Ownership Submission
FORM 3
 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
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(Print or Type Responses)
1. Name and Address of Reporting Person *
  Lauer Thomas Charles
 2. Date of Event Requiring Statement (Month/Day/Year)
01/20/2006		 3. Issuer Name and Ticker or Trading Symbol
ALLIED CAPITAL CORP [ALD]
(Last)
(First)
(Middle)
1919 PENNSYLVANIA AVENUE, NW, 3RD FLOOR		 4. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
_____ Director _____ 10% Owner
__X__ Officer (give title below) _____ Other (specify below)
Managing Director
 5. If Amendment, Date Original Filed(Month/Day/Year)
(Street)

WASHINGTON, DC 20006		 6. Individual or Joint/Group Filing(Check Applicable Line)
_X_ Form filed by One Reporting Person
___ Form filed by More than One Reporting Person
(City)
(State)
(Zip)
Table I - Non-Derivative Securities Beneficially Owned
1.Title of Security
(Instr. 4)		 2. Amount of Securities Beneficially Owned
(Instr. 4)		 3. Ownership Form: Direct (D) or Indirect (I)
(Instr. 5)		 4. Nature of Indirect Beneficial Ownership
(Instr. 5)
Common Stock 3,921
D
 
Common Stock 639
I
by 401K
Common Stock 500
I
by IRA

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly. SEC 1473 (7-02)
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Table II - Derivative Securities Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 4)		 2. Date Exercisable and Expiration Date
(Month/Day/Year)		 3. Title and Amount of Securities Underlying Derivative Security
(Instr. 4)		 4. Conversion or Exercise Price of Derivative Security 5. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 5)		 6. Nature of Indirect Beneficial Ownership
(Instr. 5)
Date Exercisable Expiration Date Title Amount or Number of Shares
Incentive Stock Option (right to buy)   (1) 05/24/2014 Common Stock 11,763 $ 25.5 D  
Incentive Stock Option (right to buy)   (2) 08/03/2015 Common Stock 3,635 $ 27.51 D  
Non-Qualified Stock Option (right to buy)   (1) 05/24/2014 Common Stock 134,316 $ 25.5 D  
Non-Qualified Stock Option (right to buy)   (2) 08/03/2015 Common Stock 121,365 $ 27.51 D  
Phantom Stock Units   (3)   (4) Common Stock 2,266 $ (5) D  

Reporting Owners

Reporting Owner Name / Address Relationships
Director 10% Owner Officer Other
Lauer Thomas Charles
1919 PENNSYLVANIA AVENUE, NW
3RD FLOOR
WASHINGTON, DC 20006		       Managing Director  

Signatures

s/ Thomas C Lauer 01/24/2006
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 5(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1) The May 24, 2004, option grant vests in 4 equal installments on 6/30/04, 6/30/05, 6/30/06 and 6/30/07
(2) The August 3, 2005 option grant vests in three installments on 6/30/06, 6/30/07 and 6/30/08.
(3) The phantom stock units were awarded under the Allied Capital Corporation Deferred Compensation Plan II and are fully vested.
(4) Upon termination, phantom stock units will be distributed over a two year period or immediately upon a change in control.
(5) Phantom Stock Units acquired have a 1 for 1 conversion.

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