DEBT |
12 Months Ended |
|---|---|
Dec. 31, 2025 | |
| Debt Disclosure [Abstract] | |
| DEBT | DEBT Term Loans On November 14, 2022, the Company entered into a Credit Agreement (the “2022 Credit Agreement”) with a third-party financial institution, which provided for a $75.0 million senior secured credit facility (the “2022 Term Loan”), originally set to mature on November 14, 2026. Prior to that maturity date, on November 14, 2025, the Company entered into a new Credit Agreement (the “2025 Credit Agreement”) with a separate third-party financial institution. The 2025 Credit Agreement provides for a $75.0 million senior unsecured credit facility (the “2025 Term Loan”), maturing on November 14, 2030. Proceeds received from 2025 Term Loan were used to repay all of the outstanding principal and interest on the 2022 Term Loan, totaling $68.4 million, and the 2022 Credit Agreement was terminated at that time. Refer to the following sections for descriptions of key terms and features of the 2022 and 2025 Credit Agreements. 2022 Credit Agreement Proceeds received from the 2022 Term Loan were net of a 2% original issue discount, and the Company also incurred approximately $0.4 million in initial debt issuance costs. Additional debt modification costs totaling approximately $0.8 million were subsequently incurred upon executing Amendments 1 and 2 of the 2022 Credit Agreement (see below). Both the original issue discount and the debt issuance and modification costs were being amortized over the life of the 2022 Term Loan to Interest Expense on Term Loan using the effective interest method. Upon the repayment of the 2022 Term Loan in November 2025, unamortized original issue discount and debt issuance and modification costs totaling $0.9 million were amortized into Interest Expense on Term Loan on an accelerated basis. In June and November 2024, the Company signed Amendments 1 and 2, respectively, to the 2022 Credit Agreement, which primarily provided for temporary reductions in the minimum tangible net worth and minimum asset coverage ratios (see below) for specified periods. In exchange, the Company incurred the debt modification fees referenced above, and agreed to make quarterly $2.5 million principal repayments on the 2022 Term Loan, starting on December 31, 2024. The Company made four quarterly $2.5 million principal repayments prior to the full repayment in November 2025. Following Amendment 2 to the 2022 Credit Agreement, borrowings under 2022 Term Loan accrued interest at the Secured Overnight Financing Rate (“SOFR”) plus 11.0% per annum. Interest was required to be paid in cash as incurred each month, and was recorded in Interest Expense on Term Loan on the Company’s consolidated statements of operations. The Company’s obligations under the 2022 Term Loan were guaranteed by its wholly-owned subsidiaries PHL and BillGuard, and were secured by a first priority, perfected lien on substantially all of the assets of PMI (subject to exclusions such as certain cash amounts and deposit accounts), PHL and BillGuard, as well as equity interests in all of PMI’s subsidiaries, with the exception of PGT. The 2022 Credit Agreement contained a number of covenants that, among other things and subject to certain exceptions and thresholds, restricted PMI’s ability to incur certain new indebtedness; incur certain liens; sell or otherwise dispose of all or substantially all its assets; make loans, advances, and guarantees; and pay dividends or make other distributions on equity interests. In addition, the 2022 Credit Agreement contained certain financial covenants with which the Company was required to remain in compliance as of the last business day of each month during the life of the 2022 Term Loan: •a minimum tangible net worth •a minimum net liquidity •a maximum leverage ratio •a minimum asset coverage ratio The Company was in compliance with all covenants for all applicable monthly periods through the termination date of November 14, 2025. 