Ownership Submission
FORM 4
Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN 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 *
SHULMAN JOHN D
   2. Issuer Name and Ticker or Trading Symbol
ALLIED CAPITAL CORP [ALD] 		5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
_____ Director _____ 10% Owner
__X__ Officer (give title below) _____ Other (specify below)
Managing Director
(Last)
(First)
(Middle)
1919 PENNSYLVANIA AVENUE, NW, 3RD FLOOR		 3. Date of Earliest Transaction (Month/Day/Year)
07/18/2007
(Street)

WASHINGTON, DC 20006		 4. If Amendment, Date Original Filed(Month/Day/Year)
 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 Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)		 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code
(Instr. 8)		 4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)		 5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4)		 6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)		 7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code V Amount (A) or (D) Price
Common Stock 07/18/2007   A   101,660 A $ 31.75 106,459 D  

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)		 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (Month/Day/Year) 3A. Deemed Execution Date, if any (Month/Day/Year) 4. Transaction Code
(Instr. 8)		 5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)		 6. Date Exercisable and Expiration Date
(Month/Day/Year)		 7. Title and Amount of Underlying Securities
(Instr. 3 and 4)		 8. Price of Derivative Security
(Instr. 5)		 9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 4)		 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)		 11. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares
Non-Qualified Stock Option (right to buy) $ 21.52 07/18/2007   D     284,974   (1) 12/13/2012 Common Stock 284,974 (2) 0 D  
Non-Qualified Stock Option (right to buy) $ 21.59 07/18/2007   D     22,053   (3) 09/20/2011 Common Stock 22,053 (2) 0 D  
Non-Qualified Stock Option (right to buy) $ 21.875 07/18/2007   D     286,287   (4) 04/05/2011 Common Stock 286,287 (2) 0 D  
Non-Qualified Stock Option (right to buy) $ 27.51 07/18/2007   D     50,000   (5) 08/03/2015 Common Stock 50,000 (2) 96,365 D  
Non-Qualified Stock Option (right to buy) $ 28.98 07/18/2007   D     100,000   (6) 03/11/2014 Common Stock 100,000 (2) 293,100 D  

Reporting Owners

Reporting Owner Name / Address Relationships
 Director  10% Owner  Officer  Other
SHULMAN JOHN D
1919 PENNSYLVANIA AVENUE, NW
3RD FLOOR
WASHINGTON, DC 20006		       Managing Director  

Signatures

 s/ John D. Shulman   07/19/2007
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 4(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 canceled options, granted on December 13, 2002, provided for vesting in three equal installments commencing on June 30, 2003.
(2) On July 18, 2007, the issuer canceled, pursuant to the issuer's tender offer, options previously granted to the reporting person. In exchange for the options, the reporting person received an option cancellation payment ("OCP") which was paid one-half in cash and one-half in unregistered shares of the issuer's common stock. The value of the OCP was equal to the difference between the weighted average market price of $31.75, less the exercise price of the option, multiplied by the number options canceled.
(3) The canceled options, granted on September 20, 2001, provided for vesting in three equal annual installments commencing one year from grant date.
(4) The canceled options, granted on April 5, 2001, provided for vesting in three equal annual installments commencing one year from grant date.
(5) The canceled options, granted on August 3, 2005, provided for vesting in three equal installments on June 30, 2006, June 30, 2007 and June 30, 2008.
(6) The canceled options, granted on March 11, 004, provided for vesting in four equal installments on June 30, 2004, June 30, 2005, June 30, 2006 and June 30, 2007

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