SecProbe.io

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The information
in this preliminary prospectus supplement is not complete and
may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus supplement
and the accompanying prospectus are not an offer to sell and are
not soliciting offers to buy these securities in any state where
such offer or sale is not permitted.

    SUBJECT TO COMPLETION, DATED
    JULY  , 2009

     PRELIMINARY
    PROSPECTUS SUPPLEMENT

     (to Prospectus dated
    July   , 2009)

               Shares

    Fifth Street
    Finance Corp.

    Common
    Stock

    $
    per share

    We are offering for sale
    8,121,827 shares of our common stock, $0.01 par value
    per share. These shares are being offered at a discount from our
    most recently determined net asset value per share of $11.94
    pursuant to the authority granted by our common stockholders at
    a special meeting of stockholders held on June 24, 2009.
    Our current authority to offer shares at a price below net asset
    value per share ends on June 24, 2010, unless our
    stockholders extend this authority at another meeting of
    stockholders before such date. In connection with the receipt of
    such stockholder approval, we agreed to limit the number of
    shares that we issue at a price below net asset value pursuant
    to this authorization so that the aggregate dilutive effect on
    our then outstanding shares will not exceed 15%. Sales of
    common stock at prices below net asset value per share dilute
    the interests of existing stockholders, have the effect of
    reducing our net asset value per share and may reduce our market
    price per share. See “Risk Factors” beginning on
    page 13 of the accompanying prospectus and “Sales of
    Common Stock Below Net Asset Value” on
    page S-8
    of this prospectus supplement and on page 80 of the
    accompanying prospectus.

    We are a specialty finance company
    that lends to and invests in small and mid-sized companies in
    connection with investments by private equity sponsors. Our
    investment objective is to maximize our portfolio’s total
    return by generating current income from our debt investments
    and capital appreciation from our equity investments.

    We are an externally managed,
    closed-end, non-diversified management investment company that
    has elected to be treated as a business development company
    under the Investment Company Act of 1940. We are managed by
    Fifth Street Management LLC, whose six principals collectively
    have over 50 years, and individually have between
    14 years and 3 years, of experience lending to and
    investing in small and mid-sized companies.

    Our common stock is listed on the
    New York Stock Exchange under the symbol “FSC.” On
    July 9, 2009 and March 31, 2009, the last reported
    sale price of our common stock on the New York Stock Exchange
    was $9.85 and $7.74, respectively. We are required to determine
    the net asset value per share of our common stock on a quarterly
    basis and we have not yet determined the net asset value per
    share of our common stock for the quarter ended June 30,
    2009. Our net asset value per share of our common stock as of
    March 31, 2009 was $11.94.

    Investing in our common stock
    involves a high degree of risk, and should be considered highly
    speculative. See “Risk Factors” beginning on
    page 13 of the accompanying prospectus to read about
    factors you should consider, including the risk of leverage,
    before investing in our common stock.

    This prospectus supplement and any
    accompanying prospectus contain important information about us
    that a prospective investor should know before investing in our
    common stock. Please read this prospectus supplement and any
    accompanying prospectus before investing and keep them for
    future reference. We file periodic reports, current reports,
    proxy statements and other information with the Securities and
    Exchange Commission. This information is available free of
    charge by contacting us at White Plains Plaza, 445 Hamilton
    Avenue, Suite 1206, White Plains, NY 10601 or by telephone
    at
    (914) 286-6800
    or on our website at www.fifthstreetfinance.com. Information
    contained on our website is not incorporated by reference into
    this prospectus supplement, and you should not consider that
    information to be part of this prospectus supplement. The
    Securities and Exchange Commission also maintains a website at
    www.sec.gov that contains such information.

    Per Share

    Total

    Public offering price

    $

    $

    Underwriting discount (5.0%)

    $

    $

    Proceeds, before expenses, to us (1)

    $

    $

    (1)

    We estimate that we will incur approximately $750,000 (or $0.09
    per share of the shares sold in this offering) in offering
    expenses in connection with this offering.

    The underwriters have the option to purchase up to an
    additional
    shares of common stock at the public offering price, less the
    underwriting discount, within 30 days from the date of this
    prospectus supplement solely to cover any over-allotments. If
    the over-allotment option is exercised in full, the total public
    offering price will be $     , and the
    total underwriting discount (5.0%) will be
    $     . The proceeds to us would be
    $     , before deducting estimated
    expenses payable by us of $750,000.

