Loan received pursuant to the Payroll Protection Program
In April 2020, the Company was approved for, and received a loan with proceeds of $1.01 million under the Paycheck Protection Program(“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses, with the amount of the loan being determined by application of a formula defined in the CARES Act that is based, in large part, on payroll expenses incurred by the Company. Amounts received pursuant to the PPP are intended to fund qualifying expenses, as defined in the CARESAct, which include, without limitation, employee payroll, health care benefits, rent and utilities, mortgage payments and interest on other debt obligations incurred prior to February 15, 2020.
Under the terms of the PPP, certain amounts received as a loan may be forgiven if they are used for qualifying expenses. The United States Treasury Department published an interim final rule in the Federal Registry on June 1, 2020, with such interim final rule allowing for further comments up to July 1, 2020, to define the terms and conditions under which amounts will qualify for forgiveness. In addition, the Paycheck Program Flexibility Act of 2020 was signed into law by the President of the United States on June 5, 2020, which amends the CARESAct and eases the rules on the use of loan proceeds and forgiveness criteria. Any loan amounts that are not forgiven are required to be repaid over a two-year period, with a deferral period of six months and at an annual interest rate of 1%. Please note that the terms and conditions governing forgiveness and repayment could be amended or revised in the future.
The loan received has been recorded as a liability by the Company as of the date received. The Company intends to apply for forgiveness of amounts received under the PPP, in accordance with requirements of the CARES Act, as amended. Any loan amounts forgiven will be removed from liabilities recorded. Please note that there can be no assurances of forgiveness of any or all of the loan amount received pursuant to the PPP and there can also be no assurances as to the terms and conditions of repayment of any loan amounts not forgiven.
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