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Long-Term Debt (Tables) | 12 Months Ended
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Dec. 31, 2021
Debt Disclosure [Abstract] |
Schedule of long-term debt | Long-term debt consists of the following:
| December 31, 2021 |  | December 31, 2020
| (in thousands)
A promissory note that allowed for advances up to $5,000,000 through March 2018, at which point it converted to a term loan. Outstanding principal balance of $4,815,000 was converted in March 2018, set to mature in March 2023. Principal and interest payment of $91,000 due monthly at the fixed rate of 4.98%. The loan was secured by certain machinery and equipment. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum fixed charge coverage ratio and net income. The loan was paid off in 2021. | $ | — |  |  | $ | 2,322 |
An equipment loan with a draw down period ending August 28, 2019 for up to $10,000,000, at which point the entire principal outstanding was due, unless extended. Outstanding principal balance of $9,476,000 was converted to a term loan in June 2019, set to mature in July 2024. Principal and interest payment of $193,000 due monthly starting August 2019 at the fixed rate of 5.75%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. The loan was paid off in 2021. | — |  |  | 7,450 |
A $2,130,000 term loan that expired April 30, 2021. Principal and interest payment of $56,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate. The loan was secured by the company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | — |  |  | 212 |
A $935,000 term loan that expired December 31, 2021. Principal and interest payment of $20,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued at a fixed rate of 3.50%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | — |  |  | 234 |
Subtotal, continue on following page | $ | — |  |  | $ | 10,218 |
| December 31, 2021 |  | December 31, 2020
| (in thousands)
Subtotal from previous page | $ | — |  |  | $ | 10,218 |
An equipment loan with a draw down period ended May 31, 2019 for up to $10,000,000. After the draw period, the outstanding principal balance is converted to a term loan payable, set to mature on May 31, 2024. The first principal and interest payment commenced in July 2019. Interest accrued based on prime rate. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain fixed financial covenants, including a fixed charge coverage ratio and a minimum tangible net worth. The loan was paid off in 2021. | — |  |  | 7,000 |
A $3,000,000 term loan that was set to expire December 2024. Interest only payment due for the first six months. Principal and interest payment of $58,000 due monthly beginning January 2020 with the remaining principal and unpaid interest due at maturity. Interest accrues at prime rate plus 0.25%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, debt service charge ratio, and debt to EBITDA rolling ratio. The loan was paid off in 2021. | — |  |  | 2,444 |
A $21,580,000 term loan that matures in May 2029. Interest accrues at prime rate less 0.25% (3.00% at December 31, 2021 and 2020) and principal payments ranging from $24,000 to $40,000 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan was collateralized by substantially all of the Company’s and Global Well’s assets and was guaranteed by the Company and certain of its shareholders. The Company incurred debt issuance costs of approximately $119,000, which is reported as a reduction of the carrying value of debt on the accompanying consolidated balance sheet. | 20,808 |  |  | 21,130 |
A $3,000,000 term loan that was set to expire June 17, 2025. Principal and interest payment of $55,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate plus margin of 0.25% (3.50% as of December 31, 2020). The loan was secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. The loan was paid off in 2021. | — |  |  | 2,723 |
A $5,000,000 Paycheck Protection Program loan that was set to expire April 16, 2022. Interest accrued at 1.0%. The loan was forgiven in June 2021. | — |  |  | 5,000 |
Subtotal, continue on following page | $ | 20,808 |  |  | $ | 48,515 |
KARAT PACKAGING INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| December 31, 2021 |  | December 31, 2020
| (in thousands)
Subtotal from previous page | $ | 20,808 |  |  | $ | 48,515 |
A $16,540,000 term loan that was set to mature June 30, 2025. Interest accrued at 4.5% fixed and principal payments ranging from $31,000 to $0 along with interest due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan was collateralized by substantially all of the Company’s and Global Well’s assets and was guaranteed by the Company and certain of its shareholders. This loan was refinanced in September 2021 (see below). | — |  |  | 16,361 |
A $23,000,000 term loan that matures September 30, 2026, with the initial balance of $16,115,000 and an option to request for additional advances up to a maximum of $6,885,000 through September 2022. Interest accrues at a fixed rate of 3.5%. Principal and interest payments of $116,000 are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s shareholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. | 15,909 |  |  | — |
Long-term debt | 36,717 |  |  | 64,876 |
Less: unamortized loan fees | (200) |  |  | (102) |
Less: current portion | (1,178) |  |  | (11,364) |
Long-term debt, net of current portion | $ | 35,339 |  |  | $ | 53,410 |
Schedule of future maturities | At December 31, 2021, future maturities are:
| (in thousands)
2022 | $ | 1,178 |
2023 | 1,224 |
2024 | 1,276 |
2025 | 1,333 |
2026 | 12,794 |
Thereafter | 18,912 |
| $ | 36,717 |

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