    At our request, the underwriters have
    reserved           shares
    in the offering for purchase by certain of our directors and
    officers, although they have no obligation to buy any shares in
    the offering.

    Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus supplement or the
    accompanying prospectus is truthful or complete. Any
    representation to the contrary is a criminal offense.

    The underwriters expect to deliver the shares on or
    about          ,
    2009.

    Wells Fargo Securities

    Stifel Nicolaus

    The date of this prospectus supplement
    is          ,
    2009

    TABLE OF
    CONTENTS

    PROSPECTUS
    SUPPLEMENT

    Page

    Prospectus Summary

    S-1

    Fees and Expenses

    S-6

    Use of Proceeds

    S-8

    Sales of Common Stock Below Net Asset Value

    S-8

    Capitalization

    S-13

    Underwriting

    S-14

    Validity of the Securities

    S-19

    Available Information

    S-19

    PROSPECTUS

    Page

    Prospectus Summary

    1

    The Offering

    5

    Fees and Expenses

    9

    Selected Financial and Other Data

    11

    Risk Factors

    13

    Special Notice Regarding Forward-Looking Statements

    29

    Use of Proceeds

    29

    Price Range of Common Stock and Distributions

    30

    Management’s Discussion and Analysis of Financial Condition
    and Results of Operations

    32

    Senior Securities

    49

    Business

    50

    Portfolio Companies

    60

    Management

    63

    Portfolio Management

    68

    Investment Advisory Agreement

    70

    Administration Agreement

    76

    License Agreement

    76

    Certain Relationships and Related Party Transactions

    77

    Control Persons and Principal Stockholders

    77

    Sales of Common Stock Below Net Asset Value

    80

    Dividend Reinvestment Plan

    85

    Description of Our Securities

    86

    Material U.S. Federal Income Tax Considerations

    89

    Regulation

    94

    Plan of Distribution

    98

    Custodian, Transfer and Distribution Paying Agent and Registrar

    99

    Brokerage Allocation and Other Practices

    99

    Legal Matters

    99

    Independent Registered Public Accounting Firm

    99

    Available Information

    99

    Privacy Notice

    100

    Index to Financial Statements

    F-1

    S-i

    You should rely only on the information contained in this
    prospectus supplement and the accompanying prospectus. Neither
    we nor the underwriters have authorized any other person to
    provide you with different information from that contained in
    this prospectus supplement or the accompanying prospectus. If
    anyone provides you with different or inconsistent information,
    you should not rely on it. This prospectus supplement and the
    accompanying prospectus do not constitute an offer to sell, or a
    solicitation of an offer to buy, any shares of our common stock
    by any person in any jurisdiction where it is unlawful for that
    person to make such an offer or solicitation or to any person in
    any jurisdiction to whom it is unlawful to make such an offer or
    solicitation. The information contained in this prospectus
    supplement and the accompanying prospectus is complete and
    accurate only as of their respective dates, regardless of the
    time of their delivery or sale of our common stock. This
    prospectus supplement supersedes the accompanying prospectus to
    the extent it contains information different from or additional
    to the information in that prospectus.

    This document is in two parts. The first part is this prospectus
    supplement, which describes the terms of this offering of common
    stock and also adds to and updates information contained in the
    accompanying prospectus. The second part is the accompanying
    prospectus, which gives more information. To the extent the
    information contained in this prospectus supplement differs from
    the information contained in the accompanying prospectus, the
    information in this prospectus supplement shall control.

    Information contained in this prospectus supplement and the
    accompanying prospectus may contain forward-looking statements,
    which can be identified by the use of forward-looking
    terminology such as “may,” “will,”
    “expect,” “intend,” “anticipate,”
    “estimate,” or “continue” or the negative
    thereof or other variations thereon or comparable terminology.
    The matters described in “Risk Factors” in the
    accompanying prospectus and certain other factors noted
    throughout this prospectus supplement and the accompanying
    prospectus constitute cautionary statements identifying
    important factors with respect to any such forward-looking
    statements, including certain risks and uncertainties that could
    cause actual results to differ materially from those in such
    forward-looking statements. The forward-looking statements
    contained in this prospectus supplement and the accompanying
    prospectus are excluded from the safe harbor protection provided
    by Section 27A of the Securities Act of 1933.

