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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As
filed with the Securities and Exchange Commission on March 22, 2022</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Registration
No. 333-[__]</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b>UNITED
STATES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b>SECURITIES
AND EXCHANGE COMMISSION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 12pt"><b>Washington,
D.C. 20549</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b>FORM
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Exact
name of registrant as specified in its charter)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span>13241
Bartram Park Blvd.</span>, <span>Suite 2401</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span>Jacksonville</span>,
<span>Florida</span> <span>32258</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span><span>(302)</span>
<span>752-2688</span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Address,
including zip code, and telephone number, including area code, of registrant&#8217;s principal executive offices)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_905_edei--ContactPersonnelName_c20210101__20211231_zyQo5Tz2vep4"><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" name="dei:ContactPersonnelName">Daniel
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span>Chief
Executive Officer</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span><span id="xdx_90E_edei--EntityAddressAddressLine1_c20210101__20211231_zL1r6LFeZHs7"><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" name="dei:EntityAddressAddressLine1">13241
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_901_edei--EntityAddressCityOrTown_c20210101__20211231_zWx3Nm3ugegk"><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" name="dei:EntityAddressCityOrTown">Jacksonville</ix:nonNumeric></span>,
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_90C_edei--CityAreaCode_c20210101__20211231_zkfHARzUt17k"><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" name="dei:CityAreaCode">(302)</ix:nonNumeric>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Name,
address, including zip code, and telephone number, including area code, of agent for service)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Copies
of all communications, including copies of all communications sent to agent for service, should be sent to:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span>Michael
K. Rafter</span>, Esq.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Erin
Reeves McGinnis, Esq.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Nelson
Mullins Riley &amp; Scarborough LLP</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span>Atlantic
Station</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>201
17th Street <span>NW</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Suite
1700&#8239;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Atlanta,
Georgia 30363</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Telephone:
(404) 322-6000</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Facsimile:
(404) 322-6050</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Approximate
date of commencement of proposed sale to the public:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As
soon as practicable following the effectiveness of this Registration Statement.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 (the &#8220;Securities Act&#8221;) check the following box. [X]</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. [&#160;&#160;]</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. [&#160;&#160;]</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. [&#160;&#160;]</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of &#8220;large accelerated filer,&#8221; &#8220;accelerated filer,&#8221;
&#8220;smaller reporting company,&#8221; and &#8220;emerging growth company&#8221; in Rule 12b-2 of the Securities Exchange Act of 1934.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 60%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 40%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated
    filer [&#160;&#160;]</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90D_edei--EntityFilerCategory_c20210101__20211231_zd4D1glD5t64"><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory">Non-accelerated
    filer</ix:nonNumeric></span> [X]</span></td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span>If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. <span id="xdx_902_edei--EntityExTransitionPeriod_c20210101__20211231_z7J3YfpkEZMg"><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" format="ixt:booleantrue" name="dei:EntityExTransitionPeriod">[X]</ix:nonNumeric></span></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Pursuant
to Rule 415(a)(6) under the Securities Act of 1933, as amended, the securities registered pursuant to this Registration Statement include
unsold securities previously registered for sale pursuant to the Registrant&#8217;s Registration Statement on Form S-1 (File No. 333-224557)
initially filed by the Registrant on May 1, 2018 (the &#8220;Prior Registration Statement&#8221;). The Prior Registration Statement registered
securities with a maximum offering price of $70 million for sale pursuant to the Registrant&#8217;s offering, and included securities
that remained unsold from the Issuer&#8217;s preceding Registration Statement on Form S-1 (File No. 333-203707) filed by the Registrant
on April 29, 2015. Of the amount being registered by this Registration Statement, approximately $25 million of offering securities
remain unsold from the Prior Registration Statement. This unsold amount is being carried forward to this Registration Statement and the
filing fees paid with respect to the prior registration of the unsold securities is being used to offset filing fees that would otherwise
be due in connection with the filing of this Registration Statement. Pursuant to Rule 415(a)(6), the offering of unsold securities under
the Prior Registration Statement will be deemed terminated as of the date of effectiveness of this Registration Statement. As of March
16, 2022 we have issued Notes with an aggregate principal amount of approximately $36 million under the Prior Registration Statement.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant files a further amendment which specifically states that this Registration Statement will thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration Statement becomes effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><b>The
information in this preliminary prospectus is not complete and may be changed. We may not sell the</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><b>securities
described herein pursuant to this preliminary prospectus until the registration statement filed with the Securities and Exchange Commission
is effective. This preliminary prospectus is not an offer to sell the securities and it is not soliciting an offer to buy these securities
in any state where the offer or sale of the securities is not permitted.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><b>SUBJECT
TO COMPLETION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><b>PRELIMINARY
PROSPECTUS DATED MARCH 22, 2022</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="forms-1_001.jpg" alt="" style="height: 52px; width: 341px" /></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>$70,000,000
in Fixed Rate Subordinated Notes</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shepherd&#8217;s
Finance, LLC is offering up to $70,000,000 in aggregate principal amount of our Fixed Rate Subordinated Notes (&#8220;Notes&#8221;) on
a continuous basis. The initial minimum investment amount required is $500. From time to time, we may, however, change the minimum investment
amount that is required. The maximum investment amount per investor is $1,000,000 aggregate principal amount, or $1,000,000 per Note,
but a higher maximum investment amount may be approved on a case-by-case basis. As of March 16, 2022, we have issued Notes in our previous
public offerings with an aggregate principal amount of approximately $67,153,000. The term &#8220;Notes,&#8221; as used throughout this
prospectus, can mean both the Notes offered in this offering and Notes offered in prior or future offerings of the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
issue the Notes in varying purchase amounts and maturities that we establish from time to time. The Notes will initially be offered with
maturities ranging from 12 months to 48 months from the date of issuance. For each maturity, we also establish an interest rate. The
interest rates will vary within the predetermined interest rate ranges, as described in this prospectus, but annual interest rates as
of the date of this prospectus are as follows: 6% for 12-month Notes; 7% for 24-month Notes; 4% for 36-month Notes; and 8% for 48-month
Notes. See &#8220;Prospectus Summary &#8212; The Offering &#8212; Interest Rate.&#8221; Interest will be calculated based on the actual
number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365/366 day year. When you make an
investment, your rate will be fixed throughout the duration of your investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may market our Notes in many ways, including but not limited to, publishing the then current features (e.g., the maturities and interest
rates currently offered by us) of the Notes in advertising on the internet, newspapers, and through direct mail campaigns. At any time,
you also may obtain the then applicable features of the Notes from our website at <span style="text-decoration: underline">www.shepherdsfinance.com</span> or by calling (302)
752-2688 (30-ASK-ABOUT). However, the information on our website is not a part of this prospectus. Any substantive change to the features
of the Notes that does not constitute a fundamental change will be included in a Rule 424(b)(3) prospectus supplement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are offering the Notes directly, without an underwriter or placement agent, and on a continuous basis. We do not have to sell any minimum
amount of Notes to accept and use the proceeds of this offering. Therefore, once you purchase a Note, we may immediately use the proceeds
of your investment and your investment will be returned only if we repay your Note. We cannot assure you that all or any portion of the
Notes we are offering will be sold. We have not made any arrangement to place any of the proceeds from this offering in an escrow, trust,
or similar account. The Notes are not listed on any securities exchange and there will not be any public trading market for the Notes.
We have the right to reject any investment, in whole or in part, for any reason.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may redeem any Note, in whole or in part, at any time prior to maturity, upon 30 to 60 days&#8217; written notice, for a redemption price
equal to the principal amount plus any earned but unpaid interest thereon to the date of redemption. Subject to certain restrictions,
a holder of a Note with a 36-month maturity purchased on or after February 4, 2020 may require the Company to redeem all or a portion
of such Note. Additionally, you may request early redemption of a Note purchased by you at any time on or after 180 calendar days after
issuance of a Note, but we reserve the right to decline your request for any reason. If we grant your redemption request, we will mail
you a payment equal to the principal amount plus any earned but unpaid interest to the date of redemption, minus a 180-day interest penalty.
Furthermore, unless the subordination provisions in the indenture restrict our ability to make the redemption, a holder of a Note may
also require us to redeem all or a portion of their Note, regardless of amount, for a redemption price equal to the principal amount
plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date, upon one business day&#8217;s
advance notice to us, but only if the holder immediately upon redemption invests the entirety of the proceeds from such redemption in
another Note or another security then-offered by us, if any. In such event, the holder will not be subject to a holding period requirement
or an interest penalty.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            Notes mature between one and four years from the date of issuance. Between 30 to 60 days
                                            prior to the maturity date, we will mail to you a letter notifying you of the upcoming maturity
                                            date. Upon maturity, principal and any earned but unpaid interest will be paid to you.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
should read this prospectus and any applicable prospectus supplement carefully before you invest in the Notes. The Notes are our general
unsecured obligations and are subordinated in right of payment to all of our present and future senior debt. As of December 31, 2021,
we had approximately $42,963,000 in debt outstanding that ranks equal or senior to the Notes, including approximately $20,636,000 in
Notes issued pursuant to our prior offerings of Notes. We expect to incur additional debt in the future, including, without limitation,
the Notes offered pursuant to this prospectus and senior debt.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
Notes are not certificates of deposit or similar obligations guaranteed by any depository institution and are not insured by the Federal
Deposit Insurance Corporation (FDIC) or any governmental or private insurance fund, or any other entity. We do not contribute funds to
a separate account such as a sinking fund to repay the Notes upon maturity.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>We
are an &#8220;emerging growth company&#8221; and &#8220;smaller reporting company&#8221; under the federal securities laws and are subject
to reduced public company reporting requirements. See &#8220;Risk Factors&#8221; beginning on page 13 for significant factors
you should consider before buying the Notes. The most significant risks include the following:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    Notes are not insured or guaranteed by the FDIC or any third party, so repayment of your Note depends upon our equity (which may
    be limited at times), our experience, the collateral securing our loans, and our ability to manage our business and generate adequate
    cash flows.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes are risky speculative investments. Therefore, you should not invest in the Notes unless you are able to afford the loss of
    your entire investment.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
    will not be any market for the Notes, so you should only purchase them if you do not have any need for your money prior to the maturity
    of the Note.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
    will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company as is customarily performed
    in underwritten offerings.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have the right to pay your investment back to you before the stated maturity of your investment. If we do, you may not be able to
    reinvest the proceeds at comparable rates and you will stop earning interest on your investment.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    business is not industry-diversified. The United States economy experienced a slow recovery after the significant downturn in the
    homebuilding industry beginning in 2007, which was one of the worst credit and liquidity crises since the 1930s. Deterioration in
    the homebuilding industry or economic conditions, including as a result of COVID-19, could decrease demand and pricing for new homes
    and residential home lots. A decline in housing values similar to the national downturn in the real estate market that began in 2007
    would have a negative impact on our business. Smaller value declines will also have a negative impact on our business. These factors
    may decrease the likelihood we will be able to generate enough cash to repay the Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
    we are reliant on a single developer and homebuilder, the Hoskins Group, who is concentrated in the Pittsburgh, Pennsylvania market,
    for a significant portion of our revenues and a portion of our capital. Our second largest customer is in the Orlando, Florida market
    and is also a significant portion of our portfolio.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Most
    of our assets are commercial construction loans to homebuilders and/or developers which are a higher than average credit risk, and
    therefore could expose us to higher rates of loan defaults, which could impact our ability to repay amounts owed to you.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have entered into loan purchase and sale agreements with third parties to sell them portions of some of our loans. This increases
    our leverage. While the agreements are intended to increase our profitability, large loan losses and/or idle cash could actually
    reduce our profitability, which could impair our ability to pay principal and/or interest on the Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    depend on the availability of significant sources of credit to meet our liquidity needs and our failure to maintain these sources
    of credit could materially and adversely affect our liquidity in the future.</span></td></tr>
</table>

<p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="margin: 0"></p>

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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page -->

<p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have unfunded commitments to builders as of December 31, 2021. If every builder borrowed every amount allowed (which would mean all
    of their homes were complete) and no builders paid us back, we would need to fund that amount. While some of that amount would automatically
    come from our loan purchase and sale agreements, the rest would have to come from our Notes Program and/or our lines of credit. Therefore,
    we may not have the ability to fund our commitments to builders.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have a significant amount of debt and expect to incur a significant amount of additional debt in the future, including issuance of
    the Notes, which will subject us to increased risk of loss. Our present and future senior debt may make it difficult to repay the
    Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    operations are not subject to the stringent banking regulatory requirements designed to protect investors, so repayment of your investment
    is completely dependent upon our successful operation of our business.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    Chief Executive Officer (who is also on our board of managers) and Executive Vice President will face conflicts of interest as a
    result of the secured lines of credit made to us, which could result in actions that are not in the best interests of our Note holders.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    indenture and terms of our Notes do not restrict our use of leverage. A relatively small loss can cause over leveraged companies
    to suffer a material adverse change in their financial position. If this happened to us, it may make it difficult to repay the Notes.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>These
securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission, and neither
the Securities and Exchange Commission nor any state securities commission has passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Price
    to Public</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Underwriting
    Discount and Commission <sup>(1)</sup></b></span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Proceeds
                                            to</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Company
                                            <sup>(2)</sup></b></span></p></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 48%"><span style="font-family: Times New Roman, Times, Serif">Per Note</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 14%; text-align: right"><span style="font-family: Times New Roman, Times, Serif">100</span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 14%; text-align: center"><span style="font-family: Times New Roman, Times, Serif">None</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 14%; text-align: right"><span style="font-family: Times New Roman, Times, Serif">100</span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">70,000,000</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif">None</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">70,000,000</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<!-- Field: Rule-Page --><div style="margin-left: auto; margin-right: auto; width: 100%"><div style="border-top: Black 1.5pt solid; font-size: 1pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></div></div><!-- Field: /Rule-Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes are not being offered or sold pursuant to any underwriting or similar agreement, and no commissions or other remuneration will
    be paid in connection with their sale. The Notes will be sold at face value.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(2)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    will receive all of the net proceeds from the sale of the Notes, which, if we sell all of the Notes covered by this prospectus, we
    estimate will total approximately $69,326,628 after expenses.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
date of this prospectus is [__], 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_001"></span>SUITABILITY
STANDARDS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An
investment in our Notes involves significant risks and is only suitable for persons who have adequate financial means, desire a relatively
long-term investment and will not need liquidity from their investment. This investment is not suitable for persons who seek liquidity
or guaranteed income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not established general suitability standards for investors in our Notes; however, certain states in which we intend to sell the
Notes have established special suitability standards. Notes will be sold only to investors in these states who meet the special suitability
standards set forth below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
    Alabama Residents &#8211; </b>Notes will only be sold to residents of the State of Alabama representing that they have (i) an annual
    gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. Further, investors in the State of Alabama
    may not invest more than 10% of their liquid net worth in us or our affiliates.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
    Alaska Residents &#8211; </b>Notes will only be sold to residents of the State of Alaska representing that they have (i) a minimum
    annual gross income of $70,000 and a minimum net worth of $70,000, or (ii) a minimum net worth of $250,000. In each case, net worth
    is to be calculated exclusive of an individual&#8217;s principal automobile, principal residence, and home furnishings.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
    California Residents &#8211; </b>Notes will only be sold to residents of the State of California representing that they have (i)
    a gross income of $65,000 and net worth of $250,000, or (ii) a net worth of $500,000.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
    Idaho and Kentucky Residents &#8211; </b>Notes will only be sold to residents of the States of Idaho and Kentucky representing that
    they have (i) a liquid net worth of $85,000 and annual gross income of $85,000, or (ii) a liquid net worth of $300,000. Additionally,
    the investor&#8217;s total investment in the Notes shall not exceed 10% of his or her liquid net worth. Liquid net worth is that
    portion of net worth consisting of cash, cash equivalents and readily marketable securities.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
    Indiana Residents &#8211; </b>Notes will only be sold to residents of the State of Indiana representing that they have (i) an annual
    gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. In each case, net worth is to be calculated
    exclusive of an individual&#8217;s principal automobile, principal residence, and home furnishings.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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    worth of $85,000 and annual gross income of $85,000, or (ii) a liquid net worth of $300,000. Additionally, the investor&#8217;s total
    investment in the Notes shall not exceed 10% of his or her liquid net worth. Liquid net worth is that portion of net worth consisting
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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    Kansas Residents &#8211; </b>It is recommended by the Office of the Kansas Securities Commissioner that Kansas investors limit their
    aggregate investment in the securities of the Issuer and other similar programs to not more than 10% of their liquid net worth. For
    these purposes, liquid net worth shall be defined as that portion of total net worth (total assets minus liabilities) that is comprised
    of cash, cash equivalents and readily marketable securities, as determined in conformity with U.S. Generally Accepted Accounting
    Principles.</span></td></tr>
</table>

<p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="margin: 0"></p>

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<p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="margin: 0"></p><table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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    Maine Residents &#8211; </b>The Maine Office of Securities recommends that an investor&#8217;s aggregate investment in this offering
    and similar offerings not exceed 10% of the investor&#8217;s liquid net worth. For this purpose, &#8220;liquid net worth&#8221; is
    defined as that portion of net worth that consists of cash, cash equivalents and readily marketable securities.</span></td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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    Massachusetts and New Mexico Residents &#8211; </b>It is required by the Securities Divisions of each of Massachusetts and New Mexico
    that Massachusetts and New Mexico investors limit their aggregate investment in our Notes and other similar programs to not more
    than 10% of their liquid net worth. For these purposes, liquid net worth shall be defined as that portion of total net worth (total
    assets minus liabilities) that is comprised of cash, cash equivalents and readily marketable securities, as determined in conformity
    with U.S. Generally Accepted Accounting Principles. It is further required by the Securities Divisions of each of Massachusetts and
    New Mexico that Massachusetts and New Mexico investors have (i) a net income of at least $200,000 in each of the two most recent
    years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the
    current year, or (ii) an individual net worth, or joint net worth with that person&#8217;s spouse, in excess of $1,000,000, excluding
    the value of the person&#8217;s primary residence.</span></td></tr>
</table>

<p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
    Missouri Residents &#8211; </b>No more than 10% of any one Missouri investor&#8217;s liquid net worth shall be invested in the Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
    North Dakota and Oregon Residents &#8211; </b>Notes will only be sold to residents of the States of North Dakota and Oregon representing
    that they have (i) an annual gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. Further,
    investors in the States of North Dakota or Oregon may not invest more than 10% of their liquid net worth in the offering.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
    Tennessee Residents &#8211; </b>An investment by a Tennessee resident must not exceed ten percent (10%) of their liquid net worth.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
    Vermont Residents &#8211; </b>Accredited investors in Vermont, as defined in 17 C.F.R. &#167; 230.501, may invest freely in this
    offering. In addition to the suitability standards described above, non-accredited Vermont investors may not purchase an amount in
    this offering that exceeds 10% of the investor&#8217;s liquid net worth. For these purposes, &#8220;liquid net worth&#8221; is defined
    as an investor&#8217;s total assets (not including home, home furnishings, or automobiles) minus total liabilities.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SHEPHERD&#8217;S
FINANCE, LLC</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>TABLE
OF CONTENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_001">SUITABILITY STANDARDS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">i</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_002">QUESTIONS AND ANSWERS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_003">PROSPECTUS SUMMARY</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">7</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_004">Our Company and Our Business</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">7</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_005">The Offering</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">8</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_006">SUMMARY OF PRINCIPAL RISK FACTORS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">11</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_007">RISK FACTORS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_008">Risks Related to Our Offering and Business</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_009">Risks Related to Conflicts of Interest</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">23</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_010">Risks Related to Liquidity</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">24</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_011">FORWARD-LOOKING STATEMENTS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">30</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_012">USE OF PROCEEDS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">31</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_013">BUSINESS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_014">Overview</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_015">Investment Objectives and Opportunity</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">33</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_016">Loan Portfolio</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right">38</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_017">Other Investments</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right">39</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_018">Credit Quality Information</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">39</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_019">Debt Summary and Sources of Liquidity</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">40</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_020">Competition</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">46</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_021">Human Capital Resources</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">46</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_022">Regulatory Matters</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">46</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_023">Legal Proceedings</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">47</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_024">Reports to Security Holders</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">47</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_025">MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">48</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_026">Overview</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">48</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_027">Critical Accounting Estimates</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">50</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_028">Consolidated Results of Operations</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">52</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_029">Consolidated Financial Position</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">57</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_030">Secured Borrowings</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">64</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_031">Unsecured Borrowings</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">68</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_032">Priority of Borrowings</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">70</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_033">Liquidity and Capital Resources</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">70</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_034">Inflation, Interest Rates, and Housing Starts</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">72</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_035">Recent Accounting Pronouncements</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">74</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_036">Subsequent Events</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">74</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_037">MATERIAL FEDERAL INCOME TAX CONSEQUENCES</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">74</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_038">Interest Income on the Notes</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">74</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_039">Treatment of Dispositions of Notes</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">75</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_040">Non-U.S. Holders</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">75</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_041">Reporting and Backup Withholding</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">75</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_042">Foreign Account Tax Compliance Withholding</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">75</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_043">CERTAIN EMPLOYEE BENEFIT PLAN CONSIDERATIONS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">76</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_044">General Fiduciary Matters</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">76</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_045">Prohibited Transaction Issues</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">76</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_046">Representation</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">77</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_047">MANAGEMENT</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">77</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_048">Executive Officers and Board of Managers</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">77</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_049">Committees of the Board of Managers</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">79</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_050">Limited Liability and Indemnification of Directors, Officers, Employees, and Other Agents</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">80</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_051">EXECUTIVE COMPENSATION</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">81</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_052">Executive Officer Compensation</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">81</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_053">Board of Managers Compensation</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">82</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_054">PRINCIPAL SECURITY HOLDERS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">83</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_055">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">84</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_056">Transactions with Affiliates</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">84</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_057">Affiliate Transaction Policy</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">87</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_058">Board of Managers Independence</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">87</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_059">DESCRIPTION OF NOTES</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">88</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_060">General</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">88</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_061">Established Features of the Notes</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">88</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_062">Subordination</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">89</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_063">Redemption by Us Prior to Maturity</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">89</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_064">Redemption at the Request of the Holder Prior to Maturity</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">89</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_065">Redemption upon Your Death</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">90</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_066">Additional Redemption Options for Notes with a 36-Month Maturity</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">90</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_067">No Restrictions on Additional Debt or Business</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">90</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_068">Modification of Indenture</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">90</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_069">Place, Method, and Time of Payment</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">91</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_070">Events of Default</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">91</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_071">Satisfaction and Discharge of Indenture</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">92</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_072">Reports</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">92</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_073">Service Charges</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">92</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_074">Book Entry Record of Your Ownership</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">92</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_075">Transfer</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">92</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_076">Concerning the Trustee</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">92</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_077">PLAN OF DISTRIBUTION</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">93</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_078">CHARITABLE MATCH PROGRAM</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">94</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_079">LEGAL MATTERS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">94</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_080">EXPERTS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">94</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_081">WHERE YOU CAN FIND MORE INFORMATION</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">94</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#silaa_082">INDEX TO FINANCIAL STATEMENTS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-1</span></td></tr>
  </table>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>You
should rely only upon the information contained in this prospectus. We have not authorized anyone to provide you with information different
from that contained in this prospectus. We are offering to sell the Notes only in jurisdictions where offers and sales are permitted.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_002"></span>QUESTIONS
AND ANSWERS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
we have provided some of the more frequently asked questions and answers relating to the offering of the Notes. Please see the &#8220;Prospectus
Summary&#8221; and the remainder of the prospectus for more information about the offering of the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Who
    is Shepherd&#8217;s Finance, LLC?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shepherd&#8217;s
    Finance, LLC, along with our consolidated subsidiary, (&#8220;Shepherd&#8217;s Finance,&#8221; &#8220;we,&#8221; &#8220;our,&#8221;
    &#8220;us,&#8221; or the &#8220;Company&#8221;) is a finance company organized as a limited liability company in the State of Delaware.
    Our business is focused on commercial lending to participants in the residential construction and development industry. Our Chief
    Executive Officer (&#8220;CEO&#8221;), who is also on our board of managers, is Daniel M. Wallach. Mr. Wallach is responsible for
    overseeing our day-to-day operations. Our office is located in Jacksonville, Florida. As of December 31, 2021, we have 66 customers
    in 20 states. As of December 31, 2021, Mr. Wallach and his wife, directly or indirectly, own 80.7% of our outstanding common membership
    interests, which constitute our voting membership interests. Therefore, Mr. Wallach is able to exercise significant control over
    our business, including with respect to the composition of our board of managers. A manager may be removed by a vote of holders of
    80% of our outstanding voting membership interests.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    are your primary business activities?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    extend and service commercial loans to small-to-medium sized homebuilders for the purchase of lots and/or the construction of homes
    thereon. In some circumstances, the lot is purchased with an older home on the lot which is then either removed or rehabilitated.
    If the home is rehabilitated, the loan is referred to as a &#8220;rehab&#8221; loan. As we continue to grow our business, we are
    focusing some of our efforts on our rehab loan program, which we believe in the long run will face less bank competition and have
    more stable demand than our new construction program. We also extend and service loans for the purchase of lots and undeveloped land
    and the development of that land into residential building lots. Most of the loans are for &#8220;spec homes&#8221; or &#8220;spec
    lots,&#8221; meaning they are built or developed speculatively (with no specific end-user homeowner in mind). The loans are generally
    secured, and the collateral is the land, lots, and constructed items thereon, as well as additional collateral, as we deem appropriate.
    As of December 31, 2021, we had 224 construction loans in 20 states with 66 borrowers and 15 development loans in six states with
    12 borrowers. We intend to continue expanding our lending activity and further diversifying our loan portfolio.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    is your experience in this type of lending?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
                                            2011, we have extended and serviced commercial loans to small-to-medium sized homebuilders
                                            for the purchase of lots and/or the construction of homes thereon. We have also extended
                                            rehab loans to homebuilders in instances when the lot has an existing home which is either
                                            removed or rehabilitated. We also extend and service loans for the purchase of lots and undeveloped
                                            land and the development of that land into residential building lots. We have originated
                                            approximately $266,382,000 of loans from December 2011 through December 2021. As of December
                                            31, 2021, we had 224 construction loans in 20 states with 66 borrowers and 15 development
                                            loans in six states with 12 borrowers.</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    CEO, Daniel M. Wallach, has been in the housing industry since 1985. For 11 years, he was the Chief Financial Officer of 84 Lumber
    Company (&#8220;84 Lumber&#8221;), a multi-billion dollar supplier of building materials to home builders. He also was responsible
    for 84 Lumber&#8217;s lending business for 20 years. During those years, he was responsible for the creation and implementation of
    many secured lending programs to builders, some of which were performed fully by 84 Lumber, and some of which were performed in partnership
    with banks. In general, both the creation of all loans and the resolution of defaulted loans were Mr. Wallach&#8217;s responsibility,
    whether the loans were company loans or loans in partnership with banks. Through these programs, he was responsible for the creation
    of approximately $2,000,000,000 in loans which generated interest spread of $50,000,000 after deducting for loan losses. Through
    the years, Mr. Wallach managed the development of systems for reducing and managing the risks and losses on defaulted loans. Mr.
    Wallach also was responsible for 84 Lumber&#8217;s unsecured debt to builders, which reached over $300,000,000 at its peak. He also
    gained experience in securing defaulted unsecured debt.</span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Why
    will your potential customers want to borrow from you?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
    the number of housing starts dropped to historically low levels in 2007, they have been recovering since and there were approximately
    1,130,000 new single family homes with construction started in the United States in 2021. See &#8220;Management&#8217;s Discussion
    and Analysis of Financial Condition and Results of Operations &#8212; Inflation, Interest Rates, and Housing Starts.&#8221; Many
    small-to-medium sized home builders can build homes for customers who have their own financing, but are unable to obtain or supply
    any or enough of their own financing to build speculative or model homes. The ability to have available either a speculative home
    or a model home can greatly increase the total number of homes a builder can sell per year, so despite the high cost of providing
    financing to builders today, we believe that there is a significant demand. Banks, which historically have been the most popular
    provider of financing for builders, are mostly not in that business today, or are in the business at a reduced level. We believe
    that this void in supply gives us the opportunity to profit in this niche business of providing financing to small-to-medium sized
    home builders. In addition, we believe that this is a good time to extend commercial loans to builders in the residential real estate
    market because many of our competitors have sustained losses due to the impact of the COVID-19 pandemic and, therefore, are currently
    reluctant to lend in this space.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    is the role of the Board of Managers?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
    our CEO and other executive officers are responsible for our day-to-day operations, our board of managers is responsible for governance
    over our business. Our board of managers is comprised of Daniel M. Wallach, who is also our CEO, and three independent managers,
    Eric A. Rauscher, Kenneth R. Summers, and Gregory L. Sheldon.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    kind of offering is this and how many Notes are outstanding?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    are offering up to $70,000,000 in Notes. As of December 31, 2021, we have approximately $20,636,000 of Notes outstanding, consisting
    of Notes issued pursuant to our prior offerings. We previously engaged in three public offering of Notes, the most recent of which
    terminated on [__], 2022. Notes issued in our prior offerings rank equally to the Notes offered in this offering.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>How
    are the Notes sold?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes are offered directly by us without an underwriter or placement agent. We may market the Notes by advertisements on the internet,
    advertisements in local and/or national newspapers, roadway sign advertisements, or through direct mail campaigns and other miscellaneous
    media in states in which we have properly registered the offering or qualified for an exemption from registration.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    are the proposed terms of the Notes you are offering?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance. The interest rates
    will vary within the predetermined interest rate ranges, as described in this prospectus, but annual interest rates as of the date
    of this prospectus are as follows: 6% for 12-month Notes; 7% for 24-month Notes; 4% for 36-month Notes; and 8% for 48-month Notes.
    Interest will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly
    based on a 365/366 day year. When you make an investment, your rate will be fixed throughout the duration of your investment.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>How
    is the interest rate determined?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
    time to time, we will establish the interest rate(s) we are offering for various maturities. By referring to the features (e.g.,
    the maturities and interest rates) which are in effect at the time, you will see the interest rate(s) and maturities we are currently
    offering. The interest rate offered on the Notes depends on which maturity you select and is subject to a range, as follows: </span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%; margin-left: 0.5in">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">Note Maturity</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Minimum
    <br />
    Rate</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Ceiling</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%"><span style="font-family: Times New Roman, Times, Serif">12-Month</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 14%; text-align: right"><span style="font-family: Times New Roman, Times, Serif">5</span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 14%; text-align: right"><span style="font-family: Times New Roman, Times, Serif">10</span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">24-Month</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">6</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">10</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif">36-Month</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right">&#160;&#160;&#160;&#160;<span style="font-family: Times New Roman, Times, Serif">3</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">6</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">48-Month</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">8</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">12</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
interest rate on a Note purchased by you is fixed and will not change over the term of the Note.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    will you do with the proceeds raised from this offering?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    all of the Notes offered by this prospectus are sold, we expect to receive approximately $69,326,628 in net proceeds (after
    deducting all costs and expenses associated with this offering). We intend to use substantially all of the net proceeds from this
    offering as follows and in the following order of priority:</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    make payments on other borrowings, including loans from affiliates;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    pay Notes on their scheduled due date and Notes that we are required to redeem early;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    make interest payments on the Notes; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    the extent we have remaining net proceeds and adequate cash on hand, to fund any one or more of the following activities:</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9675;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    extend commercial construction loans to homebuilders to build single or multi-family homes, develop lots, or rehabilitate an older
    home on an existing lot;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9675;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    make distributions to equity owners, including distributions on our preferred equity;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9675;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">for
    working capital and other corporate purposes provided, however, no more than 20% of the proceeds will be used for such purposes;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9675;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    purchase defaulted secured debt from financial institutions at a discount;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9675;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    purchase defaulted unsecured debt from suppliers to homebuilders at a discount and then secure it with real estate or other collateral;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9675;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    purchase real estate, in which we will operate our business (one such purchase occurred in February 2017); and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9675;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    redeem Notes which we have decided to redeem prior to maturity.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    is a Note?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
    Note is our promise to pay you a specified rate of interest for a specific period of time and to repay your principal investment
    upon maturity. The Notes are our general unsecured obligations and are subordinate in right of payment to all present and future
    senior debt. &#8220;Subordinated&#8221; means that if we are unable to pay our debts as they come due, all of the senior debt would
    be paid in full first. After the senior debt is paid in full, any remaining money would be used to repay the Notes and other subordinated
    debt that are equal to the Notes in priority. As of December 31, 2021, we had $22,327,000 in senior debt and approximately $25,776,000
    in subordinated debt. We expect to incur debt in the future, including, but not limited to, more senior debt and the Notes offered
    pursuant to this offering.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    is an indenture?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
    required by United States federal law, the Notes will be governed by a document called an &#8220;indenture.&#8221; An indenture is
    a contract between us and a trustee. The main role of the trustee is to enforce your rights against us if we are in default of our
    obligations under the Notes. Defaults are described in this prospectus under &#8220;Description of Notes &#8212; Events of Default.&#8221;
    There are some limitations on the extent to which the trustee acts on your behalf. These limitations are described in this prospectus
    under &#8220;Description of Notes &#8212; Events of Default.&#8221;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes will be issued under an indenture dated [__], 2022, between us and [__], as trustee. The indenture does not limit the principal
    amount of debt securities that we may issue under it. The indenture is governed by Delaware law and is qualified under the Trust
    Indenture Act of 1939.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Is
    my investment in the Notes insured or guaranteed?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No,
    the Notes are:</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOT
    certificates of deposit with an insured financial institution;</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOT
    guaranteed by any depository institution; and</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOT
    insured by the FDIC or any governmental or private insurance fund, or any other person or entity.</b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes are backed only by the faith and credit of our Company and our operations. You are dependent upon our ability to effectively
    manage our business to generate sufficient cash flow, including cash flow from our commercial lending activities, for the repayment
    of principal at maturity and the ongoing payment of interest on the Notes.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>How
    is interest calculated and paid to me?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
    will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based
    on a 365-day year (366-day in case of a leap year). Interest will be earned daily, and we will pay interest to you monthly or at
    maturity as you request. If you choose to be paid interest at maturity rather than monthly, the interest will be compounded monthly.
    If any day on which a payment is due with respect to a Note is not a business day, then you will not be entitled to payment of the
    amount due until the following business day, and no additional interest will be due as a result of such delay. If you elect to be
    paid interest monthly, interest on your Note will be paid on the first business day of every month. Your first interest payment date
    will be the month following the month in which the Note is issued, except that if a new Note is issued within the last 10 days preceding
    an interest payment date, the first interest payment will be made on the next succeeding interest payment date (i.e., approximately
    35&#8211;40 days after issuance). No payments under $50 will be made, with any interest payment being accrued to your benefit and
    earning interest on a monthly compounding basis until the payment due to you is at least $50 on an interest payment date.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>If
    I elect to have interest on the Note paid in one lump sum at maturity, can I change my election later?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yes,
    we will allow you to change your election so that you receive monthly payments of earned and unpaid interest instead. You should
    contact us at (302) 752-2688 (30-ASK-ABOUT) or use our website, <span style="text-decoration: underline">www.shepherdsfinance.com</span>, to learn the steps you should take
    to change your election.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>When
    do the Notes mature?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes will generally mature based on the maturity date you select at the time of purchase, unless the Company chooses to redeem your
    Note prior to its stated maturity or, in certain circumstances, you require us to redeem your Note prior to its stated maturity.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>May
    I redeem a Note prior to maturity?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Beginning
                                            180 calendar days after the issuance date, you may request, in writing, that we redeem the
                                            Note. Your request, however, is subject to our consent and we may decline your request at
                                            our choosing. If we agree to your redemption request, a 180-day interest penalty will be
                                            imposed. This means that you will not receive the last 180 days&#8217; worth of interest
                                            and, if the accrued and unpaid interest is not sufficient to cover the amount of the penalty,
                                            then any remaining amount of the penalty shall be deducted from the principal amount of the
                                            Note (i.e., we will subtract the remaining interest penalty from your original investment).</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Holders
    of a Note with a 36-month maturity purchased on or after February 4, 2020 may require us to redeem all or a portion of such Note
    for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated
    rate to the redemption date, subject to certain restrictions primarily related to how much advance notice is provided to us. Furthermore,
    unless the subordination provisions in the indenture restrict our ability to make the redemption, a holder of a Note may also require
    us to redeem all or a portion of their Note, regardless of amount and without any interest penalty, for a redemption price equal
    to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date,
    upon one business day&#8217;s advance notice to us, but only if the holder immediately upon redemption invests the entirety of the
    proceeds from such redemption in another Note or another security then-offered by us, if any. The restriction requiring you to wait
    until 180 days have passed from the issuance of your Note to request a redemption does not apply to the redemptions described in
    this paragraph. See the &#8220;Description of Notes &#8212; Additional Redemption Options for Notes&#8221; section of this prospectus
    for additional information.</span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    happens if I die prior to the maturity date?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
    the written request of the executor or administrator of your estate (or if your Note is held jointly with another investor, the joint
    owner of your Note), we will redeem any Note at any time after death. The redemption price will be equal to the principal amount
    plus earned but unpaid interest payable on the Note, without any interest penalty. We will seek to honor any such request as soon
    as reasonably possible based on our cash position at the time and our then current cash needs, but generally within two weeks of
    the request. It is possible that the subordination provisions in the indenture may restrict our ability to honor your request.</span></td></tr>
  </table>
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    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Can
    you force me to redeem my Note?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yes.
    At any time we may call all or a portion of your Note for redemption. We will give you 30 to 60 days&#8217; notice of the mandatory
    redemption and repay your Note for a price equal to the principal amount plus earned but unpaid interest to the day we repay your
    Note.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Are
    there any JOBS Act considerations?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
                                            are an &#8220;emerging growth company,&#8221; as defined in the Jumpstart Our Business Startups
                                            Act, or the JOBS Act, and are eligible to take advantage of certain exemptions from, or reduced
                                            disclosure obligations relating to, various reporting requirements that are normally applicable
                                            to public companies. Such exemptions include, among other things, not being required to comply
                                            with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
                                            disclosure obligations relating to executive compensation in proxy statements and periodic
                                            reports, and exemptions from the requirement to hold a non-binding advisory vote on executive
                                            compensation and obtain shareholder approval of any golden parachute payments not previously
                                            approved.</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally,
    under Section 107 of the JOBS Act, an &#8220;emerging growth company&#8221; may take advantage of the extended transition period
    provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. This means an
    &#8220;emerging growth company&#8221; can delay adopting certain accounting standards until such standards are otherwise applicable
    to private companies. However, we have elected to &#8220;opt out&#8221; of such extended transition period, and will therefore comply
    with new or revised accounting standards on the applicable dates on which the adoption of such standards are required for non-emerging
    growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition period for compliance
    with new or revised accounting standards is irrevocable.</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    will remain an &#8220;emerging growth company&#8221; until the earliest of (i) the last day of the first fiscal year in which we
    have total annual gross revenues of $1.07 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of
    the date of the first sale of our common equity securities pursuant to an effective registration statement, (iii) the date on which
    we become a &#8220;large accelerated filer&#8221; as defined in Rule 12b-2 under the Exchange Act (which would occur if the market
    value of our common equity held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently
    completed second fiscal quarter), or (iv) the date on which we have, during the preceding three year period, issued more than $1
    billion in non-convertible debt.</span></p></td></tr>
  </table>
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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>What
    are some of the significant risks of my investment in the Notes?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
    should carefully read and consider all risk factors beginning on page 13 of this prospectus prior to investing. A summary
    of the principal risk factors we face is also contained in the &#8220;Summary of Principal Risk Factors&#8221; section of this prospectus.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>How
    do I purchase a Note?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
                                            may purchase a Note from us by visiting our website at <span style="text-decoration: underline">www.shepherdsfinance.com</span> and
                                            following the instructions under the heading &#8220;Investors&#8221; and then &#8220;Our
                                            Investment Process&#8221; or by calling (302) 752-2688 (30-ASK-ABOUT) to request a copy of
                                            the prospectus along with an investment application. Upon receipt of your application and
                                            investment check and the acceptance and posting of your investment, we will send you a confirmation,
                                            which describes, among other things, the term, interest rate, and principal amount of your
                                            Note.</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    reserve the right to reject any investment. Among other reasons, we may reject an investment if the information in your investment
    application is incorrect or incomplete, or if the interest rate or maturity you have selected has not been offered by us in the past
    seven calendar days for your desired investment amount at the time we receive your investment documents.</span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Q:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Whom
    may I contact for more information?</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
    can obtain additional copies of this prospectus and review the established features of the Notes at <span style="text-decoration: underline">www.shepherdsfinance.com</span>
    or by calling (302) 752-2688 (30-ASK-ABOUT). However, the information contained on our website is not part of this prospectus. If
    you have questions about the suitability of an investment in the Notes for you, you should contact your own investment, tax, and
    other financial advisors.</span></td></tr>
  </table>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_003"></span>PROSPECTUS
SUMMARY</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
summary highlights selected information, most of which was not otherwise addressed in the &#8220;Questions and Answers&#8221; section
of this prospectus. For more information about us, you should carefully read the entire prospectus, including the section entitled &#8220;Risk
Factors,&#8221; the consolidated financial statements and other consolidated financial data, any related prospectus supplement, and the
documents we have referred you to in the &#8220;Where You Can Find More Information&#8221; section. There will be no trading market for
the Notes, so you will not be able to use the money you invest until the maturity or other repayment of the Note. Your right to be repaid
prior to maturity is at our sole discretion, except upon your death and except for holders of certain 36-month Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_004"></span>Our
Company and Our Business</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business is focused on commercial lending to participants in the residential construction and development industry. We believe this market
is underserved because of the lack of traditional lenders currently participating in the market. We are located in Jacksonville, Florida.
We are organized as a Delaware limited liability company and our operations are governed pursuant to our limited liability company agreement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
commercial loans we extend are secured by mortgages on the underlying real estate. We extend and service commercial loans to small-to-medium
sized homebuilders for the purchase of lots and/or the construction of homes thereon. In some circumstances, the lot is purchased with
an older home on the lot which is then either removed or rehabilitated. If the home is rehabilitated, the loan is referred to as a &#8220;rehab&#8221;
loan. As we continue to grow our business, we are focusing some of our efforts on our rehab loan program, which we believe in the long
run will face less bank competition and have more stable demand than our new construction program. We also extend and service loans for
the purchase of lots and undeveloped land and the development of that land into residential building lots. In addition, we may, depending
on our cash position and the opportunities available to us, do none, any or all of the following: purchase defaulted unsecured debt from
suppliers to homebuilders at a discount (and then secure that debt with real estate or other collateral), purchase defaulted secured
debt from financial institutions at a discount, purchase real estate in which we will operate our business (one such purchase occurred
in February 2017), and conduct other business related to or in coordination with extending loans to homebuilders and developers. Our
investment policies may be amended or changed at any time by our board of managers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
had $46,943,000 and $46,405,000 in loan assets as of December 31, 2021 and December 31, 2020, respectively. As of December 31, 2021,
we had 224 construction loans in 20 states with 66 borrowers and 15 development loans in six states with 12 borrowers. As of December
31, 2021, four of the development loans are with a borrower in Pittsburgh, Pennsylvania. We have various sources of capital, detailed
below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">(All dollar [$] amounts shown in table in thousands.)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Capital Source</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; width: 60%; text-align: left">Purchase and sale agreements and other secured borrowings</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">19,165</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">22,968</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Secured line of credit from affiliates</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">859</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Unsecured line of credit (senior)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,250</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">500</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">EIDL advance</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Unsecured Notes through our Notes Program, gross</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">20,636</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">21,482</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Other unsecured debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6,193</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,411</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Preferred equity, Series C units</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,014</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,582</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Preferred equity, Series B units</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,720</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,630</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Common equity</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(130</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">47</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">54,707</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">55,630</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Economic
and Industry Dynamics</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
found a niche in the home construction financing industry, to become the lender of choice or secondary lender to residential homebuilders
during the absence of sufficient lending at the homebuilder&#8217;s local financial institution or community bank. Our customers increase
their sales and profits by borrowing from us and, in return we generate positive returns on secured loans we make to them.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Risk
and Mitigation</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that while creating speculative construction loans is a high-risk venture, the reduction in competition, the differences in our
lending versus typical small bank lending, and our loss mitigation techniques will all help this to continue to be a profitable business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
engage in various activities to try to mitigate the risks inherent in this type of lending by:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 48px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Keeping
    the loan-to-value ratio, or LTV, between 60% and 75% on a portfolio basis, however, individual loans may, from time to time, have
    a greater LTV;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Generally
    using deposits from the builder on home construction loans to ensure the completion of the home. Lending losses on defaulted loans
    are usually a higher percentage when the home is not built, or is only partially built;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Having
    a higher yield than other forms of secured real estate lending;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Using
    interest escrows from our loans;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Paying
    major subcontractors and suppliers directly, which reduces the frequency of liens on the property (liens generally hurt the net realized
    value of loss mitigation techniques);</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Aggressively
    working with builders who are in default on their loan before and during foreclosure. This technique generally yields a reduced realized
    loss; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Market
    grading. We review all lending markets, analyzing their historic housing start cycles. Then, the current position of housing starts
    is examined in each market. Markets are classified into volatile, average, or stable, and then graded based on that classification
    and our opinion of where the market is in its housing cycle. This grading is then used to determine the builder deposit amount, the
    LTV, and the yield.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_005"></span>The
Offering</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Securities
    Offered</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 68%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    are offering up to $70,000,000 in aggregate principal amount of our Notes in this public offering (the &#8220;Notes Program&#8221;).
    The Notes will be governed by an indenture between us and [__], as trustee. The Notes will not have the benefit of a sinking fund
    and will not be guaranteed by the FDIC or any governmental or private insurance fund, or any other person or entity.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Minimum
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Maximum
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    maximum investment is $1,000,000 per Note, or $1,000,000 in the aggregate per investor, but a higher maximum investment amount may
    be approved by us on a case-by-case basis.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Interest
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 68%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Various
    rates will be offered by us from time to time, which will be impacted by the maturity selected by you (see &#8220;Maturity,&#8221;
    below), and will be subject to a range, as follows: </span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 68%; margin-left: 32%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Note Maturity</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%">12-Month</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 14%; text-align: right">5</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 14%; text-align: right">10</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>24-Month</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>36-Month</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>48-Month</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">12</td><td style="text-align: left">%</td></tr>
  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 68%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance. The interest rates
    will vary within the predetermined interest rate ranges, but annual interest rates as of the date of this prospectus are as follows:
    6% for 12-month Notes; 7% for 24-month Notes; 4% for 36-month Notes; and 8% for 48-month Notes. Interest will be calculated based
    on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365/366 day year.
    When you make an investment your interest rate will be fixed throughout the duration of your investment.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Payment
    of Interest</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
    will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based
    on a 365/366 day year. Interest will be earned daily, and we will pay interest to you monthly or at maturity as you request. If you
    choose to be paid interest at maturity rather than monthly, the interest will be compounded monthly. If any day on which a payment
    is due with respect to a Note is not a business day, then you will not be entitled to payment of the amount due until the following
    business day, and no additional interest will be due as a result of such delay. If you elect to be paid interest monthly, interest
    on your Note will be paid on the first business day of every month. Your first interest payment date will be the month following
    the month in which the Note is issued, except that if a new Note is issued within the last 10 days preceding an interest payment
    date, the first interest payment will be made on the next succeeding interest payment date (i.e., approximately 35&#8211;40 days
    after issuance). No payments under $50 will be made, with any interest payment being accrued to your benefit and earning interest
    on a monthly compounding basis until the payment due to you is at least $50 on an interest payment date.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Maturity</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ranging
    from 12 months to 48 months from the date of issuance.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Redemption
    by You</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
    to our agreement in our sole discretion, you may request that we redeem a Note purchased by you at any time beginning 180 calendar
    days after the issuance date, with a 180-day interest penalty. This means that you will not receive the last 180 days&#8217; worth
    of interest and, if the accrued and unpaid interest is not sufficient to cover the amount of the penalty, then any remaining amount
    of the interest penalty shall be deducted from the principal amount of the Note (i.e., we will subtract the remaining interest penalty
    from your original investment).</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Holders
    of a Note with a 36-month maturity purchased on or after February 4, 2020 may require us to redeem all or a portion of such Note
    for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated
    rate to the redemption date, subject to certain restrictions primarily related to how much advance notice is provided to us. Furthermore,
    unless the subordination provisions in the indenture restrict our ability to make the redemption, a holder of a Note may also require
    us to redeem all or a portion of their Note, regardless of amount and without any interest penalty, for a redemption price equal
    to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date,
    upon one business day&#8217;s advance notice to us, but only if the holder immediately upon redemption invests the entirety of the
    proceeds from such redemption in another Note or another security then-offered by us, if any. The restriction requiring you to wait
    until 180 days have passed from the issuance of your Note to request a redemption does not apply to the redemptions described in
    this paragraph. See the &#8220;Description of Notes &#8212; Additional Redemption Options for Notes&#8221; section of this prospectus
    for additional information.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Redemption
    in the Event of Death</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
    the subordination provisions in the indenture restrict our ability to make the redemption, at the written request of the executor
    or administrator of your estate (or if your Note is jointly held with another investor, at the written request of your joint investor),
    we will redeem the Note at any time after death for a redemption price equal to the principal amount plus earned but unpaid interest
    payable on the Note, without any interest penalty. We will seek to honor any such redemption request as soon as reasonably possible,
    based on our then current cash position and needs, but generally within two weeks of the request.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Redemption
    by Us</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 68%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
    any time we may call your Note for redemption upon 30 to 60 days&#8217; notice. The redemption price will be equal to the principal
    amount plus accrued and unpaid interest to the date of the redemption.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Subordination</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes are subordinated, in all rights to payment and in all other respects, to all of our senior debt. Senior debt includes, without
    limitation, all of our bank debt, our secured lines of credit from affiliates, our unsecured line of credit, senior subordinated
    debt, and any debt we obtain in the future. This means that if we are unable to pay our debts when due, all of the senior debt would
    be paid first, before any payment would be made on the Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Events
    of Default</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
    the indenture, an event of default is generally defined as (1) a default in the payment of principal or interest on the Notes that
    is not cured for 30 days, (2) bankruptcy or insolvency, or (3) our failure to comply with provisions of the Notes or the indenture
    if such failure is not cured or waived within 60 days after the receipt of a specific notice.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Transfer
    Restrictions</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Transfer
    of a Note is effective only upon the receipt of valid transfer instructions from the Note holder of record.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Trustee</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">[__]</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Plan
    of Distribution</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
    offering is being conducted directly by us, without any underwriter or placement agent.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Charitable
    Match Program</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    offer a charitable match program for interest payments that you elect to give to a qualifying charity. If you choose to participate
    in the program and donate all or a portion of your interest payments to charity, when we calculate your interest we will deduct the
    percentage of interest you selected and keep track of that amount separate from your information. After interest is calculated for
    all Note holders at the beginning of December of each year, all of the money for each charity will be totaled up and sent in one
    check to each charity. Each check will have the name and address of each contributor, and the amount each contributed. Our matching
    portion will be included in the total check. We will match your interest payment donation up to 10% of your interest.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risk
    Factors</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
    &#8220;Risk Factors&#8221; beginning on page 13 and other information included in this prospectus and any prospectus supplement
    for a discussion of factors you should carefully consider before investing in the Notes.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_006"></span>SUMMARY
OF PRINCIPAL RISK FACTORS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
is a summary of the principal risk factors we face. Please read it carefully and refer to the more detailed descriptions of the risk
factors in the &#8220;Risk Factors&#8221; section of this prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    Notes are not insured or guaranteed by the FDIC or any third party, so repayment of your Note depends upon our equity (which may
    be limited at times), our experience, the collateral securing our loans, and our ability to manage our business and generate adequate
    cash flows.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Notes are risky speculative investments. Therefore, you should not invest in the Notes unless you are able to afford the loss of
    your entire investment.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
    will not be any market for the Notes, so you should only purchase them if you do not have any need for your money prior to the maturity
    of the Note.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
    will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company as is customarily performed
    in underwritten offerings.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have the right to pay your investment back to you before the stated maturity of your investment. If we do, you may not be able to
    reinvest the proceeds at comparable rates and you will stop earning interest on your investment.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    business is not industry-diversified. The United States economy experienced a slow recovery after the significant downturn in the
    homebuilding industry beginning in 2007, which was one of the worst credit and liquidity crises since the 1930s. Deterioration in
    the homebuilding industry or economic conditions, including as a result of COVID-19, could decrease demand and pricing for new homes
    and residential home lots. A decline in housing values similar to the national downturn in the real estate market that began in 2007
    would have a negative impact on our business. Smaller value declines will also have a negative impact on our business. These factors
    may decrease the likelihood we will be able to generate enough cash to repay the Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
    we are reliant on a single developer and homebuilder, the Hoskins Group, who is concentrated in the Pittsburgh, Pennsylvania market,
    for a significant portion of our revenues and a portion of our capital. Our second largest customer is in the Orlando, Florida market
    and is also a significant portion of our portfolio.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Most
    of our assets are commercial construction loans to homebuilders and/or developers which are a higher than average credit risk, and
    therefore could expose us to higher rates of loan defaults, which could impact our ability to repay amounts owed to you.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    we lose or are unable to hire or retain key personnel, we may be delayed or unable to implement our business plan, which would adversely
    affect our ability to repay the Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have entered into loan purchase and sale agreements with third parties to sell them portions of some of our loans. This increases
    our leverage. While the agreements are intended to increase our profitability, large loan losses and/or idle cash could actually
    reduce our profitability, which could impair our ability to pay principal and/or interest on the Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
    has broad discretion over the use of proceeds from this offering, and it is possible that the funds will not be used effectively
    to generate enough cash for payment of principal and interest on the Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    a large number of our current and prospective borrowers are unable to repay their loans within a normal average number of months,
    we will experience a significant reduction in our income and liquidity, and may not be able to repay the Notes as they become due.
    Due to the impact from COVID-19, some of our borrowers have been unable to repay their loans within a normal average number of months
    and it is possible that additional borrowers may also be unable to repay their loans within a normal average number of months.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    depend on the availability of significant sources of credit to meet our liquidity needs and our failure to maintain these sources
    of credit could materially and adversely affect our liquidity in the future.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have unfunded commitments to builders as of December 31, 2021. If every builder borrowed every amount allowed (which would mean all
    of their homes were complete) and no builders paid us back, we would need to fund that amount. While some of that amount would automatically
    come from our loan purchase and sale agreements, the rest would have to come from our Notes Program and/or our lines of credit. Therefore,
    we may not have the ability to fund our commitments to builders.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have a significant amount of debt and expect to incur a significant amount of additional debt in the future, including issuance of
    the Notes, which will subject us to increased risk of loss. Our present and future senior debt may make it difficult to repay the
    Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Payment
    on the Notes is subordinate to the payment of our outstanding present and future senior debt, if any. Since there is no limit to
    the amount of senior debt we may incur, our present and future senior debt may make it difficult to repay the Notes.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    operations are not subject to the stringent banking regulatory requirements designed to protect investors, so repayment of your investment
    is completely dependent upon our successful operation of our business.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    Chief Executive Officer (who is also on our board of managers) and Executive Vice President will face conflicts of interest as a
    result of the secured lines of credit made to us, which could result in actions that are not in the best interests of our Note holders.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    indenture and terms of our Notes do not restrict our use of leverage. A relatively small loss can cause over leveraged companies
    to suffer a material adverse change in their financial position. If this happened to us, it may make it difficult to repay the Notes.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_007"></span>RISK
FACTORS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operations and your investment in the Notes are subject to a number of risks. You should carefully read and consider these risks, together
with all other information in this prospectus, before you decide to buy the Notes. If any of these risks occur in the future, our business,
consolidated financial condition, operating results, and cash flows and our ability to repay the Notes could be materially adversely
affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="silaa_008"></span>Risks
Related to Our Offering and Business</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
Notes are not insured or guaranteed by the FDIC or any third party, so repayment of your Note depends upon our equity (which may be limited
at times), our experience, the collateral securing our loans, and our ability to manage our business and generate adequate cash flows.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Notes are not certificates of deposit or similar obligations or guaranteed by any depository institution and are not insured by the FDIC
or any governmental or private insurance fund, or any other entity. Therefore, you are dependent upon our ability to manage our business
and generate adequate cash flows. If we are unable to generate sufficient cash flow to repay our debts, you could lose your entire investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
Notes are risky speculative investments. Therefore, you should not invest in the Notes unless you are able to afford the loss of your
entire investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Notes may not be a suitable investment for you, and we advise you to consult with your investment, tax, and other professional financial
advisors prior to deciding whether to invest in the Notes. The characteristics of the Notes, including the maturity and interest rate,
may not satisfy your investment objectives. The Notes may not be a suitable investment for you based on your ability to withstand a loss
of interest or principal or other aspects of your financial situation, including your income, net worth, financial needs, investment
risk profile, return objectives, investment experience, and other factors. Before deciding whether to purchase Notes, you should consider
your investment allocation with respect to the amount of your contemplated investment in the Notes in relation to your other investments
and the diversity of those holdings. <b>If you cannot afford to lose all of your investment, you should not invest in these Notes.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>There
will not be any market for the Notes, so you should only purchase them if you do not have any need for your money prior to the maturity
of the Note.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Notes are not listed on a national securities exchange or authorized for quotation on the Nasdaq stock market, or any securities exchange.
The Notes do not have a CUSIP identification number. There is no trading market for the Notes. It is unlikely that the Notes will be
able to be used as collateral for a loan. Except as described elsewhere in this prospectus, you have no right to require redemption of
the Notes. You should only purchase these Notes if you do not have the need for your money prior to the maturity of the Note.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company as is customarily performed
in underwritten offerings.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Notes are being offered by our Executive Vice President of Operations without an underwriter or placement agent. Therefore, you
will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company. Accordingly, you should
consult your investment, tax, and other professional financial advisors prior to deciding whether to invest in the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
business is not industry-diversified. The United States economy experienced a slow recovery after the significant downturn in the homebuilding
industry beginning in 2007, which was one of the worst credit and liquidity crises since the 1930s. Deterioration in the homebuilding
industry or economic conditions, including as a result of COVID-19, could decrease demand and pricing for new homes and residential home
lots. A decline in housing values similar to the national downturn in the real estate market that began in 2007 would have a negative
impact on our business. Smaller value declines will also have a negative impact on our business. These factors may decrease the likelihood
we will be able to generate enough cash to repay the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Developers
and homebuilders to whom we may make loans use the proceeds of our loans to develop raw land into residential home lots and construct
homes. The developers obtain the money to repay our development loans by selling the residential home lots to homebuilders or individuals
who will build single-family residences on the lots, or by obtaining replacement financing from other lenders. A developer&#8217;s ability
to repay our loans is based primarily on the amount of money generated by the developer&#8217;s sale of its inventory of single-family
residential lots. Homebuilders obtain the money to repay our loans by selling the homes they construct or by obtaining replacement financing
from other lenders, and thus, the homebuilders&#8217; ability to repay our loans is based primarily on the amount of money generated
by the sale of such homes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
homebuilding industry is cyclical and is significantly affected by changes in industry conditions, as well as in general and local economic
conditions, such as:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">employment
    level and job growth;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">demographic
    trends, including population increases and decreases and household formation;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">availability
    of financing for homebuyers;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">interest
    rates;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">affordability
    of homes;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">consumer
    confidence;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">levels
    of new and existing homes for sale, including foreclosed homes and homes held by investors and speculators; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">housing
    demand generally.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
conditions may occur on a national scale or may affect some of the regions or markets in which we operate more than others.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
generally lend a percentage of the values of the homes and lots. These values are determined shortly prior to the lending. If the values
of homes and lots in markets in which we lend drop fast enough to cause the builders losses that are greater than their equity in the
property, we will be forced to liquidate the loan in a fashion which will cause us to lose money. If these losses when combined and added
to our other expenses are greater than our revenue from interest charged to our customers, we will lose money overall, which will hurt
our ability to pay interest and principal on the Notes. Values are typically affected by demand for homes, which can change due to many
factors, including but not limited to, demographics, interest rates, the overall economy, which can be impacted by outbreaks of communicable
illnesses, including the ongoing COVID-19 pandemic, cost of building materials and labor, availability of financing for end-users, inventory
of homes available and governmental action or inaction. If there is a tightening of the credit markets, it would be more difficult for
potential homeowners to obtain financing to purchase homes. If housing prices decline or sales in the housing market decline, our customers
may have a hard time selling their homes at a profit. This could cause the amount of defaulted loans that we will own to increase. An
increase in defaulted loans would reduce our revenue and could lead to losses on our loans. A decline in housing prices will further
increase our losses on defaulted loans. If the amount of defaulted loans or the loss per defaulted loan is large enough, we will operate
at a loss, which will decrease our equity. This could cause us to become insolvent, and we will not be able to pay back your principal
and interest on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
face risks related to an epidemic, pandemic or other health crisis, such as the novel coronavirus (COVID-19 pandemic), which could have
a material adverse effect on our business, financial condition, liquidity, results of operations, and prospects.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
face risks related to an epidemic, pandemic, or other health crisis. COVID-19 has spread globally and the pandemic has caused significant
disruptions to the economy. We have been impacted and continue to face risks related to COVID-19, which has caused disruptions to the
economy and in all of the markets in which we lend. Our operating results depend significantly on the homebuilding industry. The pandemic
may cause decreases in demand for the sales of homes in those areas and others in the future, which could negatively affect our homebuilding
customers and their ability to repay our loans. In such event, our business, financial condition, liquidity, results of operations, and
prospects could be adversely impacted, including our ability to repay our Notes. The ultimate extent of the impact of the COVID-19 pandemic
on our business, financial condition, liquidity, results of operations, and prospects will depend on future developments, which are highly
uncertain and cannot be predicted, including the effectiveness of vaccines against COVID-19 and its variants, public adoption rates of
vaccines, and the uncertainty of new variants of the virus, among others. As we emerge from the pandemic, housing trends may shift in
a negative direction in some or all of our markets.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of the potential impact of COVID-19, we suspended originations of new loans as of March 20, 2020 in order to maintain our liquidity
and based on our expectation that home values would likely decrease in the near future. We initially told all of our borrowers that we
would fund all loans where the underlying home was already under construction, and advised them to build as quickly as possible to bring
the homes on the market as soon as possible. For loans where the borrower had not yet begun construction of the underlying home, we initially
told them that we would not fund construction and they should therefore not start construction.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 7, 2020, we made the decision to reopen lending under normal, pre-COVID-19 terms for a limited group of certain of its customers.
In addition, the decision was made to allow rehab loans to builders at terms that are less conservative than those established in April
2020 but more conservative than terms prior to the arrival of COVID-19. At that point, we were offering normal terms to approximately
40% of our customers, and restricted terms to approximately 60% of its customers. In the second half of 2020, the Company slowly increased
the percentage of customers with normal terms to near 100% by the end of the year. The initial negative impact of COVID-19 can be seen
in our financial statements, predominantly in 2020.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
to the continued cases of the COVID-19 pandemic, there are still economic uncertainties that could negatively impact net income (loss).
Other financial impacts could occur though such potential impact is unknown at this time.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
homebuilding industry could experience adverse conditions, and the industry&#8217;s implementation of strategies in response to such
conditions may not be successful.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
United States homebuilding industry experienced a significant downturn beginning in 2007. During the course of the downturn, many homebuilders
focused on generating positive operating cash flow, resizing and reshaping their product for a more price-conscious consumer and adjusting
finished new home inventories to meet demand, and did so in many cases by significantly reducing the new home prices and increasing the
level of sales incentives. Notwithstanding these strategies, homebuilders continued to experience an elevated rate of sales contract
cancelations, as many of the factors that affect new sales and cancelation rates are beyond the control of the homebuilding industry.
Although the homebuilding industry has experienced positive gains over the last decade, there can be no assurance that these gains will
continue, and these gains may be impacted if negative economic conditions occur as a result of COVID-19, or if there is a negative impact
on the homebuilding industry&#8217;s expectations for future home sales. The homebuilding industry could suffer similar, or worse, adverse
conditions in the future. Decreases in new home sales would increase the likelihood of defaults on our loans and, consequently, reduce
our ability to repay your investment in the Notes.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have $46,943,000 of loan assets as of December 31, 2021. A 35% reduction in total collateral value would reduce our earnings and net
worth by $2,828,000. Larger reductions would result in lower earnings and lower net worth.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, we had $46,943,000 of loan assets on our books. These assets are recorded on our balance sheet at the lower of
the loan amount or the value of the collateral after deduction for expected selling expenses. A reduction in the value of the underlying
collateral could result in significant losses. A 35% reduction, for instance, would result in a $2,828,000 loss. Accordingly, our business
is subject to risk of a loss of a portion of our Note holders&#8217; investments if such a reduction were to occur.</span></p>



