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                                                                       EXHIBIT 5

                      SUTHERLAND, ASBILL & BRENNAN, L.L.P.
                         1275 Pennsylvania Avenue, N.W.
                            Washington, D.C.  20004


                                 July 2, 1997

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549

          Re:      Allied Capital Corporation II Stock Option Plan:
                   Registration on Form S-8

Ladies and Gentlemen:

          Reference is made to the Registration Statement on Form S-8 (the
"Registration Statement") of Allied Capital Corporation II, a Maryland
corporation (the "Company"), filed on the date hereof with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, in connection
with a proposed offering by the Company to certain of its employees, officers
and non-officer directors of an additional 606,490 shares of the Company's
common stock, $1.00 par value per share (the "Shares") under the Allied Capital
Corporation II Stock Option Plan (the "Plan").

          As counsel for the Company, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such corporate
records or other documents as we have deemed relevant as a basis for our
opinion hereinafter expressed.  Where factual matters material to this opinion
letter were not independently established, we have relied upon certificates
and representations of current executive officers and responsible employees
and agents of the Company and upon such other data as we deemed to be
appropriate under the circumstances.

          This opinion is limited to the corporate laws of the State of
Maryland and we express no opinion with respect to the laws of any other
jurisdiction.  With respect to the corporate laws of the State of Maryland, we
have examined and relied upon the General Corporation Law of the State of
Maryland.

          Based upon and subject to the foregoing, it is our opinion that the
Shares have been duly and validly authorized and, when issued and paid for
pursuant to the offering and in the manner contemplated by the Registration
Statement, will be validly issued, fully paid and nonassessable.

          We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.

                                        SUTHERLAND, ASBILL & BRENNAN, L.L.P.


                                        By:  /s/ Steven B. Boehm
                                             ------------------------------
                                             Steven B. Boehm





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