Note 10: Credit Facilities

The Company has one secured term-debt credit facility. The facility is non-revolving and does not have an option to renew or extend additional credit. Additionally, the facility does not contain a prepayment penalty. Under the terms of the credit facility, the Company must maintain a minimum collateralization ratio of at least 120%. If at any time the Company fails to maintain its required minimum collateralization ratio, it will be required to deliver cash or qualifying mortgage loans in an amount sufficient to enable us to meet its obligation to maintain a minimum collateralization ratio. The collateral securing the facility at September 30, 2020 and December 31, 2019 satisfied the 120% minimum. As of September 30, 2020, the Company has only pledged qualifying mortgage loans as collateral on the credit facility. In addition, the credit facility includes a number of borrower covenants. The Company is in compliance with these covenants as of September 30, 2020 and December 31, 2019, respectively.

Previously, the Company had an additional term-debt credit facility that carried the same terms as the facility it currently has. On September 25, 2020, the Company reached an agreement with OSK VII, LLC to pay off the entire outstanding contractual principal balance of $15.0 million. The Company realized $2.4 million in gains on the extinguishment of debt because of this agreement. The Company was in compliance with its covenants and its minimum collateralization ratio on the facility at December 31, 2019 and at the time of the payoff.

On April 27, 2020, MP Securities applied for and received a Paycheck Protection Program loan (“PPP Loan”) granted under the CARES Act. According to the terms of the program, as administered by the Small Business Association, payments on the loan are deferred for six months, deferred interest is capitalized into the principal balance of the loan, and qualifying amounts of the principal balance of the loan and deferred interest are eligible to be forgiven if MP Securities retains employees and maintains salary levels for its existing employees. Qualifying amounts include amounts equal to eligible payroll costs, certain rent payments, and utility payments as defined by the program. No collateral is required to be pledged for the PPP Loan.

The following table summarizes the principal terms the Company’s term debt as of September 30, 2020:


Nature of Borrowing	Interest Rate	Interest Rate Type	Amount Outstanding		Monthly Payment		Maturity Date	Amount of Loan Collateral Pledged		Amount of Cash Pledged
Term Loan	2.525%	Fixed	$	52,433	$	450	11/1/2026	$	65,966	$	—
PPP Loan	1.000%	Fixed	$	111	$	—	4/27/2022	$	—	$	—

Future principal contractual payments of the Company’s term debt during the twelve-month periods ending September 30, are as follows (dollars in thousands):



2021	$	4,134
2022		4,346
2023		4,343
2024		4,451
2025		4,567
Thereafter		30,703
	$	52,544

Note that the above table includes future contractual principal payments of the PPP Loan, disregarding potential forgiveness.

On September 30, 2020, Ministry Partners Investment Company, LLC, entered into a Loan and Security Agreement with KCT Credit Union, an Illinois state chartered financial institution (“CUSO LOC”). The CUSO LOC is a $7.0 million short-term demand credit facility with a one-year maturity date of September 30, 2021. The facility carried a balance of zero at September 30, 2020. The interest rate on the facility is equal to the United States Prime Rate plus 0.50%. The interest rate was 3.75% on September 30, 2020. The CUSO LOC will automatically renew for another one-year term unless either party furnishes written notice at least thirty (30) days prior to the termination date that it does not intend to renew the agreement. The Company has secured the CUSO LOC with certain of its mortgage loan investments. The Company may draw funds on the CUSO LOC at any time until the line is fully drawn. Repayment of each advance is due one hundred and twenty (120) days after the advance is made or earlier in the event that a collateral loan becomes more than sixty (60) days delinquent and the Company fails to cure such deficiency. To secure its obligations under the CUSO LOC, the Company has agreed to grant a priority first lien and security interest in certain of its mortgage loan investments and maintain a minimum collateralization ratio measured by taking outstanding balance of mortgage notes pledged under the facility as compared to the total amount of principal owed on the CUSO LOC. The minimum ratio must equal at least 120%. The CUSO LOC contains typical affirmative covenants for a credit facility of this nature. The Company was in compliance with these covenants at September 30, 2020. As of September 30 2020, the Company did not have an outstanding balance on the CUSO LOC.