By CANADIAN VENDING
Spot Coffee Canada reported that their subsidiaries have received approval from their lender for loans in the aggregate amount of U.S.$1,065,206 pursuant to the United States Small Business Administration (SBA) program identified as the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act or SBA-CARES act.
The company will be able to use the proceeds of the SBA-CARES Loans for various items, including:
- Payroll costs
- Costs of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums as well as employee salaries, commission, or similar compensations
- Payment of rents and utilities; and
- Interest on any other debt obligation.
Furthermore, the SBA-CARES Loans also have the following characteristics:
- Eligible for forgiveness in an amount equal to the sum of the above-mentioned costs and payments;
- Free from any personal or other guarantees and no fees are to SBA; and
- Able to exclude any amount that would normally be includible in gross income of the Company by reason of the debt forgiveness from gross income.
As noted in Spot Coffee’s news release dated April 6, 2020, in addition to the emergency loans, the company’s US subsidiaries have also applied for a second set of loans under the SBA Economic Injury Disaster Loan (“EIDL”) program (the “SBA-EIDL Loans”). The foregoing applications are still pending and are subject to determination by the SBA.
Loans under this program are working capital loans that:
- Can be in an amount of up to $2-million (U.S.) depending on the eligibility of the qualifying company bearing interest rate of 3.75 per cent per annum
- Are available for companies with businesses, like SPoT, which are directly affected by the COVID-19 disaster
- Are used to pay fixed debts, payroll, accounts payable and other invoices that could have been paid had the disaster not occurred
- Are not intended to replace lost sales or profits or for expansion
- Will not be declined by the SBA for lack of collateral but will require borrowers to pledge what is available
- Funds under this program come directly from the U.S. treasury, therefore the company needs to apply for this loan directly to SBA’s disaster assistance program and not through its bank.
Eligibility for these working capital loans is based on:
- The size (must be small business) and type of business as well as the financial resources of the Company;
- A credit history of the company acceptable to SBA; and
- An ability of the company’s business to repay the loan.
SPoT’s management has reviewed its eligibility for the SBA-EIDL Loans and believes that SPoT meets the criteria for approval. SPoT will announce the SBA determination on this loan application once it has been completed.
Canada Emergency Business Account
SPoT has also been approved for the Canada Emergency Business Account, pursuant to which it has obtained a $40,000 line of credit at 0 per cent interest, with no minimum monthly principal payments required until December 31, 2022.