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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have $7,657,000 of development loan assets as of December 31, 2021, which unlike our construction loans, are long term loans. This longer
duration as well as the nature of collateral (raw ground and lots) creates more risk for that portion of our portfolio.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Development
loans are riskier than construction loans for two reasons: the duration of the loan and the nature of the collateral. The duration (being
three to five years as compared to generally less than one year on construction loans) allows for a greater period of time over which
the collateral value could decrease. Also, the collateral value of development loans is more likely to change in greater percentages
than that of built homes. For example, during a 70% reduction in housing starts, newly completed homes still have value, but lots may
be worthless. This added risk to this portion of our portfolio adds risk to our investors as our net worth would be significantly impacted
by losses.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Currently,
we are reliant on a single developer and homebuilder, the Hoskins Group, who is concentrated in the Pittsburgh, Pennsylvania market,
for a significant portion of our revenues and a portion of our capital. Our second largest customer is in the Orlando, Florida market
and is also a significant portion of our portfolio.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, 26% of our outstanding loan commitments consisted of loans made to Benjamin Marcus Homes, LLC and Investor&#8217;s
Mark Acquisitions, LLC, both of which are owned by Mark Hoskins (collectively all three parties are referred to herein as the &#8220;Hoskins
Group&#8221;). We refer to the loans to the Hoskins Group as the &#8220;Pennsylvania Loans.&#8221; The Hoskins Group is concentrated
in the Pittsburgh, Pennsylvania market. The Hoskins Group also has a preferred equity interest in us, and in January 2021 we invested
approximately $500,000 in Series A Preferred Units in Benjamin Marcus Homes, LLC. Therefore, currently, we are reliant upon a single
developer and homebuilder who is concentrated in a single city, for a significant portion of our revenues and a portion of our capital.
Any event of bankruptcy, insolvency, or general downturn in the business of this developer and homebuilder or in the Pittsburgh housing
market generally will have a substantial adverse financial impact on our business and our ability to pay back your investments in the
Notes in the long term. Adverse conditions affecting the local housing market could include, but are not limited to, declines in new
housing starts, declines in new home prices, declines in new home sales, increases in the supply of available building lots or built
homes available for sale, increases in unemployment, and unfavorable demographic changes. One of our independent managers, Gregory L.
Sheldon, also serves an advisor to the Hoskins Group and, consequently, Mr. Sheldon may face conflicts of interest in the advice that
he provides to us and the Hoskins Group, including if any such adverse condition were to materialize.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Also,
as of December 31, 2021, 7% of our outstanding loan commitments consisted of loans made to a customer in Orlando, Florida.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have foreclosed assets as of December 31, 2021, which unlike our loans, are recorded on our balance sheet at the value of the collateral,
net of estimated selling expenses.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
reduction in the value of the underlying collateral of our foreclosed assets could result in significant losses. For example, a 35% reduction
in the value of the underlying collateral (net of estimated selling expenses) would result in a $953,000 loss. Our business is subject
to increased risk of not being able to repay timely your investment in the Notes if such a reduction were to occur.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Increases
in interest rates, reductions in mortgage availability, or increases in other costs of home ownership could prevent potential customers
from buying new homes and adversely affect our business and financial results.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Most
new home purchasers finance their home purchases through lenders providing mortgage financing. Immediately prior to 2007, interest rates
were at historically low levels and a variety of mortgage products were available. As a result, home ownership became more accessible.
The mortgage products available included features that allowed buyers to obtain financing for a significant portion or all of the purchase
price of the home, had very limited underwriting requirements or provided for lower initial monthly payments. Accordingly, more people
were qualified for mortgage financing.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
2007, the mortgage lending industry has experienced significant instability, beginning with increased defaults on subprime loans and
other nonconforming loans and compounded by expectations of increasing interest payment requirements and further defaults. This, in turn,
resulted in a decline in the market value of many mortgage loans and related securities. Lenders, regulators and others questioned the
adequacy of lending standards and other credit requirements for several loan products and programs offered in those years. Credit requirements
tightened, and investor demand for mortgage loans and mortgage-backed securities declined. In general, fewer loan products, tighter loan
qualifications, and a reduced willingness of lenders to make loans make it more difficult for many buyers to finance the purchase of
homes. These factors served to reduce the pool of qualified homebuyers and made it more difficult to sell to first-time and move-up buyers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mortgage
rates may rise significantly over the next several years. The benefit of recent trends loosening credit to potential end users of homes
may be outweighed by the rise of interest rates for those borrowers, which might lower demand for new homes. In response to the COVID-19
pandemic, the Federal Open Market Committee cut short-term interest rates to a record low range of 0% to 0.25%. The Federal Reserve has
indicated it expects rates to increase five times through 2022. If short-term interest rates continue to remain at their historically
low levels for a prolonged period and assuming longer-term interest rates fall further, we could experience a reduced interest spread
as our interest-earning assets would continue to reprice downward while our interest-bearing liability rates could fail to decline in
tandem, which would have an adverse effect on our net interest income.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
reduction in the demand for new homes may reduce the amount and price of the residential home lots sold by the developers and homebuilders
to which we loan money and/or increase the amount of time such developers and homebuilders must hold the home lots in inventory. These
factors increase the likelihood of defaults on our loans, which would adversely affect our business and consolidated financial results.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Most
of our assets are commercial construction loans to homebuilders and/or developers which are a higher-than-average credit risk, and therefore
could expose us to higher rates of loan defaults, which could impact our ability to repay amounts owed to you</i>.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
primary business is extending commercial construction loans to homebuilders, along with some loans for land development. These loans
are considered higher risk because the ability to repay depends on the homebuilder&#8217;s ability to sell a newly built home. These
homes typically are not sold by the homebuilder prior to commencement of construction. Therefore, we may have a higher risk of loan default
among our customers than other commercial lending companies. If we suffer increased loan defaults in any given period, our operations
could be materially adversely affected, and we may have difficulty making our principal and interest payments on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
underwriting standards and procedures are more lenient than conventional lenders.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
invest in loans with borrowers who will not be required to meet the credit standards of conventional mortgage lenders, which is riskier
than investing in loans made to borrowers who are required to meet those higher credit standards. Because we generally approve loans
more quickly than some other lenders or providers of capital, there may be a risk that the due diligence we perform as part of our underwriting
procedures will not reveal the need for additional precautions. If so, the interest rate that we charge and the collateral that we require
may not adequately protect us or generate adequate returns for the risk undertaken.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we lose or are unable to hire or retain key personnel, we may be delayed or unable to implement our business plan, which would adversely
affect our ability to repay the Notes.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not have an employment agreement with any of our employees and cannot guarantee that they will remain affiliated with us. Although
we have purchased key person life insurance on our Chief Executive Officer, we do not have key person insurance on any of our other employees.
If any of our key employees were to cease their affiliation with us, our consolidated operating results could suffer. We believe that
our future success depends, in part, upon our ability to hire and retain additional personnel. We cannot assure you that we will be successful
in attracting and retaining such personnel, which could hinder our ability to implement our business plan.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Employee
misconduct could harm us by subjecting us to monetary loss, significant legal liability, regulatory scrutiny, and reputational harm.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
reputation is critical to maintaining and developing relationships with our existing and potential customers and third parties with whom
we do business. There is a risk that our employees could engage in misconduct that adversely affects our business. For example, if an
employee were to engage - or be accused of engaging - in illegal or suspicious activities including fraud or theft, we could suffer direct
losses from the activity, and in addition we could be subject to regulatory sanctions and suffer serious harm to our reputation, financial
condition, customer relationships, and ability to attract future customers or employees. Employee misconduct could prompt regulators
to allege or to determine based upon such misconduct that we have not established adequate supervisory systems and procedures to inform
employees of applicable rules or to detect and deter violations of such rules. It is not always possible to deter employee misconduct,
and the precautions we take to detect and prevent misconduct may not be effective in all cases. Misconduct by our employees, or even
unsubstantiated allegations of misconduct, could result in a material adverse effect on our reputation and our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>A
failure in, or breach of, our operational or security systems or infrastructure, or those of our third-party vendors, including as a
result of cyber-attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage
our reputation, increase our costs, and cause losses.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely heavily on communications and information systems to conduct our business. Information security risks for our business have generally
increased in recent years in part because of the proliferation of new technologies; the use of the Internet and telecommunications technologies
to process, transmit, and store electronic information, including the management and support of a variety of business processes, including
financial transactions and records, personally identifiable information, and customer and investor data; and the increased sophistication
and activities of organized crime, hackers, terrorists, activists, and other external parties. As customer, public, and regulatory expectations
regarding operational and information security have increased, our operating systems and infrastructure must continue to be safeguarded
and monitored for potential failures, disruptions, and breakdowns. Certain of our software and technology systems have been developed
internally and may be vulnerable to unauthorized access or disclosure. Our business, financial, accounting, and data processing systems,
or other operating systems and facilities, may stop operating properly or become disabled or damaged as a result of a number of factors,
including events that are wholly or partially beyond our control. For example, there could be electrical or telecommunication outages;
natural disasters such as earthquakes, tornadoes, and hurricanes; disease pandemics; events arising from local or larger scale political
or social matters, including terrorist acts; and, as described below, cyber-attacks.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business relies on its digital technologies, computer and email systems, software, and networks to conduct its operations. Although we
have information security procedures and controls in place, our technologies, systems, and networks and, because the nature of our business
involves the receipt and retention of personal information about our customers, our customers&#8217; personal accounts may become the
target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse,
loss, or destruction of our customers&#8217;, or other third parties&#8217; confidential information. Third parties with whom we do business
or who facilitate our business activities, including intermediaries or vendors that provide service or security solutions for our operations,
and other third parties, could also be sources of operational and information security risk to us, including from breakdowns or failures
of their own systems or capacity constraints. In addition, hardware, software, or applications we develop or procure from third parties
may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we have disaster recovery and other policies and procedures designed to prevent or limit the effect of the failure, interruption, or
security breach of our information systems, there can be no assurance that any such failures, interruptions, or security breaches will
not occur or, if they do occur, that they will be adequately addressed. Our risk and exposure to these matters remain heightened because
of the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of our controls, processes,
and practices designed to protect our systems, computers, software, data, and networks from attack, damage, or unauthorized access remain
a focus for us. As threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance our
protective measures or to investigate and remediate information security vulnerabilities. Disruptions or failures in the physical infrastructure
or operating systems that support our business and customers, or cyber-attacks or security breaches of the networks or systems, could
result in regulatory fines, penalties or intervention, reputation damage, reimbursement or other compensation costs, and/or additional
compliance costs, any of which could have a material effect on our results of operations or financial condition. Furthermore, if such
attacks are not detected immediately, their effect could be compounded.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>



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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are susceptible to customer fraud, which could cause us to suffer losses on our loan portfolio.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
most of our customers do not publicly report their financial condition and therefore typically are not required to be audited on a regular
basis, we are susceptible to a customer&#8217;s fraud, which could cause us to suffer losses on our loan portfolio. The failure of a
customer to accurately report its financial position, compliance with loan covenants, or eligibility for additional borrowings could
result in our providing loans that do not meet our underwriting criteria, defaults in loan payments, and the loss of some or all of the
principal of a particular loan or loans. Customer fraud can come in other forms, including but not limited to fraudulent invoices for
work done, appraisal fraud, and fraud related to inspections done by third parties.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have entered into loan purchase and sale agreements with third parties to sell them portions of some of our loans. This increases our
leverage. While the agreements are intended to increase our profitability, large loan losses and/or idle cash could actually reduce our
profitability, which could impair our ability to pay principal and/or interest on the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
loan purchase and sale agreements we entered into have allowed us to increase our loan assets and debt. If loans that we create have
significant losses, the benefit of larger balances can be outweighed by the additional loan losses. Also, while these transactions are
booked as secured financing, they are not lines of credit. Accordingly, we will have increased our loan balances without increasing our
lines of credit, which can cause a decrease in liquidity. One solution to this liquidity problem is having idle cash for liquidity, which
then could reduce our profitability. If either of these problems is persistent and/or significant, our ability to pay interest and principal
on our Notes may be impaired.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Management
has broad discretion over the use of proceeds from this offering, and it is possible that the funds will not be used effectively to generate
enough cash for payment of principal and interest on the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
expect to use the proceeds from this offering for purposes detailed in the &#8220;Questions and Answers&#8221; and &#8220;Use of Proceeds&#8221;
sections. Because no specific allocation of the proceeds is required in the indenture, our management will have broad discretion in determining
how the proceeds of the offering will be used.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Additional
competition may decrease our profitability, which would adversely affect our ability to repay the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may experience increased competition for business from other companies and financial institutions that are willing to extend the same
types of loans that we extend at lower interest rates and/or fees. These competitors also may have substantially greater resources, lower
cost of funds, and a better-established market presence. If these companies increase their marketing efforts to our market niche of borrowers,
or if additional competitors enter our markets, we may be forced to reduce our interest rates and fees in order to maintain or expand
our market share. Any reduction in our interest rates, interest income, or fees could have an adverse impact on our profitability and
our ability to repay the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
real estate loans are illiquid, which could restrict our ability to respond rapidly to changes in economic conditions.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
real estate loans we currently hold and intend to extend are illiquid. As a result, our ability to sell under-performing loans in our
portfolio or respond to changes in economic, financial, investment, and other conditions may be very limited. We cannot predict whether
we will be able to sell any real estate loan for the price or on the terms set by us, or whether any price or other terms offered by
a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to
close the sale of a loan. The relative illiquidity of our loan assets may impair our ability to generate sufficient cash to make required
interest and principal payments on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>



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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
systems and procedures might be inadequate to handle our potential growth. Failure to successfully improve our systems and procedures
would adversely affect our ability to repay the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may experience growth that could place a significant strain upon our operational systems and procedures. Initially, all of our computer
systems used electronic spreadsheets and we utilized other methods that a small company would use. Over time, we added a loan document
system which many banks use to produce closing documents for loans. In 2018, we replaced our previous electronic spreadsheet system for
Notes investors with a proprietary system. In addition, in 2019, we replaced our loan asset tracking system with a new proprietary system.
In 2021 we replaced our loan production systems with a new proprietary system. If any of these systems fail, it could have a material
adverse effect on our business, financial condition, results of operations, and, ultimately, our ability to repay principal and interest
on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&#160;</p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we do not meet the requirements to maintain effective internal controls over financial reporting, our ability to raise new capital will
be harmed.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we do not maintain effective internal controls over our financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act
of 2002, then it could result in delaying future SEC filings or future offerings. If future SEC filings or future offerings are delayed,
it could have an extreme negative impact on our cash flow causing us to default on our obligations, including on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are required to devote resources to comply with various provisions of the Sarbanes-Oxley Act, including Section 404 relating to internal
controls testing, and this may reduce the resources we have available to focus on our core business.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to Section 404 of the Sarbanes-Oxley Act and the related rules adopted by the SEC and the Public Company Accounting Oversight Board,
or PCAOB, our management is required to report on the effectiveness of our internal controls over financial reporting. We may encounter
problems or delays in completing any changes necessary to our internal controls over financial reporting. Among other things, we may
not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section
404. Any failure to comply with the various requirements of the Sarbanes-Oxley Act may require significant management time and expenses
and divert attention or resources away from our core business. In addition, we may encounter problems or delays in completing the implementation
of any requested improvements provided by our independent registered public accounting firm.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to risk of significant losses on our loans because we do not require our borrowers to insure the title of their collateral
for our loans.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">It
is customary for lenders extending loans secured by real estate to require the borrower to provide title insurance with minimum coverage
amounts set by the lender. We do not require most of our homebuilders to provide title insurance on their collateral for our loans to
them. This represents an additional risk to us as the lender. The homebuilder may have a title problem which normally would be covered
by insurance, but may result in a loss on the loan because insurance proceeds are not available.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
collateral securing our real estate loans may not be sufficient to pay back the principal amount in the event of a default by the borrowers.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the event of default, our real estate loan investments are generally dependent entirely on the loan collateral to recover our investment.
Our loan collateral consists primarily of a mortgage on the underlying property. In the event of a default, we may not be able to recover
the premises promptly and the proceeds we receive upon sale of the property may be adversely affected by risks generally related to interests
in real property, including changes in general or local economic conditions and/or specific industry segments, declines in real estate
values, increases in interest rates, real estate tax rates and other operating expenses including energy costs, changes in governmental
rules, regulations and fiscal policies (including environmental legislation), acts of God, and other factors which are beyond our or
our borrowers&#8217; control. Current market conditions may reduce the proceeds we are able to receive in the event of a foreclosure
on our collateral. Our remedies with respect to the loan collateral may not provide us with a recovery adequate to recover our investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>



