Aqua Metals Reno, Inc. (“AMR”), a subsidiary of Aqua Metals Inc., entered into a $10,000,000 loan with Green Bank on November 3, 2015. The term of the loan was twenty-one years. During the first twelve months, only interest was payable and thereafter monthly payments of interest and principal were due. The interest rate adjusted on the first day of each calendar quarter to the greater of six percent (6%) or two percent (2%) per annum above the minimum prime lending rate charged by large U.S. money center commercial banks as published in the Wall Street Journal. The terms of the Loan Agreement contained various affirmative and negative covenants. Among them, AMR was required to maintain a minimum debt service coverage ratio of 1.25 to 1.0 (beginning with the twelve-month period ending March 31, 2017), a maximum debt-to-net worth ratio of 1.0 to 1.0 and a minimum current ratio of 1.5 to 1.0. AMR was in compliance with all but the minimum debt service coverage ratio covenant as of and for each of the calendar quarters in the period March 31, 2017 through September 30, 2020. AMR obtained a waiver for the minimum debt service coverage ratio covenant for each of the aforementioned calendar quarters.

The net proceeds of the loan were used for the construction of the Company’s lead acid recycling operation in McCarran, Nevada. Collateral for this loan was AMR’s accounts receivable, goods, equipment, fixtures, inventory, accessions and a certificate of deposit in the amount of $1,000,000. The certificate of deposit is reported in "Other Assets" in the condensed consolidated balance sheet. The loan was guaranteed by the United States Department of Agriculture Rural Development (“USDA”), in the amount of 90% of the principal amount of the loan. The Company paid a guarantee fee to the USDA in the amount of $270,000 at the time of closing and was required to pay to the USDA an annual fee in the amount of 0.50% of the guaranteed portion of the outstanding principal balance of the loan as of December 31 of each year. The costs associated with obtaining the Green Bank loan of $0.8 million were recorded as a reduction to the carrying amount of the note and were being amortized as interest expense over the twenty-one year life of the loan. Amortization of the deferred financing costs was $36,000 for both of the years ended December 31, 2020 and December 31, 2019, respectively. 

On December 10, 2020, the Company retired the loan with Veritex Community Bank ("Veritex"), the successor in interest to Green Bank. AMR utilized insurance proceeds including $7.9 million held in an escrow account at Veritex as well as the $1.0 million certificate of deposit held by Veritex, as collateral for the note, to pay the balance of the loan. As part of the loan payoff, the Company expensed the remaining unamortized loan costs of $0.6 million. In addition, the Company incurred a prepayment penalty of $0.4 million, which is also included in interest expense.   

On May 7, 2020, the Company received loan proceeds in the amount of approximately $332,000 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provided for loans to qualifying businesses. The loans and accrued interest are forgivable if the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during a prescribed period.

The unforgiven portion of the PPP loans are now payable over five years at an interest rate of 1%, with a deferral of payments until September of 2021. The Company believes it has used the loan proceeds for purposes consistent with the PPP requirements and has applied for loan forgiveness. Subsequent to December 31, 2020, one of the Company's two PPP loans for $131,000 was forgiven. The Company believes the remaining PPP loan will also qualify for forgiveness. However, there is no assurance that the Company will be eligible for forgiveness of the remaining outstanding loan, in whole or in part.

Notes payable is comprised of the following (in thousands):

The future principal payments related to the Paycheck Protection Program obligations are as follows as of December 31, 2020 (in thousands):