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Commercial Loans

6 Months Ended

Jun. 30, 2017

3. COMMERCIAL LOANS

Loans Receivable

The Company offers short-term secured non–banking loans to real estate investors (also known as hard money) to fund their acquisition and construction of properties located in the New York Metropolitan area. The loans are principally secured by collateral consisting of real estate and, generally, accompanied by personal guarantees from the principals of the borrowers. The loans are generally for a term of one year. The loans are initially recorded, and carried thereafter, in the financial statements at cost. Most of the loans provide for receipt of interest only during the term of the loan and a balloon payment at the end of the term.

At June 30, 2017, we were committed to an additional $3,830,500 in construction loans that can be drawn by the borrowers when certain conditions are met.

At June 30, 2017, no one entity has loans outstanding representing more than 10% of the total balance of the loans outstanding. In addition, at June 30, 2017, the Company did not have any loans outstanding that were joint ventured with partners.

The Company generally grants loans for a term of one year. When a performing loan reaches its maturity, and the borrower requests an extension, we may extend the term of the loan beyond one year. Prior to granting an extension of any loan, we reevaluate the underlying collateral.

Credit Risk

Credit risk profile based on loan activity as of June 30, 2017:

Performing loans

Developers-

Residential

Developers-

Commercial

Developers- Mixed Used

Total outstanding loans

June 30, 2017

37,796,820

500,000

2,945,000

41,241,820

At June 30, 2017, the Company’s loans receivable includes loans in the amount of $345,000, $766,320 and $5,032,500 originally due in 2014, 2015 and 2016, respectively. In all instances the borrowers are currently paying their interest and, generally, the Company receives a fee in connection with the extension of the loans. Accordingly, at June 30, 2017, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof included in operations.

Subsequent to the balance sheet date, $1,610,000 of the loans receivable at June 30, 2017 were paid off.