Note 9 - Debt Financing

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

9.

     Debt Financing

On

April 17, 2020,

the Company received

$1,556

in loan proceeds from the Paycheck Protection Program (the “PPP”), established pursuant to the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The unsecured loan is evidenced by a promissory note of the Company dated

April 15, 2020 (

the “Note”) in the principal amount of

$1,556,

issued to BMO Harris Bank N.A. (the “Bank”), the lender.

Under the terms of the Note, interest will accrue on the outstanding principal at the rate of

1.0%

per annum. The term of the Note is

two

years, though it

may

be payable sooner in connection with an event of default under the Note. To the extent the loan amount is

not

forgiven under the PPP, the Company is obligated to make equal monthly payments of principal and interest, beginning

seven

months from the date of the Note, until the maturity date. The Note contains covenants by the Company, including obtaining the written consent of the Bank prior to material changes in the management or ownership of the Company.

As of

September 30, 2020

the Company has utilized the entire balance of loan proceeds to fund its payroll expenses.  As a result, the Company believes it has met the eligibility criteria for forgiveness.  To the extent any amount is deemed unforgiveable, such amount will be payable over the terms of the note.

On

June 19, 2019,

the Company entered into a Cash Collateral Security agreement with BMO Harris Bank, N.A. (the BMO Harris agreement) to use for the sole purpose of issuing standby letters of credit. The BMO Harris agreement requires us to pledge as cash collateral

105%

of the aggregate face amount of outstanding standby letters of credit. The Company pays

250

basis points on the face values of outstanding letters of credit. There are

no

financial covenants set forth in the BMO Harris agreement. At

September 

30,

2020

and

December 31, 2019,

respectively, the Company had outstanding standby letters of credit totaling approximately

$2,278

and

$2,461

under the BMO Harris agreement. As of

September 

30,

2020

and

December 31, 2019

respectively, the Company held

$2,392

and

$2,587

 in a separate restricted use designated BMO Harris Bank N.A. deposit account. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments.

In connection with the transition to BMO Harris Bank N.A., the Company canceled its U.S. credit facility with JPMorgan Chase Bank, N.A. effective on

September 25, 2019.