Under what conditions does Black Bear Diner recognize the PPP-SD loan proceeds as other income?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2025 | $ 113,506 | |------------------------------------------|---------------| | 2026 | 116,898 | | 2027 | 120,406 | | 2028 | 124,014 | | 2029 | 105,920 | | Total minimum lease payments | 580,744 | | Less: imputed interest | (22,819) | | Present value of lease liability | 557,925 | | Less: current portion of lease liability | (105,194) | | Lease liability, net of current portion | $ 452,731 | Litigation: The Company is subject to litigation and pending claims arising in the ordinary course of business. The Company records reserves for such matters when payment is probable, and the amount of a claim is reasonably estimable. The ultimate resolution of pending claims has not had and is not expected to have a material adverse effect on the Company's financial condition, position or cash flows at December 25, 2024 and December 27, 2023.
NOTE 6 - GOVERNMENT ASSISTANCE PROGRAMS
Paycheck Protection Forgivable Program Loans: As a result of the economic uncertainty stemming from the impact of the COVID-19 pandemic, on March 16, 2021, the Company received a Second-Draw Paycheck Protection Program (PPP-SD) loan in the principal amount of $1,124,900 from the SBA in accordance with the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act ("Economic Aid Act"). The PPP-SD loan has a stated interest rate of 1% per annum and has a contractual maturity date of March 1, 2026.
The Company has elected to account
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, the company received a Second-Draw Paycheck Protection Program (PPP-SD) loan of $1,124,900 on March 16, 2021. The loan, obtained from the SBA, carries a 1% interest rate per annum and matures on March 1, 2026. Black Bear Diner accounts for this loan as debt, following ASC 470 guidelines.
Initially, the PPP-SD loan proceeds are recorded as a long-term debt. Black Bear Diner recognizes these proceeds as 'other income' only when the SBA legally forgives the loan balance. During the year ending December 29, 2021, Black Bear Diner applied for forgiveness and received $999,509 in partial forgiveness.
As of December 27, 2023, and December 25, 2024, the remaining balance of the PPP-SD loan is still recorded as long-term debt, with the current portion reflected in current liabilities on the balance sheet. This accounting treatment means that the forgiven portion of the loan directly boosts Black Bear Diner's income statement, while the unforgiven portion remains a liability until fully repaid or forgiven.