Quarterly report pursuant to Section 13 or 15(d)

Debt Obligations

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Debt Obligations
 3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
Debt Obligations Debt Obligations
Debt consists of the following:
March 31, 2023 December 31, 2022
Month Issued Outstanding Face Amount Carrying Value Maximum Facility Size Final Stated Maturity Weighted Average
Carrying Value(a)
Funding Cost Life (Years)
Revolving credit facility(a)
Apr 2021 $ 7,694  $ 7,694  $ 30,000  Apr 2023 9.9  % 0.1 $ 20,613 
a.In March 2016, Sunlight entered into a Loan and Security Agreement with a lender (“Prior Lender”). In May 2019, Sunlight and Prior Lender amended and restated the agreement to provide Sunlight a $15.0 million revolving credit facility (“Prior Facility”). In April 2021, Sunlight paid the Prior Facility in full using proceeds from a Loan and Security Agreement into which Sunlight entered with Silicon Valley Bank (“SVB”) and replaced the associated standby letter of credit. Borrowings under the current revolving credit facility, secured by the net assets of Sunlight Financial LLC, bear interest at a per annum rate equal to the sum of (i) a floating rate index and (ii) a fixed margin. The facility includes unused facility costs, and amounts borrowed under this facility are nonrecourse to Sunlight Financial Holdings Inc.

Sunlight’s debt obligations are subject to customary loan covenants and event of default provisions, including event of default provisions triggered by a failure to maintain minimum liquidity and earnings as well as maintaining capacity to fund Loans.

Activities — Activities related to the carrying value of Sunlight’s debt obligations were as follows:

For the Three Months Ended March 31,
2023 2022
Beginning Balance $ 20,613  $ 20,613 
Borrowings —  — 
Repayments (12,919) — 
Amortization of deferred financing costs —  — 
Ending Balance $ 7,694  $ 20,613 

Maturities — At March 31, 2023, all of Sunlight’s debt obligations contractually mature in 2023.
Covenants — Sunlight is required to maintain minimum liquidity, EBITDA, and available takeout commitment levels on a quarterly basis under the Loan and Security Agreement. As a result of the platform fee losses in the fourth quarter of 2022, Sunlight did not meet the EBITDA requirement at March 31, 2023. Additionally, without the benefit of the Commitment & Transaction Support Agreement, breaches of other significant agreements, including the Bank Partner Agreements, could also potentially trigger a cross default under the Loan and Security Agreement. Due to this financial covenant breach, SVB was contractually entitled to request for immediate repayment of the outstanding debt obligation (Note 11).
As of March 31, 2023, Sunlight’s financial covenants and calculated amounts were as follows (in millions):

March 31, 2023
Covenant Minimum Amount
EBITDA Covenant(a)
$ 5  $ (37)
Liquidity(b)
10  76 
Available takeout commitment(c)
200  626 
a.EBITDA Covenant for the six-month period ended each quarter of at least $5.0 million.
b.Unrestricted cash equal to, or greater than, the greater of (i) 35% of amounts borrowed under the revolving credit facility and (ii) $10.0 million.
c.Aggregate Direct Channel Partners' and Bank Partner's unused committed obligation to purchase and hold Loans of at least $200.0 million.