Neuronetics (NSDQ:STIM) and Obalon Therapeutics (NSDQ:OBLN) are the latest companies to announce that they entered into loans under the Paycheck Protection Program (PPP).
The U.S. Small Business Association administers the PPP as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act. Under the PPP, 75% of the loan proceeds must be used for payroll purposes, while the remainder can be used for payroll as well or for rent, mortgage interest or utilities.
All or a portion of the loan may be forgiven if all of the company’s employees are retained on the payroll for eight weeks after the date of the loan and it is used within the guidelines of the program. Forgiveness is also based on the company maintaining or quickly rehiring employees and maintaining salary levels.
Neuronetics, which develops a transcranial magnetic stimulation system to treat major depressive disorder, entered into a promissory note with Silicon Valley Bank for nearly $6.4 million with an interest rate of 1% per annum.
The note matures on April 21, 2022, and Neuronetics is required to pay all accrued interest under the loan that is not forgiven in accordance with the PPP on Nov. 21, 2020, according to a news release.
Non-surgical weight-loss treatment developer Obalon executed a promissory note in favor of Silicon Valley Bank for a principal amount of $430,047. Its loan includes the same interest rate as Neruonetics’ and matures on April 22, 2022.