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DEBT | 6 Months Ended
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Jun. 30, 2022
Debt Disclosure [Abstract] |
DEBT | 7. DEBT The following table summarizes the debt balances as of June 30, 2022 and December 31, 2021, and the debt activity for the six months ended June 30, 2022 (in thousands):
|  |  |  | During the Six Months Ended June 30, 2022 |  |
|  | Balances as of December 31, 2021 |  | Debt Issuances & Assumptions |  | Repayments |  | Accretion & (Amortization) |  | Balances as of June 30, 2022
Mortgage Payable: |  |  |  |  |  |  |  |  |  |
Outstanding Balance |  | $ | 97,100 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 97,100 |
Deferred debt origination costs — Mortgage Payable |  | (120) |  |  | — |  |  | — |  |  | 13 |  |  | (107) |
Total Mortgage Payable |  | 96,980 |  |  | — |  |  | — |  |  | 13 |  |  | 96,993 |
Secured Borrowings — Government Guaranteed Loans: |  |  |  |  |  |  |  |  |  |
Outstanding Balance |  | 6,671 |  |  | — |  |  | (441) |  |  | — |  |  | 6,230 |
Unamortized premiums |  | 305 |  |  | — |  |  | — |  |  | (34) |  |  | 271 |
Total Secured Borrowings — Government Guaranteed Loans |  | 6,976 |  |  | — |  |  | (441) |  |  | (34) |  |  | 6,501 |
Other Debt: |  |  |  |  |  |  |  |  |  |
2018 revolving credit facility |  | 60,000 |  |  | 40,000 |  |  | (25,000) |  |  | — |  |  | 75,000 |
2020 unsecured revolving credit facility |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Junior subordinated notes |  | 27,070 |  |  | — |  |  | — |  |  | — |  |  | 27,070 |
SBA 7(a) loan-backed notes |  | 7,670 |  |  | — |  |  | (3,656) |  |  | — |  |  | 4,014 |
Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility |  | 5,030 |  |  | — |  |  | (4,825) |  |  | — |  |  | 205 |
Deferred debt origination costs — other |  | (989) |  |  | — |  |  | — |  |  | 567 |  |  | (422) |
Discount on junior subordinated notes |  | (1,592) |  |  | — |  |  | — |  |  | 47 |  |  | (1,545) |
Total Other Debt |  | 97,189 |  |  | 40,000 |  |  | (33,481) |  |  | 614 |  |  | 104,322 |
Total Debt, Net |  | $ | 201,145 |  |  | $ | 40,000 |  |  | $ | (33,922) |  |  | $ | 593 |  |  | $ | 207,816 |
Mortgage Payable—The mortgage payable is secured by a deed of trust on a property and assignments of rents receivable. As of June 30, 2022, the Company’s mortgage payable had a fixed interest rate of 4.14% per annum, with monthly payments of interest only, due on July 1, 2026. The loan is nonrecourse. Secured Borrowings—Government Guaranteed Loans—Secured borrowings—government guaranteed loans represent sold loans which are treated as secured borrowings because the loan sales did not meet the derecognition criteria provided for in ASC 860-30, Secured Borrowing and Collateral. These loans included cash premiums that are amortized as a reduction to interest expense over the life of the loan using the effective interest method and are fully amortized when the underlying loan is repaid in full. As of June 30, 2022, the Company’s secured borrowings-government guaranteed loans included $3.7 million of loans sold for a premium and excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 4.13%, and $2.6 million of loans sold for an excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 1.81%. 2018 Revolving Credit Facility—In October 2018, the Company entered into a secured revolving credit facility with a bank syndicate that, as amended, allows the Company to borrow up to $209.5 million, subject to a borrowing base calculation (the “2018 revolving credit facility”). In September 2020, the 2018 revolving credit facility was amended (the “2018 Credit Facility Modification”) to remedy the effect that COVID-19 had on the Company’s ability to borrow under the 2018 revolving credit facility during the period from September 2, 2020 through August 14, 2021 (the “Deferral Period”). The 2018 revolving credit facility bore interest during the Deferral Period at (A) the base rate plus 1.05% or (B) LIBOR plus 2.05% and (ii) bears interest after the Deferral Period, at (A) the base rate plus 0.55% or (B) LIBOR plus 1.55%. As of June 30, 2022 and December 31, 2021, the variable interest rate was 3.72% and 2.15%, respectively. The 2018 revolving credit facility is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The 2018 revolving credit facility is secured by deeds of trust on certain of the Company’s properties. The 2018 revolving credit facility contains customary covenants and is not subject to any financial covenants (though the amount the Company may borrow under the 2018 revolving credit facility is determined by a borrowing base calculation). The 2018 revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions, including providing notice of the election and paying an extension fee of 0.15% of each lender’s commitment being extended on the effective date of such extension. The Company is working with a bank to refinance the 2018 revolving credit facility prior to its maturity date. There can, however, be no assurance that such refinancing will occur. In the interim, in order to preserve flexibility with respect to the Company’s liquidity, the Company submitted an extension notice in July 2022 to extend the maturity of the 2018 Revolving Credit Facility to October 2023. The extension is subject to the satisfaction of certain conditions that the Company expects to be able to satisfy (if the refinancing does not occur). As of June 30, 2022 and December 31, 2021, $75.0 million and $60.0 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $125.9 million and $117.6 million, respectively, was available for future borrowings. 