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Commercial Loans

9 Months Ended

Sep. 30, 2018

4. 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 around the New York Metropolitan area. The loans are principally secured by collateral consisting of first mortgage positions on 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 September 30, 2018, the Company was committed to $7,641,500 in construction loans that can be drawn by the borrowers when certain conditions are met.

At September 30, 2018, no one entity has loans outstanding representing more than 10% of the total balance of the loans outstanding.

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

Credit Risk

Credit risk profile based on loan activity as of September 30, 2018 and December 31, 2017:

Performing loans	Developers- Residential		Developers- Commercial		Developers- Mixed Used		Total outstanding loans
September 30, 2018	$	51,496,236	$	3,660,000	$	3,355,000	$	58,511,236
December 31, 2017	$	41,739,000	$	900,000	$	2,485,000	$	45,124,000

At September 30, 2018, the Company’s loans receivable includes loans in the amount of $2,060,000 and $6,447,500 originally due in 2016 and 2017, 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 September 30, 2018, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof.

Subsequent to the balance sheet date, $954,000 of the loans receivable at September 30, 2018 were paid off.