    S-ii

    PROSPECTUS
    SUMMARY

    This summary highlights some of the information in this
    prospectus supplement and the accompanying prospectus. It is not
    complete and may not contain all of the information that you may
    want to consider. To understand the terms of the common stock
    offered hereby, you should read the entire prospectus supplement
    and the accompanying prospectus carefully. Together, these
    documents describe the specific terms of the shares we are
    offering. You should carefully read the sections titled
    “Risk Factors,” “Selected Financial and Other
    Data,” “Management’s Discussion and Analysis of
    Financial Condition and Results of Operations” and
    “Financial Statements” in the accompanying prospectus,
    as well as the documents identified in the section titled
    “Available Information” in this prospectus supplement.
    Except as otherwise noted, all information in this prospectus
    supplement and the accompanying prospectus assumes no exercise
    of the underwriters’ over-allotment option.

    We commenced operations on February 15, 2007 as Fifth
    Street Mezzanine Partners III, L.P., a Delaware limited
    partnership. Effective as of January 2, 2008, Fifth Street
    Mezzanine Partners III, L.P. merged with and into Fifth Street
    Finance Corp., a newly formed Delaware corporation. Unless
    otherwise noted, the terms “we,” “us,”
    “our” and “Fifth Street” refer to Fifth
    Street Mezzanine Partners III, L.P. prior to the merger date,
    and Fifth Street Finance Corp. on and after the merger date. In
    addition, the terms “Fifth Street Management” and
    “investment adviser” refer to Fifth Street Management
    LLC.

    Fifth
    Street Finance Corp.

    We are a specialty finance company that lends to and invests in
    small and mid-sized companies in connection with investments by
    private equity sponsors. We define small and mid-sized companies
    as those with annual revenues between $25 million and
    $250 million. We are externally managed and advised by
    Fifth Street Management, whose six principals collectively have
    over 50 years, and individually have between 14 years
    and 3 years, of experience lending to and investing in
    small and mid-sized companies. Fifth Street Management is an
    affiliate of Fifth Street Capital LLC, a private investment firm
    founded and managed by Leonard M. Tannenbaum who has led the
    investment of over $450 million in small and mid-sized
    companies, including the investments made by Fifth Street, since
    1998.

    Our investment objective is to maximize our portfolio’s
    total return by generating current income from our debt
    investments and capital appreciation from our equity
    investments. To meet our investment objective we seek to
    (i) capitalize on our investment adviser’s strong
    relationships with private equity sponsors; (ii) focus on
    transactions involving small and mid-sized companies which we
    believe offer higher yielding debt investment opportunities,
    lower leverage levels and other terms more favorable than
    transactions involving larger companies; (iii) continue our
    growth of direct originations; (iv) employ disciplined
    underwriting policies and rigorous portfolio management
    practices; (v) structure our investments to minimize risk
    of loss and achieve attractive risk-adjusted returns; and
    (vi) leverage the skills and experience of our investment
    adviser.

    As of March 31, 2009, we have originated
    $343.3 million of investments and our portfolio totaled
    $290.8 million at fair value and was comprised of
    investments in 26 portfolio companies. The weighted average
    annualized yield of our debt investments as of March 31,
    2009 was approximately 16.4%. Our investments generally range in
    size from $5 million to $40 million and are
    principally in the form of first and second lien debt
    investments, which may also include an equity component. As of
    March 31, 2009, all of our debt investments were secured by
    first or second priority liens on the assets of our portfolio
    companies. Moreover, we held equity investments consisting of
    common stock, preferred stock or LLC interests in 20 out of 26
    portfolio companies as of March 31, 2009.

    Fifth Street Mezzanine Partners III, L.P., our predecessor fund,
    commenced operations as a private partnership on
    February 15, 2007. Effective as of January 2, 2008,
    Fifth Street Mezzanine Partners III, L.P. merged with and into
    Fifth Street Finance Corp., a newly formed corporation that is
    an externally managed, closed-end, non-diversified management
    investment company which has elected to be treated as a business
    development company under the Investment Company Act of 1940, or
    the “1940 Act.”

    As a business development company, we are required to comply
    with regulatory requireme