9. LOANS PAYABLE

The Company’s loans payable are summarized below:

SCHEDULE OF LOANS PAYABLE 

During the years ended December 31, 2021 and 2020, the Company made principal payments on loans payable in the aggregate of $185,086 and $355,583, respectively, of which $13,128 and $7,940, respectively, were paid on the 2020 Demand Loan, $0 and $5,906, respectively, were paid on the 2018 Demand Loan, $78,092 and $50,836, respectively, were paid on the 2018 Loan, $13,453 and $40,662, respectively, were paid on the 2017 Loan, and $80,413 and $250,239, respectively, were paid on the Land Loan. On March 26, 2021, the Company obtained forgiveness of the PPP Loan, which was recognized as other income on the consolidated statement of operations. The remaining decrease in principal balances are the result of the impact of the change in exchange rates during the period.

Future minimum principal payments under the loans payable are as follows:

SCHEDULE OF FUTURE MINIMUM PRINCIPAL PAYMENTS OF LOANS PAYABLE 

The Company incurred interest expense related to the loans payable in the amount of $29,419 and $57,633 during the years ended December 31, 2021 and 2020, respectively, of which $0 and $9,335, respectively represented amortization of debt discount. As of December 31, 2021 and 2020, there is accrued interest of $6,787 and $2,376, respectively, related to the Company’s loans payable.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PPP Loan

On May 6, 2020, the Company entered into a loan from the U.S. Small Business Administration (“SBA”) pursuant to the Paycheck Protection Program (“PPP”) enacted by Congress under the Coronavirus Aid, Relief, and Economic Security Act (15 U.S.C. 636(a)(36)) (the “CARES Act”), resulting in net proceeds of $242,486 (the “PPP Loan”). To facilitate the PPP Loan, the Company entered into a note payable agreement with Santander Bank, N.A. as the lender.

Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020, the Company was eligible to apply for and receive forgiveness for all or a portion of their respective PPP Loan. Such forgiveness was determined, subject to limitations, based on the use of the loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”) incurred during the 24 weeks subsequent to funding, and on the maintenance of employee and compensation levels, as defined, following the funding of the PPP Loan. The Company used the proceeds of the PPP Loan for Qualifying Expenses. On March 26, 2021, the Company was approved for the forgiveness on the full amount of the PPP Loan.

SBA Economic Injury Disaster Loans

On May 22, 2020, the Company received a loan in the principal amount of $94,000 (the “EIDL Loan”) pursuant to the Economic Injury Disaster Loan (“EIDL”) assistance program offered by the SBA in response to the impact of the COVID-19 pandemic on the Company’s business. The EIDL Loan bears interest at 3.75% per annum and matures on May 22, 2050. Proceeds from the EIDL are being used for working capital purposes. Monthly installment payments of $459, including principal and interest, are due monthly beginning May 22, 2021. The EIDL Loan is secured by a security interest in all of the Company’s assets.

2020 Demand Loan

On March 1, 2020, the Company received a loan in the amount of $27,641 (ARS $1,777,778) (the” 2020 Demand Loan”) which bore interest at 10% per month and was due upon demand of the lender (the “Demand Loan”). Interest is paid monthly. The entire remaining outstanding balance of the 2020 Demand Loan was paid in full during 2021.

2018 Loan

On January 25, 2018 the Company received a bank loan in the amount of $525,000 (the “2018 Loan”), denominated in U.S. dollars. The 2018 Loan bears interest at 6.75% per annum and was due on January 25, 2023. Pursuant to the terms of the 2018 Loan, principal and interest is to be paid in 60 equal monthly installments of $10,311, beginning on February 23, 2018. During 2018, the Company defaulted on certain 2018 Loan payments, and as a result, the 2018 Loan is payable upon demand as of December 31, 2021 and 2020.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Land Loan

On August 19, 2017, the Company purchased 845 hectares of land adjacent to its existing property at AWE. The Company paid $100,000 at the date of purchase and executed a note payable in the amount of $600,000, denominated in U.S. dollars (the “Land Loan”) with a stated interest rate of 0% and with quarterly payments of $50,000 beginning on December 18, 2017 and ending August 18, 2021. The Company imputed interest on the note at 7% per annum and recorded a discounted note balance of $517,390 on August 19, 2017, which was amortized over the term of the loan using the effective interest method. On August 12, 2020, the terms of the Land Loan were amended such that (i) the original maturity date (August 18, 2021) was changed to December 31, 2020 and (ii) the remaining balance was reduced by $137,850 from $459,500 to $321,652. The Company agreed to pay the loan in four equal payments at the end of each month starting August 30, 2020. The amendment was accounted for as a debt restructuring with the future undiscounted cash flows being less than the net carrying value of the original debt. No interest expense was recorded subsequent to August 30, 2020 and all payments subsequent to August 30, 2020 reduced the carrying value of the Land Loan. A gain of $130,421 was recorded in connection with the restructuring of the Land Loan. The entire remaining outstanding balance of the Land Loan was paid in full during 2021.