Exhibit 10.14(c)


                                       December 19, 2002


Banc of America Securities LLC
600 Montgomery Street
San Francisco, California 94111

Ladies and Gentlemen:

     1. Introduction. This agreement confirms our agreement with you ("BAS")
relating to the modification of certain terms of the Letter Agreement (the
"LETTER AGREEMENT") dated September 30, 2002, between BAS and Allied Capital
Corporation, a Maryland corporation (the "COMPANY"), modifying certain terms of
the Forward Issuance Agreement (the "FORWARD ISSUANCE AGREEMENT") dated August
31, 2000, between BAS and the Company. Each capitalized term not otherwise
defined herein shall have the meaning assigned to such term in the Letter
Agreement or the Forward Issuance Agreement, as applicable.

     2. Additional Fee. The payment date of the Additional Fee shall be changed
from December 27, 2002 to March 31, 2003.

     3. Underwriting or Placement Commissions. The Company and BAS agree that
with respect to any Issuance completed after December 31, 2002 and no later than
March 31, 2003, BAS's underwriting or placement discount, commission or fee
shall be changed from 3.0% of the aggregate gross proceeds of such Issuance to
2.75% of the aggregate gross proceeds of such Issuance.

     4. No Other Modification. Other than as specifically provided herein, this
agreement shall not operate to modify any other terms of the Letter Agreement.
The Letter Agreement shall remain in full force and effect after the execution
of this agreement.

     5. Governing Law. This agreement shall be governed by and construed in
accordance with the substantive law of the State of New York.

     6. Counterparts. This agreement may be issued in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

                                       1





     Please confirm your agreement with the foregoing by signing and returning a
copy of this agreement to the undersigned.


                                        Very truly yours,

                                        ALLIED CAPITAL CORPORATION


                                        By: /s/ Kelly A. Anderson
                                            --------------------------
                                            Name: Kelly A. Anderson
                                            Title: EVP and Treasurer




Accepted and Agreed as of
the date first above written:

BANC OF AMERICA SECURITIES LLC

By: /s/ Derek Dillon
    --------------------------
     Name: Derek Dillon
     Title: Managing Director



                                       2