TORONTO, April 6, 2020 /CNW/ - SPOT COFFEE
(CANADA) LTD. (TSX-V: SPP) ("Spot"
or the "Company") wishes to report that its management has
started the process of formal applications by its US operating
companies for two specific loans offered by the US
government's $2.2 Trillion
Stimulus Package, which has been passed by the US Senate, House of
Representatives and the White House.
One loan falls under the Small Business Administration ("SBA")
program identified as the Coronavirus Aid, Relief, and Economic
Security ("CARES") Act, and the second loan is described under the
SBA Economic Injury Disaster Loan ("EIDL") program. Please click on
the link below for the most relevant site for a better
understanding of the general terms of the above-mentioned
loans.
https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
Spot's US Financial Executive Committee met and reviewed with
the US counsel and director, Mr. R. J. Stapell, the terms and
conditions of the above-mentioned loans in order to determine the
eligibility of Spot's US operating companies to apply for these
loans and unanimously felt confident to proceed with their formal
loan applications.
The amounts and main conditions of the two loans are as
follows:
SBA – CARES
This program provides fully guaranteed federal loans to small
businesses to help them keep their employees working during the
COVID-19 pandemic and economic downturn. As per the SBA – CARES
provisions, the Company will be applying through its bank for its
SBA – CARES loan.
The loan amount is calculated on the basis of the average total
monthly payments by the Company for payroll costs incurred during
the 1-year period before the date on which the loan is made
multiplied by 2.5.
Subject to the final terms and conditions of the loan, if
approved, the Company's understanding is that it can use the
proceeds of the loan for:
- 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.
- Interest on any other debt obligation.
Furthermore, the loan given to the Company is:
- 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
payable to SBA.
- Able to exclude any amount which would normally be includible
in gross income of the Company by reason of the debt forgiveness
from gross income.
SBA- EIDL
Loans under this program are in fact working capital loans
that:
- Can be in an amount of up to US $2
million depending on the eligibility of the qualifying
company bearing interest rate of 3.75% 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.
- An ability of the company's business to repay the loan.
Spot will also be applying through its bank for the Canada Emergency Business Account which
provides the Company with a $40,000
line of credit at 0% interest and requiring no minimum monthly
principal payments until December 31,
2022. The Canada Emergency
Business Account has been specifically designed by the Canadian
government to help small and medium-sized businesses with their
most pressing needs during the COVID-19 crisis.
The Company joins all the small and medium-sized businesses in
extending their many thanks to the governments of the USA and Canada for their efforts and support of the
business community and its employees until such time this crisis
passes and the economies recover.
Spot will be reporting on the results of its loan applications
as soon as they are made available.
About Spot Coffee
Spot Coffee has been designing, building and operating
company-owned and franchise community cafés in the
northeastern United States for
almost 25 years. Spot's cafés provide their customers with the
highest quality service, signature made-to-order meals and
award-winning micro-roasted coffee. Each Spot café is distinctively
designed to suit the local neighbourhood. creating a warm and
friendly gathering place for the community. Spot's commercial
business focuses on the sale of roasted coffee beans to food
service and grocery chains, business offices, and resellers such as
universities and hospitals.
We seek Safe Harbor.
Forward Looking Statements
Except for statements of historical fact relating to the
Company, certain information contained herein constitutes
forward-looking statements. Although we believe that the
expectations reflected in the forward-looking information are
reasonable, there can be no assurance that such expectations will
prove to be correct. We cannot guarantee future results,
performance or achievements. Consequently, there is no
representation that the actual results achieved will be the same,
in whole or in part, as those set out in the forward-looking
information.
SOURCE Spot Coffee (Canada)
Ltd.