What is the role of the SBA in the forgiveness of Black Bear Diner's PPP-SD loan?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
or its PPP-SD loan as debt in accordance with ASC 470 - Debt. Under ASC 470, the PPP-SD loan proceeds are initially recorded as a long-term debt and subsequently recognized as other income if and when the loan balance is legally forgiven by the SBA.
During the year ended December 29, 2021, the Company submitted its applications for forgiveness of the PPP-SD loan to the SBA. The Company received partial forgiveness in the amount of $999,509 of the PPP-SD loan. As of December 25, 2024 and December 27, 2023, the remaining outstanding balance on the PPP-SD loan is recorded as long-term debt with the current portion reflected in current liabilities in the balance sheet.
Under the terms of the Paycheck Protection Program, a PPP loan provides for conditional forgiveness if the Company utilizes the loan proceeds on admissible expenses, including qualifying payroll, rent, and utility expenses, and maintains employment and compensation levels for a specified period of time. Although the Company believes the conditions for full forgiveness of the PPP-SD loan have been met, ultimate forgiveness is conditioned upon the SBA concurring with the Company's good-faith assessment that the current economic uncertainty made the loan request necessary to support ongoing operations and the loan proceeds were used for admissible expenses. If the Company is later determined to have violated the provisions of the Paycheck Protection Program, the Company may be required to repay the PPP-SD loan in its entirety and/or be subject to additional penalties.
formed by the elected Board of Members. Members and managers are indemnified by the Company against any and all losses, claims, demands, costs, damages and any other liabilities arising out of the business of the Company. Distributions are made in accordance with distribution provisions as more fully described in the limited liability company operating agreement. During the years ended December 25, 2024 and December 27, 2023, the Company distributed $14,102,475 and $7,965,000 to the Parent, respectively.
es for the grant of profits interest units to officers and employees of both the Company and Holdco. The operating agreement provides for time-based vesting units and performance-based vesting units.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, the Small Business Administration (SBA) plays a crucial role in the forgiveness of the company's Second-Draw Paycheck Protection Program (PPP-SD) loan. Black Bear Diner received a PPP-SD loan of $1,124,900 on March 16, 2021, with a 1% interest rate and a maturity date of March 1, 2026. The company accounts for this loan as debt, initially recording it as a long-term liability.
The FDD states that the loan is recognized as "other income" only when the SBA legally forgives the loan balance. Black Bear Diner applied for forgiveness of this loan and received partial forgiveness of $999,509. The remaining balance is recorded as long-term debt, with the current portion reflected in current liabilities on the balance sheet as of December 25, 2024, and December 27, 2023.
Ultimate forgiveness of the PPP-SD loan is conditional upon the SBA concurring with Black Bear Diner's assessment that economic uncertainty necessitated the loan and that the proceeds were used for admissible expenses, such as payroll, rent, and utilities. If the SBA determines that Black Bear Diner violated the Paycheck Protection Program provisions, the company may be required to repay the loan in full and/or be subject to additional penalties. This highlights the SBA's authority to review and approve the forgiveness of the PPP-SD loan, ensuring compliance with program requirements.