SMITH MIDLAND CORP Debt Disclosure
4. NOTES PAYABLE
Notes payable consist of the following (in thousands):
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| December 31, |
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| 2024 |
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| 2023 |
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Note payable to Burke & Herbert Bank & Trust, formally Summit Community Bank (the "Bank"), maturing February 2037; with monthly payments of approximately $21 of principal and interest fixed at 4.09%; net of $21 and $22 of deferred loan costs, respectively; collateralized by the related real property. |
| $ | 2,379 |
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| $ | 2,525 |
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Note payable to the Bank, maturing October 2029; with monthly payments of approximately $22 of principal and interest fixed at 3.64% under a Promissory Notes Rate Conversion Agreement; net of $13 and $16 of deferred loan costs, respectively; collateralized by all assets of Smith-Carolina Corporation and guaranteed by the Company. |
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| 1,166 |
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| 1,382 |
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Note payable to the Bank, maturing March 2030; with monthly payments of approximately $27 of principal and interest fixed at 3.99%; net of $18 and $22 of deferred loan costs, respectively; collateralized by the Company’s property, plant, and buildings. |
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| 1,536 |
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| 1,792 |
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Installment note, collateralized by certain machinery and equipment maturing in 2025; with monthly payments of $1.1 with an annual interest rate of 2.90%. |
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| 13 |
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| 29 |
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A revolving line of credit evidenced by promissory note with the Bank, with the available amount of $5,000 with no balance outstanding as of December 31, 2024. The line of credit is evidenced by a commercial revolving promissory note, which carries a variable interest rate of prime, with a floor of 4.99%. The line of credit was renewed on January 1, 2025 and matures January 1, 2026. The amount available is based on the lower of the maximum $5,000 or 50% of eligible cash, inventory, and accounts receivable balances at the financial statement date. Key provisions of the line of credit require the Company (i) to obtain bank approval for capital expenditures in excess of $5,000 during the term of the loan and (ii) to obtain bank approval prior to its funding of any acquisition. The line of credit is collateralized by a first lien position on the Company's accounts receivable, inventory, and equipment. |
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| — |
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| — |
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Total Notes Payable Outstanding |
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| 5,094 |
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| 5,728 |
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Less current maturities |
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| (658 | ) |
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| (636 | ) |
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Notes Payable-less current maturities |
| $ | 4,436 |
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| $ | 5,092 |
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The total notes payable balance is offset by debt issuance costs associated with securing the loans summarized above and are amortized straight line over the term of the related loan, which approximates the effective interest rate method. The total unamortized costs (in thousands) as of December 31, 2024 is $52 and $60 as of December 31, 2023.
On October 1, 2023, the Company received a Commitment Letter from the Bank to provide a guidance line of credit specifically to purchase business equipment in an amount up to $1,500. The commitment provided for the purchase of equipment for which a note payable will be executed with a term not to exceed five years with an interest rate at the Wall Street Journal prime rate plus 0.50% with a floor of 3.50% per annum. The loan is collateralized by a first lien position on all equipment purchased under the line. The commitment for the guidance line of credit matured on October 1, 2024. As of October 1, 2024, the Company had not purchased any equipment pursuant to the $1,500 commitment.
Under the loan covenants, for both the Line of Credit with the Bank, the Company is limited to annual capital expenditures (in thousands) of $5,000 and has received a waiver for 2024 from the Bank, and must maintain tangible net worth (in thousands) of $25,000.
The Company's notes payable includes certain restrictive covenants, which require the Company to maintain minimum levels of tangible net worth, places limits on annual capital expenditures for which a waiver was received in 2024, and limits on the payment of cash dividends. At December 31, 2024, the Company was in compliance with all covenants.
The aggregate amounts of notes payable maturing in each of the next five years and thereafter are as follows (in thousands):
Year Ending December 31, |
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2025 |
| $ | 658 |
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2026 |
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| 671 |
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2027 |
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| 699 |
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2028 |
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| 727 |
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2029 |
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| 713 |
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Thereafter |
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| 1,626 |
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| $ | 5,094 |
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | May 27, 2025 | Showing above |
| 2021 | Mar 31, 2022 | |
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.