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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
a large number of our current and prospective borrowers are unable to repay their loans within a normal average number of months, we
will experience a significant reduction in our income and liquidity, and may not be able to repay the Notes as they become due.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Construction
loans that we extend are expected to be repaid in a normal average number of months, typically nine months, depending on the size of
the loan. Development loans are expected to last for many years. We have interest paid on a monthly basis, but also charge a fee which
will be earned over the life of the loan. If these loans are repaid over a longer period of time, the amount of income that we receive
on these loans expressed as a percentage of the outstanding loan amount will be reduced, and fewer loans with new fees will be able to
be made, since the cash will not be available. This will reduce our income as a percentage of the Notes, and if this percentage is significantly
reduced it could impair our ability to pay principal and interest on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
cost of funds is substantially higher than that of banks.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
we do not offer FDIC insurance, and because we want to grow our Notes Program faster than most banks want to grow their CD base, our
Notes offer significantly higher rates than bank CDs. Our cost of funds is higher than banks&#8217; cost of funds due to, among other
factors, the higher rate that we pay on our Notes and other sources of financing. This may make it more difficult for us to compete against
banks when they rejoin our niche lending market in large numbers. This could result in losses which could impair or eliminate our ability
to pay interest and principal on our outstanding Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to the general market risks associated with real estate construction and development.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
financial performance depends on the successful construction and/or development and sale of the homes and real estate parcels that serve
as security for the loans we make to homebuilders and developers. As a result, we are subject to the general market risks of real estate
construction and development, including weather conditions, the price and availability of materials used in construction of homes and
development of lots, environmental liabilities and zoning laws, and numerous other factors that may materially and adversely affect the
success of the projects.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
operations are not subject to the stringent banking regulatory requirements designed to protect investors, so repayment of your investment
is completely dependent upon our successful operation of our business.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operations are not subject to the stringent regulatory requirements imposed upon the operations of commercial banks, savings banks, and
thrift institutions, and are not subject to periodic compliance examinations by federal or state banking regulators. For example, we
will not be well diversified in our product risk, and we cannot benefit from government programs designed to protect regulated financial
institutions. Therefore, an investment in our Notes does not have the regulatory protections that the holder of a demand account or a
certificate of deposit at a bank does. The return on any Notes purchased by you is completely dependent upon our successful operations
of our business. To the extent that we do not successfully operate our business, our ability to pay interest and principal on your Notes
will be impaired.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have the right to pay your investment back to you before the stated maturity of your investment. If we do, you may not be able to reinvest
the proceeds at comparable rates and you will stop earning interest on your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
any time, we may redeem all or a portion of the outstanding Notes purchased by you prior to their maturity. In the event we redeem any
part or all of your Notes early, you would have the risk of reinvesting the proceeds at the then-current market rates, which may be higher
or lower.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are an &#8220;emerging growth company&#8221; under the federal securities laws and are subject to reduced public company reporting requirements.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an &#8220;emerging growth company,&#8221; as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and are eligible
to take advantage of certain exemptions from, or reduced disclosure obligations relating to, various reporting requirements that are
normally applicable to public companies.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
will remain an &#8220;emerging growth company&#8221; until the earliest of (1) the last day of the first fiscal year in which we have
total annual gross revenues of $1.07 billion or more, (2) the last day of the fiscal year following the fifth anniversary of the date
of the first sale of our common equity securities pursuant to an effective registration statement, (3) the date on which we become a
&#8220;large accelerated filer&#8221; as defined in Rule 12b-2 under the Exchange Act (which would occur if the market value of our common
equity held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently completed second fiscal
quarter, and we have been publicly reporting for at least 12 months), or (4) the date on which we have issued more than $1 billion in
non-convertible debt during the preceding three-year period. Under the JOBS Act, emerging growth companies are not required to (1) provide
an auditor&#8217;s attestation report on management&#8217;s assessment of the effectiveness of internal control over financial reporting,
pursuant to Section 404 of the Sarbanes-Oxley Act, (2) comply with new requirements adopted by the PCAOB which require mandatory audit
firm rotation or a supplement to the auditor&#8217;s report in which the auditor must provide additional information about the audit
and the issuer&#8217;s financial statements, (3) comply with new audit rules adopted by the PCAOB after April 5, 2012 (unless the SEC
determines otherwise), (4) provide certain disclosures relating to executive compensation generally required for larger public companies,
or (5) hold shareholder advisory votes on executive compensation.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally,
the JOBS Act provides that an &#8220;emerging growth company&#8221; may take advantage of an extended transition period for complying
with new or revised accounting standards that have different effective dates for public and private companies. This means an &#8220;emerging
growth company&#8221; can delay adopting certain accounting standards until such standards are otherwise applicable to private companies.
However, we have elected to &#8220;opt out&#8221; of such extended transition period, and will therefore comply with new or revised accounting
standards on the applicable dates on which the adoption of such standards is required for non-emerging growth companies. Section 107
of the JOBS Act provides that our decision to opt out of such extended transition period for compliance with new or revised accounting
standards is irrevocable.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are exposed to risk of environmental liabilities with respect to properties of which we take title. Any resulting environmental remediation
expense may reduce our ability to repay the Notes.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the course of our business, we foreclose and take title to real estate that could be subject to environmental liabilities. We may be
held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred
by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances
or chemical release at any property. The costs associated with investigation or remediation activities could be substantial. In addition,
as the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs
resulting from environmental contamination emanating from the property. If we ever become subject to significant environmental liabilities,
our business, financial condition, liquidity, and results of operations could be materially and adversely affected.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Persons
investing the assets of employee benefit plans, qualified retirement plans, IRAs, and other tax-favored benefit accounts should consider
the Employee Retirement Income Security Act of 1974, as amended (&#8220;ERISA&#8221;) and related risks of investing in the Notes.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ERISA
Section 406 and Section 4975 of the Internal Revenue Code of 1986, as amended (the &#8220;Code&#8221;), prohibit certain transactions
that involve (i) a pension, 401(k), or other qualified retirement plan or employee benefit plan subject to ERISA (&#8220;plan&#8221;),
or a tax-favored benefit account such as an individual retirement account or annuity, Archer MSA, health savings account, or Coverdell
education savings account (&#8220;account&#8221;), and (ii) any person who is a &#8220;party-in-interest&#8221; or &#8220;disqualified
person&#8221; with respect to such a plan or account. Consequently, the fiduciary of a plan or owner of an account contemplating an investment
in the Notes should consider whether we, any other person associated with the issuance of the Notes, or any of our or their affiliates,
is or might become a &#8220;party-in-interest&#8221; or &#8220;disqualified person&#8221; with respect to the plan or account and, if
so, whether an exemption from such prohibited transaction rules is applicable.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, if you are investing the assets of an individual retirement account or annuity (&#8220;IRA&#8221;) or a qualified or nonqualified
pension or retirement plan, you should satisfy yourself that your investment (i) is consistent with your fiduciary obligations under
ERISA and other applicable law, (ii) is made in accordance with the documents and instruments governing your plan or IRA, including your
plan&#8217;s investment policy, and (iii) satisfies any prudence and diversification requirements that may apply under ERISA or other
applicable law. You should also determine that your investment will not impair the liquidity of the plan&#8217;s trust or the IRA and
will not produce UBTI for the plan&#8217;s trust or the IRA; or, if it does produce UBTI, that the purchase and holding of the Notes
is still consistent with your fiduciary obligations. You should also satisfy yourself that you will be able to value the assets of the
plan annually or as otherwise required by ERISA or other applicable law.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
further discussion of issues and risks associated with an investment in the Notes by plans, IRAs and other accounts, see the &#8220;Certain
Employee Benefit Plan Considerations&#8221; section of this prospectus.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="silaa_009"></span>Risks
Related to Conflicts of Interest</span></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
CEO (who is also on our board of managers) and Executive Vice President will face conflicts of interest as a result of the secured lines
of credit made to us, which could result in actions that are not in your best interests.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have two lines of credit from Daniel M. Wallach (our CEO and chairman of the board of managers) and his affiliates, and one line of credit
from William Myrick (our Executive Vice President). The first line of credit has a maximum principal borrowing amount of $1,250,000 and
is payable to Mr. Wallach and his wife, Joyce S. Wallach, as tenants by the entirety (the &#8220;Wallach LOC&#8221;). The second line
of credit has a maximum principal borrowing amount of $250,000 and is payable to the 2007 Daniel M. Wallach Legacy Trust (the &#8220;Wallach
Trust LOC,&#8221; and together with the Wallach LOC, the &#8220;Wallach Affiliate LOCs&#8221;). The third line of credit has a maximum
principal borrowing amount of $1,000,000 and is payable to Mr. Myrick (the &#8220;Myrick LOC&#8221;). As of December 31, 2021, there
was no amount outstanding pursuant to the Wallach Trust LOC, with availability on that line of credit of $250,000, there was no amount
outstanding pursuant to the Wallach LOC, with remaining availability on that line of credit of $1,250,000. As of December 31, 2021, the
amount outstanding pursuant to the Myrick LOC was $859,000 with availability on that line of credit of $141,000. The interest rates on
the Wallach Affiliate LOCs and the Myrick LOC generally equal the prime rate plus 3% and were 6.25% as of December 31, 2021. The Wallach
Affiliate LOCs and the Myrick LOC are collateralized by a lien against all of our assets. The Notes are subordinated in right of payment
to all secured debt, including these Wallach Affiliate LOCs and the Myrick LOC. Pursuant to the promissory note for each Wallach Affiliate
LOCs and the Myrick LOC, the lenders have the option of funding any amount up to the face amount of the note, in the lender&#8217;s sole
and absolute discretion. Therefore, Mr. Wallach and Mr. Myrick will face conflicts of interest in deciding whether and when to exercise
any rights pursuant to the Wallach Affiliate LOCs and Myrick LOC, respectively. If Mr. Wallach or Mr. Myrick exercise their rights to
collect on their collateral upon a default by us, we could lose some or all of our assets, which could have a negative effect on our
ability to repay the Notes.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>As
a result of his large equity ownership in the Company, our CEO will face a conflict of interest in deciding the number of distributions
to equity owners, which could result in actions that are not in the best interests of Note holders.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, our CEO (who is also on the board of managers) beneficially owned 80.7% of the common equity of the Company. He
and his wife also own 36.0% the Series C cumulative preferred units outstanding as of December 31, 2021. Since the Company is taxed as
a partnership for federal income tax purposes, all profits and losses flow through to the equity owners. Therefore, Mr. Wallach and his
affiliated equity owners of the Company will be motivated to distribute profits to the equity owners on an annual basis, rather than
retain earnings in the Company for Company purposes. There is currently no limit in the indenture or otherwise on the amount of funds
that may be distributed by the Company to its equity owners. If substantial funds are distributed to the equity owners, the liquidity
and capital resources of the Company will be reduced and our ability to repay the Notes may be negatively impacted.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Some
of our employees and managers may face conflicts of interest as a result of their and their relatives&#8217; investment in the Notes,
which could result in actions that are not in your best interests.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employees,
managers, members, and relatives of managers and members have invested in the Notes, in the aggregate amount of $3,989,000 as of December
31, 2021. While investment in the Notes by our affiliates may align their interests with those of other Note holders, it could also create
conflicts of interest by influencing those employees&#8217; or managers&#8217; actions during times of financial difficulties. For example,
the fact that certain of our managers hold Notes, and the value of Notes they hold, could influence their decision to redeem Notes at
a time or times when it would be prudent to use our cash resources to build capital, pay down other outstanding obligations, or grow
our business. There may be other situations not presently foreseeable in which the ownership of Notes by related persons may create conflicts
of interest. These conflicts of interest could result in action or inaction by management that is adverse to other holders of the Notes.
See &#8220;Certain Relationships and Related Transactions &#8212; Transactions with Affiliates &#8212; Investments Pursuant to Public
Notes Offerings.&#8221;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have three lines of credit from affiliates which allow us to incur a significant amount of secured debt. These lines are collateralized
by a lien against all of our assets. Our purchase and sale agreements function as secured debt as well. We expect to incur a significant
amount of additional debt in the future, including issuance of the Notes, which will subject us to increased risk of loss.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, we had $859,000 of secured debt outstanding on our senior debt lines of credit from affiliates of $2,500,000 and
the capacity to sell portions of many loans under the terms of our loan purchase and sale agreements. The affiliate loans are collateralized
by a lien against all of our assets. The loan purchase and sale agreements and other secured debt are with third-parties and are collateralized
by loans. In addition, we expect to incur a significant amount of additional debt in the future, including issuance of the Notes, borrowing
under credit facilities and other arrangements. The Notes will be subordinated in right of payment to all secured debt, including the
affiliate loans. Therefore, in the event of a default on the secured debt, affiliates of our Company, including Mr. Wallach, have the
right to receive payment ahead of Note holders, as do other secured debt holders, such as the loan purchasers under the purchase and
sale agreements. Accordingly, our business is subject to increased risk of a total loss of our Note holders&#8217; investments if we
are unable to repay all of our secured debt.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="silaa_010"></span>Risks
Related to Liquidity</span></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
depend on the availability of significant sources of credit to meet our liquidity needs and our failure to maintain these sources of
credit could materially and adversely affect our liquidity in the future.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
plan to maintain our loan purchase and sale agreements and our lines of credit from affiliates so that we may draw funds when necessary
to meet our obligation to redeem maturing Notes, pay interest on the Notes, meet our commitments to lend money to our customers, and
for other general corporate purposes. Certain features of the loan purchase and sale agreements with third parties have added liquidity
and flexibility, which have lessened the need for the lines of credit from affiliates. If we fail to maintain liquidity through our loan
purchase and sale agreements and lines of credit for any reason, including a potential negative impact to the credit markets as a result
of an outbreak of a communicable illness such as COVID-19, we will be more dependent on the proceeds from the Notes for our continued
liquidity. If the sale of the Notes is significantly reduced or delayed for any reason and we fail to obtain or renew a line of credit,
or we default on any of our lines of credit, then our ability to meet our obligations, including our Note obligations, could be materially
adversely affected, and we may not have enough cash to pay back your investment.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the borrowing capacity on two of our lines of credit is based on the amount outstanding on the underlying collateral loans.
If we are unable to find suitable investment opportunities, we may not be able to replace the underlying collateral loans with new loans
and, in such a situation, the borrowing capacity on those lines of credit would be reduced. Also, the failure to maintain an active line
of credit (and therefore using cash for liquidity instead of a borrowing line) will reduce our earnings, because we will be paying interest
on the Notes, while we are holding cash instead of reducing our borrowings.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have unfunded commitments to builders as of December 31, 2021. If every builder borrowed every amount allowed (which would mean all of
their homes were complete) and no builders paid us back, we would need to fund that amount. While some of that amount would automatically
come from our loan purchase and sale agreements, the rest would have to come from our Notes Program and/or our lines of credit. Therefore,
we may not have the ability to fund our commitments to builders.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, we have $22,902,000 of unfunded commitments to builders. If every builder borrowed every amount allowed and no
builders repaid us then we would need to fund that amount. Lines of credit, loan purchase and sale agreements, payoffs from builders,
and immediate investments in our Notes may not be enough to fund our commitments to builders as they become payable. If we default on
these obligations, then we may face any one or more of the following: a higher default rate, lawsuits brought by customers, an eventual
lack of business from borrowers, missed principal and interest payments to Note holders and holders of other debt, and a lack of desire
for investors to invest in our Notes Program. Therefore, we could default on our repayment obligations to our Note holders.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have two secured lines of credit which expire in 2022, and the unsecured portion of a line of credit which also expires in 2022. Failure
of those lines to renew could strain our ability to pay other obligations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have a $1,325,000 line of credit (the &#8220;Shuman LOC&#8221;). As of December 31, 2021, the amount outstanding under the Shuman LOC
was $125,000 which is due in July 2022. We do not know whether the Shuman LOC will be renewed. We also have a $7,000,000 line of credit
(the &#8220;Swanson LOC&#8221;), a portion of which is unsecured (the &#8220;Unsecured Swanson LOC&#8221;). The balances on the Swanson
LOC that were secured and unsecured as of December 31, 2021 were $6,841,000 and $159,000 respectively. Both the secured and unsecured
portions of the Swanson LOC are due in July 2022. We do not know whether the Swanson LOC will be renewed. If we are unable to renegotiate
or extend these lines of credit, then we may default on one or both of those lines of credit. Therefore, we could default on repayment
obligations to some of our debt holders, including our Note holders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have a significant amount of debt and expect to incur a significant amount of additional debt in the future, including issuance of the
Notes, which will subject us to increased risk of loss. Our present and future senior debt may make it difficult to repay the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have a significant amount of debt and expect to incur a significant amount of additional debt in the future. As of December 31, 2021,
we have approximately $47,729,000 of debt, net of deferred financing costs. Our primary sources of debt include our lines of credit,
loan purchase and sale agreements, and the Notes. As of December 31, 2021, we have a total outstanding balance of $9,876,000 on our lines
of credit and approximately $8,469,000 on our loan purchase and sale agreements. We also have the capacity to sell portions of many loans
under the terms of our loan purchase and sale agreements. The loan purchase and sale agreements and other secured debt are with third
parties and all but one of the lines of credit are collateralized by loans that we have issued to builders. The Notes are subordinate
and junior in priority to any and all of our senior debt and senior subordinated debt, and equal to any and all non-senior debt, including
other Notes. There are no restrictions in the indenture regarding the amount of senior debt or other indebtedness that we may incur.
As of December 31, 2021, we had approximately $7,074,000 in Notes coming due by December 2022, and we cannot be certain whether we will
be able to fund those Notes upon maturity. Upon the maturity of our senior debt, by lapse of time, acceleration or otherwise, the holders
of our senior debt have first right to receive payment, in full, prior to any payments being made to a Note holder or to other non-senior
debt. Therefore, upon such maturity of our senior debt Note holders would only be repaid in full if the senior debt is satisfied first
and, following satisfaction of the senior debt, if there is an amount sufficient to fully satisfy all amounts owed under the Notes and
any other non-senior debt.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, we expect to incur a significant amount of additional debt in the future, including issuance of the Notes, borrowing under
credit facilities, and other arrangements. The Notes will be subordinated in right of payment to all secured debt, including the Wallach
Affiliate LOCs, Myrick LOC, loan purchase and sale agreements, the senior subordinated note discussed in the prior paragraph, and the
line of credit discussed in the prior paragraph. Therefore, in the event of a default on the secured debt, affiliates of our Company,
including Mr. Wallach, have the right to receive payment ahead of Note holders, as do other secured debt holders, such as the loan purchasers
under the loan purchase and sale agreements. Accordingly, our business is subject to increased risk of a total loss of your investment
if we are unable to repay all of our secured debt.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
the proceeds from the issuance of the Notes exceed the cash flow needed to fund the desirable business opportunities that are identified,
we may not be able to invest all of the funds in a manner that generates sufficient income to pay the interest and principal on the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
ability to pay interest on our debt, including the Notes, pay our expenses, and cover loan losses is dependent upon interest and fee
income we receive from loans extended to our customers. If we are not able to lend to a sufficient number of customers at high enough
interest rates, we may not have enough interest and fee income to meet our obligations, which could impair our ability to pay interest
and principal to you. If money brought in from new Notes and from repayments of loans from our customers exceeds our short-term obligations
such as expenses, Notes interest and redemptions, and line of credit principal and interest, then it is likely to be held as cash, which
will have a lower return than the interest rate we are paying on the Notes. This will lower earnings and may cause losses which could
impair our ability to repay the principal and interest on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Increases
in interest rates would increase the amount of debt payments under the Wallach Affiliate LOCs and the Myrick LOC which could impair our
ability to repay the principal and interest on the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
interest rate under the Wallach Affiliate LOCs and Myrick LOC is generally equal to the prime rate plus three percent. Increases in interest
rates will increase the applicable prime rate and therefore, the interest rate under the Wallach Affiliate LOCs and the Myrick LOC will
increase. An increase in the interest rate would increase the amount of debt payments under the Wallach Affiliate LOCs and Myrick LOC
which would reduce our cash flows and could impair our ability to repay the principal and interest on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
incurred indebtedness secured by our office property, which may result in foreclosure.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
debt incurred by us in connection with our office property is secured by a mortgage. If we default on our secured indebtedness, the lender
may foreclose and the entire investment in the office property could be lost, which could adversely affect our ability to repay the principal
and interest on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
indenture does not contain the type of covenants restricting our actions, such as restrictions on creating senior debt, paying distributions
to our owners, merging, recapitalizing, and/or entering into highly leveraged transactions. The indenture does not contain provisions
requiring early payment of Notes in the event we suffer a material adverse change in our business or fail to meet certain financial standards.
Therefore, the indenture provides very little protection of your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Notes do not have the benefit of extensive covenants. The covenants in the indenture are not designed to protect your investment if there
is a material adverse change in our consolidated financial condition, results of operations, or cash flows. For example, the indenture
does not contain any restrictions on our ability to create or incur senior debt or other debt to pay distributions to our equity holders,
including our Chief Executive Officer and our Executive Vice President. It also does not contain any financial covenants (such as a fixed
charge coverage or a minimum amount of equity) to help ensure our ability to pay interest and principal on the Notes. The indenture does
not contain provisions that permit Note holders to require that we redeem the Notes if there is a takeover, recapitalization or similar
restructuring. In addition, the indenture does not contain covenants specifically designed to protect you if we engage in a highly leveraged
transaction. Therefore, the indenture provides very little protection of your investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Payment
on the Notes is subordinate to the payment of our outstanding present and future senior debt, if any. Since there is no limit to the
amount of senior debt we may incur, our present and future senior debt may make it difficult to repay the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
loan purchase and sale agreements and secured lines of credit with third-parties also function as senior debt. The balance on those loan
purchase and sale agreements and other secured debt, net of deferred financing costs was $20,016,000 on December 31, 2021, and is expected
to grow in the future. In addition, we have $1,250,000 in senior unsecured lines of credit which were fully drawn as of December 31,
2021. We also have senior subordinated notes which are senior to the Notes of $1,054,000 as of December 31, 2021. The Notes are subordinate
and junior in priority to any and all of our senior debt and senior subordinated debt, and equal to any and all non-senior debt, including
other Notes. The Notes are senior to junior subordinated notes. There are no restrictions in the indenture regarding the amount of senior
debt or other indebtedness that we may incur. Upon the maturity of our senior debt, by lapse of time, acceleration or otherwise, the
holders of our senior debt have first right to receive payment, in full, prior to any payments being made to a Note holder or to other
non-senior debt. Therefore, upon such maturity of our senior debt Note holders would only be repaid in full if the senior debt is satisfied
first and, following satisfaction of the senior debt, if there is an amount sufficient to fully satisfy all amounts owed under the Notes
and any other non-senior debt.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Additional
competition for investment dollars may decrease our liquidity, which would adversely affect our ability to repay the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
could experience increased competition for investment dollars from other companies and financial institutions that are willing to offer
higher interest rates. We may be forced to increase our interest rates in order to maintain or increase the issuance of Notes. Any increase
in our interest rates could have an adverse impact on our liquidity and our ability to meet a debt covenant under any future lines of
credit obtained and/or to repay the Notes.</span></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are unable to meet our Note maturity and redemption obligations, and we are unable to obtain additional financing or other sources
of capital, we may be forced to sell off our operating assets or we might be forced to cease our operations, and you could lose some
or all of your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Notes have maturities ranging from one year to four years. In addition, holders of our Notes may request redemption upon death and we
would be obligated to fulfill such redemption request. Holders of a 36-month Note issued on or after February 4, 2020 may request redemption
at any time and, subject to certain limitations, we would be obligated to fulfill such redemption request. We intend to pay our Note
maturity and redemption obligations using our normal cash sources, such as collections on our loans to customers, as well as proceeds
from the Notes Program. We may experience periods in which our Note maturity and redemption obligations are high. Since our loans are
generally repaid when our borrower sells a real estate asset, our operations and other sources of funds may not provide sufficient available
cash flow to meet our continued Note maturity and redemption obligations. While we have secured lines of credit from affiliates of up
to $2,500,000 with $859,000 borrowed as of December 31, 2021, our affiliates are not obligated to fund our borrowing requests. For all
of these reasons we may be substantially reliant upon the net offering proceeds we receive from the Notes Program to pay these obligations.
If we are unable to repay or redeem the principal amount of the Notes when due, and we are unable to obtain additional financing or other
sources of capital, we may be forced to sell off our operating assets or we might be forced to cease our operations, and you could lose
some or all of your investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>There
is no &#8220;early warning&#8221; on the Notes if we perform poorly. Only interest and principal payment defaults on the Notes can trigger
a default on the Notes prior to a bankruptcy.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are a limited number of performance covenants to be maintained under the Notes and/or the indenture. Therefore, no &#8220;early warning&#8221;
of a possible default by us exists. Under the indenture, only (i) the non-payment of interest and/or principal on the Notes by us when
payments are due, (ii) our bankruptcy or insolvency, or (iii) a failure to comply with provisions of the Notes or the indenture (if such
failure is not cured or waived within 60 days after receipt of a specific notice) could cause a default to occur.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
will not have the opportunity to evaluate our investments before they are made.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
intend to use the net offering proceeds in accordance with the &#8220;Use of Proceeds&#8221; section of our prospectus, including investment
in secured real estate loans for the acquisition and development of parcels of real property as single-family residential lots and/or
the construction of single-family homes. Since we have not identified any investments that we will make with the net proceeds of this
offering, we are generally unable to provide you with information to evaluate the potential investments we may make with the net offering
proceeds before purchasing the Notes. You must rely on our management to evaluate our investment opportunities, and we are subject to
the risk that our management may not be able to achieve our objectives, may make unwise decisions, or may make decisions that are not
in our best interest.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>A
portion of our collateral securing the Pennsylvania Loans is preferred equity in our Company. In the event of a foreclosure on the properties
securing the Pennsylvania Loans, a portion of our collateral is preferred equity in our Company, it would be difficult to sell the preferred
equity in order to reduce the loan balance.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Some
of the collateral securing the Pennsylvania Loans is preferred equity in our Company, which has a book value of $1,720,000 as of December
31, 2021. If the borrower defaults on any of the Pennsylvania Loans and we are forced to use collateral to repay any of the Pennsylvania
Loans, we will need to sell this preferred interest in us to a third party. There is no liquid market for this instrument, so we can
give no assurance as to our ability to generate any amount of proceeds from that collateral.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Because
we require a substantial amount of cash to service our debt, we may not be able to pay our obligations under the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
service our total indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors, including
our successful financial and operating performance. We cannot assure you that our business plans will succeed or that we will achieve
our anticipated financial results, which may prevent us from being able to pay our obligations under the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
indenture and terms of our Notes do not restrict our use of leverage. A relatively small loss can cause over leveraged companies to suffer
a material adverse change in their financial position. If this happened to us, it may make it difficult to repay the Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial
institutions which are federally insured typically have 8-12% of their total assets in equity. A reduction in their loan assets due to
losses of 2% reduces their equity by roughly 20%. We had 14% and 11% of our loan assets in equity as of December 31, 2021 and 2020, respectively.
If we allow our assets to increase without increasing our equity, we could have a much lower equity as a percentage of assets than we
have today, which would increase our risk of nonpayment on the Notes. Note holders have no structural mechanism to protect them from
this action, and rely solely on us to keep equity at a satisfactory ratio.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
expect to be substantially reliant upon the net offering proceeds we receive from the sale of our Notes to meet principal and interest
obligations on previously issued Notes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
intend to use the net offering proceeds from the sale of Notes to, among other things, make payments on other borrowings, fund redemption
obligations, make interest payments on the Notes, and to run our business to the extent that other sources of liquidity from our operations
(e.g., repayment of loans we have previously extended to our customers) and our credit lines are inadequate. However, these other sources
of liquidity are subject to risks. Our operations alone may not produce a sufficient return on investment to repay interest and principal
on our outstanding Notes. We may not be able to obtain an additional line of credit when needed or retain one or more of our existing
lines of credit. We may not be able to attract new investors, have sufficient loan repayments, or have sufficient borrowing capacity
when we need additional funds to repay principal and interest on our outstanding Notes or redeem our outstanding Notes. If any of these
things occur, our liquidity and capital needs may be severely affected, and we may be forced to sell off our loan receivables and other
operating assets, or we may be forced to cease our operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we default in our Note payment obligations, the indenture agreements provide that the trustee could accelerate all payments due under
the Notes, which would further negatively affect our consolidated financial position and cash flows.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
obligations with respect to the Notes are governed by the terms of indenture agreements with [__], as trustee. Under the indentures,
in addition to other possible events of default, if we fail to make a payment of principal or interest under any Note and this failure
is not cured within 30 days, then we will be deemed in default. Upon such a default, the trustee or holders of 25% in principal of the
outstanding Notes could declare all principal and accrued interest immediately due and payable. If our total assets do not cover these
payment obligations, then we would most likely be unable to make all payments under the Notes when due, and we might be forced to cease
our operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>There
is no sinking fund to ensure repayment of the Notes at maturity, so you are totally reliant upon our ability to generate adequate cash
flows.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not contribute funds to a separate account, commonly known as a sinking fund, to repay the Notes upon maturity. Because funds are
not set aside periodically for the repayment of the Notes over their respective terms, you must rely on our consolidated cash flows from
operations, investing and financing activities and other sources of financing for repayment, such as funds from sale of the Notes, loan
repayments, and other borrowings. To the extent cash flows from operations and other sources are not sufficient to repay the Notes, you
may lose all or part of their investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we have a large number of repayments on the Notes, whether because of maturity or redemption, we may be unable to make such repayments.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are obligated to redeem a Note without any interest penalty (i) upon the death of an investor, if requested by the executor or administrator
of the investor&#8217;s estate (or if the Note is held jointly, by the surviving joint investor), and (ii) subject to certain limitations,
upon request by an investor holding a 36-month Note issued on or after February 4, 2020. Such redemption requests are not subject to
our consent but are subject to restrictions in the indenture. We may be faced with a large number of such redemption requests at one
time. We are also required to repay all of the Notes upon their maturity. If the amounts of those repayments are too high, and we cannot
offset them with loan repayments, secure new financing, or issue additional Notes, we may not have the liquidity to repay the investments.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_011"></span>FORWARD-LOOKING
STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
prospectus contains forward-looking statements within the meaning of the federal securities laws. Words such as &#8220;may,&#8221; &#8220;will,&#8221;
&#8220;expect,&#8221; &#8220;anticipate,&#8221; &#8220;believe,&#8221; &#8220;estimate,&#8221; &#8220;continue,&#8221; &#8220;predict,&#8221;
or other similar words identify forward-looking statements. Forward-looking statements appear in a number of places in this prospectus,
including without limitation, &#8220;Use of Proceeds,&#8221; &#8220;Management&#8217;s Discussion and Analysis of Financial Condition
and Results of Operations&#8221; and &#8220;Business,&#8221; and include statements regarding our intent, belief or current expectation
about, among other things, trends affecting the markets in which we operate, our business, financial condition and growth strategies.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, forward-looking
statements are not guarantees of future performance and involve risks and uncertainties. Important factors that could cause our actual
results to differ materially from the expectations reflected in these forward-looking statements include those set forth below, as well
as general economic, business and market conditions (including without limitation changes in the political and economic climate, economic
conditions and fiscal imbalances in the United States, and other major developments, including wars, natural disasters, epidemics and
pandemics, including the outbreak of novel coronavirus (COVID-19), military actions, and terrorist attacks), changes in federal and local
laws and regulations, and increased competitive pressures. In addition, actual results may differ materially from those predicted in
the forward-looking statements as a result of various factors, including but not limited to those set forth in the &#8220;Risk Factors&#8221;
section of this prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
any of the events described in &#8220;Risk Factors&#8221; occur, they could have an adverse effect on our business, financial condition,
and results of operations. When considering forward-looking statements, you should keep these risk factors, as well as the other cautionary
statements in this prospectus in mind. You should not place undue reliance on any forward-looking statement. We are not obligated to
update forward-looking statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_012"></span>USE
OF PROCEEDS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
dollar [$] amounts shown in thousands.)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
net proceeds we receive from this offering will be equal to the amount of the Notes we sell, less our offering expenses. If we sell the
maximum offering amount of the Notes, which is $70,000, we estimate that we will incur approximately $673 in initial expenses
and our net proceeds will be approximately $69,327.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
receive cash proceeds in varying amounts from time to time as the Notes are sold. A number of factors prevent us from precisely calculating
the allocation of proceeds. The amount and timing from inflows depend on the sale of Notes, our customer loan repayments, and our borrowing
capacity. Further, the Notes have varying maturities and dates of issuance, which make it impossible to predict with any accuracy how
much of the proceeds will be used to redeem the Notes in any given year. We also cannot predict how many Notes will be sold or the amount
of interest expense that will be incurred. For these reasons, we cannot provide any specific allocation of proceeds we will use for any
particular purpose. However, we intend to use substantially all of the net offering proceeds as follows, in the following order of priority:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    make payments on other borrowings, including loans from affiliates;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    pay Notes on their scheduled due date and Notes that we are required to redeem early;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    make interest payments on the Notes; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    the extent we have remaining net proceeds and adequate cash on hand, to fund any one or more of the following activities:</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in">&#9675;</td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    extend commercial construction loans to homebuilders to build single or multi-family homes, develop lots, or rehabilitate an older
    home on an existing lot;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#9675;</td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    make distributions to equity owners, including distributions on our preferred equity;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#9675;</td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">for
    working capital and other corporate purposes provided, however, no more than 20% of the proceeds will be used for such purposes;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#9675;</td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    purchase defaulted secured debt from financial institutions at a discount;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#9675;</td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    purchase defaulted unsecured debt from suppliers to homebuilders at a discount and then secure it with real estate or other collateral;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#9675;</td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    purchase real estate, which we will operate our business in (one such purchase occurred in February 2017); and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#9675;</td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to
    redeem Notes which we have decided to redeem prior to maturity.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
is no minimum number or amount of the Notes that we must sell to receive and use the proceeds from the sale of the Notes, and we cannot
assure you that all or any portion of the Notes will be sold. In the event that we do not raise sufficient proceeds from our offerings
of Notes, we could curtail the amount of funds we loan to our customers, or we could wrap up operations and pay back our debt, including
the Notes. This might result in the Notes being paid back early. Please see &#8220;Risk Factors &#8212; Risks Related to Liquidity &#8212;
We expect to be substantially reliant upon the net offering proceeds we receive from the sale of our Notes to meet principal and interest
obligations on previously issued Notes,&#8221; &#8220;Risk Factors &#8212; Risks Related to Liquidity &#8212; There is no sinking fund
to ensure repayment of the Notes at maturity, so you are totally reliant upon our ability to generate adequate cash flows,&#8221; and
&#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations &#8212; Liquidity and Capital Resources.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_013"></span>BUSINESS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_014"></span>Overview</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business is focused on commercial lending to participants in the residential construction and development industry. We believe this market
is underserved because of the lack of traditional lenders currently participating in the market. We are located in Jacksonville, Florida.
We are a Delaware limited liability company and were originally organized in 2007. Our operations are governed pursuant to our limited
liability company agreement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
began commercial lending to residential homebuilders in late 2011. Our current loan portfolio is described more fully in this section
under the sub heading &#8220;Commercial Construction and Development Loans.&#8221; Our board of managers is comprised of Daniel M. Wallach
and three independent managers &#8212; Eric A. Rauscher, Kenneth R. Summers, and Gregory L. Sheldon. Our officers are responsible for
our day-to-day operations, while the board of managers is responsible for overseeing our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
commercial loans we extend are secured by mortgages on the underlying real estate. We extend and service commercial loans to small-to-medium
sized homebuilders for the purchase of lots and/or the construction of homes thereon. In some circumstances, the lot is purchased with
an older home on the lot which is then either removed or rehabilitated. If the home is rehabilitated, the loan is referred to as a &#8220;rehab&#8221;
loan. We also extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential
building lots. In addition, we may, depending on our cash position and the opportunities available to us, do none, any or all of the
following: purchase defaulted secured debt from financial institutions at a discount, purchase defaulted unsecured debt from suppliers
to homebuilders at a discount (and then secure that debt with real estate or other collateral), and purchase real estate in which we
will operate our business (one such purchase occurred in February 2017).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Chief Executive Officer (&#8220;CEO&#8221;), Mr. Wallach, has been in the housing industry since 1985. He was the CFO of a multi-billion
dollar supplier of building materials to home builders for 12 years. He also was responsible for that company&#8217;s lending business
for 20 years. During those years, he was responsible for the creation and implementation of many secured lending programs to builders.
Some of these were performed fully by that company, and some were performed in partnership with banks. In general, the creation of all
loans, and the resolution of defaulted loans, was his responsibility, whether the loans were company loans or loans in partnership with
banks. Through these programs, he was responsible for the creation of approximately $2,000,000,000 in loans which generated interest
spread of $50,000,000, after deducting for loan losses. Through the years, he managed the development of systems for reducing and managing
the risks and losses on defaulted loans. Mr. Wallach also was responsible for that company&#8217;s unsecured debt to builders, which
reached over $300,000,000 at its peak. He also gained experience in securing defaulted unsecured debt.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, our Executive Vice President of Operations has 16 years of experience in this type of lending. Our Chief Financial Officer
(&#8220;CFO&#8221;) has 16 years of accounting experience for SEC registrants. Our Executive Vice President has been in the housing industry
for over 37 years, including holding executive level positions for the majority of that time.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
had $46,943,000 and $46,405,000 in loan assets as of December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, respectively,
we had 224 and 213 construction loans in 20 and 21 states with 66 and 67 borrowers. As of December 31, 2021 and 2020, respectively, we
had 15 and nine development loans in six and five states with 12 and eight borrowers. We have various sources of capital, detailed below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">(All dollar [$] amounts shown in table in thousands.)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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31,</b></span></p>
                                                                                 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2021</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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31,</b></span></p>
                                                                                 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2020</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Capital Source</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; width: 60%; text-align: left">Purchase and sale agreements and other secured borrowings</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">19,165</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">22,968</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Secured lines of credit from affiliates</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">859</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Unsecured line of credit (senior)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,250</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">500</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Economic Injury Disaster Loan Emergency Advance</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Unsecured Notes through our Notes Program, gross</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">20,636</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">21,482</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Other unsecured debt</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6,193</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,411</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Preferred equity, Series C units</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,014</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,582</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Preferred equity, Series B units</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,720</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,630</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Common equity</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(130</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">47</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">54,707</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">55,630</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
additional information related to the loan purchase and sale agreements and the lines of credit, please see &#8220;&#8212; Debt Summary
and Sources of Liquidity&#8221; below.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_015"></span>Investment
Objectives and Opportunity</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Background
and Strategy</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
markets are highly fragmented, with numerous large, mid-size, and small lenders and investment companies, such as banks, savings and
loan associations, credit unions, insurance companies, and institutional lenders, all competing for investment opportunities. Many of
these market participants experienced losses, as a result of the housing market (which started to decline in 2006, reached its bottom
in 2008, and is now getting back to historical norms as of 2021), and their participation in lending in it. As a result of credit losses
and restrictive government oversight, the financial institutions are not participating in this market to the extent they had before the
credit crisis (as evidenced by the general lack of availability of construction financing and the higher cost of financing for the deals
actually done). We believe that these lenders, while increasing their willingness and capacity to lend, will be unable to satisfy the
current demand for residential construction financing, creating attractive opportunities for niche lenders such as us for many years
to come. Our goal is not to be a customer&#8217;s only source of commercial lending, but an extra, more user-friendly piece of their
financing. In 2021, while more small banks returned to the construction lending market, the demand for our loan products has remained
relatively constant. We attribute this to our sales staff, a housing market which has been strong in 2021, and an increase in the number
of small home builders in the market. Housing starts in 2021 were at (for the year) the historical average of between 1,000,000 and 1,100,000
single family starts.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
loans are marketed by lending representatives who work for us and are driven to maintain long-term customer relationships. Compensation
for loan originators is focused on the profitability of loans originated, not simply the volume of loans originated. As of December 31,
2021, we have retained 20 employees (three of which are lending representatives) including our CEO. In his previous experience, our CEO
had a nationwide staff of 20 lenders working in the field.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
efforts are designed to create a loan portfolio that includes some or all of the following investment characteristics: (i) provides current
income; (ii) is well-secured by residential real estate; (iii) is short term in nature; and (iv) provides high interest spreads.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
investment policies may be amended or changed at any time by our board of managers. In the years ahead, we plan on continuing our expansion
of lending, increasing our geographic diversity, growing our rehab lending program, and improving our financial performance. We will
be adding systems and people to accomplish these goals.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
we continue to grow our business, we are focusing some of our efforts on our rehab loan program, which we believe in the long run will
face less bank competition and have more stable demand than our new construction program.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
engage in various activities to try to mitigate the risks inherent in this type of lending by:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Keeping
    the loan-to-value ratio (&#8220;LTV&#8221;) between 60% and 75% on a portfolio basis, however, individual loans may, from time to
    time, have a greater LTV;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Generally
    using deposits from the builder on home construction loans to ensure the completion of the home. Lending losses on defaulted loans
    are usually a higher percentage when the home is not built, or is only partially built;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Having
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Using
    interest escrows for some of our loans;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Aggressively
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Market
    grading. We review all lending markets, analyzing their historic housing start cycles. Then, the current position of housing starts
    is examined in each market. Markets are classified into volatile, average, or stable, and then graded based on that classification
    and our opinion of where the market is in its housing cycle. This grading is then used to determine the builder deposit amount, LTV,
    and how much of the lot purchase the builder is required to fund.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table contains items that we believe differentiate us from our competitors:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 20%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 30%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Our
    Methods</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 46%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Comments</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lending
    Regulation</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    follow various state and federal laws, but are not regulated and controlled by bank examiners from the government. We follow best
    practices we have learned through our experience, some of which are required of banks.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
    instance, banks are not required to buy title insurance by law, but typically banks do purchase title insurance for the properties
    on which they lend. We generally do not, as it is very difficult to collect on title policies. Instead, we use title searches to
    protect our interests.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">FDIC
    Insurance</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    do not offer FDIC insurance to our unsecured Notes investors.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    yield to our customers, and our cost of funds, is typically higher than that of most banks. We charge our borrowers higher interest
    rates than do most banks. We also save money by not paying for FDIC insurance.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Capital
    Structure</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Typically,
    our unsecured Notes offered through our Notes Program are due in one to four years, or when the Note matures.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
    results in liquidity risk (i.e., funding borrowing requests or maturities of debt). Our assets typically turnover much quicker (about
    4 times faster) than our average unsecured debt does, and our unsecured debt is mostly prepayable. These items help keep liquidity
    stable.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Community
    Reinvestment Act (CRA)<sup>(1)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    do not participate in the CRA.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    sole purpose in making each individual loan is to maximize our returns while maintaining proper risk management.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 20%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Leverage</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    try to maintain a 15% ratio of equity (including redeemable preferred equity) to loan assets.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 46%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    equity to loan assets, net ratio was 14.1% as of December 31, 2021. The higher the percentage, the more potential losses the company
    can absorb without impacting debt holders.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Product
    Diversification</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    generally make loans to builders to purchase lots and/or to construct or rehab homes.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have extensive experience in our field.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Geographic
    Diversity</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    lend in 20 states as of December 31, 2021.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    believe that this geographic diversity helps in down markets, as not all housing markets decrease at the same rate and time.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Governmental
    Bailouts</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Most
    likely not eligible.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    are not likely to be eligible for bank bailouts, which have happened periodically. We maintain a better leverage ratio to counter
    this. We received two PPP loans, one in 2020, which was forgiven in 2020, and one in 2021, which was forgiven in 2021.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Underwriting</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    focus on items that, in our experience, tend to predict risk.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
    items include using collateral, controlling LTVs, controlling the number of loans in one subdivision, underwriting appraisals, conducting
    property inspections, and maintaining certain files and documents similar to those that a bank might maintain.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    CRA subjects a bank who receives FDIC insurance to regulatory assessment to determine if the bank meets the credit needs of its entire
    community, and to consider that determination in its evaluation of any application made by the bank for, among other things, approval
    of the acquisition or establishment of a bank branch.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Lines
of Business</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
efforts are designed to create a portfolio that includes some or all of the following investment characteristics: (i) provides current
income; (ii) is well-secured by residential real estate; (iii) is short term in nature; and (iv) provides high interest spreads. While
we primarily provide commercial construction loans to homebuilders (for residential real estate), we may also purchase defaulted unsecured
debt from suppliers to homebuilders at a discount (and then secure that debt with real estate or other collateral), purchase defaulted
secured debt from financial institutions at a discount, and purchase real estate in which we will operate our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
investment policies may be amended or changed at any time by our board of managers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Commercial
Construction Loans to Homebuilders</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
extend and service commercial loans to small-to-medium sized homebuilders for the purchase of lots and/or the construction of homes thereon.
Our customers generally benefit from doing business with us not just because they are able to sell additional homes (which we finance),
but because, as they build additional homes, they are able to increase sales of homes that are built as contracted homes, where the eventual
home owner obtains the loan. Builders generally have more success selling homes when a model or spec home is available for customers
to see. We also extend and service loans for the purchase of undeveloped land and the development of that land into residential building
lots. In addition, we lend money to purchase and rehabilitate older existing homes. Most of the loans are for &#8220;spec homes&#8221;
or &#8220;spec lots,&#8221; meaning they are built or developed speculatively (with no specific end-user home owner in mind).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
a typical home construction transaction, a homebuilder obtains a loan to purchase a lot and build a home on that lot. In some cases,
the builder has a contract with a customer to purchase the home upon its completion. In other cases, the home is built as a spec home,
but the homebuilder believes it will sell before or shortly after completion, and therefore, building the home before it is under contract
will increase the homebuilder&#8217;s sales and profitability. The builder may also believe that the construction of a spec home will
increase the number of contract sales the homebuilder will have in a given year, as it may be easier to sell contract homes when the
customer can see the builder&#8217;s work in the spec home. In some cases, these speculatively built homes are constructed with the intention
to keep them as a model for a period of time, to increase contract sales, and then be sold. These are called model homes. While we may
lend to a homebuilder for any of these types of new construction homes, through December 31, 2021, about 66% of our construction loans
have been spec homes and 34% have been contracts.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
a typical rehab transaction, we fund all of the purchase price, and then all or a portion of the cost to complete the project. In some
circumstances, we are unable to see the inside of the home prior to closing, so we assume that anything from drywall to completion needs
to be redone, as well as what we can see from the outside. Because we are flexible in our need to see the inside of the home, and we
only use experienced builders as customers for this type of lending, we believe that this differentiates us from banks.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
fund the loans that we originate using available cash resources that are generated primarily from borrowings, our loan purchase and sale
agreements, proceeds from the fixed rate subordinated notes (&#8220;Notes&#8221;) offered pursuant to our public offering (&#8220;Notes
Program&#8221;), equity, and net operating cash flow. We intend to continue funding loans we originate using the same sources.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
is a seasonal aspect to home construction, and this affects our monthly cash flow. In general, since the home construction loans we create
will last less than a year on average, and since we are geographically diverse, the seasonality impact is somewhat mitigated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Generally,
our real estate loans are secured by one or more of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    parcels of land to be developed;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">finished
    lots;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">new
    or rehabbed single-family homes; and/or</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">in
    most cases, personal guarantees of the principals of the borrower entity.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Most
of our lending is based on the following general policies:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 38%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Customer
    Type</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 60%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Small-to-Medium
    Size Homebuilders</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Loan
    Type</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Commercial</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Loan
    Purpose</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Construction/Rehabilitation
    of Homes or Development of Lots</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Security</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Homes,
    Lots, and/or Land</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Priority</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Generally,
    our loans are secured by a first priority mortgage lien; however, we may make loans secured by a second or other lower priority mortgage
    lien.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Loan-to-Value
    Averages</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">60&#8211;75%</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Loan
    Amounts</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Average
    home construction loan is $300,000. Development loans vary greatly.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Term</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Demand,
    however most home construction loans typically payoff in under one year, and development loans are typically three to five-year projects.</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Rate</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
    of Funds (&#8220;COF&#8221;) plus 3%, minimum rate of 7%</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Origination
    Fee</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5%
    for home construction loans, development loans on a case by case basis</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Title
    Insurance</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Only
    on high risk loans and rehabs</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Hazard
    Insurance</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Always</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>General
    Liability Insurance</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Always</span></td></tr>
</table>

<p style="margin: 0">&#160;</p>

<p style="margin: 0"></p>

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<p style="margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 38%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Credit</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 60%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Builder
    should have significant building experience in the market, be building in the market currently, be able to make payments of interest,
    be able to make the required deposit, have acceptable personal credit, and have open lines of credit (unsecured) with suppliers reasonably
    within terms. Required deposits may be able to be avoided if we do not fund the purchase of land. We generally do not advertise to
    find customers, but use our loan representatives and our builder website, www.constructionspecloans.com. </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Third
    Party Guarantor</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None,
    however the loans are generally guaranteed by the owners of the borrower.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may change these policies at any time based on then-existing market conditions or otherwise, at the discretion of our CEO and the Loan
Policy Committee.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Commercial
Development Loans to Homebuilders</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential buildings. In
a typical development transaction, a homebuilder/developer purchases a specific parcel or parcels of land. Developers must secure financing
in order to pay the purchase price for the land as well as to pay expenses incurred while developing the lots. This is the financing
we provide. Once financing has been secured, the lot developers create individual lots. Developers secure permits allowing the property
to be developed and then design and build roads and utility systems for water, sewer, gas, and electricity to service the property. The
individual lots are then sold before a home is built on them; paid off, built on and then sold; or built on, then sold and paid off (in
these cases, we may subordinate our loan to the home construction loan).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Purchases
and Securitization of Unsecured Debt from Suppliers to Homebuilders</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Homebuilders
generally buy their construction materials from building supply companies, which offer unsecured credit lines for these purchases. Sometimes
the builder is unable to pay the principal on their line of credit when due, and in a small percentage of these cases, the builder owns
unencumbered real estate. When this is the case, the building supply company may convert the unsecured line of credit to secured, using
this real estate as security. In some of these situations, the building supply company is unwilling to complete this type of transaction,
and is willing to take a payment of a percentage of the balance of the unsecured line as full payment. If we pay the building supply
company a percentage of this debt, and then take the real estate as collateral for the whole amount of the original debt, management&#8217;s
experience indicates we will be able to eventually collect from the builder, or from the sale of the property through foreclosure or
otherwise, creating a profit for the Company. We have not completed any of these transactions, but may choose to do so if the opportunity
presents itself.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Purchases
of Defaulted Secured Debt from Financial Institutions</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Many
financial institutions have made loans to homebuilders. In some cases, these loans default, and eventually these loans result in collateral
foreclosure. After the foreclosure proceeding, the properties usually become the property of the financial institution, which then sells
the property, generally at a loss. While the loan is in the foreclosure process, and after the process while the real estate is owned
and for sale, the bank holds a nonperforming asset. Sometimes these nonperforming assets negatively impact the banks&#8217; profitability
and regulatory ratios. Some banks choose to cleanse their books of these items at a severe loss, allowing them to, while taking a loss,
get back to their commercial lending business. There are potential opportunities to purchase some portfolios of defaulted loans, and/or
real estate owned through foreclosure, at deep discounts compared to the actual value of the property. We have not completed any of these
transactions, but may choose to do so if the opportunity presents itself.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Acquisitions
of Real Estate</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
certain circumstances, the commercial construction loans described above may result in us owning commercial real property as a result
of a loan workout, foreclosure, or similar circumstances. Over the course of running our company since 2011 we have acquired and disposed
of properties for these reasons. The foreclosed assets line of our balance sheet shows the value of properties we have obtained through
this process that we have not yet disposed of. In addition, in February 2017 we purchased a commercial office in which we now operate.
We intend to manage and dispose of any real property assets we acquire in the manner that our management determines is most advantageous
to us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_016"></span>Loan
Portfolio</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Commercial
Loans &#8211; Construction Loan Portfolio Summary</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2021:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
dollar [$] amounts shown in table in thousands.)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(2)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Commercial
Loans &#8212; Real Estate Development Loans</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of our loan portfolio to builders for land development as of December 31, 2021 and 2020. A significant portion
of our development loans consist of the Pennsylvania Loans. Our additional development loans are in Connecticut, Delaware, Florida, South
Carolina, and Texas.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
dollar [$] amounts shown in table and footnotes in thousands.)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Number<br /> of<br /> Borrowers</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    value is determined by the appraised value adjusted for remaining costs to be paid and third-party mortgage balances. Part of this
    collateral is $1,720 of preferred equity in our Company. In the event of a foreclosure on the property securing these loans, the
    portion of our collateral that is preferred equity in our Company might be difficult to sell, which could impact our ability to eliminate
    the loan balance.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(2)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    commitment amount does not include letters of credit.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(3)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    loan to value ratio is calculated by taking the outstanding amount and dividing by the appraised value calculated as described above.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(4)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents
    the weighted average loan to value ratio of the loans.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_017"></span>Other
Investments</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2021, we invested $500,000 to purchase five Series A preferred membership interests (the &#8220;BMH Preferred Interests&#8221;)
in Benjamin Marcus Homes, L.L.C. (&#8220;BMH&#8221;), a member of the Hoskins Group and currently our largest customer. The BMH Preferred
Interests carry an annual 7% cumulative dividend preference compounded annually, payable upon a liquidation event or dissolution and
when and as declared by BMH&#8217;s board of managers, and have no voting rights. BMH generally is prohibited from paying a dividend
on any membership interests prior to the payment of dividends on the Series A preferred membership interests.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_018"></span>Credit
Quality Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table presents credit-related information at the &#8220;class&#8221; level in accordance with Financial Accounting Standards
Board (&#8220;FASB&#8221;) Accounting Standards Codification Topic (&#8220;ASC&#8221;) 310-10-50, <i>Disclosures about the Credit Quality
of Finance Receivables and the Allowance for Credit Losses</i>. A class is generally a disaggregation of a portfolio segment. In determining
the classes, the Company considered the finance receivable characteristics and methods it applies in monitoring and assessing credit
risk and performance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes finance receivables by the risk ratings that regulatory agencies utilize to classify credit exposure and which
are consistent with indicators the Company monitors. Risk ratings are reviewed on a regular basis and are adjusted as necessary for updated
information affecting the borrowers&#8217; ability to fulfill their obligations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
definitions of these ratings are as follows:</span></p>

