|12 Months Ended|
Dec. 31, 2022
Note 14. Debt
Credit and Security Facility
During the year ended December 31, 2022, the Company entered into a $10.0 million Credit and Security Facility, which consists of a $6.0 million Revolving Line of Credit and a $4.0 Equipment Guidance Line.
The $6.0 million Revolving Line of Credit has a term of one year with interest due monthly and principal due at maturity. All amounts borrowed under the Revolving Line of Credit carry a variable interest of not less than 4.0% and are secured by the assets of ESS Metron. As of December 31, 2022, the interest rate was 7.5%.
The $4.0 million Equipment Guidance Line has a term of one year and permits the Company to finance up to 80.0% of certain equipment purchases. All amounts borrowed under the Equipment Guidance Line carry a variable interest of not less than 4.0% and are secured by the assets of ESS Metron. As of December 31, 2022, the interest rate was 7.5%.
Total borrowings under the Credit and Security Facility as of, and during the year ended, December 31, 2022, were less than $0.1 million.
All borrowings and accrued interest under the equipment guidance line convert to fixed rate term loans every six months, which have eitherterms for borrowings used to acquire vehicles and manufacturing equipment (“Manufacturing Term Loans”) or terms for borrowings of equipment other than vehicles and manufacturing equipment (“Equipment Term Loans”). The Manufacturing Term Loans carry interest at a fixed rate equal to the five-year treasury rate plus 2.5% as of conversion and the Equipment Term Loans carry interest at a fixed rate equal to the three-year treasury rate plus 2.5% as of conversion. As of December 31, 2022, no amounts were due under Manufacturing Term Loans or Equipment Term Loans.
As of December 31, 2022, the Company was in compliance with all covenants of the Credit and Security Facility.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef