SecProbe.io

Harry S. Pangas
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, DC 20004- 2415     January 16, 2013

RE:   K CAP Financial, Inc.  (“Company ”)
                   File Nos.: 333- 185559; 814- 00735

Dear M r. Pangas :
  On December 19,  2012, the Company, which has elected to be regulated as a business
development company under the provisions of the Investment Company Act of 1940 (“1940
Act”), filed a registration statement on Form N -2 under the Securities Act of 1933 (“1933 Act”)
to register up to $2 0 million in aggregate offering price of the Company’s common shares . Based
on your letter of December 19, 2012, which states that the disclosure in the registration statement contains no material changes from the disclosur e included in a prior filing  reviewed by the staff
related  to the offering of senior notes , except for the description of the Company’s common stock
and the inclusion of updated financial information, we have accorded the registration statement
selective r eview. Based on that review, we  have the following comments.

 Prospectus

1. In the Fees and Expenses table on page 11 of the Prospectus footnote 5 states that
“Acquired fund fees and expenses represent the estimated indirect expense incurred due
to investm ents in other investment companies and private funds, including CLO Funds
managed by the Asset Manager Affiliates.”  The acquired fund fees and expenses should be stated as a separate line item in the fee table.

2. In the Fees and Expenses table on page 11  of the Prospectus the total annual expenses
noted are 5.98%.  The total annual expenses of the Company as noted in the September
30, 2012, Form 10- Q are 7.0%.  Please confirm in your response that the only difference
between the two figures noted above is  an assumption of the sale of common shares that
are being offered in this filing.  In addition, include a statement above the fee table stating
that the expense ratios assume the receipt of the proceeds of the offering , if that is the
case.

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 3. We note tha t portions of the filing are incomplete.  We may have additional comments on
such portions when you complete them in a pre -effective amendment, on disclosures
made in response to this letter, on information supplied supplementally, or on financial
statemen ts and exhibits added in any pre -effective amendments.

Financial Statement Comments

4. We und erstand that the Company  does not have a “controlling financial interest” in the
wholly owned subsidiary, Katonah 2007-  I CLO Ltd.  In your response, please inform  the
staff whether  the Company  has assessed the implications o f Regulation S -X Article 3 -09,
Separate financial statements of subsidiaries not consolidated and 50 percent or less
owned persons, and Regulation S -X Article 4-08 (g), Summarized financial info rmation
of subsidiaries not consolidated and 5 0 percent or less owned persons.   Article 3 -09(a) of
Regulation S -X requires a registered investment company  to include the financial
statements of a subsidiary not consolidated in its filings if the subsidiary  meets one of the
three significant subsidiary tests in 1.02(w) of S -X.  In your response, please state
whether Katonah 2007- I CLO Ltd triggers any of the three significant subsidiary tests  in
1.02 (w) of Regulation S -X.  If none of the tests are triggered, would the requirements of
Article 4 -08 (g) apply to the Company?

5.  In the September 30, 2012,  10-Q, the Financial Highlights state  that the total expense
ratio is 6.9%.  The total ratio is a combination of the interest expense of 3.2% and the non-interest expense of 3.8%.  The total expense should be stated as 7.0%, not 6.9%.
Revise the ratio accordingly.

6. The Balance Sheet as of September 30, 2012, includes restricted cash of $6,093,126.  In
your response, please explain the purpose of the restricted cash balance.

7. The Schedule of Investments (“SOI”) must identify those assets considered “non-
qualifying.”  This comment was previously communicated to the Company ; however,
such disclosure does not appear to be included in the SOI for September 30, 2012,  or for
December 31, 2011.  The footnote that was added in the last registration s tatement states
the following,   “ Investment is not a qualifying asset as defined under Section 55(a) of the
1940 Act.”   Ensure that this footnote is added to this registrat ion s tatement as well as all
future annual and quarterly filings.

8. In Note 4 to the Financial Statements, Investments, Fair Value Measurements, consider
providing additional disclosures in the Level III chart disclosing the asset type, fair value,
valuat ion technique, unobservable inputs and the range of inputs.  The first item to
include is  an additional column disclosing the weighted average range.  Owing  to the
wide range of inputs and the effects that result from a wide range as disclosed , a weighted
average should be stated for each separate range of inputs.  See the example as stated in
the FASB example in ASC 820.  In addition, since the Company relies on the use of
vendor pricing for their L evel III holdings , consider adding as a best practice a ro w in the
table that shows the amount of vendor priced securities so the reader can reconcile the
total Level III holdings in the ASU 2011- 04 disclos ure to the final balance in the L evel
III roll forward.   Lastly, provide a directional chart that illustrates the change to an
unobservable input that may result in a significant change to the value of the investment.
For an example of this chart , please refer to the notes to the financial statements of
BlackRock Corporate High Yield Fund, Inc. semi -annual rep ort dated August 30, 2012,
filed on November 5, 2012.  The current disclosure is very broad in stating that a

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 significant increase or decrease in such unobservable inputs would result in a significant
lower or higher fair value measurement.

***************

      The staff may have additional comments on disclosure made in response to these
comments, on information supplied supplementally, or on remaining exhibits.  Please respond to
the foregoing in a pre -effective amendment with changed material marked  in conformity with
rule 210 under Regulation S -T.  The Company  should provide a response to all comments.
Where no changes will be made in the filing in response to a comment made in this letter, please
indicate this fact in your letter and briefly state  the basis for your position.

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filings reviewed by the staff to be certain that they have provided all information investors
require for an informed decision.  Since the Company and its management are in possession of all
facts relating to the Company’s disclosure, they are responsible for the accuracy and adequacy of
the disclosures they have made.

 In connection with responding to our comments, please provide,  in writing, a statement
from the Company acknowledging that:

• The Company is responsible for the accuracy and adequacy of the disclosure in
the filing ;
• Staff comments or changes to disclosure in response to staff comments in the
filing  reviewed by the sta ff do not foreclose the Commission from taking any
action with respect to the filing ;
• The Company may not assert staff comments as defense in any proceeding
initiated by the Commission or any person under the federal securities laws of the
United States.

In addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Division of Investment Management in connection
with our review of your filing or in response to our comments on your filing.

We will consider a written request for acceleration of the eff ective date of the registration
statement as a confirmation of the fact that those requesting acceleration are aware of their
respective responsibilities.  We will act on the request and, pursuan t to delegated authority, grant
acceleration of the effective date.

Please respond to this letter by filing a pre- effective amendment pursuant to Rule 472
under the 1933 Act .  Please respond to all comments.  Where no changes will be made in the
filing in  response to a comment, please inform us in a supplemental letter and state the basis for
your position.

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If you have any questions prior to filing a pre -effective amendment, please call me at
(202) 551- 6970 or Sheila Stout at (202) 551- 6987.

      Sincerely,

      Mary A. Cole
      Senior Counsel

       Sheila Stout
       Senior Staff Accountant