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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 48px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 48px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pass
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Special
    mention &#8211; a special mention asset exhibits potential weaknesses that deserve management&#8217;s close attention. If left uncorrected,
    these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Classified
    &#8211; a classified asset ranges from: 1) assets that are inadequately protected by the current sound worth and paying capacity
    of the borrower, and are characterized by the distinct possibility that some loss will be sustained if the deficiencies are not corrected
    to 2) assets with weaknesses that make collection or liquidation in full unlikely on the basis of current facts, conditions, and
    values. Assets in this classification can be accruing or on non-accrual depending on the evaluation of these factors.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
Receivables &#8211; By risk rating:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
dollar [$] amounts shown in table in thousands.)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31,</b></span></p>
                                                                                 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2021</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31,</b></span></p>
                                                                                 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2020</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: justify">Pass</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">38,893</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">35,544</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">Special mention</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,344</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,089</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Classified &#8211; accruing</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 1.5pt">Classified &#8211; nonaccrual</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,526</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">11,816</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">50,763</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">50,449</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
Receivables &#8211; Method of impairment calculation:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
dollar [$] amounts shown in table in thousands.)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31,</b></span></p>
                                                                                 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2021</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31,</b></span></p>
                                                                                 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2020</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Performing loans evaluated individually</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">16,495</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">16,412</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Performing loans evaluated collectively</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">24,742</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">22,221</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Non-performing loans without a specific reserve</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">596</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,518</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Non-performing loans with a specific reserve</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">8,930</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">10,298</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Total evaluated collectively for loan losses</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">50,763</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">50,449</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
December 31, 2021 and 2020, there were no loans acquired with deteriorated credit quality. There were 23 impaired loan assets as of December
31, 2021 compared to 29 impaired loans assets as of December 31, 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>2022
Outlook</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
2022, we anticipate using proceeds from the Notes Program, the loan purchase and sale agreements, and other sources to generate additional
loans (mostly spec home construction loans), increase loan balances, and increase our customer and geographic diversity. We anticipate
that the rehab program will grow as a percentage of our origination volume.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_019"></span>Debt
Summary and Sources of Liquidity</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
is a summary of some of our debt and sources of liquidity. The discussion below does not discuss all of our debt. Please see the &#8220;Management&#8217;s
Discussion and Analysis of Financial Condition and Results of Operations&#8221; as well as our financial statements and the notes to
those financial statements contained elsewhere in this prospectus for additional information about debt and sources of liquidity.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Loan
Purchase and Sale Agreements</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have two loan purchase and sale agreements where we are the seller of portions of loans we create. One loan purchase and sale agreement
is with Builder Finance, Inc. (&#8220;Builder Finance&#8221;), and the second loan purchase and sale agreement is with S.K. Funding,
LLC (&#8220;S.K. Funding&#8221;). These agreements are described below.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Loan
Purchase and Sale Agreement with Builder Finance</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
entered into a loan purchase and sale agreement (the &#8220;Builder Finance LPSA&#8221;) with Builder Finance in February 2017. Pursuant
to the Builder Finance LPSA, Builder Finance has the right, from time to time, to purchase from us senior priority interests in certain
loans made to fund the vertical construction of one to four family residential dwellings (&#8220;Eligible Loans&#8221;). The Builder
Finance LPSA was made effective as of August 1, 2016. Each Eligible Loan is evidenced by notes secured by, among other things, mortgages
or deeds of trust encumbering the respective construction properties. The Builder Finance LPSA has been amended five times as of December
31, 2021, to allow for, among other things, the purchaser to retain their portion of the loan past the 12 month period described below.
As of December 31, 2021, the book value of loans which serve as collateral under the Builder Finance LPSA is approximately $4.8 million
and the amount due from us to Builder Finance under the Builder Finance LPSA is approximately $3.0 million. Builder Finance receives
the actual interest rate charged to the borrower on the loans or portions of loans that it purchases pursuant to the Builder Finance
LPSA.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the procedures set forth in Sections 5.5 through 5.7 of the Builder Finance LPSA, we, upon written notice to Builder Finance, have
the right at any time (the &#8220;Call Option&#8221;) to repurchase from Builder Finance the transferred rights to any senior loan. The
Call Option purchase price for each senior loan will be an amount equal to the then outstanding principal amount of the senior loan held
by Builder Finance plus accrued interest, provided that if the aggregate interest paid to Builder Finance in respect of such senior loan
as of the repurchase date will be less than 4% of the total commitment amount of Builder Finance in respect of such senior loan, then
the purchase price shall be increased by an amount equal to such shortfall. Similarly, Builder Finance, upon written notice to the us,
has the right at any time (the &#8220;Put Option&#8221;), to elect to require us to repurchase the transferred rights pertaining to any
senior loan, or any portion of a senior loan held by Builder Finance. The Put Option purchase price will be an amount equal to the outstanding
principal amount of the senior loan held by Builder Finance plus accrued interest, provided that the aggregate put prices payable in
respect of all senior loans put to us during any trailing 12 month period ending on the date of the put notice shall never exceed the
Put Option Limit, which is an amount equal to 10% of all fundings made by Builder Finance to us under the senior loans during such 12
month period.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
agreed that until the prior payment of all amounts due to Builder Finance in respect of the senior loan and the transferred rights: (a)
all payments by us or Builder Finance from or on behalf of borrowers under or pursuant to the relevant loan documents will be applied
<i>first</i>, to the payment of any amounts due to Builder Finance in respect of the senior loan and the transferred rights, and <i>second</i>,
to the payment of any amounts due to us in respect of the subordinated loan; (b) all payments received by us or Builder Finance in connection
with the foreclosure upon or other realization on any loan collateral will be applied <i>first</i>, to the payment of any amounts due
to Builder Finance in respect of the senior loan and the transferred rights, and <i>second</i>, to the payment of any amounts due to
us in respect of the subordinated loan; and (c) our rights in and to the loan collateral or any security interests granted under Loan
Documents will be subordinated to any and all rights of Builder Finance in and to such collateral and interests.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are generally the servicer of the loans. Unless otherwise agreed to in writing by the parties, the Builder Finance LPSA will terminate:
(a) when the entire indebtedness due under the relevant loan documents for all senior loans held by Builder Finance shall have been paid,
and we have paid to Builder Finance all amounts due under the Builder Finance LPSA, and no new amounts become due thereunder within 30
days thereafter; or (b) when all senior loans and subordinate loans and the rights under the Builder Finance LPSA relating thereto are
owned and held by one person, firm or corporation for its own account for a period exceeding 30 days.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Loan
Purchase and Sale Agreement with S.K. Funding</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
also entered into a loan purchase and sale agreement (the &#8220;S.K. Funding LPSA&#8221;) with Seven Kings Holdings, Inc. (&#8220;7Kings&#8221;)
in April 2015. However, on or about May 7, 2015, 7Kings assigned its right and interest in the S.K. Funding LPSA to S.K. Funding, which
is an affiliate of 7Kings. The S.K. Funding LPSA has been amended 11 times as of December 31, 2021, to allow for, among other things,
S.K. Funding to purchase numerous loans in amounts greater than that permitted by the original S.K. Funding LPSA. As of December 31,
2021, the book value of loans which serve as collateral under the S.K. Funding LPSA is approximately $8.1 million and the amount due
from us to S.K. Funding under the S.K. Funding LPSA is approximately $5.5 million.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, the weighted average interest rate of loans purchased by S.K. Funding under the S.K. Funding LPSA is approximately
10% per annum. We service all of the loans. There is an unlimited right for us to call any loan sold.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Lines
of Credit</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have ten lines of credit, four of which are from affiliates, and a business loan agreement. As of December 31, 2021, we have a total
balance of approximately $10,893,000 across the lines of credit with remaining availability of approximately $5,995,000.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Lines
of Credit Extended by Mr. Wallach and His Affiliates</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have two lines of credit from Daniel M. Wallach (our CEO and chairman of the board of managers) and his affiliates. The first line of
credit has a maximum principal borrowing amount of $1,250,000 and is payable to Mr. Wallach and his wife, Joyce S. Wallach, as tenants
by the entirety (the &#8220;Wallach LOC&#8221;). The second line of credit has a maximum principal borrowing amount of $250,000 and is
payable to the 2007 Daniel M. Wallach Legacy Trust (the &#8220;Wallach Trust LOC,&#8221; and together with the Wallach LOC, the &#8220;Wallach
Affiliate LOCs&#8221;). The Notes are subordinated in right of payment to all secured debt, including these Wallach Affiliate LOCs. Pursuant
to the promissory note for each Wallach Affiliate LOC, the lenders have the option of funding any amount up to the face amount of the
note, in the lender&#8217;s sole and absolute discretion. The Wallach Affiliate LOCs are due and payable upon demand by the lender. As
of December 31, 2021, there were no amounts borrowed against the Wallach LOC, with availability on that line of credit of $1,250,000,
and there were no amounts borrowed against the Wallach Trust LOC, with remaining availability on that line of credit of $250,000.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Wallach Affiliate LOCs are collateralized by a lien against all of our assets. The Notes are subordinated in right of payment to all
secured debt, including the Wallach Affiliate LOCs. The interest rate on the Wallach Affiliate LOCs generally equals the prime rate plus
3%. The interest rate on the Wallach Affiliate LOCs may not, however, exceed the maximum rate allowed by applicable law. As of December
31, 2021 and 2020, the interest rate was 6.25% and 6.25%, respectively, for both the Wallach LOC and the Wallach Trust LOC. We may, at
our option, choose to prepay the principal, interest, or other amounts due from us under the Wallach Affiliate LOCs in whole or in part
at any time.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Wallach Affiliate LOCs were approved by Mr. Wallach in his capacity as sole manager prior to the time we had independent managers. The
independent managers ratified and approved these transactions subsequent to the formation of the board of managers. In June 2018, we
entered into a First Amendment to the Wallach LOC and a First Amendment to the Wallach Trust LOC which modified the interest rates under
the Wallach Affiliate LOCs to generally equal the prime rate plus 3%. These amendments were approved by a majority of our independent
managers. See &#8220;Risk Factors &#8212; Risks Related to Conflicts of Interest &#8212; Our CEO (who is also on our board of managers)
and Executive Vice President will face conflicts of interest as a result of the secured lines of credit made to us, which could result
in actions that are not in the best interests of our Note holders.&#8221;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Line
of Credit Extended by Swanson</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
October 2017, we entered into a line of credit agreement (as amended, the &#8220;Swanson LOC Agreement&#8221;) with Paul Swanson, which
was subsequently assigned to Judith Swanson, as trustee of a trust. Pursuant to the Swanson LOC Agreement, the lender provides us with
a revolving line of credit (the &#8220;Swanson LOC&#8221;) not to exceed $7,000,000. The balances on the unsecured portion and the secured
portion of the Swanson LOC are due in July 2022. As of December 31, 2021, the outstanding principal balance of the secured portion was
approximately $6,841,000 and the outstanding principal balance of the unsecured portion was approximately $159,000.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Swanson LOC requires monthly payments of interest only during the term of the Swanson LOC, with the principal balance due upon termination.
The unpaid principal amounts advanced on the Swanson LOC bear interest for each day until due at a fixed rate per annum (computed on
the basis of a year of 360 days for actual days elapsed) for each day at 9%. We may, at our option, choose to prepay the principal, interest,
or other amounts due from us under the Swanson LOC in whole or in part at any time.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are pledging, and will continue to pledge in the future, certain of our commercial loans as collateral for a portion of the Swanson LOC
(the &#8220;Swanson Collateral Loans&#8221;) pursuant to the Collateral Assignment of Notes and Documents dated as of October 23, 2017.
The amount outstanding under the Swanson LOC may not exceed 67% of the aggregate amount outstanding on the Swanson Collateral Loans then
pledged to secure the Swanson LOC. Our obligation to repay the Swanson LOC is evidenced by a promissory note from us dated October 23,
2017.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
lender may demand the unpaid principal amount under the Swanson LOC, along with interest accrued thereon and all other amounts owing
under the Swanson LOC upon an &#8220;event of default,&#8221; as defined in the Swanson LOC Agreement. An &#8220;event of default&#8221;
includes our failing to pay payments within 10 days of when such payment is due, our failing to service the Swanson Collateral Loans
in a commercially reasonable manner, or our filing of a petition for bankruptcy.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">R.
Scott Summers, P.L.L.C., a West Virginia professional limited liability company (the &#8220;Swanson LOC Custodian&#8221;) serves as the
custodian to hold the Swanson Collateral Loans for the benefit of the Swanson lender pursuant to the Custodial Agreement dated as of
October 23, 2017 between us, the Swanson lender, and the Swanson LOC Custodian. The Swanson LOC Custodian is owned by R. Scott Summers,
an investor in our Notes Program, a lender under one of the New LOC Agreements (described below), and the son of Kenneth R. Summers,
one of our independent managers. The Swanson LOC Custodian is responsible for certifying to the Swanson lender that it has received the
relevant Swanson Collateral Loan assignment documentation from us. We are responsible for paying the Swanson LOC Custodian&#8217;s monthly
fee, which is equal to 1% interest on the amount of the Swanson Collateral Loans outstanding in the Swanson LOC Custodian&#8217;s custody.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Line
of Credit Extended by Shuman</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
July 2017, we entered into a line of credit agreement (the &#8220;Shuman LOC Agreement&#8221;) with a group of lenders, and the Shuman
LOC Agreement is now held by Cindy K. Shuman as widow and devisee of Mr. Shuman (collectively, &#8220;Shuman&#8221;). Pursuant to the
Shuman LOC, Shuman provides us with a revolving line of credit (the &#8220;Shuman LOC&#8221;) not to exceed $1,325,000. The Shuman LOC
is secured with assignments of certain notes and mortgages and carries a total annual cost of funds to us of 10%. The Shuman line of
credit is currently due in July 2022, although it may be extended for additional 12-month periods. As of December 31, 2021, the Shuman
LOC had an outstanding principal balance of $125,000.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Shuman LOC requires monthly payments of interest only during the term of the Shuman LOC, with the principal balance due upon termination.
The unpaid principal amounts advanced on the Shuman LOC bear interest for each day until due at a fixed rate per annum (computed on the
basis of a year of 360 days for actual days elapsed) for each day at 10%. We may, at our option, choose to prepay the principal, interest,
or other amounts due from us under the Shuman LOC in whole or in part at any time.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are pledging, and will continue to pledge in the future, certain of our commercial loans as collateral for the Shuman LOC (the &#8220;Shuman
Collateral Loans&#8221;) pursuant to the Collateral Assignment of Notes and Documents dated as of July 11, 2017. The amount outstanding
under the Shuman LOC may not exceed 67% of the aggregate amount outstanding on the Shuman Collateral Loans then pledged to secure the
Shuman LOC. Our obligation to repay the Shuman LOC is evidenced by a promissory note from us dated July 11, 2017.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shuman
may demand the unpaid principal amount under the Shuman LOC, along with interest accrued thereon and all other amounts owing under the
Shuman LOC upon an &#8220;event of default,&#8221; as defined in the Shuman LOC Agreement. An &#8220;event of default&#8221; includes
our failing to pay payments within 10 days of when such payment is due, our failing to service the Shuman Collateral Loans in a commercially
reasonable manner, or our filing of a petition for bankruptcy.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">R.
Scott Summers, P.L.L.C., a West Virginia professional limited liability company (the &#8220;Shuman LOC Custodian&#8221;) serves as the
custodian to hold the Shuman Collateral Loans for the benefit of Shuman pursuant to the Custodial Agreement dated as of July 11, 2017
between us, Shuman, and the Shuman LOC Custodian. The Shuman LOC Custodian is owned by R. Scott Summers, an investor in our Notes Program,
a lender under one of the New LOC Agreements (described below), and the son of Kenneth R. Summers, one of our independent managers. The
Shuman LOC Custodian is responsible for certifying to Shuman that it has received the relevant Shuman Collateral Loan assignment documentation
from us. We are responsible for paying the Shuman LOC Custodian&#8217;s monthly fee, which is equal to 1% interest on the amount of the
Shuman Collateral Loans outstanding in the Shuman LOC Custodian&#8217;s custody.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Line
of Credit Extended by William Myrick</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2018, we entered into a line of credit agreement (the &#8220;Myrick LOC Agreement&#8221;) with our Executive Vice President, William
Myrick. Pursuant to the Myrick LOC Agreement, Mr. Myrick provides us with a line of credit (the &#8220;Myrick LOC&#8221;) not to exceed
$1,000,000. The Myrick LOC is due and payable upon demand by the lender. As of December 31, 2021, the Myrick LOC had an outstanding principal
balance of $859,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Myrick LOC is collateralized by a lien against all of our assets. The interest rate on the Myrick LOC generally equals the prime rate
plus 3%. As of December 31, 2021 and 2020, the interest rate was 6.25% and 6.25%, respectively, for the Myrick LOC. We may, at our option,
choose to prepay the principal, interest, or other amounts due from us under the Myrick LOC in whole or in part at any time.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Myrick may demand the unpaid principal amount under the Myrick LOC, along with interest accrued thereon and all other amounts owing under
the Myrick LOC upon an &#8220;event of default,&#8221; as defined in the Myrick LOC Agreement. An &#8220;event of default&#8221; includes
our failing to pay payments within 10 days of when such payment is due, a default under the Myrick LOC Agreement&#8217;s terms or obligations
or representations, or our filing of a petition for bankruptcy or a commencement of foreclosure proceedings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Myrick LOC was approved by a majority of our independent managers as they determined the terms of the Myrick LOC to be in the best interests
of the Company and that the transaction is on terms no less favorable to us than could be obtained from an independent third party.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>New
LOC Agreements</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
2020 and 2019, we entered into five line of credit agreements (the &#8220;New LOC Agreements&#8221;) with lenders. Pursuant to the New
LOC Agreements, the lenders provide us with revolving lines of credit (the &#8220;New LOCs&#8221;) not to exceed a total of approximately
$6,063,000. The New LOC Agreements are secured with assignments of certain notes and mortgages and carry a total annual interest rate
ranging from 9.0% to 11.0%. The terms generally allow the lenders to give one month notice of nonrenewal after which the principal balance
will reduce to zero over the next six months. As of December 31, 2021, we had borrowed $2,909,000 in principal on the New LOCs, with
availability on those lines of credit of approximately $3,154,000. The largest aggregate amount of principal outstanding on the New LOC
Agreements during 2021 was $3,859,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">One
of the lenders of a New LOC Agreement is R. Scott Summers, the son of Kenneth R. Summers, one of our independent managers. The Company&#8217;s
board of managers approved the Company entering into the New LOC Agreement with R. Scott Summers, which provides us with a line of credit
secured with assignments of certain notes and mortgages and a lien against all of our assets, and with principal not to exceed $2,000,000.
R. Scott Summers is also an investor in our Notes and serves as custodian under various lines of credit to us, as described above and
below.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
New LOC Agreements require monthly payments of interest only during the term of each New LOC Agreement, with the principal balance due
upon termination. The unpaid principal amounts advanced on the New LOC Agreements bear interest for each day until due at a fixed rate
per annum (computed on the basis of a year of 360 days for actual days elapsed) for each day. We may, at our option, choose to prepay
the principal, interest, or other amounts due from us under the New LOC Agreements in whole or in part at any time.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are pledging, and will continue to pledge in the future, certain of our commercial loans as collateral for the New LOCs (the &#8220;New
LOC Collateral Loans&#8221;) pursuant to Collateral Assignments of Notes and Documents.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
lenders may demand the unpaid principal amount under their respective New LOC Agreement, along with interest accrued thereon and all
other amounts owing under such New LOC Agreement upon an &#8220;event of default,&#8221; as defined in each New LOC Agreement. An &#8220;event
of default&#8221; includes our failing to pay payments within 10 days of when such payment is due, our failing to service the New LOC
Collateral Loans in a commercially reasonable manner, or our filing of a petition for bankruptcy.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">R.
Scott Summers, P.L.L.C., a West Virginia professional limited liability company (the &#8220;New LOCs Custodian&#8221;) also serves as
the custodian to hold the New LOC Collateral Loans for the benefit of the lenders of the New LOCs pursuant to the Custodial Agreement
dated as of July 30, 2019 between us and the New LOCs Custodian. We are responsible for paying the New LOCs Custodian&#8217;s monthly
fee, which is equal to 1% interest on the amount of the New LOC Collateral Loans outstanding in the New LOCs Custodian&#8217;s custody.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Loan
Extended by Community Bank</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2020, we entered into a business loan agreement (the &#8220;Community Bank Loan&#8221;) with Community Bank. Pursuant to the Community
Bank Loan, Community Bank provides us with a loan not to exceed a principal amount of $362,000. The Community Bank Loan is secured by
certain of our foreclosed assets and carries an annual interest rate of 3.8% based on a year of 360 days. The Community Bank Loan is
due in July 2025. As of December 31, 2021, we owed an outstanding principal balance of $217,000 pursuant to the Community Bank Loan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Community Bank Loan requires monthly payments of interest only until July 2023, with principal payments then becoming due monthly. We
may, at our option, choose to prepay the principal, interest, or other amounts due from us under the Community Bank Loan in whole or
in part at any time.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mortgage</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2018, we entered into a commercial mortgage with Community Bank (the &#8220;Commercial Mortgage&#8221;) on the office building
which we own and operate (our &#8220;Office Building&#8221;) in an amount not to exceed $660,000. The Commercial Mortgage is due and
payable in January 2033. As of December 31, 2021, the principal amount of the Commercial Mortgage was $604,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Commercial Mortgage is secured by a first mortgage lien and an assignment of leases and rents on our Office Building. The annual interest
rate on the Commercial Mortgage is 5.07%. We may, at our option, choose to prepay the principal, interest, or other amounts due from
us under the Commercial Mortgage in whole or in part at any time.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following constitute events of default under the Commercial Mortgage: a failure to make any payment when due; a failure to comply with
or perform and other term, obligation, covenant or condition under the Commercial Mortgage; a default under any loan, extension of credit,
security agreement, purchase or sale agreement, or any other agreement, in favor of any other creditor or person that materially affect
any of our property or our ability to repay the Commercial Mortgage; and any false statements under the Commercial Mortgage.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Paycheck
Protection Program Loans</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 5, 2021, we entered into an agreement to borrow approximately $362,000 from LCA Bank Corporation pursuant to the Paycheck Protection
Program (&#8220;PPP&#8221;), originally created under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, and extended
to &#8220;second draw&#8221; PPP loans as described below. The PPP is intended to provide loans to qualified businesses to cover payroll
and certain other identified costs. Funds from the loan may only be used for certain purposes, including payroll, benefits, rent, and
utilities. All or a portion of the loan may be forgivable, as provided by the terms of the PPP. The loan has an interest rate of 1.0%
per annum and a term of 60 months. Payments will be deferred in accordance with the CARES Act, as modified by the Paycheck Protection
Program Flexibility Act of 2020; however, interest will accrue during the deferral period. If the loan is not forgiven in accordance
with the terms of the program, we will be obligated to make monthly payments of principal and interest to repay the loan in full prior
to maturity. The loan is evidenced by a promissory note, which contains customary events of default relating to, among other things,
payment defaults and breaches of representations. We may prepay the loan at any time prior to maturity with no prepayment penalties.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Previously,
in May 2020, we received a first draw PPP loan in the amount of approximately $362,000. In November 2020, the full principal amount of
the first draw PPP loan and the accrued interest were forgiven by the U.S. Small Business Administration (the &#8220;SBA&#8221;). In
December 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act was signed into law, extending the SBA&#8217;s
authority to guarantee second draw PPP loans through March 31, 2021, pursuant to which we received the February 5, 2021 PPP loan. In
August 2021, the full principal amount of the February 5, 2021 PPP loan and the accrued interest were forgiven by the SBA.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_020"></span>Competition</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Historically,
our industry has been highly competitive. We compete for opportunities with numerous public and private investment vehicles, including
financial institutions, specialty finance companies, mortgage banks, pension funds, opportunity funds, hedge funds, REITs, and other
institutional investors, as well as individuals. Many competitors are significantly larger than us, have well-established operating histories
and may have greater access to capital, resources and other advantages over us. These competitors may be willing to accept lower returns
on their investments or to modify underwriting standards and, as a result, our origination volume and profit margins could be adversely
affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that this is a good time to extend commercial loans to builders in the residential real estate market because, currently, this
market appears underserved, and many of our competitors have sustained losses due to the impact of the COVID-19 pandemic and, therefore,
are reluctant to lend in this space at this time. We expect our loans to be different than other lenders in the markets in which we are
active. Typically, the differences are:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    loans may have a higher fee;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    loans typically require a small deposit which is refundable, versus a large upfront payment for the lot which is not refundable;
    and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">some
    of our loans may have lower costs as a result of not requiring title insurance.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_021"></span>Human
Capital Resources</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, we have retained 20 full-time employees (three of which are lending representatives) including our CEO. The development,
attraction, and retention of employees is a strong focus for the Company, as is fostering and maintaining a strong, healthy corporate
culture. Additionally, as described in more detail in the &#8220;Executive Compensation &#8212; Executive Officer Compensation&#8221;
section of this prospectus, we have an executive compensation program designed to attract, retain, and motivate highly talented executives
and to align each executive&#8217;s incentives with our short-term and long-term objectives, while maintaining a healthy and stable financial
position.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_022"></span>Regulatory
Matters</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Financial
Regulation</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operations are not subject to the stringent regulatory requirements imposed upon the operations of commercial banks, savings banks, and
thrift institutions. We are not subject to periodic compliance examinations by federal or state banking regulators. Further, our Notes
are not certificates of deposit or similar obligations or guaranteed by any depository institution and are not insured by the FDIC or
any governmental or private insurance fund, or any other entity.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
Investment Company Act of 1940</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An
investment company is defined under the Investment Company Act of 1940, as amended (the &#8220;Investment Company Act&#8221;), to include
any issuer engaged primarily in the business of investing, reinvesting, or trading in securities. Absent an exemption, investment companies
are required to register as such with the SEC and to comply with various governance and operational requirements. If we were considered
an &#8220;investment company&#8221; within the meaning of the Investment Company Act, we would be subject to numerous requirements and
restrictions relating to our structure and operation. If we were required to register as an investment company under the Investment Company
Act and to comply with these requirements and restrictions, we may have to make significant changes in our structure and operations to
comply with exemption from registration, which could adversely affect our business. Such changes may include, for example, limiting the
range of assets in which we may invest. We intend to conduct our operations so as to fit within an exemption from registration under
the Investment Company Act for purchasing or otherwise acquiring mortgages and other liens on and interest in real estate. In order to
satisfy the requirements of such exemption, we may need to restrict the scope of our operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Environmental
Compliance</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not believe that compliance with federal, state, or local laws relating to the protection of the environment will have a material
effect on our business in the foreseeable future. However, loans we extend or purchase are secured by real property. In the course of
our business, we may own or foreclose and take title to real estate that could be subject to environmental liabilities with respect to
these properties. We (or our loan customers) may be held liable to a governmental entity or to third parties for property damage, personal
injury, investigation, and clean-up costs incurred by these parties in connection with environmental contamination or may be required
to investigate or clean up hazardous or toxic substances or chemical release at a property. The costs associated with the investigation
or remediation activities could be substantial. In addition, if we become the owner of or discover that we were formerly the owner of
a contaminated site, we may be subject to common law claims by third-parties based on damages and costs resulting from environmental
contamination emanating from the property. To date, we have not incurred any significant costs related to environmental compliance and
we do not anticipate incurring any significant costs for environmental compliance in the future. Generally, when we are lending on property
which is being developed into single family building lots, an environmental assessment is done by the builder for the various governmental
agencies. When we lend for new construction on newly developed lots, the lots have generally been reviewed while they were being developed.
We also perform our own physical inspection of the lot, which includes assessing potential environmental issues. Before we take possession
of a property through foreclosure, we again assess the property for possible environmental concerns, which, if deemed to be a significant
risk compared to the value of the property, could cause us to forego foreclosure on the property and to seek other avenues for collection.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_023"></span>Legal
Proceedings</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this prospectus, we are not aware that we or our members are a party to any pending or threatened legal proceeding or
proceeding by a governmental authority that would have a material adverse effect on our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_024"></span>Reports
to Security Holders</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the &#8220;Exchange Act&#8221;), which
require us to file annual, quarterly, and special reports and other information with the SEC. All of these filings with the SEC are available
to the public over the Internet at the SEC&#8217;s website at <span style="text-decoration: underline">www.sec.gov</span>. The annual reports we file with the SEC will contain
consolidated financial information that has been examined and reported upon, with an opinion expressed by an independent registered public
accounting firm. You may access this information online, at our website, at <span style="text-decoration: underline">www.shepherdsfinance.com</span>, or by calling us at (302)
752-2688 (30-ASK-ABOUT) or writing us at Shepherd&#8217;s Finance, LLC, 13241 Bartram Park Blvd., Suite 2401, Jacksonville, Florida 32258
to have copies mailed to you at no cost. However, information contained on our website does not constitute part of this prospectus, and
you should rely only on the information contained in or specifically incorporated by reference into this prospectus in deciding whether
to invest in the Notes. We do not intend to deliver reports to security holders if such reports are not required pursuant to Section
15(d) of the Exchange Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_025"></span>MANAGEMENT&#8217;S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
dollar [$] amounts shown in thousands.)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with
our consolidated financial statements and the notes thereto contained elsewhere in this prospectus. See also the &#8220;Forward-Looking
Statements&#8221; section of this prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_026"></span>Overview</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
were organized in the Commonwealth of Pennsylvania in 2007 under the name 84 RE Partners, LLC and changed our name to Shepherd&#8217;s
Finance, LLC on December 2, 2011. We converted to a Delaware limited liability company on March 29, 2012. Our business is focused on
commercial lending to participants in the residential construction and development industry. We believe this market is underserved because
of the lack of traditional lenders currently participating in the market. We are located in Jacksonville, Florida. Our operations are
governed pursuant to our limited liability company agreement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
commercial loans we extend are secured by mortgages on the underlying real estate. We extend and service commercial loans to small-to-medium
sized homebuilders for the purchase of lots and/or the construction of homes thereon. In some circumstances, the lot is purchased with
an older home on the lot which is then either removed or rehabilitated. If the home is rehabilitated, the loan is referred to as a &#8220;rehab&#8221;
loan. We also extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential
building lots. In addition, we may, depending on our cash position and the opportunities available to us, do none, any or all of the
following: purchase defaulted unsecured debt from suppliers to homebuilders at a discount (and then secure that debt with real estate
or other collateral), purchase defaulted secured debt from financial institutions at a discount, and purchase real estate in which we
will operate our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Economic
and Industry Dynamics</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
2021, the Company continued to focus on specific issues that arose in 2020 primarily due to the pandemic, one of which was the reduction
of non-interest earning assets. As of December 31, 2021, loans classified as non-accrual were 23 or $9,526 compared to 29 or $11,816
for the same period in the prior year. In addition, as of December 31, 2021 we had 5 foreclosed assets or $2,724 compared to 17 and $4,449
for the same period of the prior year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company continues to lose interest income on assets that do not accrue interest. During the year ended December 31, 2021 the estimated
loss on interest income related to impaired and foreclosed assets was $1,715. Looking ahead, we expect this to decrease as we continue
to sell our remaining foreclosed assets in 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
the Company continues to face COVID-19 risks as it relates to the economy and the homebuilding industry, management made the decision
that during 2022 we will focus on the following five areas:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Decrease
    the amount of non-interest-bearing assets, which includes cash, our foreclosed assets and classified non-accrual loans or impaired
    loans receivables;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase
    loan originations which were lower during the year ended December 31, 2020 due primarily to COVID-19;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Maintain
    liquidity to fund new loan originations and for the completion of construction costs for existing loans;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lowering
    our cost of funds (to keep us competitive in the market); and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Raising
    our margin beyond simply eliminating nonperforming assets.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
anticipate that for 2022, the housing market in most of the areas in which we do business will be strong despite the impact of COVID-19.
We also anticipate that the losses we incurred in principal related to COVID-19 will not continue, and that the lack of interest due
to non-performing assets from COVID-19 will decrease significantly in 2022. Short term interest rates as well as mortgage interest rates
are expected to rise. A rise in short term rates is likely to benefit the company as our competitors&#8217; rates will rise faster than
ours making us more competitive, but a rise in long term interest rates may negatively impact the housing industry as a whole, and therefore
us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Perceived
Challenges and Anticipated Responses</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is not intended to represent a comprehensive list or description of the risks or challenges facing the Company. Currently,
our management is most focused on the following challenges along with the corresponding actions to address those challenges:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid; border-left: black 1.5pt solid; width: 38%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Perceived
    Challenges and Risks</b></span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-right: black 1.5pt solid; border-bottom: black 1.5pt solid; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-top: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-right: black 1.5pt solid; border-bottom: black 1.5pt solid; width: 60%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Anticipated
    Management Actions/Response</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-left: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Potential
    loan value-to-collateral value issues (i.e., being underwater on particular loans)</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    manage this challenge by risk-rating both the geographic region and the builder, and then adjusting the loan-to-value (i.e., the
    loan amount versus the value of the collateral) based on risk assessments. Additionally, we collect a deposit up-front for construction
    loans. Despite these efforts, if values in a particular area of the country drop by 60%, we will have loaned more than the value
    of the collateral. We have found that the best solution to this risk is a speedy resolution of the loan, and helping the builder
    finish the home rapidly rather than foreclosing on the partially built home. Our experience in this area will help us limit, but
    not eliminate, the negative effects in the event of another economic downturn.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-left: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Concentration
    of loan portfolio (i.e., how many of the loans are of or with any particular type, customer, or geography)</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
    of December 31, 2021 and 2020, 26% and 29%, respectively, of our outstanding loan commitments consist of loans to one borrower, and
    the collateral is in one real estate market, Pittsburgh, Pennsylvania. Accordingly, the ultimate collectability of a significant
    portion of these loans is susceptible to changes in market conditions in that area. As of December 31, 2021, our next two largest
    customers make up 7% and 4% of our loan commitments, with loans in Orlando, Florida and Spokane, Washington, respectively. As of
    December 31, 2020, our next two largest customers made up 12% and 6% of our loan commitments, with loans in Orlando and Cape Coral,
    Florida, respectively. In the upcoming years, we plan on continuing to increase our geographic and builder diversity while continuing
    to focus on our residential homebuilder customers.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-left: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
    having funds available to us to service the commitments we have</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
                                            of December 31, 2021, our typical construction loan had about 65% of its loan amount outstanding
                                            on average. That means that on average, about 35% of the commitment is not loaned, usually
                                            because the house is not complete. As of December 31, 2021, unfunded commitments totaled
                                            $22,902, which we will fund along with our purchase and sale agreement participants. However,
                                            if we are short on cash, we could do the following:</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.4in; text-indent: -0.1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
    raise interest rates on the Notes we offer to our investors to attract new Note investments;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.2in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
    sell more secured interest on our loans; or</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.2in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
    draw down on our lines of credit from our affiliates.</span></p></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-left: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Nonpayment
    of interest by our customers</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Most
    of our customers pay interest on a monthly basis, and these funds are used to, among other things, pay interest on our debt monthly.
    While we have the liquidity to withstand some nonpayment of interest, if a high percentage of our customers were not paying interest,
    it will impede our ability to pay our debts on time.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-left: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Nonperforming
    assets</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-right: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
    of December 31, 2021, nonperforming assets were approximately $10,425 (defined as impaired loans and/or loans on nonaccrual plus
    foreclosed assets net of reserves). </span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_027"></span>Critical
Accounting Estimates</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
assist in evaluating our consolidated financial statements, we describe below the critical accounting estimates that we use. We consider
an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly
uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period
to period, or use of different estimates that we reasonably could have used, would have a material impact on our consolidated financial
condition or results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Loan
Losses</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Future
losses on current loans are estimated in our financial statements. This estimate is important because it is on our largest asset (loans
receivable). It is impossible to know what these losses will be, as the condition of the market cannot be determined, and specific situations
with each loan are unpredictable and change constantly. Loan losses, as applicable, are accounted for both on the consolidated balance
sheets and the consolidated statements of operations. On the consolidated statements of operations, management estimates the number of
losses to capture during the current year. This current period amount incurred is referred to as the loan loss provision. The calculation
of our allowance for loan losses, which appears on our consolidated balance sheets as a reduction to loans receivable, net and is detailed
in the notes to our financial statements, requires us to compile relevant data for use in a systematic approach to assess and estimate
the number of probable losses inherent in our commercial lending operations and to reflect that estimated risk in our allowance calculations.
We use the policy summarized as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
establish a collective reserve for all loans which are not more than 60 days past due at the end of each quarter. This collective reserve
includes both a quantitative and qualitative analysis. In addition to historical loss information, the analysis incorporates collateral
value, decisions made by management and staff, percentage of aging spec loans, policies, procedures, and economic conditions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
individually analyze for impairment all loans which are more than 60 days past are due at the end of each quarter. We also review for
impairment all loans to one borrower with greater than or equal to 10% of our total committed balances. If required, the analysis includes
a comparison of estimated collateral value to the principal amount of the loan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
impaired loans, if the value determined is less than the principal amount due (less any builder deposit), then the difference is included
in the allowance for loan loss. As values change, estimated loan losses may be provided for more or less than the previous period, and
some loans may not need a loss provision based on payment history. For homes which are partially complete, we appraise on an as-is and
completed basis and use the one that more closely aligns with our planned method of disposal for the property.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
loans greater than 12 months in age that are individually evaluated for impairment, appraisals have been prepared within the last 13
months if construction is greater than 90% complete. If construction is less than 90% complete the Company uses the latest appraisal
on file. Certain times the Company may choose to use a broker&#8217;s opinions of value (&#8220;BOV&#8221;) as a replacement for an appraisal
if deemed more efficient by management. Appraised values are adjusted down for estimated costs associated with asset disposal. Broker&#8217;s
opinion of selling price, use currently valid sales contracts on the subject property, or representative recent actual closings by the
builder on similar properties may be used in place of a broker&#8217;s opinion of value.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Appraisers
are state certified, and are selected by first attempting to utilize the appraiser who completed the original appraisal report. If that
appraiser is unavailable or unreasonably expensive, we use another appraiser who appraises routinely in that geographic area. BOVs are
created by real estate agents. We try to first select an agent we have worked with, and then, if that fails, we select another agent
who works in that geographic area.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
fair value of collateral has the potential to impact the calculation of the loan loss provision. Specifically, relevant to the allowance
for loan loss reserve is the fair value of the underlying collateral supporting the outstanding loan balances. Fair value measurements
are an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. Due to a rapidly changing economic market, an erratic housing market, the various methods that could be
used to develop fair value estimates, and the various assumptions that could be used, determining the collateral&#8217;s fair value requires
significant judgment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
                                               31, 2021</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Loan Loss</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Provision</b></span></p></td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Change in Fair Value Assumption</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Higher/(Lower)</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Increasing fair value of the real estate collateral by 35%*</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 78%; text-align: left">Decreasing fair value of the real estate collateral by 35%**</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">2,828</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
Increases in the fair value of the real estate collateral do not impact the loan loss provision, as the value generally is not &#8220;written
up.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">**
If the loans were nonperforming, assuming a book amount of the loans outstanding of $46,943, and the fair value of the real estate collateral
on all outstanding loans was reduced by 35%.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Foreclosed
Assets</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Foreclosed
assets, as applicable, are accounted for both on the consolidated balance sheets and the consolidated statements of operations. On the
consolidated statements of operations, management estimates the amount of impairment to capture when a loan is converted to a foreclosed
asset, the impairment when the value of an asset drops below the carrying amount, and any loss or gain upon final disposition of the
asset. The calculation of the impairment, which appears on our consolidated balance sheets as a reduction in the asset, requires us to
compile relevant data for use in a systematic approach to assess and estimate the value of the asset and therefore any required impairment
thereof. We use the policy summarized as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
properties which exist in the condition in which we intend to sell them, we obtain an appraisal of the assets current value. We reduce
the appraised value by 10% to account for estimated selling costs. This amount is used to initially book the asset. Typically, prior
to the initial booking of the foreclosed asset, the loan has already been reserved to this level. If during ownership, the value of the
foreclosed asset drops, an additional impairment is recorded. For assets that need to be improved prior to sale, we adjust the portion
of the appraised value related to construction improvements for the percentage of the improvements which have not yet been made.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
fair value of real estate will impact our foreclosed asset value, which is recorded at 100% of fair value (after selling costs are deducted).
Fair value measurements are an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December 31, 2021</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Foreclosed Assets</b></span></p></td><td>&#160;</td></tr>
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Change in Fair Value Assumption</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Higher/(Lower)</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Increasing fair value of the foreclosed asset by 35%*</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 78%; text-align: left">Decreasing fair value of the foreclosed asset by 35%</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">953</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
Increases in the fair value of the foreclosed assets do not impact the carrying value, as the value generally is not &#8220;written up.&#8221;
Those gains would be recognized at the sale of the asset. However, the increase in fair value may be recognized up to the cost basis
of the foreclosed asset which was determined at the foreclosure date.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
Loss Contingencies</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
loss contingencies are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably
estimable. Disclosure is required when there is a reasonable possibility that the ultimate loss will exceed the recorded provision. Contingent
liabilities are often resolved over long time periods. Estimating probable losses requires analysis of multiple forecasts that often
depend on judgments about potential actions by third parties such as courts, arbitrators, juries, or regulators.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Accounting
and Auditing Standards Applicable to &#8220;Emerging Growth Companies&#8221;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an &#8220;emerging growth company&#8221; under the JOBS Act. For as long as we are an &#8220;emerging growth company,&#8221; we are
not required to: (1) comply with any new or revised financial accounting standards that have different effective dates for public and
private companies until those standards would otherwise apply to private companies, (2) provide an auditor&#8217;s attestation report
on management&#8217;s assessment of the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley
Act, (3) comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory
audit firm rotation or a supplement to the auditor&#8217;s report in which the auditor would be required to provide additional information
about the audit and the financial statements of the issuer or (4) comply with any new audit rules adopted by the PCAOB after April 5,
2012, unless the SEC determines otherwise. However, we have elected to &#8220;opt out&#8221; of the extended transition period discussed
in (4), and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards
is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition
period for compliance with new or revised accounting standards is irrevocable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
Significant Accounting Policies</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
significant accounting policies, not involving the same level of measurement uncertainties as those discussed above, are nevertheless
important to an understanding of the consolidated financial statements. Policies related to credit quality information, fair value measurements,
offsetting assets and liabilities, related party transactions and revenue recognition require difficult judgments on complex matters
that are often subject to multiple and recent changes in the authoritative guidance. Certain of these matters are among topics currently
under reexamination or have recently been addressed by accounting standard setters and regulators. Specific conclusions have not been
reached by these standard setters, and outcomes cannot be predicted with confidence. Also, see Note 2 of our consolidated financial statements,
as they discuss accounting policies that we have selected from acceptable alternatives.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_028"></span>Consolidated
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Key
financial and operating data for the years ended December 31, 2021 and 2020 are set forth below. For a more complete understanding of
our industry, the drivers of our business, and our current period results, this discussion should be read in conjunction with our consolidated
financial statements, including the related notes and the other information contained in this document.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounting
principles generally accepted in the United States of America (U.S. GAAP) require that we report financial and descriptive information
about reportable segments and how these segments were determined. Our management determines the allocation and performance of resources
based on operating income, net income and operating cash flows. Segments are identified and aggregated based on the products sold or
services provided and the market(s) they serve. Based on these factors, management has determined that our ongoing operations are in
one segment, commercial lending.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
income for the year ended December 31, 2021 increased $2,694 to $765 when compared to the same period of 2020. The increase in net income
was primarily due to decreasing the economic effects stemming from the COVID-19 pandemic, most importantly nonperforming assets and loan
losses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, we had $46,943 and $46,405 in loan assets, net as of December 31, 2021 and 2020, respectively. As of December 31, 2021, we
had 224 construction loans in 20 states with 66 borrowers and 15 development loans in six states with 12 borrowers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Interest
Spread</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table displays a comparison of our interest income, expense, fees and spread for the years ended December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*Annualized
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are three main components that can impact our interest spread:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
<b><i>Difference between the interest rate received (on our loan assets) and the interest rate paid (on our borrowings).</i></b> The
loans we have originated have interest rates which are based on our cost of funds, with a minimum cost of funds of 7%. For most loans,
the margin is fixed at 3%; however, for our development loans the margin is generally fixed at 7%. This component is also impacted by
the lending of money with no interest cost (our equity).</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
income on loans was 11% for both the years ended December 31, 2021 and 2020. The Company expensed $469 in interest income during 2020
due to impairment of loans associated with four of our borrowers directly related to COVID-19. In addition, estimated interest not earned
during the year ended December 31, 2021 and 2020 related to those borrowers was approximately $926 and $1,099, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
anticipate our standard margin to be 3% on all future construction loans and generally 7% on all development loans which yields a blended
margin of approximately 3.6%.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
<b><i>Fee income.</i></b> Our construction loan fee is 5% on the amount we commit to lend, which is amortized over the expected life
of each loan. We do not recognize a loan fee on our development loans. When loans terminate before than their expected life, the remaining
fee is recognized at the termination of the loan.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fee
income on loans before deferred loan fee adjustments increased 2% to 7% for the year ended December 31, 2021 compared to 5% for the same
period of 2020. The increase of 2% primarily related to modification fees charged on certain loans during 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deferred
loan origination fees increased to (2)% for the year ended December 31, 2021 compared to (1)% for the same period of 2020. The increase
in deferred loan origination fees was primarily due to the number of closed and modified construction and development loans, which during
2021 and 2020, was 320 and 224, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
<b><i>Amount of nonperforming assets.</i></b> Generally, we can have two types of nonperforming assets that negatively affect interest
spread: loans not paying interest and foreclosed assets.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021 and 2020, we had 23 impaired loans in the aggregate amount of $9,526 and 29 impaired loans in the aggregate amount
of $11,816 that were not paying interest, respectively. Non-performing assets not related to the impact of COVID-19 were $2,914 of the
$9,526 for 2021 and $1,229 of the $11,816 for 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
to the impact of COVID-19, the Company transferred the loan receivables balance of $9,728 as of June 30, 2020 for one of our largest
borrowers into a non-performing asset. As of December 31, 2021, the amount due from this borrower is $6,612.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Foreclosed
assets do not provide a monthly interest return. As of December 31, 2021 and 2020, foreclosed assets were $2,724 and $4,449, respectively,
which resulted in a negative impact on our interest spread in both years.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
amount of nonperforming assets is expected to decrease in the first half of 2022 as we continue to liquidate nonperforming loans and
foreclosed assets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash
also does not yield a return. During the third quarter of 2021 we used cash to reduce the amount of debt while maintaining a responsible
level of liquidity to cover unfunded commitments on loans and cash needs for operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Loan
Loss Provision</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Loan
loss provision (expense throughout the year) was $588 and $1,805 for the years ended December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
allowance for loan losses at December 31, 2021 was $2,048 which primarily consisted of $163 for loans without specific reserves, $342
for loans with specific reserves, $60 for special mention loans and $1,483 for specific reserves due to the impact of COVID-19. During
the year ended December 31, 2021, we incurred $509 in direct charge offs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
allowance for loan losses at December 31, 2020 was $1,968, of which $151 is related to loans without specific reserves. The Company recorded
specific reserves for loans impaired due to impacts from COVID-19 of $1,532, special mention loans of $120 and impaired loans not due
to impacts from COVID-19 of $165. During the year ended December 31, 2020, we incurred $72 in direct charge offs.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Non-Interest
Income</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Gain
on Sale of Foreclosed Assets</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the years ended December 31, 2021 and 2020, we recognized $166 and $160, respectively, as a gain on the sale of foreclosed assets which
related to the sale of six and seven foreclosed assets during 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Gain
on Foreclosure of Assets</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the years ended December 31, 2021 and 2020, we recognized $67 and $52 as a gain on the foreclosure of assets. We transferred one and
seven loan receivable assets to foreclosed assets which resulted in a gain on foreclosure during the years ended December 31, 2021 and
2020, respectively.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Impairment
Gains on Foreclosed Assets</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the year ended December 31, 2021 and 2020, we recognized $0 and $91, respectively, as a gain on impairment of foreclosed assets. During
2020, the impairment gain related primarily to four certain foreclosed assets.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Gain
on the Extinguishment of Debt</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
borrowed approximately $361 in each of February 2021 and May 2020, pursuant to the Paycheck Protection Program (&#8220;PPP&#8221;), created
under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. The PPP is intended to provide loans to qualified businesses
to cover payroll and certain other identified costs. Funds from the loan may only be used for certain purposes, including payroll, benefits,
rent, and utilities. All or a portion of the loan may be forgivable, as provided by the terms of the PPP.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2021 and November 2020, the full principal amount of the PPP loans and the accrued interest were forgiven by the U.S. Small Business
Administration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
April 2020, the Company received a grant under the Economic Injury Disaster Loan Emergency Advance (the &#8220;EIDL Advance&#8221;) of
$10 which was used for payroll and other certain operating expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
February 2021, the full EIDL Advance of $10 and accrued interest were forgiven by the U.S. Small Business Administration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Non-Interest
Expense</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Selling,
General and Administrative (&#8220;SG&amp;A&#8221;) Expenses</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table displays our SG&amp;A expenses for the years ended December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="vertical-align: bottom">
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="font-weight: bold; text-align: left">Selling, general and administrative expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">224</td><td style="width: 1%; text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">99</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">99</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">65</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">85</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">52</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">498</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">154</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">140</td><td style="text-align: left">&#160;</td></tr>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">112</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">SG&amp;A
expenses decreased $312 to $1,873 for the year ended December 31, 2021 compared to $975 for the same period of 2020 due primarily to
the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Loss
on the Sale of Foreclosed Assets</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the years ended December 31, 2021 and 2020, we recognized $92 and $102 as a loss on the sale of foreclosed assets which related to the
sale of seven and eight foreclosed assets during 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Loss
on Foreclosure of Assets</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the years ended December 31, 2021 and 2020, we recognized $47 and $54 as a loss on the foreclosure of assets. We transferred one and
two loan receivable assets to foreclosed assets during 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Impairment
Loss on Foreclosed Assets</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the year ended December 31, 2021 and 2020, we recognized $10 and $445 as a loss on impairment of foreclosed assets, respectively. During
2020, impairment loss on foreclosed assets included $91 recognized as a result of COVID-19.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_029"></span>Consolidated
Financial Position</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Cash
and Cash Equivalents</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
try to avoid borrowing on our lines of credit from affiliates. To accomplish this, we must carry some cash for liquidity. This amount
generally grows as our Company grows. As of December 31, 2021 and 2020, our cash was $3,735 and $4,749, respectively. See our Liquidity
and Capital Resources section for more information.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Loans
Receivable</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Commercial
Loans &#8211; Construction Loan Portfolio Summary</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2021:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">18</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">27</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">5</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,463</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">509</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">8</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,806</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,106</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,191</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">75</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Commercial
Loans &#8211; Real Estate Development Loan Portfolio Summary</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of our loan portfolio to builders for land development as of December 31, 2021:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,238</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(4)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financing
receivables are comprised of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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                                                                                <p style="margin-top: 0; margin-bottom: 0">2021</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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                                                                                <p style="margin-top: 0; margin-bottom: 0">2020</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Loans receivable, gross</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">50,763</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">50,449</td><td style="width: 1%; text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,143</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,092</td><td style="text-align: left">)</td></tr>
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    <td style="text-align: left">Less: Deposits</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(934</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,337</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">305</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">353</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">46,943</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Roll
forward of combined loans:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><p style="margin-top: 0; margin-bottom: 0">December 31,</p>
                                                                                <p style="margin-top: 0; margin-bottom: 0">2021</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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                                                                                <p style="margin-top: 0; margin-bottom: 0">2020</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Beginning balance</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">46,405</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">55,369</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Originations and modifications</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">45,395</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">46,177</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(44,290</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(50,079</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Transferred to foreclosed assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(791</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,118</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Transferred to real estate investments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,140</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Change in builder deposit</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">403</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">16</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Change in allowance for loan losses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(80</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,733</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Change in loan fees, net</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(99</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(87</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">46,943</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">46,405</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Credit
Quality Information</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
Receivables &#8211; By risk rating:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><p style="margin-top: 0; margin-bottom: 0">December 31,</p>
                                                                                <p style="margin-top: 0; margin-bottom: 0">2021</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><p style="margin-top: 0; margin-bottom: 0">December 31,</p>
                                                                                <p style="margin-top: 0; margin-bottom: 0">2020</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: justify">Pass</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">38,893</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">35,544</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">Special mention</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,344</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,089</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Classified &#8211; accruing</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 1.5pt">Classified &#8211; nonaccrual</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,526</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">11,816</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">50,763</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">50,449</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
Receivables &#8211; Method of impairment calculation:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><p style="margin-top: 0; margin-bottom: 0">December 31,</p>
                                                                                <p style="margin-top: 0; margin-bottom: 0">2021</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><p style="margin-top: 0; margin-bottom: 0">December 31,</p>
                                                                                <p style="margin-top: 0; margin-bottom: 0">2020</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">16,495</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">16,412</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">24,742</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">22,221</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">596</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,518</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 67 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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                                                                                <p style="margin-top: 0; margin-bottom: 0">2021</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="width: 60%; text-align: left">Unpaid principal balance (contractual obligation from customer)</td><td style="width: 2%">&#160;</td>
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    <td style="padding-bottom: 2.5pt">Value after allowance</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
is an aging schedule of loans receivable as of December 31, 2021, on a recency basis:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">203</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">90-179 days</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,058</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">0.8</td><td style="text-align: left">%</td></tr>
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    <td style="text-align: justify">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left; padding-bottom: 1.5pt">Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left; padding-bottom: 1.5pt">Partial Payment accounts (Accounts on which the total received in the last 60 days was less than 50% of the original contractual monthly payment. &#8220;Total received&#8221; to include interest on simple interest accounts, as well as late charges on deferment charges on pre-computed accounts.)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 68 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
is an aging schedule of loans receivable as of December 31, 2020, on a recency basis:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: justify">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Foreclosed
Assets</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Roll
forward of foreclosed assets for the years ended December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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                                                                                <p style="margin-top: 0; margin-bottom: 0">2021</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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                                                                                <p style="margin-top: 0; margin-bottom: 0">2020</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Beginning balance</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">4,449</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">4,916</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Additions from loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">791</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,118</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">818</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,410</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Sale proceeds</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(3,418</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(3,697</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Loss on foreclosure</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(47</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(54</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Loss on sale of foreclosed assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(92</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(102</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Gain on foreclosure</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">67</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">52</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Gain on sale of foreclosed assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">166</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">160</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Impairment loss on foreclosed assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(10</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(290</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Impairment loss on foreclosed assets due to COVID-19</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,724</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,449</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the year ended December 31, 2021 and 2020 we reclassed 2 and 4 loan receivable, net assets to foreclosed assets, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Real
Estate Investments</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2020, we acquired two lots from a borrower in exchange for the transfer of loans secured by those lots. We extinguished the principal
balance for the loans on the lots in the amount of $640 and in addition, paid a $500 management fee for the development of homes on certain
of our lots that were previously carried as loan receivables. The management fee was paid through reducing the principal balance on a
current loan receivable with the borrower. Construction has started on 3 of the 4 homes, one of which has a sales contract to sell to
an end user once the home is complete.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table is a roll forward of real estate investment assets:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><p style="margin-top: 0; margin-bottom: 0">December 31,</p>
                                                                                <p style="margin-top: 0; margin-bottom: 0">2021</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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                                                                                <p style="margin-top: 0; margin-bottom: 0">2020</p></td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Beginning balance</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">1,181</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">&#8211;</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Transfers from loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,140</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Deposits from real estate investments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(200</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Additions for construction/development</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">670</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">41</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,651</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,181</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Customer
Interest Escrow</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Pennsylvania Loans call for a funded interest escrow account which was initially funded with proceeds from the Pennsylvania Loans. The
initial funding on that interest escrow was $450. The balance as of December 31, 2021 and 2020 was $203 and $250, respectively. To the
extent the balance is available in the interest escrow, interest due on certain loans is deducted from the interest escrow on the date
due. The interest escrow is increased by 20% of lot payoffs on the same loans, and by interest and/or distributions on a loan in which
we are the borrower and Investor&#8217;s Mark Acquisitions, LLC is the lender and on the Series B preferred equity. All of these transactions
are noncash to the extent that the total escrow amount does not need additional funding.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
had 47 and 29 other loans active as of December 31, 2021 and 2020, respectively, which also had interest escrows. The cumulative balance
of all interest escrows other than the Pennsylvania Loans was $276 and $259 as of December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Roll
forward of interest escrow for the years ended December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Beginning balance</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">510</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">643</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Preferred equity dividends</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">230</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">83</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Additions from Pennsylvania Loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">513</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,173</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Additions from other loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">720</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">448</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Interest, fees, principal or repaid to borrower</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,494</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,837</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">479</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">510</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_030"></span>Secured
Borrowings</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Loan
Purchase and Sale Agreements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have two loan purchase and sale agreements where we are the seller of portions of loans we create. The two purchasers are Builder Finance,
Inc. (&#8220;Builder Finance&#8221;) and S.K. Funding, LLC (&#8220;S.K. Funding&#8221;). Generally, the purchasers buy between 50% and
75% of each loan sold. They receive interest rates ranging from our cost of funds to the interest rate charged to the borrower (interest
rates were between 6% and 13% for both 2021 and 2020). The purchasers generally do not receive any of the loan fees we charge. We have
the right to call some of the loans sold, with some restrictions. Once sold, the purchaser must fund their portion of the loans purchased.
We service the loans. Also, there are limited put options in some cases, whereby the purchaser can cause us to repurchase a loan. The
loan purchase and sale agreements are recorded as secured borrowings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2018, we entered into the Seventh Amendment (the &#8220;Seventh Amendment&#8221;) to our Loan Purchase and Sale Agreement with
S.K. Funding. The purpose of the Seventh Amendment was to allow S.K. Funding to purchase a portion of the Pennsylvania Loans.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
timing of the Company&#8217;s principal and interest payments to S.K. Funding under the Seventh Amendment, and S.K. Funding&#8217;s obligation
to fund the Pennsylvania Loans, vary depending on the total principal amount of the Pennsylvania Loans outstanding at any time, as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    the total principal amount exceeds $1,000, S.K. Funding must fund the amount between $1,000 and less than or equal to $4,500.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    the total principal amount is less than $4,500, then the Company will also repay S.K. Funding&#8217;s principal as principal payments
    are received on the Pennsylvania Loans from the underlying borrowers in the amount by which the total principal amount is less than
    $4,500 until S.K. Funding&#8217;s principal has been repaid in full.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    interest rate accruing to S.K. Funding under the Seventh Amendment is 10.5% calculated on a 365/366-day basis.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Seventh Amendment had a term of 24 months and automatically renews for additional six-month terms unless either party gives written notice
of its intent not to renew at least six months prior to the end of a term. S.K. Funding will have a priority position as compared to
the Company in the case of a default by any of the borrowers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
April 2021, we entered into the Eleventh Amendment (the &#8220;Eleventh Amendment&#8221;) to our Loan Purchase and Sale Agreement with
S.K. Funding. The purpose of the Eleventh Amendment was to allow a principal increase to $2,000 from the original $1,000 in the Tenth
Amendment dated January 2019. In addition, if the collateral value drops then an unsecured portion or $400 may be used until the collateral
is increased back to $2,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Eleventh Amendment has a term of 12 months and will automatically renew for an additional six-month term unless either party gives written
notice of its intent not to renew at least five months prior to the end of a term. S.K. Funding will have a priority position as compared
to the Company in the case of a default by any of the borrowers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Lines
of Credit</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Lines
of Credit with Mr. Wallach and His Affiliates</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2018, we entered into the First Amendment to the line of credit with our Chief Executive Officer and his wife (the &#8220;Wallach
LOC&#8221;) which modified the interest rate on the Wallach LOC to generally equal the prime rate plus 3%. The interest rate for the
Wallach LOC was 6.25% as of December 31, 2021 and 2020. As of December 31, 2021, and 2020, the amount outstanding pursuant to the Wallach
LOC was $0. The maximum amount outstanding on the Wallach LOC is $1,250 and the loan is a demand loan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2018, we also entered into the First Amendment to the line of credit with the 2007 Daniel M. Wallach Legacy Trust, which is our
CEO&#8217;s trust (the &#8220;Wallach Trust LOC&#8221;) which modified the interest rate on the Wallach Trust LOC to generally equal
the prime rate plus 3%. The interest rate for this borrowing was 6.25% as of December 31, 2021 and 2020. There were no amounts borrowed
against the Wallach Trust LOC as of December 31, 2021 and 2020. The maximum amount outstanding on the Wallach Trust LOC is $250 and the
loan is a demand loan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Line
of Credit with William Myrick</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2018, we entered into a line of credit agreement (the &#8220;Myrick LOC Agreement&#8221;) with our Executive Vice President (&#8220;EVP&#8221;),
William Myrick. Pursuant to the Myrick LOC Agreement, Mr. Myrick provides us with a line of credit (the &#8220;Myrick LOC&#8221;) with
the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $1,000;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    by a lien against all of our assets;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
    of funds to us of prime rate plus 3%; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
    upon demand.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021 and 2020, the amount outstanding pursuant to the Myrick LOC was $859 and $0, respectively. For the years ended December
31, 2021 and 2020, interest expense was $6 and $19, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Line
of Credit with Shuman</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
July 2017, we entered into a line of credit agreement (the &#8220;Shuman LOC Agreement&#8221;) with Steven K. Shuman, which is now held
by Cindy K. Shuman. Pursuant to the Shuman LOC Agreement, Shuman provides us with a revolving line of credit (the &#8220;Shuman LOC&#8221;)
with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
    of funds to us of 10%; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
                                            in July 2022, but will automatically renew for additional 12-month periods, unless either
                                            party</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">gives
    notice to not renew.</span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021 and 2020, the amount outstanding pursuant to the Shuman LOC was $125 and $1,325, respectively. Interest expense
was $77 and $135 for the years ended December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Line
of Credit with Swanson</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
December 2018, we entered into a Master Loan Modification Agreement (the &#8220;Swanson Modification Agreement&#8221;) with Paul Swanson
which modified the line of credit agreement between us and Mr. Swanson dated October 23, 2017. Pursuant to the Swanson Modification Agreement,
Mr. Swanson provides us with a revolving line of credit (the &#8220;Swanson LOC&#8221;) with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $7,000;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    with assignments of certain notes and mortgages;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
    of funds to us of 6%; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
    in July 2022, but will automatically renew for additional 12-month periods, unless either party gives notice to not renew.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Swanson LOC was fully borrowed as of December 31, 2021 and 2020. Interest expense was $619 and $709 for the years ended December 31,
2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
December 2021, the full Swanson LOC was assigned to Judith Swanson, as trustee of a trust.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>New
Lines of Credit</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
2020 and 2019, we entered into five line of credit agreements (the &#8220;New LOC Agreements&#8221;). Pursuant to the New LOC Agreements,
the lenders provide us with revolving lines of credit with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $6,063;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    with assignments of certain notes and mortgages; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Terms
    generally allow the lenders to give one month notice after which the principal balance of a New LOC Agreement will reduce to a zero
    over the next six months.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
total balance of the New LOC Agreements was $2,909 and $4,159 as of December 31, 2021 and 2020, respectively. Interest expense was $262
and $341 for the year ended December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Mortgage
Payable</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
January 2018, we entered into a commercial mortgage on our office building with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $660;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
    rate at 5.07% per annum based on a year of 360 days; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
    in January 2033.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
principal amount of our commercial mortgage was $604 and $619 as of December 31, 2021 and 2020, respectively. For the years ended December
31, 2021 and 2020, interest expense was $32 and $33, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Community
Loan</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2020, we entered into a business loan agreement with Community Bank (&#8220;Community Loan&#8221;) with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $362;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">First
    principal payment due July 2023;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    by certain of our foreclosed assets;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
    rate at 3.8% per annum based on a year of 360 days; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
    in July 2025.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
principal amount for the Community Loan was $217 and $362 as of December 31, 2021 and 2020, respectively. Interest expense for the years
ended December 31, 2021 and 2020 was $11 and $8, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Secured
Deferred Financing Costs</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company had secured deferred financing costs of $7 and $8 as of December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Secured
Borrowings Secured by Loan Assets</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Borrowings
secured by loan assets are summarized below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Book Value of Loans which Served as Collateral</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Due from Shepherd&#8217;s Finance to Loan Purchaser or Lender</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Book Value of</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Loans which Served as Collateral</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Due from Shepherd&#8217;s Finance to Loan Purchaser or Lender</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Loan Purchaser</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; width: 36%; text-align: left">Builder Finance</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">4,847</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">2,969</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">7,981</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_031"></span>Unsecured
Borrowings</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Unsecured
Notes through the Public Offering (&#8220;Notes Program&#8221;)</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
effective interest rate on borrowings through our Notes Program at December 31, 2021 and 2020 was 9.28% and 10.38%, respectively, not
including the amortization of deferred financing costs. There are limited rights of early redemption. We generally offer four durations
at any given time, ranging from 12 to 48 months. The following table shows the roll forward of our Notes Program:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: justify">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Gross Notes outstanding, end of period</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a roll forward of deferred financing costs:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
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    <td style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Accumulated amortization, beginning balance</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="padding-left: 10pt; padding-bottom: 1.5pt">Disposals</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left; padding-bottom: 2.5pt">Accumulated amortization, ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
Unsecured Debts</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
other unsecured debts are detailed below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, <br /> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 36%; text-align: left">Unsecured Note with Seven Kings Holdings, Inc.</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">315</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center">January 2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10.0</td><td style="text-align: left">%</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center">December 2021</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10.5</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">146</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center">April 2024</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">100</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">100</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">10.0</td><td style="text-align: left">%</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">174</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">11.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">200</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">200</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center">March 2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">169</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center">February 2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">600</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center">June 2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">400</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center">February 2021</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">600</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">5.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">5.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center">December 2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">20</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">20</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">11.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">20</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">20</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center">January 2025</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">15</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">9.5</td><td style="text-align: left">%</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">200</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">700</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">700</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">10</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">100</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">100</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">100</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(2)
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(3)
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(4)
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(5)
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_032"></span>Priority
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table displays our borrowings and a ranking of priority. The lower the number, the higher the priority:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">5</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_033"></span>Liquidity
and Capital Resources</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
primary liquidity management objective is to meet expected cash flow needs while continuing to service our business and customers. As
of December 31, 2021, and 2020, we had combined loans outstanding of 239 and 222, respectively. Gross loans outstanding were $50,763
and $50,449 as of December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
net cash provided by operating activities increased $779 to $1,549 as of December 31, 2021 compared to $770 for the same period of 2020.
The increase was primarily due to higher net income of $765 for the period ended December 31, 2021 compared to $(1,929) for the same
period of 2020 which was offset by lower accrued interest payable of $716 for the period ended December 31, 2021 compared to $1,422 for
the same period of 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unfunded
commitments to extend credit, which have similar collateral, credit and market risk to our outstanding loans, were $22,902 and $19,495
as of December 31, 2021 and 2020, respectively. As of December 31, 2021, other than unfunded commitments, we had no off-balance sheet
transactions, nor do we currently have any such arrangements or obligations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
anticipate a significant increase in our gross loan receivables over the 12 months subsequent to December 31, 2021 by directly increasing
originations to new and existing customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
fund our combined loans, we rely on secured debt, unsecured debt, and equity, which are described in the following table:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Source
    of Liquidity</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As
                                            of</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
    31,</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2021</b></span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As
                                            of </b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
    31,</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2020</b></span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 62%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    debt, net of deferred financing costs</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 16%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">20,016</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 16%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">22,959</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: white">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unsecured
    debt, net of deferred financing costs</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">27,713</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">26,978</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Equity*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">6,604</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5,259</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: white">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3,735</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,749</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*Equity
includes Members&#8217; Capital and Redeemable Preferred Equity.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
of December 31, 2021 and 2020, cash was $3,735 and $4,749, respectively. During 2021, the Company made the decision to pay down secured
debt with high interest rates. The New Line of Credit Agreements decreased $1,250 to $2,909 as of December 31, 2021, compared to $4,159
for the same period of 2020. In addition, the Shuman Line of Credit Agreement decreased $1,200 to $125 as of December 31, 2021 compared
to $1,325 for the same period of 2020. Secured debt, net of deferred financing costs decreased $2,943 to $20,016 as of December 31, 2021
compared to $22,959 for the same period of 2020. We anticipate secured debt to increase as our loan receivable balances increase.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unsecured
debt, net of deferred financing costs increased $735 to $27,713 as of December 31, 2021 compared to $26,978 for the same period of 2020.
The increase in unsecured debt primarily related to unsecured notes sold outside of our Notes Program.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
borrowed approximately $361 in each of February 2021 and May 2020, pursuant to the PPP, which was to cover payroll and other identified
costs. During August 2021 and November 2020, the full principal amount of the PPP loans and the accrued interest were forgiven by the
U.S. Small Business Administration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
April 2020, the Company received an EIDL Advance of $10 which was used for payroll and other certain operating expenses. In February
2021, the full EIDL Advance of $10 and accrued interest were forgiven by the U.S. Small Business Administration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Equity
increased $1,345 to $6,604 as of December 31, 2021 compared to $5,259 for the same period of 2020. The increase was due primarily to
Series C cumulative preferred equity. As of December 31, 2021, Series C cumulative preferred equity increased $1,432 to $5,014 compared
to $3,582 for the same period of 2020. The increase in equity was partially offset by a decrease in Class A common equity to a deficit
of $130 as of December 31, 2021 compared to equity of $47 for the same period of 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
anticipate an increase in our equity during the 12 months subsequent to December 31, 2021, through retaining earnings. If we are not
able to increase our equity through retained earnings, we will rely more heavily on raising additional funds through the Notes Program.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
total amount of our debt maturing through year ending December 31, 2022 is $28,238, which consists of secured borrowings of $19,219 and
unsecured borrowings of $9,019.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
borrowings maturing through the year ending December 31, 2022 significantly consists of loan purchase and sale agreements with two loan
purchasers (Builder Finance and S. K. Funding) and six lenders. These secured borrowings are listed as maturing over the next 12 months
due primarily to their related demand loan collateral. The following are secured facilities listed as maturing in 2022 with actual maturity
and renewal dates:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Swanson
    &#8211; $6,841 due July 2022 and automatically renews unless notice given;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shuman
    &#8211; $125 due July 2022 and automatically renews unless notice is given;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">S.
    K. Funding &#8211; $3,500 due July 2022 and automatically renews unless notice is given; </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">S.
    K. Funding &#8211; $2,000 of the total due January 2023; </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Builder
    Finance, Inc &#8211; $2,969 with no expiration date;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">New
    LOC Agreements - $2,909 generally one-month notice and six months to reduce principal balance to zero;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Myrick
    LOC - $859 and due upon demand; and </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mortgage
    Payable &#8211; $15 due monthly.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unsecured
borrowings due by December 31, 2022 consist of Notes issued pursuant to the Notes Program and other unsecured debt of $7,074 and $1,945,
respectively. To the extent that Notes issued pursuant to the Notes Program are not reinvested upon maturity, we will be required to
fund the maturities, which we anticipate funding through the issuance of new Notes in our Notes Program. Historically, approximately
80% of our Note holders reinvest upon maturity. The 36 month Note in our Notes Program has a mandatory early redemption option, subject
to certain conditions. As of December 31, 2021, the 36-month Notes were $376. Our other unsecured debt has historically renewed. For
more information on other unsecured borrowings, see Note 7 &#8211; Borrowings. If other unsecured borrowings are not renewed in the future,
we anticipate funding such maturities through investments in our Notes Program.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Summary</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have the funding available to address the loans we have today, including our unfunded commitments. We anticipate growing our assets through
the net sources and uses (12-month liquidity) listed above as well as future capital increases from debt, redeemable preferred equity,
and regular equity. Our expectation to grow loan asset balances is subject to changes due to changes in demand, competition, and COVID-19.
Although our secured debt is almost entirely listed as currently due because of the underlying collateral being demand notes, the vast
majority of our secured debt is either contractually set to automatically renew unless notice is given or, in the case of purchase and
sale agreements, has no end date as to when the purchasers will not purchase new loans (although they are never required to purchase
additional loans).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_034"></span>Inflation,
Interest Rates, and Housing Starts</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
we are in the housing industry, we are affected by factors that impact that industry. Housing starts impact our customers&#8217; ability
to sell their homes. Faster sales mean higher effective interest rates for us, as the recognition of fees we charge is spread over a
shorter period. Slower sales mean lower effective interest rates for us. Slower sales are likely to increase the default rate we experience.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Housing
inflation has a positive impact on our operations. When we lend initially, we are lending a percentage of a home&#8217;s expected value,
based on historical sales. If those estimates prove to be low (in an inflationary market), the percentage we loaned of the value actually
decreases, reducing potential losses on defaulted loans. The opposite is true in a deflationary housing price market. It is our opinion
that values are well above average in many of the housing markets in the U.S. today.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">General
economic inflation has been a factor and seems like it will continue to be a factor in all businesses for now and going forward. This
impacts our customers and ourselves. One of our main focuses in 2021 and in 2022 is to increase our margin to counterbalance the cost
of inflation to our expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
rates have several impacts on our business. First, rates affect housing (starts, home size, etc.). High long-term interest rates may
decrease housing starts, having the effects listed above. Higher interest rates will also affect our investors. We believe that there
will be a spread between the rate our Notes yield to our investors and the rates the same investors could get on deposits at FDIC insured
institutions. We also believe that the spread may need to widen if these rates rise. For instance, if we pay 7% above average CD rates
when CDs are paying 1.5%, when CDs are paying 3%, we may need a larger than 7% difference. This may cause our lending rates, which are
based on our cost of funds, to be uncompetitive. High interest rates may also increase builder defaults, as interest payments may become
a higher portion of operating costs for the builder. Below is a chart showing three-year U.S. treasury rates, which are being used by
us here to approximate CD rates. Short term interest rates have risen slightly but are generally low historically.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="forms-1_002.jpg" alt="" style="height: 465px; width: 670px" /></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Housing
prices are also generally correlated with housing starts, so that increases in housing starts usually coincide with increases in housing
values, and the reverse is generally true. Below is a graph showing single family housing starts from 2000 through today.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="forms-1_003.jpg" alt="" style="height: 374px; width: 670px" /></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Source:
U.S. Census Bureau)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
date, changes in housing starts, CD rates, and inflation have not had a material impact on our business. The effect of significant long
term interest rate increases may be detrimental to our earnings</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_035"></span>Recent
Accounting Pronouncements</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
Note 2 to our consolidated financial statements for a description of new or recent accounting pronouncements.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_036"></span>Subsequent
Events</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
Note 14 to our consolidated financial statements for subsequent events.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_037"></span>MATERIAL
FEDERAL INCOME TAX CONSEQUENCES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following discussion summarizes the material federal income tax consequences relating to the ownership and disposition of the Notes.
The discussion is based upon the current provisions of the Code, regulations issued under the Code and judicial or ruling authority,
all of which are subject to change that may be applied retroactively. The discussion assumes that the Notes are held as capital assets
and does not discuss the federal income tax consequences applicable to all categories of investors, some of which may be subject to special
rules such as banks, tax-exempt organizations, insurance companies, dealers in securities or currencies, persons that will hold a Note
as a position in hedging, straddle, or conversion transactions, or persons that have a functional currency other than the U.S. dollar.
If a partnership holds a Note, the tax treatment of a partner will generally depend on the status of the partner and on the activities
of the partnership. In addition, this discussion does not address holders other than original purchasers. Certain individuals, trusts,
and estates are subject to a Medicare tax of 3.8% on the lesser of (i) &#8220;net investment income&#8221;, or (ii) the excess of modified
adjusted gross income over a threshold amount. Net investment income generally includes interest income and net gains from the disposition
of Notes, unless such interest payments or net gains are derived in the ordinary course of the conduct of a trade or business (other
than a trade or business that consists of certain passive or trading activities). In addition to the federal income tax consequences
described above, you should also consider the state income tax consequences of the acquisition, ownership, and disposition of the Notes.
State income tax law may differ substantially from the corresponding federal law, and this discussion does not purport to describe any
aspect of the income tax laws of any state. You are urged to consult your own tax advisor to determine the specific federal, state, local,
and any other tax consequences applicable to you relating to your ownership and disposition of the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_038"></span>Interest
Income on the Notes</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the discussion below applicable to &#8220;non-U.S. holders,&#8221; unless the original issue discount or &#8220;OID&#8221; rules otherwise
require, interest paid on the Notes will generally be taxable to you as ordinary income in the year the interest is paid or accrued in
accordance with your method of accounting for tax purposes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">OID
is a form of interest that generally exists when a debt instrument&#8217;s stated redemption price at maturity exceeds its issue price.
However, we do not believe that the Notes will give rise to OID since they are generally issued at a price equal to their redemption
amount. If OID were to exist, under the OID rules, the excess of total payments on a Note, including interest that is not unconditionally
payable at least annually throughout the term of the Note, will be currently deductible by the issuer and currently includible in income
by the holder, under the constant yield method. Under the constant yield method, you generally would be required to include in income
increasingly greater amounts of OID in successive accrual periods. You should consult with your tax or other professionals regarding
the existence and impact, if any, of OID on your investment and taxes. A cash method holder of a Note may be taxed differently than an
accrual method holder of a Note.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_039"></span>Treatment
of Dispositions of Notes</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Upon
the sale, exchange, redemption, retirement, or other taxable disposition of a Note, you will recognize gain or loss in an amount equal
to the difference between the amount realized on the disposition and your adjusted tax basis in the Note. Your adjusted tax basis in
a Note generally will equal your original cost for the Note, increased by any accrued but unpaid interest, including OID, you previously
included in income with respect to the Note and reduced by any payments you previously received, other than interest that is unconditionally
payable at least annually throughout the term of the Note, with respect to the Note. Any gain or loss will be capital gain or loss, except
for gain representing accrued interest not previously included in your income. This capital gain or loss will be short-term or long-term
capital gain or loss, depending on whether the Note had been held for more than 12 months or for 12 months or less.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_040"></span>Non-U.S.
Holders</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Generally,
if you are a nonresident alien individual or a non-U.S. corporation and do not hold the Note in connection with a United States trade
or business, interest paid and OID accrued on the Notes will be treated as &#8220;portfolio interest&#8221; and therefore will be exempt
from a 30% United States withholding tax. In that case, you will be entitled to receive interest payments on the Notes free of United
States federal income tax provided that you periodically provide a statement on applicable IRS forms certifying under penalty of perjury
that you are not a United States person and provide your name and address. In addition, in that case you will not be subject to United
States federal income tax on gain from the disposition of a Note unless you are an individual who is present in the United States for
183 days or more during the taxable year in which the disposition takes place and certain other requirements are met. Interest paid and
accrued OID paid to a non-U.S. person are not subject to withholding if they are effectively connected with a United States trade or
business conducted by that person and we are provided a properly executed IRS Form W-8ECI. They will, however, generally be subject to
the regular United States income tax. If you are a non-U.S. corporation, that portion of your earnings and profits that is effectively
connected with your U.S. trade or business also may be subject to a &#8220;branch profits tax&#8221; at a 30% rate, although an applicable
income tax treaty may provide for lower rate.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_041"></span>Reporting
and Backup Withholding</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
will report annually to the Internal Revenue Service and to holders of record that are not excepted from the reporting requirements any
information that may be required with respect to interest on the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
certain circumstances, as a holder of a Note, you may be subject to &#8220;backup withholding.&#8221; Backup withholding may apply to
you if you are a United States person and, among other circumstances, you fail to furnish on IRS Form W-9 or a substitute Form W-9 your
Social Security number or other taxpayer identification number to us. Backup withholding may apply, under certain circumstances, if you
are a non-U.S. person and fail to provide us with the statement necessary to establish an exemption from federal income and withholding
tax on interest on the Note. Backup withholding, however, does not apply to payments on a Note made to certain exempt recipients, such
as corporations and tax-exempt organizations, and to certain non-U.S. persons. Backup withholding is not an additional tax and may be
refunded or credited against your United States federal income tax liability, provided that you furnish certain required information.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
federal tax discussion is included for general information only and may not be applicable depending upon your particular situation. You
are urged to consult your own tax advisor with respect to the specific tax consequences to you of the ownership and disposition of the
Notes, including the tax consequences under state, local, foreign, and other tax laws and the possible effects of changes in federal
or other tax laws.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_042"></span>Foreign
Account Tax Compliance Withholding</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sections
1471 through 1474 of the Code, commonly known as the Foreign Account Tax Compliance Act (&#8220;FATCA&#8221;), impose a U.S. withholding
tax of a 30% on payments of interest on the Notes and, on or after January 1, 2017, the gross proceeds from a sale or other disposition
of the Notes paid to (i) a foreign financial institution (as the beneficial owner or as an intermediary for the beneficial owner), unless
such institution enters into an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information
regarding U.S. account holders of such institution (which would include certain equity and debt holders of such institution, as well
as certain account holders that are foreign entities with U.S. owners), and (ii) a foreign entity that is not a financial institution
(as the beneficial owner or as an intermediary for the beneficial owner), unless such entity provides the withholding agent with a certification
identifying the substantial U.S. owners of the entity, which generally includes any U.S. person who directly or indirectly owns more
than 10% of the entity. An intergovernmental agreement between the U.S. and the applicable foreign country may modify these requirements.
Prospective investors should consult their own tax advisors regarding the implications of FATCA with respect to their purchase, ownership,
and disposition of the Notes.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_043"></span>CERTAIN
EMPLOYEE BENEFIT PLAN CONSIDERATIONS</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of certain considerations relating to the ownership, holding, and disposition of the Notes by employee benefit
plans, IRAs, or other tax-favored benefit accounts that are subject to ERISA, Section 4975 of the Code, or any other federal, state,
local, non-U.S., or other laws, rules, or regulations that are similar to ERISA or such provisions of the Code (collectively, &#8220;Similar
Laws&#8221;), and entities whose underlying assets are considered to include &#8220;plan assets&#8221; (within the meaning of ERISA)
of any such plan or account (each, a &#8220;Plan&#8221;).</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_044"></span>General
Fiduciary Matters</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ERISA
and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an
&#8220;ERISA Plan&#8221;) and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested
parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an
ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other
compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
considering an investment in the Notes by any Plan, a fiduciary should determine whether the investment is in accordance with the documents
and instruments governing the Plan and the applicable provisions of ERISA, the Code, or any Similar Law relating to a fiduciary&#8217;s
duties to the Plan including, without limitation, the prudence, diversification, delegation of control, and prohibited transaction provisions
of ERISA, the Code, and any other applicable Similar Laws.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_045"></span>Prohibited
Transaction Issues</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Section
406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving &#8220;plan assets&#8221;
with persons or entities who are &#8220;parties in interest,&#8221; within the meaning of ERISA, or &#8220;disqualified persons,&#8221;
within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engaged
in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and/or the Code.
In addition, the fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited transaction may be subject to penalties and
liabilities under ERISA and the Code. The acquisition and/or holding of Notes by an ERISA Plan with respect to which we are considered
a party in interest or disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406
of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class,
or individual prohibited transaction exemption. In addition, Section 408(17) of ERISA and Section 4975(d)(20) of the Code provide relief
from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions if neither we nor any of our
affiliates (directly or indirectly) have or exercise any discretionary authority or control or render any investment advice for a fee
with respect to the assets of any ERISA Plan involved in the acquisition or holding of the Notes and provided further that the ERISA
Plan pays no more than adequate consideration in connection with the acquisition and holding of the Notes. There can be no assurance
that all of the conditions of any such exemptions will be satisfied.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
of the foregoing, the Notes should not be purchased or held by any person investing &#8220;plan assets&#8221; of any Plan, unless such
purchase and holding will not constitute a non-exempt prohibited transaction under ERISA and the Code or similar violation of any applicable
Similar Laws.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_046"></span>Representation</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accordingly,
by acceptance of a Note, each purchaser and subsequent transferee will be deemed to have represented and warranted that either (i) no
portion of the assets used by such purchaser or transferee to acquire or hold the Notes constitutes assets of any Plan or (ii) the purchase
and holding of the Notes by such purchaser or transferee will not constitute a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code or any similar violation under any applicable Similar Laws.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties
that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries or other
persons considering purchasing the Notes (and holding or disposing the Notes) on behalf of any Plan or otherwise with &#8220;plan assets,&#8221;
consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code, and any Similar Laws to such transactions
and whether an exemption would be applicable to the purchase, holding, and disposition of the Notes.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_047"></span>MANAGEMENT</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_048"></span>Executive
Officers and Board of Managers</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Included
below is certain information about our managers and executive officers. Pursuant to our limited liability company agreement, as amended,
our managers are initially appointed to terms of one year, two years, or three years. Following the expiration of these initial terms,
our managers are elected to staggered terms. Mr. Wallach was initially elected to a three-year term that expired in March 2016 and his
current three-year term expires in March 2025, Mr. Summers was initially elected to a two-year term that expired in March 2014 and his
current three-year term expires in March 2023, Mr. Rauscher was initially elected to a three-year term that expired in March 2018 and
his current three-year term expires in March 2024, and Mr. Sheldon was initially elected to a one-year term that expired in March 2020
and his current three-year term expires in March 2025.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Daniel
M. Wallach</b>, age 54, is our CEO and a manager. He has been our CEO since our Company was founded and, prior to the addition of two
independent managers in March 2012, he was our sole manager. Mr. Wallach has over 25 years of experience in finance and real estate.
Prior to his time with us, most recently, from May 2011 to July 2011, Mr. Wallach was an Executive Vice President for ProBuild Holdings,
a building material supplier to homebuilders. Before that, from 1985 to 1989, and 1990 to April 2011, Mr. Wallach held various positions
with 84 Lumber Company and affiliates, including Chief Financial Officer and Director. 84 Lumber is a building material supplier to homebuilders
and was, at that time, one of our affiliates. At 84 Lumber, Mr. Wallach oversaw the company&#8217;s financial and accounting function,
including all aspects related to financial reporting, debt financing, customer financing, customer credit and management information
systems. Mr. Wallach was also intimately involved with the creation of 84 FINANCIAL, L.P., a finance company affiliated with and owned
by 84 Lumber, which had investment objectives similar to ours. Mr. Wallach has also held operational and finance positions with a mortgage
brokerage firm and a building contractor. He graduated from Washington and Jefferson College in Washington, Pennsylvania with a B.A.
in Business Administration.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Barbara
L. Harshman</b>, age 46, is our Executive Vice President of Operations, a position to which she was appointed in July 2015. She was hired
in August 2012 as Vice President of Operations. Prior to joining the Company, from 2005 to 2012, Ms. Harshman worked in various positions
in 84 Lumber Company&#8217;s lending operations, including Vice President of Lending. Ms. Harshman also worked as a credit manager for
84 Lumber during 2004 and 2005, where she managed a portfolio of $35,000,000 of unsecured debt owed by builders. Ms. Harshman graduated
from Baylor University with a B.A. in Anthropology.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Mark
Reynolds,</b> age 47, was appointed Executive Vice President of Sales in April 2021. Mr. Reynolds, has over 19 years of experience in
the construction finance industry. He was previously our Regional Sales Manager from May 2016 until April 2021 and was also the National
Real Estate Owned (&#8220;REO&#8221;) Manager from January 2020 until April 2021. Previously, Mr. Reynolds held various positions with
84 Lumber Company, including REO Specialist, where he worked with counsel to negotiate liens, finish building houses, and relieve as
much debt as possible while controlling losses (from 2008 through 2014), National Finance Manager, in residential financing (from 2006
through 2008), and Regional Finance Manager, in commercial financing, where he helped finance projects such as hotels, apartments, restaurants,
and casinos (from 2000 through 2004). Mr. Reynolds attended Indiana University at South Bend, where he studied Business Management.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Catherine
Loftin</b>, age 43, is our Chief Financial Officer, a position to which she was appointed in April 2021. Ms. Loftin previously served
as Acting Chief Financial Officer from July 2019 to April 2021 and as Chief Financial Officer from January 2018 to May 2019 and continued
to serve as our employee since May 2019. Ms. Loftin previously served as our Controller from November 2017 until her appointment as Chief
Financial Officer. Prior to joining the Company, Ms. Loftin was the Corporate Controller for Lucas Group from November 2017 to June 2018,
Division Controller for Pulte Group from July 2014 through November 2017 and Director of Financial Reporting for DS Services Holdings,
Inc. from November 2013 to April 2014. Ms. Loftin spent a majority of her career with Simmons Bedding Company as Manager of Financial
Reporting from 2006 to 2013. Ms. Loftin started her accounting career with PricewaterhouseCoopers with an internship in 1999 and an associate
in 2001. Ms. Loftin received her Bachelors of Business of Administration from the Terry College of Business School at the University
of Georgia in 2000, and her Masters of Accounting from Kennesaw State University&#8217;s Cole&#8217;s College of Business in 2001.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>William
Myrick</b>, age 60, is our Executive Vice President, a position to which he was appointed on April 20, 2021. Mr. Myrick previously served
as Executive Vice President of Sales since March 2018. Mr. Myrick was one of our independent managers from March 2012 to March 2018.
He has been involved in lumber and building materials for over 35 years. From July 2012 through December 2017, Mr. Myrick was the CEO
of American Builders Supply, a building material supplier to homebuilders, where he was responsible for all aspects of the management
of that business. From January 2007 to July 2011, he held various executive officer positions with ProBuild Holdings, including, most
recently, CEO, and was responsible for all aspects of the management of ProBuild&#8217;s business. From 1982 to January 2007, Mr. Myrick
was with 84 Lumber Company, where he held positions including, most recently, Chief Operating Officer. Mr. Myrick served as a director
of ProBuild from July 2010 to July 2011, and currently serves as a director of American Builders Supply, a position he has held since
July 2012. He is a graduate of the Advanced Management Program from Harvard Business School.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Kenneth
R. Summers</b>, age 75, is one of our independent managers, a position to which he was elected in March 2012. Mr. Summers retired from
United Bank, Inc. of Morgantown, West Virginia in December 2019. Prior to retirement, he had been an Executive Vice President for United
Bank since 2001. In that role he was responsible for the expansion and recognition of the bank&#8217;s franchise in north central West
Virginia. Mr. Summers has over 30 years of experience as a community bank executive. He graduated from the University of Charleston with
a B.S. in Accounting and Management.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Eric
A. Rauscher</b>, age 56, is one of our independent managers, a position to which he was elected in March 2015. Mr. Rauscher is a licensed
insurance sales person and has worked in that industry since 1999. Prior to that, he spent over ten years as a field sales engineer.
He graduated from Case Western Reserve University with a B.S. in Electrical Engineering and Applied Physics, with a minor in Economics.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Gregory
L. Sheldon</b>, age 63, is one of our independent managers, a position to which he was elected in March 2019. Mr. Sheldon brings 41 years
of business experience building global corporations and integrating acquisitions across finance, supply chain, manufacturing, and the
corporate functions. Since March 2021 he has served as the Interim CIO for TherapeuticsMD, an innovative pharmaceutical company exclusively
committed to advancing women&#8217;s health. His previous roles include Global Chief Information Officer for Mylan, Inc., from October
2008 to March 2013, the CIO for Duquesne Light Company from August 2013 to March 2015, and, from October 2018 until December 2019, as
the Interim CIO for MiMedx Group, Inc. Since July 2014, Mr. Sheldon has been an owner of two companies which invest in land acquisition,
development, and the construction of residential homes: White Column Investments, LLC, where he is the President and Managing Member,
and Sheldon Investments, LLC. Since 2017, he has served as a non-compensated advisor to Mark Hoskins, who owns Benjamin Marcus Homes,
LLC and Investor&#8217;s Mark Acquisitions, LLC, which are companies that design, develop, and build single family homes, and which are
also two of our customers. Mr. Sheldon has been the owner of Greg Sheldon and Associates, LLC, a consultant, and strategic advisor to
clients in the life sciences, consumer products, technology, and manufacturing industries since April 2015. Mr. Sheldon has held multiple
leadership positions with leading, global companies including Kraft General Foods, Georgia-Pacific, and Pfizer Inc., and the start-up
of The Georgia Lottery. He graduated from Georgia State University with a Master of Science in Management and from Georgia Institute
of Technology with a Bachelor of Science in Industrial Management.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_049"></span>Committees
of the Board of Managers</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
board of managers has formed the five committees described below. Each of the committees, with the exception of the loan policy committee,
operates pursuant to a written charter adopted by the committee or our board of managers. Each charter sets forth the committee&#8217;s
specific functions and responsibilities.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Audit
Committee</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of managers has established an audit committee, which consists of Messrs. Summers, Rauscher, and Sheldon, our independent managers.
Mr. Summers is the Chairman of the audit committee. The purpose of the audit committee is to assist the board of managers in fulfilling
its oversight responsibilities relating to:</span></p>

