• Filing Date: 2020-06-12
  • Form Type: 10-Q
  • Description: Quarterly report
v3.20.1
Loans Payable
9 Months Ended
Apr. 30, 2020
Payables and Accruals [Abstract]  
Loans Payable

Note 15—Loans Payable

 

On July 16, 2019, the Company obtained a loan of $140,000 to pay for its insurance coverages, repayable in nine equal installments of $15,976 starting from September 1, 2020 which represented a 4.79% annual percentage interest rate.

 

On March 27, 2020, Congress passed CARES Act to provide an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the U.S. economy, including $349 billion that was earmarked for the Paycheck Protection Program (PPP) to provide certain small businesses with liquidity to support their operations, to be administered by the Small Business Administration (SBA). An additional $310 billion was later authorized for the PPP.

 

Under the PPP, eligible small businesses can apply to an SBA-approved lender for a loan that doesn't require collateral or personal guarantees. The loans have a 1% fixed interest rate and are due in two years. However, they are eligible for forgiveness (in full or in part, including any accrued interest) under certain conditions. For loans (or parts of loans) that are forgiven, the lender will collect the forgiven amount from the U.S. government.

 

The Company believes it qualified for a PPP loan and applied for and received a $218,000 loan from Western Alliance Bank, a loan servicer and the Company's lender (see Note 9), on April 22, 2020. The Company is using these proceeds primarily for payroll purposes for U.S. employees during the covered period provided under the PPP (which was recently extended to 24 weeks) and therefore expects that most of this loan will be forgiven. Any portion of the loan that is not forgiven will due five years after inception of the loan.