not mature until June 25, 2011 and that, after giving effect to
the merger, Prospect’s debt to equity ratio will remain at less than 20%.

Mr. Larry Greene

October 12, 2009

Page 7

    Patriot believes that the Form N-14 currently contains adequate disclosure regarding
Patriot’s going concern issues, including under “Risk Factors—Risks Related to
Patriot—There is substantial doubt about Patriot’s ability to continue as a going
concern,” “The Merger Proposal—Background of the Merger” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations of
Patriot.”

Shareholder Letter

Comment:

    12.

    Please delete the reference to “state securities commissions” in the bolded
boiler plate language in the last paragraph of the shareholder letter.

    Response: The requested amendment has been made.

Questions and Answers Ab