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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    integrity of our financial statements and other financial information to be provided to the members of the Company and others;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    Company&#8217;s compliance with legal and regulatory requirements;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    system of internal controls which management of the Company has established;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    qualifications and independence of the Company&#8217;s independent auditor;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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    performance of the Company&#8217;s internal audit function and independent auditors; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Nominating
and Corporate Governance Committee</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of managers has established a nominating and corporate governance committee, which consists of Messrs. Rauscher, Summers, and Sheldon,
our independent managers. Mr. Summers is the Chairman of the nominating and corporate governance committee. The primary responsibilities
of the nominating and corporate governance committee include:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">identifying
    individuals qualified to serve on the board of managers, consistent with criteria approved by the board in accordance with the Company&#8217;s
    limited liability company agreement;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">developing
    and recommending to the board of managers a set of corporate governance policies and principles to be applicable to the Company;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">overseeing
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">considering
    and acting upon any conflicts of interest-related matter as required by the Company&#8217;s limited liability company agreement or
    otherwise permitted by the Delaware Limited Liability Company Act where the exercise of independent judgment by any of the Company&#8217;s
    managers (who is not an independent manager) could reasonably be compromised, including approval of any transaction involving the
    Company&#8217;s affiliates.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Compensation
Committee</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of managers has established a compensation committee, which consists of Messrs. Rauscher, Summers, and Sheldon, our independent
managers. Mr. Rauscher is the Chairman of the compensation committee. The compensation committee reviews and approves annually the corporate
goals and objectives applicable to the compensation of our officer, evaluates at least annually the officer&#8217;s performance in light
of those goals and objectives, and determines and approves the officer&#8217;s compensation level based on these evaluations, subject
to the approval of our members holding at least 60% of the votes eligible to be cast by the then-outstanding voting units.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Loan
Policy Committee</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of managers has established a loan policy committee, which consists of Messrs. Wallach and Summers. Mr. Wallach is the Chairman
of the loan policy committee. The loan policy committee sets standards and procedures for the review and approval of loans made by the
Company, and approves significant loans and loans which differ from the standards and procedures it has established.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Technology
Committee</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of managers has established a technology committee, which consists of Messrs. Sheldon, Wallach, and Rauscher. Mr. Sheldon is the
Chairman of the technology committee. The primary purpose of the technology committee is to assist the board of managers in evaluating
and overseeing technology matters for the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_050"></span>Limited
Liability and Indemnification of Directors, Officers, Employees, and Other Agents</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No
manager or officer shall be liable to us or any other manager or officer for any loss, damage or claim incurred by reason of any action
taken or omitted to be taken by such person in good faith and with the belief that such action or omission is in, or not opposed to,
our best interest, so long as such action or omission does not constitute fraud, gross negligence or willful misconduct by such person.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the fullest extent permitted by Delaware law, the Company shall indemnify, hold harmless, defend, pay and reimburse each of its managers
and its officer against any and all losses, claims, damages, judgments, fines or liabilities, including reasonable legal fees or other
expenses incurred in investigating or defending against such losses, claims, damages, judgments, fines or liabilities, and any amounts
expended in settlement of any claims to which such person may become subject by reason of:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
    act or omission or alleged act or omission performed or omitted to be performed on our behalf, or on behalf of any of our members
    or any direct or indirect subsidiary of the foregoing in connection with our business; or</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    fact that such person is or was acting in connection with our business as our partner, member, stockholder, controlling affiliate,
    manager, director, officer, employee or agent, any our members, or any of our and any of our members&#8217; respective controlling
    affiliates, or that such person is or was serving at our request as a partner, member, manager, director, officer, employee or agent
    of any person including us or any subsidiary of us;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">provided,
that (x) such person acted in good faith and in a manner believed by such person to be in, or not opposed to, our best interests and,
with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful, and (y) such person&#8217;s
conduct did not constitute fraud, gross negligence or willful misconduct, in either case as determined by a final, nonappealable order
of a court of competent jurisdiction. In connection with the foregoing, the termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith or, with respect to any criminal proceeding, had reasonable cause to believe that such person&#8217;s
conduct was unlawful, or that the person&#8217;s conduct constituted fraud, gross negligence or willful misconduct.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
shall promptly reimburse (and/or advance to the extent reasonably required) each of the managers and our officer for reasonable legal
or other expenses (as incurred) of such person in connection with investigating, preparing to defend or defending any claim, lawsuit
or other proceeding relating to any losses for which such person may be indemnified; provided, that if it is finally judicially determined
that such person is not entitled to the indemnification, then such person shall promptly reimburse us for any reimbursed or advanced
expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;), may be permitted
pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
maintain liability insurance, which insures against liabilities that the managers or our officer may incur in such capacities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_051"></span>EXECUTIVE
COMPENSATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_052"></span>Executive
Officer Compensation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
currently compensate our executive officers for services rendered to us. This discussion describes our compensation philosophy and policies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Objectives
of Executive Officer Compensation Program</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
objectives of our executive compensation program are to attract, retain, and motivate highly talented executives and to align each executive&#8217;s
incentives with our short-term and long-term objectives, while maintaining a healthy and stable financial position. Specifically, our
executive compensation program is designed to accomplish the following goals and objectives:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">maintain
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Determining
Executive Officer Compensation</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
compensation committee of our board of managers is responsible for determining all aspects of our executive compensation program. The
determination and assessment of executive compensation are primarily driven by the following three factors: (1) market data based on
the compensation levels, programs, and practices of other comparable companies for comparable positions, (2) our financial performance,
and (3) executive officer performance. We believe these three factors provide a reasonably measurable assessment of executive performance
in light of building value and creating a healthy financial position for us. We rely upon the judgment of the members of the compensation
committee and not on rigid formulas or short-term changes in business performance in determining the amount and mix of compensation elements
and whether each element provides the appropriate incentive and reward for performance that sustains and enhances our long-term growth.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Executive
Officer Compensation Components</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Base
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
provide each of our paid executive officers with a base salary to compensate such officer for services rendered throughout the year.
Salaries are established annually based on the individual&#8217;s position, experience, performance, past and potential contribution
to us, and level of responsibility, as well as our overall financial performance. No specific weighting is applied to any one factor
considered, and the independent managers use their judgment and expertise in determining appropriate salaries within the parameters of
the compensation philosophy.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Bonus</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
pay each of our full-time executive officers a team bonus mostly based on our overall profitability, which rewarded each of them $1,300
in 2021 and $1,200 in 2020. In addition, we rewarded an annual bonus of $1,800 for both 2021 and 2020, which is extended to compensate
vacation expenses. Finally, each executive officer is eligible for a portion of net income earned, or profit share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
pay our EVP of Sales monthly bonus based on a percentage of all new sales and construction loan payoffs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Membership
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
the beneficial owner of 80.7% (as of March 1, 2022) of our outstanding common membership interests, Mr. Wallach&#8217;s interests are
closely aligned with our success. Our Executive Vice President of Operations owns 2% of our outstanding common membership interests and
our Executive Vice President owns 15.3% of our outstanding common membership interests. As we hire additional executive officers, we
may use membership interests in some fashion as part of their compensation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table provides a summary of the compensation received by our named executive officers for the last two completed fiscal years:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(2)
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(3)
</sup>Mr. Reynolds did not serve as an executive officer of the Company in 2020 and was appointed EVP of Sales in April 2021. In addition,
Mr. Reynolds received forgiveness for an employee loan for $20,000 and $10,000 in 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Changes
for 2022</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Wallach will receive a base salary of $72,240 for 2022. Ms. Harshman, our Executive Vice President of Operations, will receive a base
salary of $112,550 for 2022 and an annual bonus of $7,000. Mr. Reynolds, our EVP of Sales, will receive a base salary of $90,975 and
will receive a monthly bonus based on a percentage of all new sales and construction loan payoffs. In addition, Mr. Wallach, Ms. Harshman
and Mr. Reynolds will receive the team and vacation bonus, which will reward between $0 and $3,600 and $1,800, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_053"></span>Board
of Managers Compensation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table provides a summary of the compensation received by our managers for the year ended December 31, 2021:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Name</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right">&#160;&#160;&#160;&#160;&#8211;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Gregory L. Sheldon</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#8211;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
paid each of the independent managers an annual retainer of $25,000. Our independent managers also receive fees of $2,000 for the first
day and $1,200 for any additional days for meetings of the board of managers and committees attended in person, all or a portion of which
may be allocated as reimbursement of expenses incurred in connection with attendance at meetings. The independent managers do not receive
separate reimbursement of out-of-pocket expenses incurred in connection with attendance at meetings. Mr. Wallach receives no compensation
for his services as a manager.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_054"></span>PRINCIPAL
SECURITY HOLDERS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth the ownership of certain of our outstanding membership interests as of December 31, 2021:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Title of Class</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name and Address of Owner<sup>(1)</sup></b></span></td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Number of Units</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 18%; text-align: left">Class A Common Units</td><td style="width: 1%">&#160;</td>
    <td style="width: 29%; text-align: center">Daniel M. Wallach and Joyce S. Wallach</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Class A Common Units</td><td>&#160;</td>
    <td style="text-align: center">Kenneth R. Summers</td><td>&#160;</td>
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    <td style="text-align: left">Class A Common Units</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    addresses of Daniel and Joyce Wallach, the 2007 Daniel M. Wallach Legacy Trust, William Myrick, and Barbara Harshman are 13241 Bartram
    Park Blvd., Suite 2401, Jacksonville, FL 32258; Kenneth R. Summers is P.O. Box 995, Morgantown, WV 26507; and Eric A. Rauscher is
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_055"></span>CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_056"></span>Transactions
with Affiliates</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Lines
of Credit Extended by Mr. Wallach and His Affiliates</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
previously described, on December 30, 2011, we obtained two demand loans from Daniel M. Wallach (our CEO who is also on our board of
managers) and affiliates of Mr. Wallach to finance our operations. These demand loans are collateralized by a lien against all of our
assets and are senior in right of payment to the Notes. As of December 31, 2021, Mr. Wallach is also the beneficial owner of 80.7% of
our outstanding common membership interests.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
first loan has a maximum principal borrowing amount of $1,250,000 and is payable to Daniel M. Wallach (our CEO and chairman of the board
of managers) and Joyce S. Wallach (Mr. Wallach&#8217;s wife), as tenants by the entirety (the &#8220;Wallach LOC&#8221;). The second
loan has a maximum principal borrowing amount of $250,000 and is payable to the 2007 Daniel M. Wallach Legacy Trust (the &#8220;Wallach
Trust LOC,&#8221; and together with the Wallach LOC, the &#8220;Wallach Affiliate LOCs&#8221;). As of December 31, 2021, there were no
amounts borrowed against the Wallach LOC, with availability on that line of credit of $1,250,000, and there were no amounts borrowed
against the Wallach Trust LOC, with remaining availability on that line of credit of $250,000. Each of the Wallach Affiliate LOCs is
evidenced by a promissory note, is payable upon demand of the lender and generally bears an interest rate equal to the prime rate plus
three percent. Pursuant to each promissory note, the lender has the option of funding any amount up to the face amount of the note, in
the lender&#8217;s sole and absolute discretion. As of December 31, 2021, and 2020, the interest rate was 6.25% for both the Wallach
LOC and the Wallach Trust LOC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
original entries into the Wallach Affiliate LOCs were approved by Mr. Wallach in his capacity as sole manager prior to the time we had
independent managers. The independent managers ratified and approved these transactions subsequent to the formation of the board of managers.
In June 2018, we entered into a First Amendment to the Wallach LOC and a First Amendment to the Trust LOC (the &#8220;Wallach Affiliate
LOCs First Amendments&#8221;) which modified the interest rates under the Wallach Affiliate LOCs to generally equal the prime rate plus
three percent. The Wallach Affiliate LOCs First Amendments were approved by a majority of our independent managers. See &#8220;Risk Factors
&#8212; Risks Related to Conflicts of Interest &#8212; Our CEO (who is also on our board of managers) and Executive Vice President will
face conflicts of interest as a result of the secured lines of credit made to us, which could result in actions that are not in the best
interests of our Note holders.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Line
of Credit Extended by Mr. Myrick</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
previously described, in June 2018, we obtained into a line of credit from our Executive Vice President, William Myrick to finance our
operations (the &#8220;Myrick LOC&#8221;). The Myrick LOC is collateralized by a lien against all of our assets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Myrick LOC has a maximum principal borrowing amount of $1,000,000 and is payable to Mr. Myrick. As of December 31, 2021, we had borrowed
$859,000 against the Myrick LOC, with availability on that line of credit of $141,000. The Myrick LOC is evidenced by a promissory note,
is payable upon demand of the lender and generally bears an interest rate equal to the prime rate (defined in the promissory note as
the daily rate equal to the &#8220;Prime Rate&#8221; of interest published in The Wall Street Journal from time to time) plus three percent.
Pursuant to the promissory note, Mr. Myrick has the option of funding any amount up to the face amount of the note, in Mr. Myrick&#8217;s
sole and absolute discretion. As of December 31, 2021 and 2020, the interest rate was 6.25% for the Myrick LOC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Myrick LOC was approved by a majority of our independent managers as they determined the terms of the Myrick LOC to be in the best interests
of the Company and that the transaction is on terms no less favorable to us than could be obtained from an independent third party.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Line
of Credit Extended by R. Scott Summers</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
previously described, in September 2019, we obtained into a line of credit (the &#8220;Summers LOC&#8221;) from R. Scott Summers. R.
Scott Summers is an investor in our Notes Program and is the son of Kenneth R. Summers, one of our independent managers. The Summers
LOC is secured with assignments of certain notes and mortgages.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Summers LOC has a maximum principal borrowing amount of $2,000,000 and is payable to R. Scott Summers. As of December 31, 2021, we had
borrowed $847,000 on the Summers LOC, with availability on that line of credit of $1,153,000. The largest aggregate amount of principal
outstanding on the Summers LOC during 2021 was $847,000. The Summers LOC is evidenced by a promissory note and bears a fixed annual interest
rate of 9%. The Summers LOC requires monthly payments of interest only during the term of the Summers LOC, with the principal balance
due upon termination.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Summers LOC was approved by a majority of our independent managers not interested in the transaction as they determined the terms of
the Summers LOC to be in the best interests of the Company and that the transaction is on terms no less favorable to us than could be
obtained from an independent third party.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Investments
Pursuant to Public Notes Offerings</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has accepted new investments under the Notes Program from employees, managers, members, and relatives of managers and members,
with $3,989,000 outstanding at December 31, 2021. For the years ended December 31, 2021 and 2020 our investments from affiliates which
exceed $120,000 through our Notes Program and other unsecured debt are detailed below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
dollar [$] amounts shown in table in thousands.)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">217</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">9.03</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">23</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">21</td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
Notes Investments</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has a Senior Subordinated Promissory Note to the father of Mr. Wallach in the principal amount of $333,000. The annual interest
rate on that promissory note is 10% and the lender may require us to repay $20,000 of principal and all unpaid interest with 10 days&#8217;
notice. As of December 31, 2021 and 2020, the amount outstanding pursuant to the promissory note was $333,000 and $352,000, respectively.
The largest aggregate amount of principal outstanding on the promissory note during 2021 and 20020 was $352,000 and $400,000, respectively.
Interest expense was $32,000 and $40,000 for the years ended December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Common
Equity Owned by Independent Managers and Our Executive Officers</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Two
of our independent managers, Messrs. Summers and Rauscher, each own 1% of our common equity, which they purchased from S.K. Funding,
LLC, an affiliate of Seven Kings Holdings, Inc., on March 31, 2017. Our Executive Vice President, William Myrick, owns 15.3% of our common
equity, of which he purchased 14.3% of from Daniel and Joyce Wallach on March 1, 2018, and the remaining 1% of which he purchased from
Seven Kings Holdings, Inc. Our Executive Vice President of Operations, Barbara L. Harshman, owns 2% of our common equity, 0.5% of which
Ms. Harshman purchased from S.K. Funding, LLC on March 31, 2017, 1% of which she purchased from the Wallachs on January 1, 2018, and
0.5% of which she purchased from Catherine Loftin on May 15, 2019.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Hoskins
Group&#8217;s Series B Preferred Equity</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Series B cumulative preferred membership units (&#8220;Series B Preferred Units&#8221;) of our membership interests were first issued
to the Hoskins Group through a reduction in the amount owed by us on a loan in which a member of the Hoskins Group is the lender. They
are redeemable only at the option of the Company or upon a change or control or liquidation. The Series B Preferred Units have a fixed
value which is their purchase price, and preferred liquidation and distribution rights. Yearly distributions of 10% of the Series B Preferred
Units&#8217; value (providing profits are available) will be made quarterly. The Hoskins Group&#8217;s Series B Preferred Units are also
used as collateral for that group&#8217;s loans to the Company. There is no liquid market for the Series B Preferred Units, so we can
give no assurance as to our ability to generate any amount of proceeds from that collateral. In December 2015, the Hoskins Group agreed
to purchase 0.1 Series B Preferred Units upon each closing of a lot sale in the subdivisions in which we lend the Hoskins Group development
funds. The Hoskins Group purchased 0.9 and 1.6 Series B Preferred Units in 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Series
C Preferred Equity</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, Daniel M. Wallach, our Chief Executive Officer and chairman of our board of managers, and his wife, Joyce S. Wallach,
own 18.05 of our Series C cumulative preferred interests (&#8220;Series C Preferred Units&#8221;). As of December 31, 2021, Gregory L.
Sheldon, one of our independent managers, and his wife, Madeline M. Sheldon, own 6.31 Series C Preferred Units. On October 13, 2019,
we issued one Series C Preferred Unit to Mr. Sheldon for the total purchase price of $100,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investors
in the Series C cumulative preferred units (&#8220;Series C Preferred Units&#8221;) may elect to reinvest their distributions in additional
Series C Preferred Units (the &#8220;Series C Reinvestment Program&#8221;). Pursuant to the Series C Reinvestment Program, as of December
31, 2021, we have issued approximately 2.03 Series C Preferred Units to Daniel M. Wallach, our CEO, for distribution proceeds of approximately
$203,000 and we have issued approximately 0.51 Series C Preferred Units to Gregory L. Sheldon for distribution proceeds of approximately
$51,000. During 2021, Mr. Sheldon invested an additional $200,000 in Series C Preferred Equity.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Series C Preferred Units have a fixed value which is their purchase price and preferred liquidation and distribution rights. Yearly distributions
of 12% of the Series C Preferred Units&#8217; value (provided profits are available) will be made on a quarterly basis. This rate can
increase if any interest rate on our public Notes offering rises above 12%. Dividends can be reinvested monthly into additional Series
C Preferred Units. The Series C Preferred Units have the same preferential rights as the Series B Preferred Units as more fully described
above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Sale
of Commercial Loans</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
November and December 2021, the Company serviced two construction loans for William Myrick (the Company&#8217;s Executive President).
The funding for construction fees and services for both Loans were provided by Mr. Myrick&#8217;s LOC. As of December 31, 2021, the Company
continued to service both loans.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
December 2021, the Company sold one loan to Gregory Sheldon (one of the Company&#8217;s Mangers) for approximately $405,000. As of December
31, 2021, the Company continued to service the loan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
July 2020, the Company purchased two loans at cost from Daniel M. Wallach (the Company&#8217;s Chief Executive Officer and Chairman of
the board of managers) for approximately $198,000. Those loans had previously been purchased from the Company by Mr. Wallach. As of December
31, 2021, the Company continued to service both loans.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_057"></span>Affiliate
Transaction Policy</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
limited liability company agreement provides that any future transaction involving us and an affiliate must be approved by a majority
vote of independent managers not otherwise interested in the transaction upon a determination of such independent managers that the transaction
is on terms no less favorable to us than could be obtained from an independent third party. An approval pursuant to this policy shall
be set forth in the minutes of the Company and shall include a description of the transaction approved. The responsibility for reviewing
and approving affiliate transactions has been delegated to the nominating and corporate governance committee of our board of managers,
which is comprised entirely of independent managers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to our limited liability company agreement, we must provide the independent managers with access, at our expense, to our legal counsel
or independent legal counsel, as needed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_058"></span>Board
of Managers Independence</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have no securities listed for trading on a national securities exchange or in an automated inter-dealer quotation system of a national
securities association, which has requirements that a majority of our board of managers be independent. For purposes of complying with
the disclosure requirements of the Securities and Exchange Commission, we have adopted the definition of independence used by the New
York Stock Exchange (&#8220;NYSE&#8221;). Under the NYSE&#8217;s definition of independence, Messrs. Summers, Rauscher, and Sheldon each
meet the definition of &#8220;independent.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_059"></span>DESCRIPTION
OF NOTES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_060"></span>General</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Notes will be issued under an indenture dated as of [__], 2022 between us and [__], as trustee. The indenture will be filed as an exhibit
to the registration statement. You can also obtain a copy of the indenture from us. We have summarized material aspects of the indenture
below. The summary is not complete, and you should read the indenture for provisions that may be important to you. The capitalized terms
used in the summary have the meanings specified in the indenture.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Notes are our direct obligations but are not secured. The Notes are registered and issued without coupons. We may change the interest
rates and the maturities of the Notes as they are offered, provided that no such change shall affect any Note issued prior to the date
of change. We may, at our discretion, limit the maximum amount any investor or related investors may maintain in outstanding Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
total aggregate maximum principal amount of the Notes offered under this prospectus is $70,000,000. The maximum investment amount per
Note is $1,000,000 or $1,000,000 in the aggregate per investor, but a higher maximum investment amount may be approved by us on a case-by-case
basis. The minimum investment amount is $500; however, from time to time, we may change the minimum investment amount that is required.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_061"></span>Established
Features of the Notes</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
is calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365-day
year (366-day in case of a leap year). Interest is earned daily, and we will pay interest to you monthly or at maturity as you request.
If you choose to be paid interest at maturity rather than monthly, the interest will be compounded monthly. If any day on which a payment
is due with respect to a Note is not a business day, then you will not be entitled to payment of the amount due until the following business
day, and no additional interest will be due as a result of such delay. If you elect to be paid interest monthly, interest on your Note
will be paid on the first business day of every month. Your first interest payment date will be the month following the month in which
the Note is issued, except that if a new Note is issued within the last 10 days preceding an interest payment date, the first interest
payment will be made on the next succeeding interest payment date (i.e., approximately 35&#8211;40 days after issuance). No payments
under $50 will be made, with any interest payment being accrued to your benefit and earning interest on a monthly compounding basis until
the payment due to you is at least $50 on an interest payment date.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
change to your original request may be made to us by contacting us at (302) 752-2688 (30-ASK-ABOUT) or by using our website <span style="text-decoration: underline">www.shepherdsfinance.com
</span>to find out what you need to do to change your election. The Notes mature one to four years from the date of issuance, as offered
by us and selected by you. Principal and unpaid interest will be paid to you upon maturity.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
time to time we will establish varying interest rates and maturities for the Notes. The interest rates offered may vary depending on
the maturity of the Notes. Upon purchase of a Note, the then-applicable interest rate for the maturity purchased will be fixed for the
term of such Note. The Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance.
For each maturity, we also establish an interest rate, subject to a range, as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-left: auto; border-collapse: collapse; width: 90%; margin-right: auto">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Note Maturity</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%">12-Month</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 16%; text-align: right">5</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 16%; text-align: right">10</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>24-Month</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>36-Month</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>48-Month</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">12</td><td style="text-align: left">%</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
interest rates will vary within the ranges but annual interest rates as of the date of this prospectus are as follows: 6% for 12-month
Notes; 7% for 24-month Notes; 4% for 36-month Notes; and 8% for 48-month Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investments
by check will be credited and interest will begin to accrue on the first business day after our bank receives a check in proper form
if the check is received prior to 9:00 a.m. Eastern time, and on the second business day following receipt if the check is received after
9:00 a.m. Eastern time. Checks are accepted subject to collection at full face value in U.S. funds.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investments
by ACH debit transfer and Wire will be credited and interest will begin to accrue on the first business day after our bank receives funds.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes
with the current established features are available until they are superseded by new established features. The current established features
are applicable to all Notes sold by us during the period the current established features are in effect. We intend to publish this information
on our website at <span style="text-decoration: underline">www.shepherdsfinance.com</span> or it may be obtained by calling (302) 752-2688 (30-ASK-ABOUT). We will also file with
the SEC a Rule 424(b)(3) prospectus supplement setting forth the established features upon any change in the established features.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_062"></span>Subordination</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
obligation to repay the principal of and make interest payments on the Notes is subordinate in right of payment to all senior debt. This
means that if we are unable to pay our debts when due, all of the senior debt would be paid first, before any payment of principal or
interest would be made on the Notes and related party debt which is equal in priority to the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
term &#8220;senior debt&#8221; means all of our debt created, incurred, assumed, or guaranteed by us, except debt that by its terms expressly
provides that such debt is not senior in right of payment to the Notes. Debt is any indebtedness, contingent or otherwise, in respect
of borrowed money, or evidenced by bonds, notes, Notes, or similar instruments or letters of credit and shall include any guarantee of
any such indebtedness. Senior debt includes, without limitation, the demand loans from our members and any line of credit we may incur
in the future. The Notes are subordinate to all of our senior debt. We may at any time borrow money on a secured or unsecured basis that
would have priority over the Notes. The Notes are not senior debt. As of December 31, 2021, the outstanding debt to which the Notes were
subordinated was approximately $22,327,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_063"></span>Redemption
by Us Prior to Maturity</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may redeem any Note, in whole or in part, at any time following the first 180 calendar days after the date of issuance of the Note for
a redemption price equal to the principal amount plus any unpaid interest thereon to the date of redemption. We will notify Note holders
whose Notes are to be redeemed by mail 30 to 60 days prior to the date of redemption. Residents of the Commonwealth of Pennsylvania will
be notified by registered mail 30 to 60 days prior to the date of redemption.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_064"></span>Redemption
at the Request of the Holder Prior to Maturity</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
your written request but subject to the subordination provisions and our consent (which may be withheld in our sole discretion), we will
redeem any Note at any time following the first 180 calendar days after the date of issuance of the Note for a redemption price equal
to the principal amount plus unpaid interest equal to the stated rate of interest minus a penalty in an amount equal to the interest
earned over the last 180 days immediately prior to the redemption date. The penalty will be taken first from any interest accrued but
not yet paid on the Note, and to the extent such accrued and unpaid interest does not cover the entire penalty amount, the remainder
of the penalty amount shall be reduced from the principal amount of the Note.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally,
unless the subordination provisions in the indenture restrict our ability to make the redemption, Note holders may require us to redeem
all or a portion of their Note, regardless of amount, for a redemption price equal to the principal amount plus an amount equal to the
unpaid interest thereon for such Note at the stated rate to the redemption date, upon one business day&#8217;s advance notice to us,
but only if the holder immediately upon redemption invests the entirety of the proceeds from such redemption in another Note or another
security then-offered by us, if any. In such event, the Note holder will not be subject to a holding period requirement or an interest
penalty.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_065"></span>Redemption
upon Your Death</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
the written request of the executor of your estate or, if your Note is held jointly with another investor, the surviving joint holder,
but subject to the subordination provisions, we will redeem any Note at any time after death for a redemption price equal to the principal
amount plus unpaid interest equal to the stated rate of interest, without any penalty. We will seek to honor any such redemption request
as soon as reasonably possible based on our cash situation at the time, but generally within two weeks of the request. In order for a
Note to be redeemed upon your death, the Note to be redeemed must have been registered in your name since the date of issuance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_066"></span>Additional
Redemption Options for Notes with a 36-Month Maturity</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
the subordination provisions in the indenture restrict our ability to make the redemption, for Notes with a 36-month maturity only purchased
on or after February 4, 2020, the holder of such a Note may require us to redeem all or a portion of such Note for a redemption price
equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption
date, as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Upon
    seven days&#8217; advance notice to us, the holder may require redemption of up to $10,000 of such Note;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Upon
    30 days&#8217; advance notice to us, the holder may require redemption of up to an additional $90,000 of such Note;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Upon
    90 days&#8217; advance notice to us, the holder may require redemption of any remaining amount of such Note requested to be redeemed;
    and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Upon
    one business day&#8217;s advance notice to the Company, the holder may require redemption of all or a portion of the Note, regardless
    of amount, but only if the Holder immediately upon redemption invests the entirety of the proceeds from such redemption in another
    security then-offered by us, including in a Note issued in this offering.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
purposes of determining the length of time within which we must redeem all or a portion of a Note as described above, the dollar amount
of a given redemption request will be added to any amount or amounts of such Note previously requested to be redeemed that were redeemed
by us. The restriction requiring you to wait until 180 days have passed from the issuance of your Note to request a redemption do not
apply to redemptions of 36-month Notes as described in this section.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
redemption options are in addition to the redemption options described elsewhere in this prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_067"></span>No
Restrictions on Additional Debt or Business</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
indenture does not restrict us from issuing additional securities or incurring additional debt (including senior debt or other secured
or unsecured obligations) or the manner in which we conduct our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_068"></span>Modification
of Indenture</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We,
together with the trustee, may modify the indenture at any time with the consent of the holders of not less than a majority in principal
amount of the Notes that are then outstanding. However, we and the trustee may not modify the indenture without the consent of each holder
affected if the modification:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 48px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 34px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reduces
    the principal or rate of interest, changes the fixed maturity date or time for payment of interest, or waives any payment of interest
    on any Note;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reduces
    the percentage of Note holders whose consent to a waiver or modification is required;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">affects
    the subordination provisions of the indenture in a manner that adversely affects the rights of any holder; or</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">waives
    any event of default in the payment of principal of, or interest on, any Note.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Without
action by you, we and the trustee may amend the indenture or enter into supplemental indentures to clarify any ambiguity, defect, or
inconsistency in the indenture, to provide for the assumption of the Notes by any successor to us, to make any change to the indenture
that does not adversely affect the legal rights of any Note holders, or to comply with the requirements of the Trust Indenture Act of
1939. We will give written notice to you of any amendment to the indenture.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_069"></span>Place,
Method, and Time of Payment</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
will pay principal and interest on the Notes at our principal executive offices or at such other place as we may designate for that purpose;
provided, however, that if we make payments by check, they will be mailed to you at your address appearing in our Note register. Any
payment of principal and interest that is due on a non-business day will be payable by us on the next business day immediately following
that non-business day.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_070"></span>Events
of Default</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An
event of default is defined in the indenture as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 34px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a
    default in payment of principal or interest on the Notes when due or payable if such default has not been cured for 30 days;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    becoming subject to events of bankruptcy or insolvency; or</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    failure to comply with any agreements or covenants in or provisions of the Notes or the indenture if such failure is not cured or
    waived within 60 days after we have received notice of such failure from the trustee or from the holders of at least 25% in principal
    amount of the outstanding Notes.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
an event of default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then-outstanding
Notes may declare the principal of and the accrued interest on all outstanding Notes due and payable. If such a declaration is made,
we are required to pay the principal of and interest on all outstanding Notes immediately, so long as the senior debt has not matured
by lapse of time, acceleration or otherwise. We are required to file annually with the trustee an officers&#8217; certificate that certifies
the absence of defaults under the terms of the indenture.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
indenture provides that the holders of a majority of the aggregate principal amount of the Notes at the time outstanding may, on behalf
of all holders, waive any existing event of default or compliance with any provision of the indenture or the Notes, except a default
in payment of principal or interest on the Notes. In addition, the trustee may waive an existing event of default or compliance with
any provision of the indenture or Notes, except in payments of principal or interest on the Notes, if the trustee in good faith determines
that a waiver or consent is in the best interests of the holders of the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
an event of default occurs and is continuing, the trustee is required to exercise the rights and duties vested in it by, and subject
to, the indenture and to use the same degree of care and skill as a prudent person would exercise under the circumstances in the conduct
of his or her affairs. The trustee however, is under no obligation to perform any duty or exercise any right under the indenture at the
request, order, or direction of Note holders unless the trustee receives indemnity satisfactory to it against any loss, liability, or
expense. Subject to such provisions for the indemnification of the trustee, the holders of a majority in principal amount of the Notes
at the time outstanding have the right to direct the time, method, and place of conducting any proceeding for any remedy available to
the trustee. The indenture effectively limits the right of an individual Note holder to institute legal proceedings in the event of our
default.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_071"></span>Satisfaction
and Discharge of Indenture</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
indenture may be discharged upon the payment of all Notes outstanding thereunder or upon deposit in trust of funds sufficient for such
payment and compliance with the formal procedures set forth in the indenture.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_072"></span>Reports</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
file annual reports containing audited consolidated financial statements and quarterly reports containing unaudited consolidated financial
information for the first three fiscal quarters of each fiscal year with the SEC while the registration statement containing this prospectus
is effective and as long thereafter as we are required to do so. Copies of such reports will be sent to any Note holder upon written
request.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_073"></span>Service
Charges</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
reserve the right to assess service charges and fees to issue a replacement interest payment check, and, in the event we permit transfer
or assignment in our discretion, to transfer or assign a Note.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_074"></span>Book
Entry Record of Your Ownership</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Notes will be issued in uncertificated form. If you purchase a Note, an account showing the principal amount of your Note will be established
in your name on our books. Interest accrued on your Note will also be credited to your account. The interest rate on your Note will be
determined on the date that your account is established. In determining your interest rate, we will use the rate in effect at the time
you: (1) submitted your subscription agreement online; (2) printed the subscription agreement from our website, provided that the rate
was offered by us with that maturity in the seven days prior to our receipt of your subscription agreement; or (3) signed and mailed
a subscription agreement, which we mailed to you, provided that the rate was offered by us with that maturity in the seven days prior
to our receipt of your subscription agreement. You will not receive any certificate or other instrument evidencing our indebtedness to
you. Upon purchase of your Note, we will send you a confirmation, which describes, among other things, the term, interest rate, and principal
amount.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_075"></span>Transfer</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
may not transfer any Note until we (as registrar) have received, among other things, appropriate endorsements and transfer documents
and any taxes and fees required by law or permitted by the indenture. We are not required to transfer any Note for a period beginning
15 days before the date notice is mailed of the redemption or the maturity of such Note and ending on the date of redemption of such
Note.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_076"></span>Concerning
the Trustee</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
indenture contains limitations on the trustee&#8217;s right, should it become one of our creditors, to obtain payment of claims in certain
cases, or to realize on property with respect to any such claim as security or otherwise. The trustee will be permitted to engage in
other transactions; however, if it acquires conflicting interests and if any of the indenture securities are in default, it must eliminate
such conflict or resign.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_077"></span>PLAN
OF DISTRIBUTION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are offering up to $70,000,000 in aggregate principal amount of the Notes. We offer the Notes directly to the public, without an underwriter
or placement agent, and on a continuous basis.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may market our Notes in many ways, including but not limited to, publishing the established features in a newspaper or through direct
mail in states in which we have properly registered the offering or qualified for an exemption from registration. Viewers of print advertising
are referred to our website at <span style="text-decoration: underline">www.shepherdsfinance.com</span>. The established features are available to investors on our website at
<span style="text-decoration: underline">www.shepherdsfinance.com</span> or by calling (302) 752-2688 (30-ASK-ABOUT). If, upon review of our website, a potential investor becomes
interested in purchasing the Notes, a prospectus will be sent upon request. We may also make oral solicitations in limited circumstances
and use other methods of marketing the offering, all in compliance with applicable laws and regulations, including securities laws. Our
employees and independent managers have been instructed not to solicit offers to purchase Notes or provide advice regarding the purchase
of the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Executive Vice President of Operations, Barbara Harshman, markets the Notes in reliance on Rule 3a4-1 under the Exchange Act, which permits
officers, directors, and employees to participate in the sale of the Notes without registering as a broker-dealer under certain circumstances.
Ms. Harshman is not subject to a statutory disqualification as such term is defined in Section 3(a)(39) of the Exchange Act. Ms. Harshman
serves as an executive officer and primarily performs substantial duties for or on our behalf otherwise than in connection with transactions
in securities and will continue to do so at the end of the offering. She is familiar with the selling practices permitted to officers
relying on Rule 3a4-1. Ms. Harshman has not been a broker or dealer, or an associated person of a broker or dealer, within the preceding
12 months, and has not nor will not participate in the sale of securities for any issuer more than once every 12 months, other than on
behalf of us in reliance on Rule 3a4-1. Ms. Harshman is not compensated in connection with any participation in the offering by the payment
of commissions or other remuneration based either directly or indirectly on the transactions in the Notes. Ms. Harshman has been instructed
in the limitations of the selling practices allowed under Rule 3a4-1.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
information contained on our website is not part of this prospectus. If you have questions about the suitability of an investment in
the Notes for you, you should consult with your own investment, tax, or other professional financial advisor. Prospective investors will
be required to complete an application prior to investing in the Notes. We reserve the right to reject any investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
will not know at the time of investment whether we will be successful in completing the sale of all of the Notes. We reserve the right
to withdraw or cancel the offering at any time. In the event of a withdrawal or cancellation, investments received prior to such withdrawal
or cancellation will be irrevocable and will be repaid in accordance with the terms of the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Notes are not listed on any securities exchange, and there is no established trading market for the Notes. We do not expect any trading
market to develop for the Notes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_078"></span>CHARITABLE
MATCH PROGRAM</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
offer a charitable match program for interest payments that you elect to give to a qualifying charity. If you choose to participate in
the program and donate all or a portion of your interest payments to charity, when we calculate your interest we will deduct the percentage
of interest you selected and keep track of that amount separate from your information. After interest is calculated for all Note holders
at the beginning of December of each year, all of the money for each charity will be totaled up and sent in one check to each charity.
Each check will have the name and address of each contributor, and the amount each contributed. Our matching portion will be included
in the total check. We will match your interest payment donation up to 10% of your interest.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
charity must be an Internal Revenue Code Section 501(c)(3) qualifying organization. We reserve the right to either not match your contribution,
or not make payments on your behalf to certain charities with missions contrary to our corporate philosophy. Upon your initial subscription,
if you select one of these charities, and we notify you that we will not match your donation to such an organization or will not make
a contribution on your behalf, you have the option of refund of your investment, donating without our matching contribution (assuming
we are just not willing to match your donation to that charity), or investing and not donating to the organization.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_079"></span>LEGAL
MATTERS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
validity of the Notes being offered by this prospectus will be passed upon for us by Nelson Mullins Riley &amp; Scarborough LLP, Atlanta,
Georgia.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_080"></span>EXPERTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
consolidated financial statements as of and for the years ended December 31, 2021 and 2020 appearing in this prospectus and registration
statement have been audited by Warren Averett, LLC (&#8220;Warren Averett&#8221;), an independent registered public accounting firm,
and are included herein in reliance upon such report, given on the authority of such firm as experts in accounting and auditing.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_081"></span>WHERE
YOU CAN FIND MORE INFORMATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have filed a registration statement on Form S-1 with the SEC with respect to the Notes offered by this prospectus. This prospectus is
a part of that registration statement, as amended, and does not contain all of the information set forth in the registration statement
and the exhibits and schedules thereto. Certain items are omitted in accordance with the rules and regulations of the SEC. For further
information about us and the Notes sold in this offering, refer to the registration statement and the exhibits and schedules filed therewith.
Statements contained in this prospectus about the contents of any contract or other document referred to are not necessarily complete
and, in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
file annual, quarterly and special reports and other information with the SEC. The registration statement is, and all of these filings
with the SEC are, available to the public over the Internet at the SEC&#8217;s website at <span style="text-decoration: underline">www.sec.gov</span>. You can also access documents
that will be incorporated by reference into this prospectus at the website we maintain at <span style="text-decoration: underline">www.shepherdsfinance.com</span>. There is additional
information about us at our website, but unless specifically incorporated by reference herein, the contents of that site are not incorporated
by reference in or otherwise a part of this prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="silaa_082"></span>INDEX
TO FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Audited
    Consolidated Financial Statements as of and for the years ended December 31, 2021 and 2020:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.1in; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.65in; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_001">Report
    of Independent Registered Public Accounting Firm on Financial Statements</a> (PCAOB ID: 2226)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-2</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_002">Consolidated Balance Sheets as of December 31, 2021 and 2020</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-3</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_003">Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-4</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_004">Consolidated Statements of Changes in Members&#8217; Capital for the Years Ended December 31, 2021 and 2020</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-5</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_005">Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-6</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_006">Notes to Consolidated Financial Statements</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-7</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span id="a_001"></span><b>REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the Board of Managers and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Members
of Shepherd&#8217;s Finance, LLC</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jacksonville,
Florida</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Opinion
on the Financial Statements</span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0 0 0 6pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have audited the accompanying consolidated balance sheets of Shepherd&#8217;s Finance, LLC as of December 31, 2021 and 2020 and the related
consolidated statements of operations, changes in members&#8217; capital, and cash flows for the years then ended, and the related notes
(collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of Shepherd&#8217;s Finance, LLC as of December 31, 2021 and 2020, and the results of
its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United
States of America.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Basis
for Opinion</span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
consolidated financial statements are the responsibility of Shepherd&#8217;s Finance, LLC&#8217;s management. Our responsibility is to
express an opinion on Shepherd&#8217;s Finance, LLC&#8217;s consolidated financial statements based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect
to Shepherd&#8217;s Finance, LLC in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose
of expressing an opinion on the effectiveness of the Company&#8217;s internal control over financial reporting. Accordingly, we express
no such opinion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
Warren Averett, LLC</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have served as Shepherd&#8217;s Finance, LLC&#8217;s auditor since 2018.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PCAOB
#2226</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Birmingham,
Alabama</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">March
10, 2022</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span id="a_002"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Shepherd&#8217;s
Finance, LLC</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Consolidated
Balance Sheets</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As
of December 31, 2021, and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" id="xdx_308_111_pn3n3_zTQ8RIISrL5e" summary="xdx: Statement - Consolidated Balance Sheets" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-style: italic"></td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_494_20211231_zkdbufosVQVi" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_496_20201231_zZx7lxbGZuUl" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-style: italic">(in thousands of dollars)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
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  <tr id="xdx_404_eus-gaap--InterestReceivable_i01I_maCzt3c_zquS09GxvWnb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40B_eus-gaap--LoansAndLeasesReceivableNetReportedAmount_i01I_maCzt3c_zNTS1G6506vh" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40B_eus-gaap--RealEstateInvestments_i01I_maCzt3c_znzI0Xdmkiw2" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_407_eus-gaap--ForeclosedAssets_i01I_pn3n3_maCzt3c_zgrBAjv6qVgb" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Foreclosed assets</td><td>&#160;</td>
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  <tr id="xdx_40B_eus-gaap--PropertyPlantAndEquipmentNet_i01I_maCzt3c_zi8m4xVXVMT" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Premises and equipment</td><td>&#160;</td>
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  <tr id="xdx_40C_eus-gaap--Assets_i01TI_mtCzt3c_zNm6NUOiQPC8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40C_eus-gaap--LiabilitiesAndStockholdersEquityAbstract_iB" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Liabilities and Members&#8217; Capital</td><td>&#160;</td>
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  <tr id="xdx_403_eus-gaap--NoninterestBearingDepositLiabilities_i01I_maCz3Vf_zILPb5ILqo6e" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40B_eus-gaap--AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrent_i01I_maCz3Vf_zkfPJC1cwvOf" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Accounts payable and accrued expenses</td><td>&#160;</td>
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  <tr id="xdx_40E_eus-gaap--InterestPayableCurrentAndNoncurrent_i01I_maCz3Vf_zSgyz0vzXV6h" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Accrued interest payable</td><td>&#160;</td>
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  <tr id="xdx_400_eus-gaap--SecuredDebt_i01I_maCz3Vf_zBaGro3Q9Ln5" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Notes payable secured, net of deferred financing costs</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:SecuredDebt" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">22,959</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--UnsecuredDebt_i01I_maCz3Vf_zov5EPxe8VA" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Notes payable unsecured, net of deferred financing costs</td><td>&#160;</td>
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  <tr id="xdx_401_eus-gaap--LoansPayableToBank_i01I_maCz3Vf_zc3F614cgcub" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">PPP loan and EIDL advance</td><td>&#160;</td>
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  <tr id="xdx_40E_eus-gaap--DueToOfficersOrStockholdersCurrentAndNoncurrent_i01I_pn3n3_maCz3Vf_zi8aMouDHMb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Due to preferred equity members</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_408_eus-gaap--Liabilities_i01TI_mtCz3Vf_maLASEzYbo_z0UdedaW5cB1" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 20pt">Total liabilities</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:Liabilities" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">51,011</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:Liabilities" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">54,010</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_eus-gaap--CommitmentsAndContingencies_i01I_maLASEzYbo_zG5SOjU2qd7g" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Commitments and Contingencies (Note 11)</td><td>&#160;</td>
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    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl0086">&#160;</span></td><td style="text-align: right"><span style="display: none; font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40F_ecustom--RedeemablePreferredEquityAbstract_i01B_zZbLyuiYD3p3" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Redeemable Preferred Equity</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_ecustom--RedeemablePreferredEquity_i02I_maLASEzYbo_zVP5zQMOyiR8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Series C preferred equity</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Members&#8217; Capital</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--LimitedLiabilityCompanyLLCPreferredUnitIssuanceValue_i02I_maMEzcT3_zQiCxosy4sv5" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Series B preferred equity</td><td>&#160;</td>
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  <tr id="xdx_40F_ecustom--CommonUnitIssuanceValues_i02I_maMEzcT3_zMRKaf2D5Oka" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Class A common (deficit) equity</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="SHEP:CommonUnitIssuanceValues" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">130</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span id="a_003"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Shepherd&#8217;s
Finance, LLC</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Consolidated
Statements of Operations</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
the years ended December 31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt">Earned distribution to preferred equity holders</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--NetIncomeLossAvailableToCommonStockholdersBasic_iT_mtCzCt2_zqsdhCJ0ZKke" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net income (loss) attributable to common equity holders</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">64</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic" contextRef="From2020-01-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">2,454</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span id="a_004"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Shepherd&#8217;s
Finance, LLC</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Consolidated
Statements of Changes in Members&#8217; Capital</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
the years ended December 31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" id="xdx_30E_114_pn3n3_zLLS558e9bvd" summary="xdx: Statement -  Consolidated Statements of Changes in Member&apos;s Capital" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: left; font-style: italic">(in thousands of dollars)</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Members&#8217; capital, beginning balance</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_988_eus-gaap--MembersCapital_iS_c20210101__20211231_zwiR4lt6amXg" title="Members&apos; capital, beginning balance" style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:MembersCapital" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,677</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_98F_eus-gaap--MembersCapital_iS_c20200101__20201231_zCwnIiqmW4Uk" title="Members&apos; capital, beginning balance" style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:MembersCapital" contextRef="AsOf2019-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">4,188</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Contributions from Series B preferred equity holders</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Earned distributions to Series B preferred equity holders</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Distributions to common equity holders</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_981_ecustom--DistributionMadeToLimitedLiabilityCompanyLLCMemberCashDistributions_c20200101__20201231_zUTj9uNDVxs1" title="Distributions to common equity holders" style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="SHEP:DistributionMadeToLimitedLiabilityCompanyLLCMemberCashDistributions" contextRef="From2020-01-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">217</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span id="a_005"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Shepherd&#8217;s
Finance, LLC</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Consolidated
Statements of Cash Flows</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
the years ended December 31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left; padding-left: 10pt">Construction loans funded through the reduction of Secured LOC from
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    <td style="text-align: left; padding-left: 10pt">PPP forgiveness in reduction of debt</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these interim condensed consolidated financial statements.</span></p>
<!-- Field: Split-Segment; Name: 001 -->
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 107 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span id="a_006"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Shepherd&#8217;s
Finance, LLC</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Notes
to Consolidated Financial Statements</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Information
presented throughout these notes to the consolidated financial statements is in thousands of dollars.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:BusinessDescriptionAndBasisOfPresentationTextBlock"><p id="xdx_805_eus-gaap--BusinessDescriptionAndBasisOfPresentationTextBlock_zvB9jIU887md" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>1.
<span id="xdx_829_zNRiomeDUOgl">Description of Business</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shepherd&#8217;s
Finance, LLC and subsidiary (the &#8220;Company&#8221;, &#8220;we&#8221;, or &#8220;our&#8221;) was originally formed as a Pennsylvania
limited liability company on May 10, 2007. We are the sole member of one consolidating subsidiary, Shepherd&#8217;s
Stable Investments, LLC. The Company operates pursuant to its Second Amended and Restated Limited Liability Company Agreement by and
among Daniel M. Wallach and the other members of the Company effective as of March 16, 2017, and as subsequently amended.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company extends commercial loans to residential homebuilders (in 20 states as of December 31, 2021) to:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">construct
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    undeveloped land into residential building lots, and</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p id="xdx_805_eus-gaap--SignificantAccountingPoliciesTextBlock_znOKE88jEMQh" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.
<span id="xdx_822_zJQxcIJXQnV">Summary of Significant Accounting Policies</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:ConsolidationPolicyTextBlock"><p id="xdx_842_eus-gaap--ConsolidationPolicyTextBlock_zkozqxPK0OKb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86B_zpGiYxTD2TRf">Principles
of Consolidation</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
consolidated financial statements include the consolidated accounts of the Company&#8217;s subsidiary and reflect all adjustments (all
of which are normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the consolidated
financial position, operating results, and cash flows for the periods. All intercompany balances and transactions have been eliminated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:UseOfEstimates"><p id="xdx_84B_eus-gaap--UseOfEstimates_zYTcr2e19Dwl" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_867_zZChyqi1Xjn5">Use
of Estimates</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America (&#8220;U.S. GAAP&#8221;) requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible
that market conditions could deteriorate, which could materially affect our consolidated financial position, results of operations and
cash flows. Among other effects, such changes could result in the need to increase the amount of our allowance for loan losses and impair
our foreclosed assets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:SegmentReportingPolicyPolicyTextBlock"><p id="xdx_845_eus-gaap--SegmentReportingPolicyPolicyTextBlock_zVUActxpeVik" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_861_zatNZ0TsRjG5">Operating
Segments</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial
Accounting Standards Board (&#8220;FASB&#8221;) Accounting Standards Codification Topic (&#8220;ASC&#8221;) 280, <i>Segment Reporting</i>,
requires that the Company report financial and descriptive information about reportable segments and how these segments were determined.
We determine the allocation of resources and performance of business units based on operating income, net income and operating cash flows.
Segments are identified and aggregated based on products sold or services provided. Based on these factors, we have determined that the
Company&#8217;s operations are in one segment, commercial lending.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:RevenueFromContractWithCustomerPolicyTextBlock"><p id="xdx_844_eus-gaap--RevenueFromContractWithCustomerPolicyTextBlock_zOd4W5foF8Yb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_866_zOMIVOEQuG4f">Revenue
Recognition</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
income generally is recognized on an accrual basis. The accrual of interest is generally discontinued on all loans past due 90 days or
more. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income,
unless management believes that the accrued interest is recoverable through liquidation of collateral. Interest received on nonaccrual
loans is applied against principal. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria
for nonaccrual status. Our construction loans charge a fee on the amount that we commit to lend, which is amortized over the expected
life of each of those loans.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company records revenue when control of the promised services is transferred to the customer, in an amount that reflects the consideration
we expect to be entitled to receive in exchange for those products or services. Our performance obligations to customers are primarily
satisfied over time as the services are performed and provided to the customer.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advertising
costs are expensed as incurred and are included in selling, general and administrative. Advertising expenses were $<span id="xdx_90E_eus-gaap--AdvertisingExpense_pn3n3_c20210101__20211231_zpVRoUk16lN7" title="Advertising expenses"><ix:nonFraction name="us-gaap:AdvertisingExpense" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">65</ix:nonFraction></span> and $<span id="xdx_907_eus-gaap--AdvertisingExpense_pn3n3_c20200101__20201231_z38GN1j2ClI" title="Advertising expenses"><ix:nonFraction name="us-gaap:AdvertisingExpense" contextRef="From2020-01-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">85</ix:nonFraction></span> for the
years ended December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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and Cash Equivalents</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
considers highly-liquid investments with original maturities of three months or less to be cash equivalents. The Company maintains its
cash account in a deposit account which, at times, may exceed federally insured limits. The Company monitors this bank account and does
not expect to incur any losses from such account.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:FairValueMeasurementPolicyPolicyTextBlock"><p id="xdx_84C_eus-gaap--FairValueMeasurementPolicyPolicyTextBlock_zONN9twMnPlb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86D_zSCPwBg6z3t5">Fair
Value Measurements</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows the guidance of FASB ASC 825, <i>Financial Instruments </i>(ASC 825), and FASB ASC 820, <i>Fair Value Measurements </i>(ASC
820). ASC 825 permits entities to measure many financial instruments and certain other items at fair value. The objective is to improve
financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related
assets and liabilities differently without having to apply complex hedge accounting provisions. ASC 820 clarifies that fair value is
an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. Under this guidance, fair value measurements are not adjusted for transaction costs. This guidance establishes
a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:PolicyLoansReceivablePolicy"><p id="xdx_847_eus-gaap--PolicyLoansReceivablePolicy_zvFTtd6FxaH9" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86B_zFeSkC7UAkJf">Loans
Receivable</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Loans
are stated at the amount of unpaid principal, net of any allowances for loan losses, and adjusted for (1) the net unrecognized portion
of direct costs and nonrefundable loan fees associated with lending, and (2) deposits made by the borrowers used as collateral for a
loan and due back to the builder at or prior to loan payoff. The net amount of nonrefundable loan origination fees and direct costs associated
with the lending process, including commitment fees, is deferred and accreted to interest income over the lives of the loans using a
method that approximates the interest method.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
loan is classified as nonaccrual, and the accrual of interest on such loan is discontinued, when the contractual payment of principal
or interest becomes 90 days past due. In addition, a loan may be placed on nonaccrual at any other time management has serious doubts
about further collectability of principal or interest according to the contractual terms, even though the loan is currently performing.
A loan may remain on accrual status if it is in the process of collection or well-secured (i.e., the loan has sufficient collateral value).
Loans are restored to accrual status when the obligation is brought current or has performed in accordance with the contractual terms
for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect
the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impaired loans, or
portions thereof, are charged off when deemed uncollectible. Once a loan is 90 days past due, management begins a workout plan with the
borrower or commences its foreclosure process on the collateral.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:LoansAndLeasesReceivableAllowanceForLoanLossesPolicy"><p id="xdx_845_eus-gaap--LoansAndLeasesReceivableAllowanceForLoanLossesPolicy_zw2gZ9DYVYZi" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86D_zGcCN96IIDEd">Allowance
for Loan Losses</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses inherent in the loan portfolio.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company establishes a collective reserve for all loans which are not more than 60 days past due at the end of each quarter. This collective
reserve includes both a quantitative and qualitative analysis. In addition to historical loss information, the analysis incorporates
collateral value, decisions made by management and staff, percentage of aging spec loans, policies, procedures, and economic conditions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company individually analyzes for impairment all loans which are more than 60 days past are due at the end of each quarter. We also review
for impairment all loans to one borrower with greater than or equal to 10% of our total committed balances. If required, the analysis
includes a comparison of estimated collateral value to the principal amount of the loan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Impaired
loans, if the value determined is less than the principal amount due (less any builder deposit), then the difference is included in the
allowance for loan loss. As values change, estimated loan losses may be provided for more or less than the previous period, and some
loans may not need a loss provision based on payment history. As for homes which are partially complete, the Company will appraise on
an as-is and completed basis, and use the appraised value that more closely aligns with our planned method of disposal for the property.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ImpairedLoansPolicyTextBlock"><p id="xdx_841_ecustom--ImpairedLoansPolicyTextBlock_zLAmVHdFFA76" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86A_z0CDSFABHfYe">Impaired
Loans</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
loan is considered to be impaired when it is probable the Company will be unable to collect all principal and interest payments due in
accordance with the contractual terms of the loan agreement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:FinanceLoanAndLeaseReceivablesHeldForInvestmentsForeclosedAssetsPolicy"><p id="xdx_843_eus-gaap--FinanceLoanAndLeaseReceivablesHeldForInvestmentsForeclosedAssetsPolicy_z5ohvU7wh1ib" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86B_zJfWl1qCuwR1">Foreclosed
Assets</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">When
a foreclosed asset is acquired in the settlement of a loan, the asset is recorded at the as-is fair value minus expected selling costs
establishing a new cost basis. The gain or loss is recorded on our consolidated statement of operations as non-interest income or expense.
If the fair value of the asset declines, a write-down is recorded through non-interest expense. While the initial valuation is done on
an as-is basis, subsequent values are based on our plan for the asset. Assets which are not going to be improved are still evaluated
on an as-is basis. Assets we intend to improve, are improving, or have improved are appraised based on the to-be-completed value, minus
reasonable selling costs, and we adjust the portion of the appraised value related to construction improvements for the percentage of
the improvements which have not yet been made. Subsequently, if a foreclosed asset has an increase in fair value the increase may be
recognized up to the cost basis which was determined at the foreclosure date.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:DeferredChargesPolicyTextBlock"><p id="xdx_848_eus-gaap--DeferredChargesPolicyTextBlock_zRcH4gDHJ7m7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86B_zf2gBuEG15kg">Deferred
Financing Costs, Net</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deferred
financing costs consist of certain costs associated with financing activities related to the issuance of debt securities (deferred financing
costs). These costs consist primarily of professional fees incurred related to the transactions. Deferred financing costs are amortized
into interest expense over the life of the related debt. The deferred financing costs are reflected as a reduction in the unsecured notes
offering liability.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p id="xdx_84E_eus-gaap--IncomeTaxPolicyTextBlock_zs6dVRP3CJ1i" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86A_zWX59eIRx1Li">Income
Taxes</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
entities included in the consolidated financial statements are organized as pass-through entities under the Internal Revenue Code. As
such, taxes are the responsibility of the members. Other significant taxes for which the Company is liable are recorded on an accrual
basis.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company applies FASB ASC 740, <i>Income Taxes </i>(ASC 740). ASC 740 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the consolidated financial statements and requires the evaluation of tax positions taken or expected
to be taken in the course of preparing the Company&#8217;s consolidated financial statements to determine whether the tax positions are
&#8220;more-likely-than-not&#8221; to be sustained by the applicable tax authority. Tax positions with respect to income tax at the LLC
level not deemed to meet the &#8220;more-likely-than-not&#8221; threshold would be recorded as a tax benefit or expense in the appropriate
period. Management concluded that there are no uncertain tax positions that should be recognized in the consolidated financial statements.
With few exceptions, the Company is no longer subject to income tax examinations for years prior to 2014.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s policy is to record interest and penalties related to taxes in interest expense on the consolidated statements of operations.
There have been no significant interest or penalties assessed or paid.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:PriorPeriodReclassificationAdjustmentDescription"><p id="xdx_847_eus-gaap--PriorPeriodReclassificationAdjustmentDescription_zOsT9KEYwpC5" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86A_zGUAMVewkpgd">Reclassifications</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
reclassifications have been made to the prior period&#8217;s financial statements and disclosures to conform to the current period&#8217;s
presentation.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 110 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:RisksAndUncertaintiesPolicyTextBlock"><p id="xdx_84B_ecustom--RisksAndUncertaintiesPolicyTextBlock_zILnBZGJrZP8" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86A_ziOph1pC7274">Risks
and Uncertainties</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is subject to many of the risks common to the commercial lending and real estate industries, such as general economic conditions,
decreases in home values, decreases in housing starts, increases in interest rates, and competition from other lenders. At December 31,
2021, our loans were significantly concentrated in a suburb of Pittsburgh, Pennsylvania, so the housing starts and prices in that area
are more significant to our business than other areas until and if more loans are created in other markets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:ConcentrationRiskCreditRisk"><p id="xdx_848_eus-gaap--ConcentrationRiskCreditRisk_zUH8WcxS8Yd1" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86F_zoMVilepwKTi">Concentrations</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of loans receivable. Our concentration
risks for our top three customers listed by geographic real estate market are summarized in the table below:</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:SchedulesOfConcentrationOfRiskByRiskFactorTextBlock"><p id="xdx_89A_eus-gaap--SchedulesOfConcentrationOfRiskByRiskFactorTextBlock_z7dHFZTOUYWf" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B7_zYNM5nNSZKGi" style="display: none">Summary
of Concentration Risks</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</ix:nonNumeric><p id="xdx_8AC_zGOpHE9Al3u3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p id="xdx_84D_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_zFKHcuUTL2ua" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_864_zqsR45qIV3Wa">Recent
Accounting Pronouncements</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
FASB issued ASU 2018-13, &#8220;<i>Fair Value Measurement (Topic 820): Disclosure Framework &#8211; Changes to the Disclosure Requirements
for Fair Value Measurement</i>.&#8221; This ASU amends the disclosure requirements of Topic 820, Fair Value Measurement, to remove disclosure
of transfers between Level 1 and Level 2 of the fair value hierarchy and to include disclosure of the range and weighted average used
in Level 3 fair value measurements, among other amendments. The ASU applies to all entities that are required to provide disclosures
about recurring or non-recurring fair value measurements. Amendments should be applied retrospectively to all periods presented, except
for certain amendments, which should be applied prospectively for only the most recent interim or annual period presented in the initial
fiscal year of adoption. ASU 2018-13 became effective for the Company on January 1, 2020. The adoption of ASU 2018-13 did not have a
material impact on the Company&#8217;s consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ASU
2016-13, &#8220;<i>Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments</i>&#8221;. The amendments
in ASU 2016-13 introduce a new current expected credit loss (&#8220;CECL&#8221;) model for certain financial assets, including mortgage
loans and reinsurance receivables. The new model will not apply to debt securities classified as available-for-sale. For assets within
the scope of the new model, an entity will recognize as an allowance against earnings its estimate of the contractual cash flows not
expected to be collected on day one of the asset&#8217;s acquisition. The allowance may be reversed through earnings if a security recovers
in value. This differs from the current impairment model, which requires recognition of credit losses when they have been incurred and
recognizes a security&#8217;s subsequent recovery in value in other comprehensive income. ASU 2016-13 also makes targeted changes to
the current impairment model for available-for-sale debt securities, which comprise the majority of the Company&#8217;s invested assets.
Similar to the CECL model, credit loss impairments will be recorded in an allowance against earnings that may be reversed for subsequent
recoveries in value. The amendments in ASU 2016-13, along with related amendments in ASU No. 2018-19 - Codification Improvements to Topic
326, Financial Instruments-Credit Losses, are effective for annual and interim periods beginning after December 15, 2019 on a modified
retrospective basis. For smaller reporting companies, the effective date for annual and interim periods is January 1, 2023. The Company
is reviewing its policies and processes to ensure compliance with the requirements in ASU 2016-13.</span></p>

