"Ready to GO: 72% of Mid-Sized Companies Will Increase Capital Spending

in Next 12 Months, a CapitalSource Finance/Gallup Poll Finds"

Middle-market companies are signaling strong optimism about their growth

and the overall economy, with a full 72 percent planning to increase

capital spending in the coming year. Larger companies are even more upbeat,

with eight in ten planning on spending, and 39 percent reporting expected

capital expenditures to exceed $5 million.

These were among the key findings from a recent CapitalSource (NYSE: CSE)

Gallup national survey of 500 top financial executives at mid-sized

companies (revenues between $25 million and $500 million). This segment of

the market includes approximately 57,000 companies that as a group employ

approximately 3 million people nationwide.

"Based on our extensive experience with companies of this size, we're not

surprised that the vast majority of them are moving ahead with growth

plans, despite the slowdown affecting some business sectors," said John

Delaney, CEO of CapitalSource Finance. "Middle-market companies tend to be

more nimble, and have seen and survived multiple economic cycles. These

businesses know how to navigate through changing conditions and often are

the first to recognize cyclical shifts and seize the opportunities they

afford."

Other key survey findings include:

-Spending priorities: Financing equipment (78%) and technology (70%) were

the top priorities named by respondents. More than 40% also indicated

plans to add to their workforce in the next 12 months.

-Economic outlook: Despite geopolitical unrest and some consumer

uncertainty, eight in 10 respondents (80%) feel the economy will strengthen

somewhat or strengthen considerably in the next 12 months, while only 4%

think the economy will weaken.

-Growth: Approximately two-thirds (68%) of chief financial officers or

senior financial executives believe their companies will grow with the

economy, with the majority predicting this growth would come sooner rather

later (fourth quarter '03, or 2004.)

-Funding sources: Although most companies (56%) plan to fund growth by

either cash or self-funding, one in three plan to raise debt (31%).

Options mentioned most often as possible sources for debt financing were

cash flow financing (55%), leasing and equipment financing (46%),

asset-based funding (34%) and commercial mortgages (21%).

-Sarbanes-Oxley Act: More than half of the mid-sized companies (59%) are

familiar with the legislation with larger companies much more familiar than

the smaller ones (74% compared to 51% of smaller companies). Of those who

knew of the legislation, nearly half (47%) felt it might encourage private

companies to remain private and some public companies to privatize.

"If midsize private companies want to become public they should adopt many

best corporate governance practices to be more appealing to lenders and the

investing community," said Delaney.

"From our lending experiences, we have found that a sizable portion of the

middle market will always have a healthy appetite for capital throughout

the economic cycle," Delaney said. "The survey results reflect a prudent

optimism among a majority of middle-market companies that we believe could

play a key role in an economic recovery."

About CapitalSource Finance LLC

CapitalSource is a specialty finance company offering asset-based, senior,

cash flow and mezzanine financing to small and mid-sized borrowers through

three focused lending units: Corporate Finance, Healthcare Finance and

Structured Finance.

* The Healthcare Finance group provides a variety of financing products

to

small to mid-sized healthcare service companies,

* The Structured Finance group provides innovative debt facilities to

companies active in the real estate and finance industries, and

* The Corporate Finance group partners with private equity and leveraged

buyout firms to deliver senior and mezzanine financing to their

portfolio companies.

Headquartered in Chevy Chase, Md., CapitalSource has a national network of

offices in Atlanta, Boston, Buffalo, Chicago, Dallas, Los Angeles,

Nashville, New York, Philadelphia and San Francisco. The company has more

than 260 employees. More information is available at

www.capitalsource.com or toll free at 866-876-8723.

The Survey

This report is based on the results of a survey conducted by The Gallup

Organization on behalf of CapitalSource Finance LLC. A national

cross-section of mid-size companies, defined as those with annual sales of

$25 million to $500 million dollars, was sampled. In each company, the

chief financial officer or equivalent position was interviewed by

telephone. A total of 500 telephone interviews were completed from August

to September 2003. Results based on the entire sample have a margin of

error of plus or minus 4.4 percentage points at the 95% confidence level.