Red Violet, Inc. Debt Disclosure
12. Long-term loan
On May 5, 2020, the Company received funding under a promissory note dated May 5, 2020 evidencing the Loan, an unsecured non-recourse loan in the principal amount of $2,152 under the CARES Act. The Company’s policy was to account for the Loan as debt.
Long-term loan as of December 31, 2020 consists of the following:
(In thousands) |
|
December 31, 2020 |
|
|
Principal amount |
|
$ |
2,152 |
|
Included in consolidated balance sheet: |
|
|
|
|
Current portion of long-term loan |
|
$ |
449 |
|
Long-term loan (non-current) |
|
|
1,703 |
|
|
|
$ |
2,152 |
|
The Loan had a two-year term and a contractual maturity of May 5, 2022. The interest rate on the Loan is 1.0% per annum.
On June 16, 2021, the Company received a notice from the Lender that the full principal amount of the Loan of $2,152 and the accrued interest of $23 had been fully forgiven, and the U.S. Small Business Administration remitted the forgiveness payment to the Lender, resulting in a gain on extinguishment of debt of $2,175 during the year ended December 31, 2021.
The fair value of the Loan approximates its carrying amount as of December 31, 2020 as the interest rate approximates market rates for similar loans.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2021 | Mar 9, 2022 | Showing above |
| 2020 | Mar 10, 2021 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.