</ix:nonNumeric><p id="xdx_85F_zorrfgqg1A2l" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:FairValueDisclosuresTextBlock"><p id="xdx_80C_eus-gaap--FairValueDisclosuresTextBlock_z4nWK3RrqQZj" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>3.
<span id="xdx_824_zLtOqxSqAMgf">Fair Value</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Utilizing
ASC 820, the Company has established a framework for measuring fair value under U.S. GAAP using a hierarchy, which requires the Company
to maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are an exit price, representing
the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
Three levels of inputs are used to measure fair value, as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
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  <tr style="font: 10pt Times New Roman, Times, Serif">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
financial instrument&#8217;s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair
value measurement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration: underline">Fair
Value Measurements of Non-Financial Instruments on a Recurring Basis</span></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has no non-financial instruments measured at fair value on a recurring basis.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration: underline">Fair
Value Measurements of Non-Financial Instruments on a Non-recurring Basis</span></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
assets are measured at fair value on a non-recurring basis when there is evidence of impairment. The fair values of impaired loans with
specific allocations of the allowance for loan losses are generally based on recent real estate appraisals of the collateral less estimated
cost to sell. Declines in the fair values of other real estate owned subsequent to their initial acquisitions are also based on recent
real estate appraisals less selling costs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Impaired
Loans</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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appraisals used to establish the value of impaired loans are based on similar properties at similar times; however due to the differences
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Foreclosed
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Foreclosed
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Foreclosed
assets, upon initial recognition, are measured and reported at fair value less cost to sell. Each reporting period, the Company remeasures
the fair value of its significant foreclosed assets. Fair value is based upon independent market prices, appraised values of the foreclosed
assets or management&#8217;s estimates of value, which the Company classifies as a Level 3 evaluation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B4_z4j9cqzTvxHg" style="display: none">Schedule
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_986_eus-gaap--AssetsFairValueDisclosure_iI_pdn3_c20201231__us-gaap--FairValueByFairValueHierarchyLevelAxis__us-gaap--FairValueInputsLevel2Member_zcQMtu1x5sp3" title="Total" style="border-bottom: Black 2.5pt double; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0527">&#8211;</span></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_eus-gaap--AssetsFairValueDisclosure_iI_pn3n3_c20201231__us-gaap--FairValueByFairValueHierarchyLevelAxis__us-gaap--FairValueInputsLevel3Member_z0Zv9unrBe2a" title="Total" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AssetsFairValueDisclosure" contextRef="AsOf2020-12-31_us-gaap_FairValueInputsLevel3Member" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">14,567</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8AD_zdlz3ElaheIk" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration: underline">Fair
Value of Financial Instruments</span></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ASC
825 requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet,
for which it is practicable to estimate that value. The following methods and assumptions were used by the Company in estimating the
fair value of its financial instruments:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Cash
and Cash Equivalents</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
carrying amount approximates fair value because of the short maturity of these instruments.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Loans
Receivable and Commitments to Extend Credit</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
variable rate loans that reprice frequently with no significant change in credit risk, estimated fair values of collateral are based
on carrying values at both December 31, 2021 and 2020. Because the loans are demand loan and therefore have no known time horizon, there
is no significant impact from fluctuating interest rates. For unfunded commitments to extend credit, because there would be no adjustment
between fair value and carrying amount for the amount if actually loaned, there is no adjustment to the amount before it is loaned. The
amount for commitments to extend credit is not listed in the tables below because there is no difference between carrying value and fair
value, and the amount is not recorded on the consolidated balance sheets as a liability.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Interest
Receivable</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
receivable from our customers is due approximately 15 days after it is billed; therefore, the carrying amount approximates fair value
for the years ended December 31, 2021 and 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Customer
Interest Escrow</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
customer interest escrow does not yield interest to the customer, but the fair value approximates the carrying value at both December
31, 2021 and 2020 because: 1) the customer loans are demand loans, 2) it is not possible to estimate how long the escrow will be in place,
and 3) the interest rate which could be used to discount this amount is negligible.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Borrowings
under Credit Facilities</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
fair value of the Company&#8217;s borrowings under credit facilities is estimated based on the expected cash flows discounted using the
current rates offered to the Company for debt of the same remaining maturities. As all of the borrowings under credit facilities or the
Notes are either payable on demand or at similar rates to what the Company can borrow funds for today, the fair value of the borrowings
is determined to approximate carrying value at both December 31, 2021 and 2020. The interest on our Notes offering is paid to our Note
holders either monthly or at the end of their investment, compounded on a monthly basis. For the same reasons as the determination for
the principal balances on the Notes, the fair value approximates the carrying value for the interest as well.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 113 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:FairValueAssetsAndLiabilitiesMeasuredOnRecurringAndNonrecurringBasisTableTextBlock"><p id="xdx_896_eus-gaap--FairValueAssetsAndLiabilitiesMeasuredOnRecurringAndNonrecurringBasisTableTextBlock_zB6HQfE28Cxl" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
table below is a summary of fair value estimates for financial instruments:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B3_z3rAHiJQwOE9" style="display: none">&#160;Schedule
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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Financial Assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="width: 1%; text-align: left">$</td><td id="xdx_987_eus-gaap--CashAndCashEquivalentsFairValueDisclosure_iI_pn3n3_c20211231__us-gaap--MeasurementInputTypeAxis__custom--CarryingAmountMember_zDmA6aJPKvUd" title="Cash and cash equivalents" style="width: 12%; text-align: right"><ix:nonFraction name="us-gaap:CashAndCashEquivalentsFairValueDisclosure" contextRef="AsOf2021-12-31_custom_CarryingAmountMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,735</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td id="xdx_989_ecustom--NotesPayableSecuredFairValueDisclosure_iI_pn3n3_c20201231__us-gaap--MeasurementInputTypeAxis__custom--CarryingAmountMember_z4gqBNtJeRVc" title="Notes payable secured, net" style="text-align: right"><ix:nonFraction name="SHEP:NotesPayableSecuredFairValueDisclosure" contextRef="AsOf2020-12-31_custom_CarryingAmountMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">22,959</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98E_ecustom--NotesPayableSecuredFairValueDisclosure_iI_pn3n3_c20201231__us-gaap--MeasurementInputTypeAxis__custom--EstimatedFairValueMember_z7eOpUj52Tm7" title="Notes payable secured, net" style="text-align: right"><ix:nonFraction name="SHEP:NotesPayableSecuredFairValueDisclosure" contextRef="AsOf2020-12-31_custom_EstimatedFairValueMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">22,959</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Notes payable unsecured, net</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98A_ecustom--NotesPayableUnsuuredFairValueDisclosure_iI_pn3n3_c20211231__us-gaap--MeasurementInputTypeAxis__custom--CarryingAmountMember_zHXiclepBO22" title="Notes payable unsecured, net" style="text-align: right"><ix:nonFraction name="SHEP:NotesPayableUnsuuredFairValueDisclosure" contextRef="AsOf2021-12-31_custom_CarryingAmountMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">27,713</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98C_ecustom--NotesPayableUnsuuredFairValueDisclosure_iI_pn3n3_c20211231__us-gaap--MeasurementInputTypeAxis__custom--EstimatedFairValueMember_zK2PyhIKKmxi" title="Notes payable unsecured, net" style="text-align: right"><ix:nonFraction name="SHEP:NotesPayableUnsuuredFairValueDisclosure" contextRef="AsOf2021-12-31_custom_EstimatedFairValueMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">27,713</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_982_ecustom--NotesPayableUnsuuredFairValueDisclosure_iI_pn3n3_c20201231__us-gaap--MeasurementInputTypeAxis__custom--EstimatedFairValueMember_zVN6z8IF9R1i" title="Notes payable unsecured, net" style="text-align: right"><ix:nonFraction name="SHEP:NotesPayableUnsuuredFairValueDisclosure" contextRef="AsOf2020-12-31_custom_EstimatedFairValueMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">26,978</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Accrued interest payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98B_ecustom--InterestPayableFairValueDisclosure_iI_pn3n3_c20211231__us-gaap--MeasurementInputTypeAxis__custom--CarryingAmountMember_z3IAhaSk1ceb" title="Accrued interest payable" style="text-align: right"><ix:nonFraction name="SHEP:InterestPayableFairValueDisclosure" contextRef="AsOf2021-12-31_custom_CarryingAmountMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,464</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_98F_ecustom--InterestPayableFairValueDisclosure_iI_pn3n3_c20201231__us-gaap--MeasurementInputTypeAxis__custom--CarryingAmountMember_zjf1xY4AQq1b" title="Accrued interest payable" style="text-align: right"><ix:nonFraction name="SHEP:InterestPayableFairValueDisclosure" contextRef="AsOf2020-12-31_custom_CarryingAmountMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,158</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table>