2020 Unsecured Revolving Credit Facility—In May 2020, the Company entered into an unsecured revolving credit facility with a bank (the “2020 unsecured revolving credit facility”) pursuant to which the Company could borrow up to a maximum of $10.0 million. Outstanding advances under the 2020 unsecured revolving credit facility bore interest at the rate of 1.00%. The 2020 unsecured revolving credit facility contains certain customary covenants including a maximum leverage ratio and a minimum fixed charge coverage ratio, as well as certain other conditions. The 2020 unsecured revolving credit facility matured on May 1, 2022. Junior Subordinated Notes—The Company has junior subordinated notes with a variable interest rate which resets quarterly based on the three-month LIBOR plus 3.25%, with quarterly interest only payments. The junior subordinated balance is due at maturity on March 30, 2035. The junior subordinated notes may be redeemed at par at the Company’s option. SBA 7(a) Loan-Backed Notes—On May 30, 2018, the Company completed a securitization of the unguaranteed portion of certain of its SBA 7(a) loans receivable with the issuance of $38.2 million of unguaranteed SBA 7(a) loan-backed notes. The SBA 7(a) loan-backed notes are secured by deeds of trust or mortgages and are collateralized solely by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of the Company’s SBA 7(a) loans receivable. The SBA 7(a) loan-backed notes mature on March 20, 2043, with monthly payments due as payments on the collateralized loans are received. Based on the anticipated repayments of the Company’s collateralized SBA 7(a) loans, at issuance, the Company estimated the weighted average remaining life of the SBA 7(a) loan-backed notes to be approximately two years. The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%. As of June 30, 2022 and December 31, 2021, the variable interest rate was 3.00% and 1.49%, respectively. The Company reflects the SBA 7(a) loans receivable as assets on its consolidated balance sheets and the SBA 7(a) loan-backed notes as debt on its consolidated balance sheets. The restricted cash on the Company’s consolidated balance sheets included funds related to the Company’s SBA 7(a) loan-backed notes of $1.1 million and $1.9 million as of June 30, 2022 and December 31, 2021, respectively. Paycheck Protection Program Liquidity Facility—In June 2020, the Company commenced borrowing funds from the Federal Reserve through the PPP Liquidity Facility (the “PPPLF”) to finance all the loans the Company originated under the PPP. Advances under the PPPLF carry an interest rate of 0.35%, are made on a dollar-for-dollar basis based on the amount of loans originated under the PPP and are secured by loans made by the Company under the PPP. The PPPLF contains customary covenants but is not subject to any financial covenants. The maturity date of PPPLF borrowings is the same as the maturity date of the loans pledged to secure the extension of credit, generally two years. At maturity, both principal and accrued interest are due. The maturity date of a PPPLF borrowing will be accelerated if, among other things, the Company has been reimbursed by the SBA for a loan forgiveness (to the extent of the forgiveness), the Company has received payment from the SBA representing exercise of the loan guarantee or the Company has received payment from the underlying borrower (to the extent of the payment received). As of June 30, 2022 and December 31, 2021, $205,000 and $5.0 million, respectively, was outstanding under the PPPLF. As the PPP has ended, no new extensions of credit may be made under the PPPLF and, as of June 30, 2022, substantially all obligations to the Federal Reserve have been satisfied. Deferred debt issuance costs, which represent legal and third-party fees incurred in connection with the Company’s borrowing activities, are capitalized and amortized to interest expense on a straight-line basis over the life of the related loan, approximating the effective interest method. Deferred debt issuance costs are presented net of accumulated amortization and are a reduction to total debt. As of June 30, 2022 and December 31, 2021, accrued interest and unused commitment fees payable of $652,000 and $467,000, respectively, were included in accounts payable and accrued expenses. Future principal payments on the Company’s debt (face value) as of June 30, 2022 are as follows (in thousands):
Years Ending December 31, |  | Mortgage Payable |  | Secured Borrowings Principal (1) |  | 2018 Revolving Credit Facility |  | Other (1) (2) |  | Total
2022 (Six months ending December 31, 2022) |  | $ | — |  |  | $ | 365 |  |  | $ | 75,000 |  |  | $ | 682 |  |  | $ | 76,047 |
2023 |  | — |  |  | 376 |  |  | — |  |  | 243 |  |  | 619 |
2024 |  | — |  |  | 388 |  |  | — |  |  | 250 |  |  | 638 |
2025 |  | — |  |  | 400 |  |  | — |  |  | 298 |  |  | 698 |
2026 |  | 97,100 |  |  | 413 |  |  | — |  |  | 187 |  |  | 97,700 |
Thereafter |  | — |  |  | 4,289 |  |  | — |  |  | 29,628 |  |  | 33,917 |
|  | $ | 97,100 |  |  | $ | 6,230 |  |  | $ | 75,000 |  |  | $ | 31,289 |  |  | $ | 209,619 |
______________________ (1)Principal payments on secured borrowings and SBA 7(a) loan-backed notes, which are included in Other, are generally dependent upon cash flows received from the underlying loans. The Company’s estimate of their repayment is based on scheduled payments on the underlying loans. The Company’s estimate will differ from actual amounts to the extent the Company experiences prepayments and or loan liquidations or charge-offs. No payment is due unless payments are received from the borrowers on the underlying loans. (2)Represents the junior subordinated notes, SBA 7(a) loan-backed notes, and borrowed funds from the Federal Reserve through the PPPLF.

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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 https://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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