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PAYCHECK PROTECTION PROGRAM LOAN

9 Months Ended

Sep. 30, 2020

PAYCHECK PROTECTION PROGRAM LOAN

PAYCHECK PROTECTION PROGRAM LOAN

15.  PAYCHECK PROTECTION PROGRAM LOAN

On April 17, 2020, the Company entered into a promissory note in the principal amount of $1,363,000 (the “PPP Loan”) in favor of Independent Bank (the “Lender”) pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), administered by the U.S. Small Business Administration (“SBA”).  The PPP Loan matures on April 17, 2022 and bears interest at a rate of 1.0% per annum.  Commencing November 17, 2020, the Company is required to pay the Lender equal monthly payments of principal and interest as necessary to fully amortize the principal amount outstanding by the maturity date.  The PPP Loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties.  The PPP Loan is unsecured and is a non-recourse obligation.  PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of payroll costs, rent, utilities, and interest on debt.  The terms of any forgiveness may also be subject to further requirements in any regulations and guidelines the SBA may adopt.

As of September 30, 2020, the Company believes it has incurred qualifying expenses equal to or greater than the principal amount of the PPP Loan; however, the Company is not able to determine the amount, if any, that might be forgiven.

On June 5, 2020, the PPP Flexibility Act was signed into law which, among other things, (i) extended the covered period from 8 weeks after the date of PPP funding to 24 weeks after the date of PPP funding, (ii) reduced the required amount of payroll expenditures from 75% to 60%, (iii) removed the prior ban on borrowers taking advantage of payroll tax deferral after loan forgiveness and (iv) extended the repayment deferral period to be the earlier of (a) the date forgiveness funds are received or (b) ten months from the end of the covered period.  The Company is evaluating the impact of these changes on the PPP Loan, including the payment date and the amounts available for forgiveness.

Assuming the PPP Loan is not forgiven, the Company’s obligations thereunder are as follows as of September 30, 2020 for years ending December 31:

2020		$	151,244
2021			912,826
2022			298,930
		$	1,363,000

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- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

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