</ix:nonNumeric><p id="xdx_8AE_zvOf5F3FcqSb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:RealEstateDisclosureTextBlock"><p id="xdx_80F_eus-gaap--RealEstateDisclosureTextBlock_zFGJC5pgx5S1" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>4.
<span><span id="xdx_826_zrWF8GsE6rhh">Real Estate Investment Assets</span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2020, the Company acquired two lots from a borrower in exchange for the transfer of loans secured by those lots. The Company extinguished
the principal balance for the loans on the lots in the amount of $<span id="xdx_90A_eus-gaap--ExtinguishmentOfDebtAmount_pn3n3_c20210101__20211231_z5ntIy3Th4Xj" title="Extinguishing of the loans"><ix:nonFraction name="us-gaap:ExtinguishmentOfDebtAmount" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">640</ix:nonFraction></span> and in addition, paid a $<span id="xdx_90E_eus-gaap--ManagementFeeExpense_pn3n3_c20210101__20211231_z5RHShKW1ir5" title="Payment of a management fee"><ix:nonFraction name="us-gaap:ManagementFeeExpense" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">500</ix:nonFraction></span> management fee for the development
of homes on certain of the Company&#8217;s lots that were previously carried as loan receivables. The management fee was paid through
reducing the principal balance on a current loan receivable with the borrower.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:RealEstateInvestmentFinancialStatementsDisclosureTextBlock"><p id="xdx_89B_eus-gaap--RealEstateInvestmentFinancialStatementsDisclosureTextBlock_zuC6qVezEnnf" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table is a roll forward of real estate investment assets:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B9_zdc7ISQKHUce" style="display: none">&#160;Schedule
of Roll Forward of Real Estate Investment Assets</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2020</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 56%; text-align: left">Beginning balance</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_98B_eus-gaap--RealEstateInvestments_iS_pn3n3_c20210101__20211231_za6EPA026TIg" title="Beginning balance" style="width: 18%; text-align: right"><ix:nonFraction name="us-gaap:RealEstateInvestments" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,181</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_988_eus-gaap--RealEstateInvestments_iS_pn3n3_c20200101__20201231_zNS8vSdn1A37" title="Beginning balance" style="width: 18%; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0599">&#8211;</span></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Transfers from loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98A_eus-gaap--TransferToInvestments_pn3n3_c20210101__20211231_zCaNymVoPlh" title="Transfers from loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0601">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98B_eus-gaap--TransferToInvestments_pn3n3_c20200101__20201231_zp497FKeObua" title="Transfers from loans" style="text-align: right"><ix:nonFraction name="us-gaap:TransferToInvestments" contextRef="From2020-01-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,140</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Deposits from real estate investments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98A_eus-gaap--PaymentsForProceedsFromDepositsOnRealEstateAcquisitions_pn3n3_c20210101__20211231_z3YiAUSjBBL7" title="Deposits from real estate investments" style="text-align: right">(<ix:nonFraction name="us-gaap:PaymentsForProceedsFromDepositsOnRealEstateAcquisitions" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">200</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_980_eus-gaap--PaymentsForProceedsFromDepositsOnRealEstateAcquisitions_pn3n3_c20200101__20201231_zZDEZ7WQPUnh" title="Deposits from real estate investments" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0607">&#8211;</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Additions for construction/development</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_988_eus-gaap--PaymentsToDevelopRealEstateAssets_pn3n3_c20210101__20211231_zdtDF4DqUjA7" title="Additions for construction/development" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:PaymentsToDevelopRealEstateAssets" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">670</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_982_eus-gaap--PaymentsToDevelopRealEstateAssets_pn3n3_c20200101__20201231_z4SMIID3Yar9" title="Additions for construction/development" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:PaymentsToDevelopRealEstateAssets" contextRef="From2020-01-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">41</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_986_eus-gaap--RealEstateInvestments_iE_pn3n3_c20210101__20211231_zBsdZhiu3Vd1" title="Ending balance" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:RealEstateInvestments" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,651</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_986_eus-gaap--RealEstateInvestments_iE_pn3n3_c20200101__20201231_zQqRGi0ycBUa" title="Ending balance" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:RealEstateInvestments" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,181</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A4_z9LiUhme6B6d" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:FinancingReceivablesTextBlock"><p id="xdx_804_eus-gaap--FinancingReceivablesTextBlock_zmeti4OVB5k" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>5.
<span id="xdx_820_zcdY3QaZ08Y6">Financing Receivables</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock"><p id="xdx_894_eus-gaap--ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock_zbWkv4Kd8C18" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financing
receivables are comprised of the following as of December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8BC_zw9gM8SzNpo" style="display: none">&#160;Schedule
of Financing Receivables</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_491_20211231_zuZMNC5oMPP4" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_495_20201231_zIBgS22yRI4d" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2020</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_maLALRNzjBF_z8dtZc7Gc1V1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Loans receivable, gross</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">50,763</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">50,449</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--LoansAndLeasesReceivableDeferredIncome_iNI_pn3n3_di_msLALRNzjBF_zgAlNLoD4jf3" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Less: Deferred loan fees</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:LoansAndLeasesReceivableDeferredIncome" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,143</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:LoansAndLeasesReceivableDeferredIncome" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,092</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_403_eus-gaap--NoninterestBearingDepositLiabilitiesDomestic_iNI_pn3n3_di_msLALRNzjBF_zBA9I9CSEf69" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Less: Deposits</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:NoninterestBearingDepositLiabilitiesDomestic" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">934</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:NoninterestBearingDepositLiabilitiesDomestic" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,337</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_40A_ecustom--DeferredOriginationCosts_iI_pn3n3_maLALRNzjBF_zW21LSTWX5n5" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Plus: Deferred origination costs</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:DeferredOriginationCosts" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">305</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:DeferredOriginationCosts" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">353</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--LoansAndLeasesReceivableAllowance_iNI_pn3n3_di_msLALRNzjBF_z3d6gNhLLgih" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: Allowance for loan losses</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:LoansAndLeasesReceivableAllowance" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,048</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:LoansAndLeasesReceivableAllowance" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,968</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_eus-gaap--LoansAndLeasesReceivableNetReportedAmount_iTI_pn3n3_mtLALRNzjBF_zMCoslpyBl22" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Loans receivable, net</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableNetReportedAmount" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">46,943</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableNetReportedAmount" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">46,405</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A5_zAD5xHUoivO1" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
allowance for loan losses at December 31, 2021 was $<span title="Allowance for loan losses"><span id="xdx_90D_eus-gaap--AllowanceForNotesAndLoansReceivableCurrent_iI_pn3n3_c20211231_zbNWKcOMas89" title="Allowance for loan losses"><ix:nonFraction name="us-gaap:AllowanceForNotesAndLoansReceivableCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,048</ix:nonFraction></span></span> which primarily consisted of $<span title="Related to loans without specific reserves"><span id="xdx_901_ecustom--FinancingReceivableRelatedAllowanceWithoutSpecificReserves_iI_pn3n3_c20211231_z0T6LstTnAs5" title="Related to loans without specific reserves"><ix:nonFraction name="SHEP:FinancingReceivableRelatedAllowanceWithoutSpecificReserves" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">163</ix:nonFraction></span></span> for loans without specific reserves, $<span title="Loans impaired due to impacts from COVID-19"><span id="xdx_907_ecustom--FinancingReceivableRelatedAllowanceWithSpecificReserves_iI_pn3n3_c20211231_z1xR6BXZfB3k" title="Related to loans with specific reserves"><ix:nonFraction name="SHEP:FinancingReceivableRelatedAllowanceWithSpecificReserves" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">342</ix:nonFraction></span></span>
for loans with specific reserves, $<span><span id="xdx_904_ecustom--SpecialMentionLoans_iI_pn3n3_c20211231_zfB0VSHC6Fdj" title="Special mention loans"><ix:nonFraction name="SHEP:SpecialMentionLoans" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">60</ix:nonFraction></span></span> for special mention loans and $<span id="xdx_90D_ecustom--ImpairedLoansDueToCovid19_iI_pn3n3_c20211231_zybzVlhVdYUh" title="Loans impaired due to impacts from COVID-19"><ix:nonFraction name="SHEP:ImpairedLoansDueToCovid19" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,483</ix:nonFraction></span> for specific reserves due to the impact of COVID-19. During
the year ended December 31, 2021, we incurred $<span><span id="xdx_901_ecustom--LoansCharges_pn3n3_c20210101__20211231_z1NuTRfvyXck" title="Loans charge offs"><ix:nonFraction name="SHEP:LoansCharges" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">509</ix:nonFraction></span></span> in direct charge offs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
allowance for loan losses at December 31, 2020 was $<span title="Allowance for loan losses"><span id="xdx_90E_eus-gaap--AllowanceForNotesAndLoansReceivableCurrent_iI_pn3n3_c20201231_zKWrfqHxYP6f" title="Allowance for loan losses"><ix:nonFraction name="us-gaap:AllowanceForNotesAndLoansReceivableCurrent" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,968</ix:nonFraction></span></span>, of which $<span title="Related to loans without specific reserves"><span id="xdx_904_ecustom--FinancingReceivableRelatedAllowanceWithoutSpecificReserves_iI_pn3n3_c20201231_zgvFoJL60mmi" title="Related to loans without specific reserves"><ix:nonFraction name="SHEP:FinancingReceivableRelatedAllowanceWithoutSpecificReserves" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">151</ix:nonFraction></span></span> is related to loans without specific reserves. The Company recorded
specific reserves for loans impaired due to impacts from COVID-19 of $<span title="Loans impaired due to impacts from COVID-19"><span id="xdx_904_ecustom--ImpairedLoansDueToCovid19_iI_pn3n3_c20201231_zywdA20pXRRk" title="Loans impaired due to impacts from COVID-19"><ix:nonFraction name="SHEP:ImpairedLoansDueToCovid19" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,532</ix:nonFraction></span></span>, special mention loans of $<span title="Special mention loans"><span id="xdx_90A_ecustom--SpecialMentionLoans_iI_pn3n3_c20201231_z7jtdiCdZrFb" title="Special mention loans"><ix:nonFraction name="SHEP:SpecialMentionLoans" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">120</ix:nonFraction></span></span> and impaired loans not due
to impacts from COVID-19 of $<span title="Impaired loans not due to impacts from COVID-19"><span id="xdx_909_ecustom--ImpairedLoansNotDueToCovid19_iI_pn3n3_c20201231_zzg4QaKKZef6" title="Impaired loans not due to impacts from COVID-19"><ix:nonFraction name="SHEP:ImpairedLoansNotDueToCovid19" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">165</ix:nonFraction></span></span>. During the year ended December 31, 2020, we incurred $<span title="Loans charge offs"><span id="xdx_906_ecustom--LoansCharges_pn3n3_c20200101__20201231_zOPwey5Ln6k9" title="Loans charge offs"><ix:nonFraction name="SHEP:LoansCharges" contextRef="From2020-01-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">72</ix:nonFraction></span></span> in direct charge offs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 114 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->13<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Commercial
Construction and Development Loans</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration: underline">Construction
Loan Portfolio Summary</span></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_904_ecustom--DescriptionOnConstructionLoan_c20210101__20211231_zR1dwTlwgp34" title="Description on construction loan"><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" name="SHEP:DescriptionOnConstructionLoan">As
of December 31, 2021, we have 66 borrowers, all of whom borrow money for the purpose of building new homes. The loans typically involve
funding of the lot and a portion of construction costs, for a total of between <span id="xdx_907_ecustom--PercentageOnPortionOfConstructionCosts_pid_dp_uPure_c20210101__20211231__srt--RangeAxis__srt--MinimumMember_zmbCkTVRkoVf" title="Percentage on portion of construction costs"><ix:nonFraction name="SHEP:PercentageOnPortionOfConstructionCosts" contextRef="From2021-01-012021-12-31_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">50</ix:nonFraction></span>% and <span id="xdx_903_ecustom--PercentageOnPortionOfConstructionCosts_pid_dp_uPure_c20210101__20211231__srt--RangeAxis__srt--MaximumMember_zcnRqVcgISb3" title="Percentage on portion of construction costs"><ix:nonFraction name="SHEP:PercentageOnPortionOfConstructionCosts" contextRef="From2021-01-012021-12-31_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">70</ix:nonFraction></span>% of the completed value of the new home. As
the home is built during the course of the loan, the loan balance increases. The loans carry an interest rate of <span id="xdx_905_eus-gaap--DebtInstrumentInterestRateEffectivePercentage_iI_pid_dp_uPure_c20211231_zaZwQXILoa28" title="Interest rate on loan"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3</ix:nonFraction></span>% above our cost of
funds. In addition, we charge a <span id="xdx_90C_ecustom--PercentageOnLoanFee_iI_pid_dp_uPure_c20211231_ziW4C2fCeTab" title="Percentage on loan fee"><ix:nonFraction name="SHEP:PercentageOnLoanFee" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5</ix:nonFraction></span>% loan fee. The cost of funds was <span id="xdx_905_ecustom--PercentageOnCostOfFunds_iI_dp_uPure_c20211231_zDE8cjH7mk91" title="Percentage on cost of funds"><ix:nonFraction name="SHEP:PercentageOnCostOfFunds" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10.91</ix:nonFraction></span>% as of December 31, 2021 and the interest rate charged to most
customers was <span id="xdx_905_ecustom--PercentageOnCostOfFunds_iI_pid_dp_uPure_c20211231__srt--TitleOfIndividualAxis__custom--CustomerMember_zDXz5kfc38Uj" title="Percentage on cost of funds"><ix:nonFraction name="SHEP:PercentageOnCostOfFunds" contextRef="AsOf2021-12-31_custom_CustomerMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">13.91</ix:nonFraction></span>%. The loans are demand loans. Most have a deposit from the builder during construction to help offset the risk of
partially built homes, and some have an interest escrow to offset payment of monthly interest risk.</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfCommercialLoansConstructionLoanPortfolioSummaryTableTextBlock"><p id="xdx_89A_ecustom--ScheduleOfCommercialLoansConstructionLoanPortfolioSummaryTableTextBlock_ztOjXfGwdEJe" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of the loan portfolio to builders for home construction loans as of December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B8_ziZdIR5iPG7l" style="display: none">Schedule
of Commercial Loans - Construction Loan Portfolio Summary</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup id="xdx_F0C_zBQNM426o1vf">(1)
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span id="xdx_F11_zzzW4VR4i3Ak" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote000710" xml:lang="en-US">The
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup id="xdx_F0D_zgKMOVxcbExd">(2)
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span id="xdx_F18_zJiOR9XHv3mi" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote000711" xml:lang="en-US">The
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup id="xdx_F01_z7NEfynEx8D6">(3)
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span id="xdx_F19_zEcpMmIaFVmb" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote000712" xml:lang="en-US">Represents
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  </table>
</ix:nonNumeric><p id="xdx_8AB_zpLWV0NoZhwi" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration: underline">Real
Estate Development Loan Portfolio Summary</span></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfCommercialLoansRealEstateDevelopmentLoanPortfolioSummaryTableTextBlock"><p id="xdx_892_ecustom--ScheduleOfCommercialLoansRealEstateDevelopmentLoanPortfolioSummaryTableTextBlock_zMnJKnOoaqV6" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of our loan portfolio to builders for land development as of December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B0_zAKpZBwMeGbd" style="display: none">&#160;Schedule
of Commercial Loans - Real Estate Development Loan Portfolio Summary</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 7%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">varies</span></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: center">2020</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td id="xdx_987_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--CollateralAxis__us-gaap--RealEstateMember_zV74Gzxkj8Bi" title="Gross Amount Outstanding" style="text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_RealEstateMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">8,230</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_989_ecustom--InterestSpreadPercentage_pid_dp_c20200101__20201231__us-gaap--CollateralAxis__us-gaap--RealEstateMember_zzxTrUNHZMgi" title="Interest Spread" style="text-align: right"><ix:nonFraction name="SHEP:InterestSpreadPercentage" contextRef="From2020-01-012020-12-31_us-gaap_RealEstateMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">7</ix:nonFraction></td><td style="text-align: left">%</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup id="xdx_F08_zZnUFNz4C3Ue">(1)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span id="xdx_F13_znUCvd86lNV6" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote000745" xml:lang="en-US">The
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    as of December 31, 2021 and 2020, respectively, of preferred equity in our Company. In the event of a foreclosure on the property
    securing these loans, the portion of our collateral that is preferred equity might be difficult to sell, which may impact our ability
    to recover the loan balance. In addition, a portion of the collateral value is estimated based on the selling prices anticipated
    for the homes.</ix:footnote></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup id="xdx_F05_zxBxillYkcH9">(2)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span id="xdx_F1F_zykq8H68z2dg" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote000750" xml:lang="en-US">The
    loan to value ratio is calculated by taking the outstanding amount and dividing by the appraised value calculated as described above.</ix:footnote></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>&#160;</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup id="xdx_F0C_zTRXrw4bZD9d">(3)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span id="xdx_F17_zYI8raRqsId3" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote000751" xml:lang="en-US">The
    commitment amount does not include letters of credit and cash bonds.</ix:footnote></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup id="xdx_F0B_z7z3nUTmQr8">(4)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span id="xdx_F13_zoDb5uEiiSOi" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote000752" xml:lang="en-US">Represents
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  </table>
</ix:nonNumeric><p id="xdx_8A6_zxmKJ4uU8Oba" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Credit
Quality Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table presents credit-related information at the &#8220;class&#8221; level in accordance with FASB ASC 310-10-50, <i>Disclosures
about the Credit Quality of Finance Receivables and the Allowance for Credit Losses</i>. A class is generally a disaggregation of a portfolio
segment. In determining the classes, the Company considered the finance receivable characteristics and methods it applies in monitoring
and assessing credit risk and performance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 115 -->
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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes finance receivables by the risk ratings that regulatory agencies utilize to classify credit exposure and which
are consistent with indicators the Company monitors. Risk ratings are reviewed on a regular basis and are adjusted as necessary for updated
information affecting the borrowers&#8217; ability to fulfill their obligations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
definitions of these ratings are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Special
    mention &#8211; a special mention asset exhibits potential weaknesses that deserve management&#8217;s close attention. If left uncorrected,
    these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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    of the borrower, and are characterized by the distinct possibility that some loss will be sustained if the deficiencies are not corrected
    to 2) assets with weaknesses that make collection or liquidation in full unlikely on the basis of current facts, conditions, and
    values. Assets in this classification can be accruing or on non-accrual depending on the evaluation of these factors.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:SummaryOfFinanceReceivablesByClassificationTableTextBlock"><p id="xdx_89E_ecustom--SummaryOfFinanceReceivablesByClassificationTableTextBlock_zdBe31wmT6ki" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
Receivables &#8211; By risk rating:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0; margin-right: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B9_zPMTDrkBwVvk" style="display: none">Summary
of Finance Receivables by Classification</span>&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2020</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: justify">Pass</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_982_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentAxis__us-gaap--PassMember_zQL7d6utS425" title="Loans receivable, gross" style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31_us-gaap_FinanceReceivablesMember_us-gaap_PassMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">38,893</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_981_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentAxis__us-gaap--PassMember_zoilwWu323lg" title="Loans receivable, gross" style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_FinanceReceivablesMember_us-gaap_PassMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">35,544</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">Special mention</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_984_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentAxis__us-gaap--SpecialMentionMember_zbrZSve6Uw3a" title="Loans receivable, gross" style="text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31_us-gaap_FinanceReceivablesMember_us-gaap_SpecialMentionMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,344</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_985_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentAxis__us-gaap--SpecialMentionMember_zM3A4rknmGw4" title="Loans receivable, gross" style="text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_FinanceReceivablesMember_us-gaap_SpecialMentionMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,089</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Classified &#8211; accruing</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98D_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pdn3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentAxis__custom--ClassifiedAccruingMember_zEwjMjfrfYn8" title="Loans receivable, gross" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0764">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_986_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pdn3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentAxis__custom--ClassifiedAccruingMember_zgeKT1JIRhTa" title="Loans receivable, gross" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0766">&#8211;</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 1.5pt">Classified &#8211; nonaccrual</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_984_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentAxis__custom--ClassifiedNonaccrualMember_zvvjwny5g8e" title="Loans receivable, gross" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31_us-gaap_FinanceReceivablesMember_custom_ClassifiedNonaccrualMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">9,526</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_98F_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentAxis__custom--ClassifiedNonaccrualMember_zMpRDuilHAdl" title="Loans receivable, gross" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_FinanceReceivablesMember_custom_ClassifiedNonaccrualMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">11,816</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98C_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember_z4WGpp7YFN25" title="Loans receivable, gross" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31_us-gaap_FinanceReceivablesMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">50,763</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_986_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember_z7H7WwBl2pse" title="Loans receivable, gross" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_FinanceReceivablesMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">50,449</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AA_zEs0u589WBpd" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfImpairmentCalculationMethodTableTextBlock"><p id="xdx_891_ecustom--ScheduleOfImpairmentCalculationMethodTableTextBlock_zS3P5p6SjhJh" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
Receivables &#8211; Method of impairment calculation:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0; margin-right: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B7_zkYQzc03Iyq8" style="display: none">&#160;Schedule
of Finance Receivables Impairment Calculation Method</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2020</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Performing loans evaluated individually</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_98F_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentPerformanceStatusAxis__custom--PerformingLoansEvaluatedIndividuallyMember_z02qqIy4bywc" title="Total evaluated collectively for loan losses" style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31_us-gaap_FinanceReceivablesMember_custom_PerformingLoansEvaluatedIndividuallyMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">16,495</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_984_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentPerformanceStatusAxis__custom--PerformingLoansEvaluatedIndividuallyMember_zZJ5rK0PK8p8" title="Total evaluated collectively for loan losses" style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_FinanceReceivablesMember_custom_PerformingLoansEvaluatedIndividuallyMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">16,412</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Performing loans evaluated collectively</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98C_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentPerformanceStatusAxis__custom--PerformingLoansEvaluatedCollectivelyMember_zvq2QIXucqhh" title="Total evaluated collectively for loan losses" style="text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31_us-gaap_FinanceReceivablesMember_custom_PerformingLoansEvaluatedCollectivelyMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">24,742</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_983_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentPerformanceStatusAxis__custom--PerformingLoansEvaluatedCollectivelyMember_zKmM1TX9oFm7" title="Total evaluated collectively for loan losses" style="text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_FinanceReceivablesMember_custom_PerformingLoansEvaluatedCollectivelyMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">22,221</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Non-performing loans without a specific reserve</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98D_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentPerformanceStatusAxis__custom--NonPerformingLoansWithoutASpecificReserveMember_zzLrKvepNXs3" title="Total evaluated collectively for loan losses" style="text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31_us-gaap_FinanceReceivablesMember_custom_NonPerformingLoansWithoutASpecificReserveMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">596</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98B_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentPerformanceStatusAxis__custom--NonPerformingLoansWithoutASpecificReserveMember_zdkVBG51mGp8" title="Total evaluated collectively for loan losses" style="text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_FinanceReceivablesMember_custom_NonPerformingLoansWithoutASpecificReserveMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,518</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Non-performing loans with a specific reserve</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_988_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentPerformanceStatusAxis__custom--NonperformingloanswithaspecificreserveMember_zRxfnT1abARj" title="Total evaluated collectively for loan losses" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31_us-gaap_FinanceReceivablesMember_custom_NonperformingloanswithaspecificreserveMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">8,930</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_985_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember__us-gaap--FinancialInstrumentPerformanceStatusAxis__custom--NonperformingloanswithaspecificreserveMember_zfyxmocjUjyd" title="Total evaluated collectively for loan losses" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_FinanceReceivablesMember_custom_NonperformingloanswithaspecificreserveMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">10,298</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Total evaluated collectively for loan losses</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98C_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20211231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember_zcOgZJznnEm5" title="Total evaluated collectively for loan losses" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2021-12-31_us-gaap_FinanceReceivablesMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">50,763</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_eus-gaap--LoansAndLeasesReceivableGrossCarryingAmount_iI_pn3n3_c20201231__us-gaap--AccountsNotesLoansAndFinancingReceivableByReceivableTypeAxis__us-gaap--FinanceReceivablesMember_z04VvU4NpFD6" title="Total evaluated collectively for loan losses" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:LoansAndLeasesReceivableGrossCarryingAmount" contextRef="AsOf2020-12-31_us-gaap_FinanceReceivablesMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">50,449</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AF_zIHqcmA7nLOe" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
December 31, 2021 and 2020, there were no loans acquired with deteriorated credit quality.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfImpairedLoansTableTextBlock"><p id="xdx_893_ecustom--ScheduleOfImpairedLoansTableTextBlock_zXFdF1N1TJuk" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of our impaired non-accrual commercial construction loans as of December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B0_zMDr3nIGKdO2" style="display: none">&#160;Schedule
of Impaired Loans</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_496_20211231_zwAnaeXzR6A5" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--ImpairedFinancingReceivableUnpaidPrincipalBalance_iI_pn3n3_maIFRGVzBi5_zgnythDDUz4h" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Unpaid principal balance (contractual obligation from customer)</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:ImpairedFinancingReceivableUnpaidPrincipalBalance" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">10,035</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_400_ecustom--ImpairedFinancingReceivableChargeoffsAndPaymentsApplied_iI_pn3n3_maIFRGVzBi5_zlA9TltyBOP8" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Charge-offs and payments applied</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="SHEP:ImpairedFinancingReceivableChargeoffsAndPaymentsApplied" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">509</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="SHEP:ImpairedFinancingReceivableChargeoffsAndPaymentsApplied" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">72</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_402_ecustom--ImpairedFinancingReceivableGrossValueBeforeRelatedAllowance_iTI_pn3n3_mtIFRGVzBi5_maIFRVAzmTz_zaT7FLnw2AR9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Gross value before related allowance</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:ImpairedFinancingReceivableGrossValueBeforeRelatedAllowance" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">9,526</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_408_eus-gaap--ImpairedFinancingReceivableRelatedAllowance_iNI_pn3n3_di_msIFRVAzmTz_zskMXlv3OICa" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Related allowance</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:ImpairedFinancingReceivableRelatedAllowance" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,825</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:ImpairedFinancingReceivableRelatedAllowance" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,698</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_40F_ecustom--ImpairedFinancingReceivableValueAfterAllowances_iTI_pn3n3_mtIFRVAzmTz_zyn8PpyqFl77" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Value after allowance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="SHEP:ImpairedFinancingReceivableValueAfterAllowances" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">7,701</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="SHEP:ImpairedFinancingReceivableValueAfterAllowances" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">10,118</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A0_z94qPD4hJsC9" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 116 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ForeclosedAssetsTextBlock"><p id="xdx_80D_ecustom--ForeclosedAssetsTextBlock_zYNXk2ruWAl9" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>6.
<span id="xdx_821_ziaKm4TGsIa5">Foreclosed Assets</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfRollForwardOfForeclosedAssetsTableTextBlock"><p id="xdx_898_ecustom--ScheduleOfRollForwardOfForeclosedAssetsTableTextBlock_zjcdeDuT1Amb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Roll
forward of foreclosed assets for the years ended December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0; margin-right: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B0_zSOxgT1KSqMl" style="display: none">&#160;Schedule
of Roll Forward of Foreclosed Assets</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2020</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Beginning balance</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_983_eus-gaap--ForeclosedAssets_iS_pn3n3_c20210101__20211231_zoAUEZTIEN9i" title="Beginning balance" style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:ForeclosedAssets" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">4,449</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Additions from loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_eus-gaap--ProceedsFromLoans_pn3n3_c20210101__20211231_z29JUcc34mt8" title="Additions from loans" style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromLoans" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">791</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Additions for construction/development</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_986_eus-gaap--PaymentsToAcquireAssetsInvestingActivities_pn3n3_c20210101__20211231_zAzxLud3dTWe" title="Additions for construction/development" style="text-align: right"><ix:nonFraction name="us-gaap:PaymentsToAcquireAssetsInvestingActivities" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">818</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Sale proceeds</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_985_eus-gaap--ProceedsFromSaleOfForeclosedAssets_iN_pn3n3_di_c20210101__20211231_zX5PhdX2roIk" title="Sale proceeds" style="text-align: right">(<ix:nonFraction name="us-gaap:ProceedsFromSaleOfForeclosedAssets" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,418</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Loss on foreclosure</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_982_ecustom--LossOnForeclosure_iN_pn3n3_di_c20210101__20211231_zPnhFXYPI8tb" title="Loss on foreclosure" style="text-align: right">(<ix:nonFraction name="SHEP:LossOnForeclosure" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">47</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Loss on sale of foreclosed assets</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Gain on foreclosure</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98F_ecustom--GainOnForeclosedAssets_iN_pn3n3_di_c20210101__20211231_zeVbDAwzsYkd" title="Gain on foreclosure" style="text-align: right"><ix:nonFraction name="SHEP:GainOnForeclosedAssets" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">67</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Gain on sale of foreclosed assets</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Impairment loss on foreclosed assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_ecustom--ImpairmentLossOnForeclosedAssets_pn3n3_c20210101__20211231_zOLuJq814DBc" title="Impairment loss on foreclosed assets" style="text-align: right">(<ix:nonFraction name="SHEP:ImpairmentLossOnForeclosedAssets" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">10</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Impairment loss on foreclosed assets due to COVID-19</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<!-- Field: Split-Segment; Name: 002 -->
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric></ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:DebtDisclosureTextBlock"><p id="xdx_80C_eus-gaap--DebtDisclosureTextBlock_zLjaAmKStQ6c" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>7.
<span id="xdx_822_ziU9RojtfOIj">Borrowings</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfShortTermDebtTextBlock"><p id="xdx_896_eus-gaap--ScheduleOfShortTermDebtTextBlock_zhQfBnqfEkde" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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31, </b></span>2020</p></td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8A7_zCEgQHJG9hh7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfMaturitiesOfLongTermDebtTableTextBlock"><p id="xdx_897_eus-gaap--ScheduleOfMaturitiesOfLongTermDebtTableTextBlock_zKmdEWTSu1i5" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span id="xdx_8B0_ztbRgQjJfTic" style="display: none">Schedule of Maturities of Debt</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Year
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td id="xdx_98B_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--OtherUnsecuredMember_zHyo0J1bvgSd" title="2022" style="font: 10pt Times New Roman, Times, Serif; width: 13%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths" contextRef="AsOf2021-12-31_custom_OtherUnsecuredMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,945</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td id="xdx_984_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--SecuredBorrowingsMember_zU420bpEJ9db" title="2022" style="font: 10pt Times New Roman, Times, Serif; width: 13%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths" contextRef="AsOf2021-12-31_custom_SecuredBorrowingsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">19,219</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2023</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_989_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--TotalAmountMaturingMember_zJbKenNC6Ooc" title="2023" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo" contextRef="AsOf2021-12-31_custom_TotalAmountMaturingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">5,060</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_98B_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--PublicOfferingMember_zWIB8HnC8tN4" title="2023" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo" contextRef="AsOf2021-12-31_custom_PublicOfferingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,475</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_987_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--OtherUnsecuredMember_zWYvfB2R6GVh" title="2023" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo" contextRef="AsOf2021-12-31_custom_OtherUnsecuredMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,514</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_98E_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--SecuredBorrowingsMember_zmTbYxQrYZeb" title="2023" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo" contextRef="AsOf2021-12-31_custom_SecuredBorrowingsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">71</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2024</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_983_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--TotalAmountMaturingMember_zoHYFqVsQ0Sl" title="2024" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree" contextRef="AsOf2021-12-31_custom_TotalAmountMaturingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">8,716</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_982_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--PublicOfferingMember_zsYsXqUqZHeh" title="2024" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree" contextRef="AsOf2021-12-31_custom_PublicOfferingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">5,002</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_98A_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--OtherUnsecuredMember_zpFwaRann1r2" title="2024" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree" contextRef="AsOf2021-12-31_custom_OtherUnsecuredMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,587</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_98B_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--SecuredBorrowingsMember_zBhMP4vjpQ12" title="2024" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree" contextRef="AsOf2021-12-31_custom_SecuredBorrowingsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">127</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2025</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_981_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--TotalAmountMaturingMember_zxiVtOoTlJ5d" title="2024" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour" contextRef="AsOf2021-12-31_custom_TotalAmountMaturingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">5,565</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_981_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--PublicOfferingMember_zhAQJJcHQTPi" title="2025" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour" contextRef="AsOf2021-12-31_custom_PublicOfferingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">5,085</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_982_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--OtherUnsecuredMember_z56N6aubq6Fe" title="2025" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour" contextRef="AsOf2021-12-31_custom_OtherUnsecuredMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">398</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_981_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--SecuredBorrowingsMember_ze1f1SSS0Foa" title="2025" style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour" contextRef="AsOf2021-12-31_custom_SecuredBorrowingsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">82</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2026
    and thereafter</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_98F_ecustom--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFourAndThereAfter_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--TotalAmountMaturingMember_zb1bXRVe4Rsl" title="2026 and thereafter" style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="SHEP:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFourAndThereAfter" contextRef="AsOf2021-12-31_custom_TotalAmountMaturingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">524</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_98A_ecustom--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFourAndThereAfter_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--PublicOfferingMember_z0P8xpRPyfah" title="2026 and thereafter" style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: xdx2ixbrl0930">-</span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_981_ecustom--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFourAndThereAfter_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--OtherUnsecuredMember_zgbrar2wSlq8" title="2026 and thereafter" style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: xdx2ixbrl0932">-</span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_98F_ecustom--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFourAndThereAfter_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--SecuredBorrowingsMember_z5jPGwkqjPsk" title="2026 and thereafter" style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="SHEP:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFourAndThereAfter" contextRef="AsOf2021-12-31_custom_SecuredBorrowingsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">524</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td id="xdx_986_eus-gaap--LongTermDebt_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--TotalAmountMaturingMember_zYcmIU1gDiHg" title="Total" style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebt" contextRef="AsOf2021-12-31_custom_TotalAmountMaturingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">48,103</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td id="xdx_982_eus-gaap--LongTermDebt_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--PublicOfferingMember_zpjK8zjCoMCf" title="Total" style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebt" contextRef="AsOf2021-12-31_custom_PublicOfferingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">20,636</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td id="xdx_985_eus-gaap--LongTermDebt_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--OtherUnsecuredMember_zCUBxitxM0H9" title="Total" style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebt" contextRef="AsOf2021-12-31_custom_OtherUnsecuredMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">7,444</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
    <td id="xdx_981_eus-gaap--LongTermDebt_iI_pn3n3_c20211231__us-gaap--DebtInstrumentAxis__custom--SecuredBorrowingsMember_zKL4qpYAKwC2" title="Total" style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LongTermDebt" contextRef="AsOf2021-12-31_custom_SecuredBorrowingsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">20,023</ix:nonFraction></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table>
</ix:nonNumeric><p id="xdx_8A7_zNHcXHyezmSe" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Secured
Borrowings</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration: underline">Loan
Purchase and Sale Agreements</span></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have two loan purchase and sale agreements where we are the seller of portions of loans we create. The two purchasers are Builder Finance,
Inc. (&#8220;Builder Finance&#8221;) and S.K. Funding, LLC (&#8220;S.K. Funding&#8221;). Generally, the purchasers buy between <span id="xdx_90E_ecustom--PercentageOnLoansSoldToPruchaser_iI_dp_uPure_c20211231__us-gaap--TypeOfArrangementAxis__custom--TwoLoanPurchaseAndSaleAgreementMember__srt--RangeAxis__srt--MinimumMember_ziu7TjIRsFr1" title="Percentage on loans sold to pruchaser"><ix:nonFraction name="SHEP:PercentageOnLoansSoldToPruchaser" contextRef="AsOf2021-12-31_custom_TwoLoanPurchaseAndSaleAgreementMember_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">50</ix:nonFraction></span>% and
<span id="xdx_90C_ecustom--PercentageOnLoansSoldToPruchaser_iI_dp_uPure_c20211231__us-gaap--TypeOfArrangementAxis__custom--TwoLoanPurchaseAndSaleAgreementMember__srt--RangeAxis__srt--MaximumMember_zXJ5LpaNyBya" title="Percentage on loans sold to pruchaser"><ix:nonFraction name="SHEP:PercentageOnLoansSoldToPruchaser" contextRef="AsOf2021-12-31_custom_TwoLoanPurchaseAndSaleAgreementMember_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">75</ix:nonFraction></span>% of each loan sold. They receive interest rates ranging from our cost of funds to the interest rate charged to the borrower (interest
rates were between <span id="xdx_90D_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20211231__us-gaap--TypeOfArrangementAxis__custom--LoanPurchaseAndSaleAgreementMember__us-gaap--RelatedPartyTransactionAxis__custom--BorrowersMember_zQzi0MJxhw7e" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2021-12-31_custom_LoanPurchaseAndSaleAgreementMember_custom_BorrowersMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6</ix:nonFraction></span>% and <span id="xdx_904_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20201231__us-gaap--TypeOfArrangementAxis__custom--LoanPurchaseAndSaleAgreementMember__us-gaap--RelatedPartyTransactionAxis__custom--BorrowersMember_zvIwzDyUUbNd" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2020-12-31_custom_LoanPurchaseAndSaleAgreementMember_custom_BorrowersMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">11</ix:nonFraction></span>% for both 2021 and 2020). The purchasers generally do not receive any of the loan fees we charge. We have
the right to call some of the loans sold, with some restrictions. Once sold, the purchaser must fund their portion of the loans purchased.
We service the loans. Also, there are limited put options in some cases, whereby the purchaser can cause us to repurchase a loan. The
loan purchase and sale agreements are recorded as secured borrowings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 117 -->
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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In March 2018, we entered into the Seventh Amendment (the &#8220;Seventh Amendment&#8221;) to our Loan Purchase and Sale Agreement with S.K. Funding. The purpose of the Seventh Amendment was to allow S.K. Funding to purchase a portion of the Pennsylvania Loans.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The timing of the Company&#8217;s principal and interest payments to S.K. Funding under the Seventh Amendment, and S.K. Funding&#8217;s obligation to fund the Pennsylvania Loans, vary depending on the total principal amount of the Pennsylvania Loans outstanding at any time, as follows:</p>

