Southeast Harris County Economic Development Council, Inc. dba Economic Alliance Houston Port Region

NOTES TO FINANCIAL STATEMENTS (Continued)

For the Years Ended December 31, 2021 and 2020

Federal Income Taxes

The Council is an exempt organization for federal income tax purposes under Section 501(c)(6) of the Internal Revenue Code.

The last three years of informational tax returns, 2020, 2019, and 2018, filed with the IRS remain subject to examination.

Estimates

The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 3 – LONG-TERM DEBT

On January 5, 2016, the Council acquired a loan from Community Bank of Texas, N.A. in the amount of $135,000 with an interest rate of 4.75 percent to purchase a building. The building has been pledged as security as a part of the loan agreement. The loan is to be paid in monthly installments of $1,055 through December 2020 with a balloon payment of $100,931 due January 5, 2021. This loan was refinanced in January 2021 at the same interest rate and a new monthly payment of $1,061 beginning February 5, 2021 through December 2025 with a balloon payment of $57,325 due January 5, 2026.

As a result of the COVID-19 pandemic, the Council applied for and was approved for an Economic Injury Disaster Loan (“EID Loan”) through the U.S. Small Business Administration in June 2020. The EID Loan was for $150,000 with a 30-year term at an interest rate of 2.75 percent. The EID Loan can be used for working capital and normal operating expenses. At the time of funding, payments were deferred for one year. The EID Loan is to be paid in monthly installments of $641 starting in December 2022. Interest accrues from the date of funding.

On February 3, 2021, the Council received Paycheck Protection Program (PPP) proceeds from Moody Bank in the amount of $106,090. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), provided for loans to qualifying organizations for amounts up to 2.5 times the average monthly payroll expenses of the qualifying organization. The PPP loan was forgiven on June 28, 2021.

On June 1, 2021, the Council received PPP proceeds from Associated Credit Union of Texas in the amount of $124,700 with a 1% interest rate. The PPP, established as part of the Coronavirus Aid, Relief, and Economic Security Act, provided loans to qualifying organizations for amounts up to 2.5 times the average monthly payroll expenses of the qualifying organization. The PPP loan was forgiven on February 2, 2022.