Quarterly report pursuant to Section 13 or 15(d)

Paycheck Protection Program Loans and Economic Injury Disaster Loans

v3.21.2
Paycheck Protection Program Loans and Economic Injury Disaster Loans
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Paycheck Protection Program Loans and Economic Injury Disaster Loans

Note 15 – Paycheck Protection Program Loans and Economic Injury Disaster Loans

 

Paycheck Protection Program loans

 

In 2020, the Company and WCI each received loans in the amount of $76,500 and $383,342, respectively, from the Bank of Southern California and the Republic Bank of Arizona (collectively, the “PPP Loans”). The PPP Loans were forgiven in November 2020, except for $10,000 of WCI’s loan that was not eligible for forgiveness due to receipt of a $10,000 Economic Injury Disaster Loan Advance (“EIDL Advance”). However, on December 27, 2020, Section 1110(e)(6) of the CARES Act was repealed by Section 333 of the Economic Aid Act. As a result, the SBA automatically remitted a reconciliation payment to WCI’s PPP lender, the Republic Bank of Arizona, for the previously deducted EIDL Advance amount, plus interest through the remittance date. On March 16, 2021, The Republic Bank of Arizona notified WCI of receipt of the reconciliation payment and full forgiveness of the EIDL Advance. The $10,000 forgiveness is reflected as other income for the nine months ended September 30, 2021, in the condensed consolidated income statements.

 

On February 17, 2021, Mentor received a second PPP Loan in the amount of $76,593 (“Second PPP Loan”) pursuant to Division N, Title III, of the Consolidated Appropriations Act, 2021 (the “Economic Aid Act”) as further set forth at Section 311 et. seq. of the Economic Aid Act.

 

The Second PPP Loan is forgivable so long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent, utilities, and other covered operations expenditures, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the forgiveness period.

 

 

Note 15 – Paycheck Protection Program loans and Economic Injury Disaster Loan (continued)

 

The Company records PPP Loans as a liability in accordance with FASB ASC 470, “Debt” and records accrued interest through the effective date of forgiveness on the PPP Loans. Total gain on extinguishment of the PPP Loans and accrued interest is reported in other income and expense in the consolidated income statement.

 

PPP loan balances consist of the following:

 

Schedule of paycheck protection plan loan balances

    September 30,
2021		     December 31,
2020		  
May 5, 2020, PPP loan from Republic Bank of Arizona to Waste Consolidators, Inc., revised December 1, 2020. The note bears interest at 1% per annum, with a revised maturation date of May 15, 2020, with monthly principal and interest payments of $560 beginning December 15, 2020. On March 16, 2021, WCI was notified of full forgiveness of the note.   $ -     $ 9,449  
                 
February 17, 2021, Second PPP loan from the Bank of Southern California, with accrued interest of $473 at September 30, 2021. The loan bears interest at 1% per annum and matures January 16, 2026. Mentor may apply for forgiveness for amounts disbursed for covered costs. Payment on any unforgiven amount begins within ten months after last day of the loan forgiveness covered period (i) beginning on the date that is 8 weeks after the date of disbursement and (ii) ending on the date that is 24 weeks after the date of disbursement. Subsequent to quarter end, on October 26, 2021, Mentor was notified of full forgiveness of the note, see Note 20.     77,066       -  
                 
Total     77,066       9,449  
                 
Less: Current maturities     -       (6,658 )
                 
Long-term portion of paycheck protection plan loans   $ 77,066     $ 2,791  

 

Interest expense on PPP Loans for the three months ended September 30, 2021 and 2020 was $194 and $1,048, respectively. Interest expense on PPP Loans for the nine months ended September 30, 2021 and 2020 was $385 and $1,798, respectively.

 

Economic injury disaster loan

 

On July 9, 2020, WCI received an additional Economic Injury Disaster Loan in the amount of $150,000 through the SBA. The loan is secured by all tangible and intangible personal property of WCI, bears interest at 3.75% per annum, requires monthly installment payments of $731 beginning July 2021, and matures July 2050. The loan is collateralized by all tangible and intangible assets of WCI.

 

EIDL loan balances at September 30, 2021 consist of the following:

 

Schedule of EIDL loan balances

    September 30,
2021		     December 31,
2020		  
July 9, 2020, WCI received an additional Economic Injury Disaster Loan, including accrued interest of $5,513 and $2,502 as of September 30, 2021 and December 31, 2020, respectively. The note is secured by all tangible and intangible personal property of WCI, bears interest at 3.75% per annum, requires monthly installment payments of $731 beginning July 2021, and matures July 2050.   $ 156,862     $ 152,602  
                 
Less: Current maturities*     -       -  
                 
Long-term portion of economic injury disaster loan   $ 156,862     $ 152,602  

 

* All payments through March of 2023 will offset accrued interest incurred in the deferral period and therefore the current maturity of principal is $0 at September 30, 2021 and December 31, 2020.

 

Interest expense on the EIDL Loan for the three months ended September 30, 2021 and 2020 was $1,449 and $1,172, respectively.

 

Interest expense on the EIDL Loan for the nine months ended September 30, 2021 and 2020 was $4,260 and $1,172, respectively.