3.	COMMERCIAL LOANS

Short Term 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 businesses. The loans are generally for a term of one year. The short term 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, 2013, we were committed to an additional $2,467,950 in construction loans that can be drawn by the borrowers when certain conditions are met.

At June 30, 2013, the Company had made loans to six borrowers in the aggregate amount of $1,679,000, of which $600,000 is included in long-term loans receivable. One individual holds at least a fifty percent interest in each of the borrowers. The Company also had made loans to seven borrowers in the aggregate amount of $1,516,000, of which $600,000 is included in long-term loans receivable. One individual holds at least a twenty-five percent interest in each of the borrowers. The aggregate loans to all these entities totaled $3,195,000 or 22.5% of our loan portfolio. There are no family relationships between any of the borrowers with any of the officers or directors of the Company.

At June 30, 2013, no one entity has loans outstanding representing more than 10% of the total balance of the loans outstanding.

At June 30, 2013, three of the loans in the Company’s portfolio were jointly funded by the Company and one to three unrelated entities, for aggregate loans of $2,385,000. The accompanying balance sheets include the Company’s portion of the loans in the amount of $1,635,000.

The Company generally grants loans for a term of one year. In some cases, the Company has agreed to extend the term of the loans beyond one year. This was mainly due to the additional lending conditions generally imposed by traditional lenders and financial institutions as a result of the mortgage crisis, which has made it more difficult overall for borrowers to secure long term financing, including the Company’s borrowers. Prior to the Company granting an extension of any loan, it reevaluates the underlying collateral.

Long Term Loans Receivable

Long term loans receivable comprise the loans that were extended beyond the original maturity dates, unless it is clear that the loan will be paid back by June 30, 2014. At June 30, 2013, the Company’s loan portfolio consists of $10,790,000 short term loans receivable and $3,393,000 long term loans receivable.

Of the long term loans receivable, approximately $53,000 have repayment terms, extending through the year ended December 31, 2017, while the remainder of the loans, by their terms, are due through June 30, 2014.

Subsequent to June 30, 2013, $800,000 of the Company’s commercial loans, of which $60,000 is included in long-term loans receivable at June 30, 2013, have been paid off.

Credit Risk

Credit risk profile based on loan activity as of June 30, 2013 and 2012:

Performing loans	Developers- Residential		Developers- Commercial		Developers Mixed Used		Total outstanding loans
June 30, 2013	$	12,043,000	$	1,510,000	$	630,000	$	14,183,000
June 30, 2012	$	9,822,366	$	23,344	$	1,220,000	$	11,065,710

At June 30, 2013, the Company’s commercial loans include loans in the amount of $333,000, $182,000, $375,000 and $715,000, originally due in 2009, 2010, 2011 , and 2012 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, 2013, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof included in operations.