NOTE 4 - INVENTORY FINANCE NOTES RECEIVABLE AND ALLOWANCE FOR LOAN LOSS

The Company offers inventory-secured financing for its products to a limited number of qualified retail dealers and developers. Administrative services for inventory-secured financing are provided by Triad Financial Services, Inc. of Jacksonville, Florida. Finance contracts require periodic installments of principal and interest over periods of up to 24 months. These notes are secured by the inventory collateral and other security depending on borrower circumstances.

Inventory finance notes receivable, net, consisted of the following:


	January 2, 2016			December 27, 2014

Inventory finance notes receivable	$	4,430,677		$	3,616,445
Allowance for loan loss		(157,350	)		(91,640	)

		4,273,327			3,524,805
Current portion of inventory finance notes receivable		(1,763,313	)		(2,081,511	)

Inventory finance notes receivable, net	$	2,510,014		$	1,443,294

With respect to our inventory finance notes receivable, 80% of the risk of loss is spread over seven borrowers as of January 2, 2016, compared to 80% of the risk of loss spread four borrowers as of December 27, 2014. In addition to historical experience, borrower inventory levels and activity are monitored in conjunction with a third-party provider to estimate the potential for loss. The Company anticipates it will be able to resell any repossessed homes, thereby mitigating loss experience. If a default occurs and collateral is lost, the Company is exposed to the loss of the full value of the note receivable. The Company recorded a provision/(benefit) for credit losses of $65,710 and $(110,320) for years ending January 2, 2016 and December 27, 2014, respectively. The following table represents changes in the estimated allowance for loan losses:


	January 2, 2016		December 27, 2014

Balance at beginning of period	$	91,640	$	201,960
Provision/(Benefit) for credit losses		65,710		(110,320	)

Balance at end of period	$	157,350	$	91,640