2025 Credit Agreement Proceeds received from the 2025 Term Loan were net of $0.2 million in debt issuance costs, which are being amortized over the life of the 2025 Term Loan to Interest Expense on Term Loan using the effective interest method. The 2025 Credit agreement also provides the option to upsize the credit facility by up to $25.0 million upon the Company’s request and subject to lender approval. As of December 31, 2025, the Company had not exercised this option, and no amount was due under this incremental facility. Borrowings under the 2025 Term Loan accrue interest at SOFR plus 7.0% per annum, and interest is payable in cash on a quarterly basis. The 2025 Term Loan is an unsecured senior credit facility. The 2025 Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions and thresholds, restrict the Company’s ability to incur new indebtedness (including finance leases); incur certain liens; and make fundamental changes to the business. In addition, the 2025 Credit Agreement contains certain financial covenants with which the Company must remain in compliance as of the last business day of each quarter during the life of the 2025 Term Loan: •a minimum tangible net worth •a minimum net liquidity •a maximum leverage ratio The Company is in compliance with all covenants as of December 31, 2025, as well as applicable quarterly periods for the year then ended. In addition, the Company believes it is in Compliance with all covenants through the date of issuance of these consolidated financial statements. The 2025 Credit Agreement also contains certain customary representations and warranties and affirmative covenants, and certain reporting obligations. The 2025 Term Loan lender will be permitted to accelerate all outstanding borrowings, terminate outstanding commitments and exercise other specified remedies upon the occurrence of certain events of default (subject to certain grace periods and exceptions), which include, among other things, payment defaults, breaches of representations and warranties, covenant defaults, certain cross-defaults to other indebtedness, certain events of bankruptcy and insolvency, certain judgments and change of control. Prosper Warehouse Trust Agreements Prosper consolidated two warehouse VIEs, PWIT and PWIIT (together, the “Warehouse VIEs”), that each entered into an agreement (together, the “Warehouse Agreements”) with certain lenders for committed revolving lines of credit (“Warehouse Lines”) during 2018 and 2019, respectively. In connection with the Warehouse Agreements, the Warehouse VIEs each entered into a security agreement with a bank as administrative agent and a national banking association as collateral trustee and paying agent. Proceeds under the Warehouse Lines could only be used to purchase certain unsecured consumer loans and related rights and documents from Prosper and to pay fees and expenses related to the Warehouse Lines. Both Warehouse VIEs were consolidated because Prosper was the primary beneficiary of the VIEs. The assets of the VIEs could be used only to settle obligations of the VIEs. Additionally, the creditors of the Warehouse Lines had no recourse to the general credit of Prosper. The loans held in the Warehouse VIEs were included in Loans Held for Sale, at Fair Value and Warehouse Lines were in Warehouse Lines in the consolidated balance sheets. PWIT Warehouse Line On January 19, 2018, Prosper, through PWIT, entered into a $100 million Warehouse Agreement with a national banking association. The PWIT Warehouse Agreement subsequently was amended in June 2018, May 2021 and May 2023, to increase the committed line of credit between two classes of loans with two separate lenders, adjust the interest rate and unused commitment fee, expand the eligibility criteria for unsecured consumer loans that could be financed through the PWIT Warehouse Line, reduce the advance rate and extend the term of the Warehouse Agreement. In March 2024, as part of the PWIT 2024-1 securitization (see Note 7, Securitizations), all outstanding loans in the warehouse were transferred to either the PMIT 2024-1 Transaction or PFL, with proceeds used to pay down the outstanding principal and interest on the PWIT Warehouse line. The facility was terminated as of March 31, 2024. PWIIT Warehouse Line On March 28, 2019, through PWIIT, Prosper entered into a second Warehouse Agreement for a $300 million Warehouse Line with a national banking association different than that of PWIT. The PWIIT Warehouse Agreement was subsequently amended in May 2021, May 2023 and July 2023, the cumulative impact of which was to break the committed line of credit into two classes of loans with two separate lenders, adjust the interest rate and extend the term of the Warehouse Agreement. In conjunction with the PMIT 2023-1 securitization (see Note 7, Securitizations), the entire portfolio of Loans Held for Sale in the PWIIT Warehouse Line was transferred to either the PMIT 2023-1 securitization or PFL. Proceeds from the sale of these loans were used to pay down the outstanding principal and interest on the PWIIT Warehouse Line, and the facility was terminated on September 25, 2023.
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