<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_903_eus-gaap--DebtInstrumentDescription_c20180301__20180331__us-gaap--TypeOfArrangementAxis__custom--TwoLoanPurchaseAndSaleAgreementMember__us-gaap--DebtInstrumentAxis__custom--PrincipalAmountExceeds2000Member_zYEpFrkvUze3"><ix:nonNumeric contextRef="From2018-03-012018-03-31_custom_TwoLoanPurchaseAndSaleAgreementMember_custom_PrincipalAmountExceeds2000Member" name="us-gaap:DebtInstrumentDescription">If the total principal amount exceeds $1,000, S.K. Funding must fund the amount between $1,000 and less than or equal to $4,500.</ix:nonNumeric></span></span></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_901_eus-gaap--DebtInstrumentDescription_c20180301__20180331__us-gaap--TypeOfArrangementAxis__custom--TwoLoanPurchaseAndSaleAgreementMember__us-gaap--DebtInstrumentAxis__custom--PrincipalAmountLessThan5500Member_zzoR5XF2tm71"><ix:nonNumeric contextRef="From2018-03-012018-03-31_custom_TwoLoanPurchaseAndSaleAgreementMember_custom_PrincipalAmountLessThan5500Member" name="us-gaap:DebtInstrumentDescription">If the total principal amount is less than $4,500, then the Company will also repay S.K. Funding&#8217;s principal as principal payments are received on the Pennsylvania Loans from the underlying borrowers in the amount by which the total principal amount is less than $4,500 until S.K. Funding&#8217;s principal has been repaid in full.</ix:nonNumeric></span></span></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The interest rate accruing to S.K. Funding under the Seventh Amendment is <span id="xdx_903_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20180331__us-gaap--TypeOfArrangementAxis__custom--LoanPurchaseAndSaleAgreementMember_zv39sWQV4F46" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2018-03-31_custom_LoanPurchaseAndSaleAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10.5</ix:nonFraction></span>% calculated on a 365/366-day basis.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Seventh Amendment had a term of 24 months and automatically renews for additional six-month terms unless either party gives written notice
of its intent not to renew at least six months prior to the end of a term. S.K. Funding will have a priority position as compared to
the Company in the case of a default by any of the borrowers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
April 2021, we entered into the Eleventh Amendment (the &#8220;Eleventh Amendment&#8221;) to our Loan Purchase and Sale Agreement with
S.K. Funding. The purpose of the Eleventh Amendment was to allow a principal increase to $<span id="xdx_90F_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20210430__us-gaap--TypeOfArrangementAxis__custom--LoanPurchaseAndSaleAgreementMember_zNONOwePZpNa" title="Debt face value"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2021-04-30_custom_LoanPurchaseAndSaleAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,000</ix:nonFraction></span> from the original $<span id="xdx_909_eus-gaap--DebtInstrumentUnamortizedDiscount_iI_pn3n3_c20210430__us-gaap--TypeOfArrangementAxis__custom--LoanPurchaseAndSaleAgreementMember_zQSBjIV4maqh" title="Debt instrument original value"><ix:nonFraction name="us-gaap:DebtInstrumentUnamortizedDiscount" contextRef="AsOf2021-04-30_custom_LoanPurchaseAndSaleAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,000</ix:nonFraction></span> in the Tenth
Amendment dated January 2019. In addition, if the collateral value drops then an unsecured portion or $<span id="xdx_90C_eus-gaap--AdditionalCollateralAggregateFairValue_iI_pn3n3_c20210430_zMWr0YZtRIk3" title="Additional collateral value"><ix:nonFraction name="us-gaap:AdditionalCollateralAggregateFairValue" contextRef="AsOf2021-04-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">400</ix:nonFraction></span> may be used until the collateral
is increased back to $<span id="xdx_902_ecustom--AdditionalCollateralAggregateFairValueIncreased_iI_pn3n3_c20210430_z2aeRr3DPaBg" title="Increased additional collateral value"><ix:nonFraction name="SHEP:AdditionalCollateralAggregateFairValueIncreased" contextRef="AsOf2021-04-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,000</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Eleventh Amendment has a term of 12 months and will automatically renew for an additional six-month term unless either party gives written
notice of its intent not to renew at least five months prior to the end of a term. S.K. Funding will have a priority position as compared
to the Company in the case of a default by any of the borrowers.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration: underline">Lines
of Credit</span></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Lines
of Credit with Mr. Wallach and His Affiliates</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2018, we entered into the First Amendment to the line of credit with our Chief Executive Officer and his wife (the &#8220;Wallach
LOC&#8221;) which modified the interest rate on the Wallach LOC to generally equal the prime rate plus <span id="xdx_90A_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20180630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachLOCMember__us-gaap--VariableRateAxis__custom--PrimePlusMember_zCmHBPmtooLl" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2018-06-30_custom_WallachLOCMember_custom_PrimePlusMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3</ix:nonFraction></span>%. The interest rate for the
Wallach LOC was <span id="xdx_906_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachLOCMember_ziWlXO4ZGRe6" title="Debt instrument interest rate"><span id="xdx_909_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachLOCMember_zuG4hUsCacT9" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2021-12-31_custom_WallachLOCMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2020-12-31_custom_WallachLOCMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6.25</ix:nonFraction></ix:nonFraction></span></span>% as of December 31, 2021 and 2020. As of December 31, 2021, and 2020, the amount outstanding pursuant to the Wallach
LOC was $<span id="xdx_90B_eus-gaap--LineOfCredit_iI_pn3n3_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachLOCMember_zjsoNIewrM26" title="Long-term line of credit"><span id="xdx_900_eus-gaap--LineOfCredit_iI_pn3n3_c20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachLOCMember_zaSGfyauXCoe" title="Long-term line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2021-12-31_custom_WallachLOCMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2020-12-31_custom_WallachLOCMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">0</ix:nonFraction></ix:nonFraction></span></span>. The maximum amount outstanding on the Wallach LOC is $<span id="xdx_90B_eus-gaap--LineOfCreditFacilityRemainingBorrowingCapacity_iI_pn3n3_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachLOCMember_zDoFebWc6nf7" title="Line of Credit Facility, Remaining Borrowing Capacity"><ix:nonFraction name="us-gaap:LineOfCreditFacilityRemainingBorrowingCapacity" contextRef="AsOf2021-12-31_custom_WallachLOCMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,250</ix:nonFraction></span> and the loan is a demand loan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2018, we also entered into the First Amendment to the line of credit with the 2007 Daniel M. Wallach Legacy Trust, which is our
CEO&#8217;s trust (the &#8220;Wallach Trust LOC&#8221;) which modified the interest rate on the Wallach Trust LOC to generally equal
the prime rate plus <span id="xdx_904_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20180630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachTrustLOCMember__us-gaap--VariableRateAxis__custom--PrimePlusMember_zdVLJYYOZyR2" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2018-06-30_custom_WallachTrustLOCMember_custom_PrimePlusMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3</ix:nonFraction></span>%. The interest rate for this borrowing was <span id="xdx_905_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachTrustLOCMember_z0VE4TFYlhz2" title="Debt instrument interest rate"><span id="xdx_90D_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachTrustLOCMember_zHtg8k6O7nmb" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2021-12-31_custom_WallachTrustLOCMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2020-12-31_custom_WallachTrustLOCMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6.25</ix:nonFraction></ix:nonFraction></span></span>% as of December 31, 2021 and 2020. There were no amounts borrowed
against the Wallach Trust LOC as of December 31, 2021 and 2020. The maximum amount outstanding on the Wallach Trust LOC is $<span id="xdx_903_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pn3n3_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WallachTrustLOCMember_zDrXkQjWaSle" title="Line of credit facility, maximum borrowing capacity"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumBorrowingCapacity" contextRef="AsOf2021-12-31_custom_WallachTrustLOCMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">250</ix:nonFraction></span> and the
loan is a demand loan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Line
of Credit with William Myrick</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2018, we entered into a line of credit agreement (the &#8220;Myrick LOC Agreement&#8221;) with our Executive Vice President (&#8220;EVP&#8221;),
William Myrick. Pursuant to the Myrick LOC Agreement, Mr. Myrick provides us with a line of credit (the &#8220;Myrick LOC&#8221;) with
the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $<span id="xdx_90F_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pn3n3_c20180630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MyrickLOCAgreementAgreementMember_zhKJOVk5mwJg" title="Line of credit facility, maximum borrowing capacity"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumBorrowingCapacity" contextRef="AsOf2018-06-30_custom_MyrickLOCAgreementAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,000</ix:nonFraction></span>;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    by a lien against all of our assets;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
    of funds to us of prime rate plus <span id="xdx_905_eus-gaap--LineOfCreditFacilityCommitmentFeePercentage_pid_dp_uPure_c20180601__20180630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MyrickLOCAgreementAgreementMember_zQTXv0xzltcf" title="line of credit facility, commitment fee percentage"><ix:nonFraction name="us-gaap:LineOfCreditFacilityCommitmentFeePercentage" contextRef="From2018-06-012018-06-30_custom_MyrickLOCAgreementAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3</ix:nonFraction></span>%; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
    upon demand.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021 and 2020, the amount outstanding pursuant to the Myrick LOC was $<span id="xdx_902_eus-gaap--LineOfCredit_iI_pn3n3_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MyrickLOCAgreementAgreementMember_zSC7HdsLw4M6" title="Long-term line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2021-12-31_custom_MyrickLOCAgreementAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">859</ix:nonFraction></span> and $<span id="xdx_907_eus-gaap--LineOfCredit_iI_pn3n3_c20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MyrickLOCAgreementAgreementMember_zEnNNQctW2j6" title="Long-term line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2020-12-31_custom_MyrickLOCAgreementAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">0</ix:nonFraction></span>, respectively. For the years ended December
31, 2021 and 2020, interest expense was $<span id="xdx_906_eus-gaap--InterestExpenseDebt_pn3n3_c20210101__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MyrickLOCAgreementAgreementMember_zl9dcdjzSmz6" title="Interest expense, debt"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2021-01-012021-12-31_custom_MyrickLOCAgreementAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">6</ix:nonFraction></span> and $<span id="xdx_902_eus-gaap--InterestExpenseDebt_pn3n3_c20200101__20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MyrickLOCAgreementAgreementMember_zMmbtAgyNhJ5" title="Interest expense, debt"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2020-01-012020-12-31_custom_MyrickLOCAgreementAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">19</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Line
of Credit with Shuman</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
July 2017, we entered into a line of credit agreement (the &#8220;Shuman LOC Agreement&#8221;) with Steven K. Shuman, which is now held
by Cindy K. Shuman. Pursuant to the Shuman LOC Agreement, Shuman provides us with a revolving line of credit (the &#8220;Shuman LOC&#8221;)
with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $<span id="xdx_906_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pn3n3_c20170731__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ShumanMember__us-gaap--TypeOfArrangementAxis__custom--ShumanLineOfCreditAgreementMember_zGMQirQqTzj4" title="Line of credit facility, maximum borrowing capacity"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumBorrowingCapacity" contextRef="AsOf2017-07-31_custom_ShumanMember_custom_ShumanLineOfCreditAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,325</ix:nonFraction></span>;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    with assignments of certain notes and mortgages;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
    of funds to us of <span id="xdx_908_eus-gaap--LineOfCreditFacilityCommitmentFeePercentage_pid_dp_uPure_c20170701__20170731__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ShumanMember__us-gaap--TypeOfArrangementAxis__custom--ShumanLineOfCreditAgreementMember_zHhlXzFMk5T2" title="line of credit facility, commitment fee percentage"><ix:nonFraction name="us-gaap:LineOfCreditFacilityCommitmentFeePercentage" contextRef="From2017-07-012017-07-31_custom_ShumanMember_custom_ShumanLineOfCreditAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10</ix:nonFraction></span>%; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_909_eus-gaap--LineOfCreditFacilityDescription_c20170701__20170731__us-gaap--TypeOfArrangementAxis__custom--ShumanLineOfCreditAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ShumanMember_zOcMYxTTp8P8" title="Line of credit facility, description"><ix:nonNumeric contextRef="From2017-07-012017-07-31_custom_ShumanMember_custom_ShumanLineOfCreditAgreementMember" name="us-gaap:LineOfCreditFacilityDescription">Due
                                                                              in July 2022, but will automatically renew for additional 12-month periods, unless either party gives notice to not
                                                                              renew.</ix:nonNumeric></span></span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 38.25pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021 and 2020, the amount outstanding pursuant to the Shuman LOC was $<span id="xdx_90C_eus-gaap--LineOfCredit_iI_pn3n3_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ShumanMember__us-gaap--TypeOfArrangementAxis__custom--ShumanLineOfCreditAgreementMember_zvK5WcEqNZtg" title="Long-term line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2021-12-31_custom_ShumanMember_custom_ShumanLineOfCreditAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">125</ix:nonFraction></span> and $<span id="xdx_903_eus-gaap--LineOfCredit_iI_pn3n3_c20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ShumanMember__us-gaap--TypeOfArrangementAxis__custom--ShumanLineOfCreditAgreementMember_zZdZPOvx1hXj" title="Long-term line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2020-12-31_custom_ShumanMember_custom_ShumanLineOfCreditAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,325</ix:nonFraction></span>, respectively. Interest expense
was $<span id="xdx_90B_eus-gaap--InterestExpenseDebt_pn3n3_c20210101__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ShumanMember__us-gaap--TypeOfArrangementAxis__custom--ShumanLineOfCreditAgreementMember_zjTgB7tlqBBh" title="Interest expense"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2021-01-012021-12-31_custom_ShumanMember_custom_ShumanLineOfCreditAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">77</ix:nonFraction></span> and $<span id="xdx_90F_eus-gaap--InterestExpenseDebt_pn3n3_c20200101__20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ShumanMember__us-gaap--TypeOfArrangementAxis__custom--ShumanLineOfCreditAgreementMember_ztp0pCFO0id5" title="Interest expense"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2020-01-012020-12-31_custom_ShumanMember_custom_ShumanLineOfCreditAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">135</ix:nonFraction></span> for the years ended December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
December 2021, the full Swanson LOC was assigned to Judith Swanson, a trustee of the 2021 Income Trust.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 118 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->17<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Line
of Credit with Swanson</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
December 2018, we entered into a Master Loan Modification Agreement (the &#8220;Swanson Modification Agreement&#8221;) with Paul Swanson
which modified the line of credit agreement between us and Mr. Swanson dated October 23, 2017. Pursuant to the Swanson Modification Agreement,
Mr. Swanson provides us with a revolving line of credit (the &#8220;Swanson LOC&#8221;) with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $<span id="xdx_905_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pn3n3_c20181231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--PaulSwansonMember__us-gaap--TypeOfArrangementAxis__custom--SwansonModificationAgreementMember_zEQhBRtYZPNe" title="Line of credit facility, maximum borrowing capacity"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumBorrowingCapacity" contextRef="AsOf2018-12-31_custom_PaulSwansonMember_custom_SwansonModificationAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">7,000</ix:nonFraction></span>;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    with assignments of certain notes and mortgages;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
    of funds to us of <span id="xdx_908_eus-gaap--LineOfCreditFacilityCommitmentFeePercentage_pid_dp_uPure_c20181201__20181231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--PaulSwansonMember__us-gaap--TypeOfArrangementAxis__custom--SwansonModificationAgreementMember_zJrCiY3oh5q4" title="Line of credit facility, commitment fee percentage"><ix:nonFraction name="us-gaap:LineOfCreditFacilityCommitmentFeePercentage" contextRef="From2018-12-012018-12-31_custom_PaulSwansonMember_custom_SwansonModificationAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6</ix:nonFraction></span>%; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
    in July 2022, but will <span id="xdx_909_eus-gaap--LineOfCreditFacilityDescription_c20181201__20181231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--PaulSwansonMember__us-gaap--TypeOfArrangementAxis__custom--SwansonModificationAgreementMember_zFampcB0nmr2" title="Line of credit facility, description"><ix:nonNumeric contextRef="From2018-12-012018-12-31_custom_PaulSwansonMember_custom_SwansonModificationAgreementMember" name="us-gaap:LineOfCreditFacilityDescription">automatically renew for additional 12-month periods</ix:nonNumeric></span>, unless either party gives notice to not renew.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Swanson LOC was fully borrowed as of December 31, 2021 and 2020. Interest expense was $<span id="xdx_909_eus-gaap--InterestExpenseDebt_pn3n3_c20210101__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--PaulSwansonMember__us-gaap--TypeOfArrangementAxis__custom--SwansonModificationAgreementMember_zZpokZ2JMAr5" title="Interest Expense, Debt"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2021-01-012021-12-31_custom_PaulSwansonMember_custom_SwansonModificationAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">619</ix:nonFraction></span> and $<span id="xdx_908_eus-gaap--InterestExpenseDebt_pn3n3_c20200101__20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--PaulSwansonMember__us-gaap--TypeOfArrangementAxis__custom--SwansonModificationAgreementMember_zaXHaqIru3Hf" title="Interest Expense, Debt"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2020-01-012020-12-31_custom_PaulSwansonMember_custom_SwansonModificationAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">709</ix:nonFraction></span> for the years ended December 31,
2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
December 2021, the full Swanson LOC was assigned to Judith Swanson, as trustee of a trust.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>New
Lines of Credit</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
2020 and 2019, we entered into five line of credit agreements (the &#8220;New LOC Agreements&#8221;). Pursuant to the New LOC Agreements,
the lenders provide us with revolving lines of credit with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $<span id="xdx_904_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pn3n3_c20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NewLineOfCreditAgreementsMember_zcTzvZgdPTx7" title="Line of credit facility, maximum borrowing capacity"><span id="xdx_908_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pn3n3_c20191231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NewLineOfCreditAgreementsMember_z4zLeU2EVte4" title="Line of credit facility, maximum borrowing capacity"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumBorrowingCapacity" contextRef="AsOf2020-12-31_custom_NewLineOfCreditAgreementsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumBorrowingCapacity" contextRef="AsOf2019-12-31_custom_NewLineOfCreditAgreementsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">6,063</ix:nonFraction></ix:nonFraction></span></span>;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    with assignments of certain notes and mortgages; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Terms
    generally allow the lenders to give one month notice after which the principal balance of a New LOC Agreement will reduce to a zero
    over the next six months.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
total balance of the New LOC Agreements was $<span id="xdx_90F_eus-gaap--LineOfCredit_iI_pn3n3_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NewLineOfCreditAgreementsMember_zoja6nu7ygW8" title="Long-term line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2021-12-31_custom_NewLineOfCreditAgreementsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,909</ix:nonFraction></span> and $<span id="xdx_906_eus-gaap--LineOfCredit_iI_pn3n3_c20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NewLineOfCreditAgreementsMember_zWfcfPlcITnc" title="Long-term line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2020-12-31_custom_NewLineOfCreditAgreementsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">4,159</ix:nonFraction></span> as of December 31, 2021 and 2020, respectively. Interest expense was $<span id="xdx_90D_eus-gaap--InterestExpenseDebt_pn3n3_c20210101__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NewLineOfCreditAgreementsMember_zN0qa0iyugY6" title="Interest expense, debt"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2021-01-012021-12-31_custom_NewLineOfCreditAgreementsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">262</ix:nonFraction></span>
and $<span id="xdx_90E_eus-gaap--InterestExpenseDebt_pn3n3_c20200101__20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NewLineOfCreditAgreementsMember_ziUKZMbZOXe4" title="Interest expense, debt"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2020-01-012020-12-31_custom_NewLineOfCreditAgreementsMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">341</ix:nonFraction></span> for the year ended December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Mortgage
Payable</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
January 2018, we entered into a commercial mortgage on our office building with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $<span id="xdx_909_eus-gaap--DebtInstrumentUnusedBorrowingCapacityAmount_iI_pn3n3_c20180131__srt--MortgageLoansOnRealEstateDescriptionTypeOfPropertyAxis__srt--OfficeBuildingMember_zmCA1r5Rjtn6" title="Debt instrument, unused borrowing capacity, amount"><ix:nonFraction name="us-gaap:DebtInstrumentUnusedBorrowingCapacityAmount" contextRef="AsOf2018-01-31_srt_OfficeBuildingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">660</ix:nonFraction></span>;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
    rate at <span id="xdx_90F_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20180131__srt--MortgageLoansOnRealEstateDescriptionTypeOfPropertyAxis__srt--OfficeBuildingMember_zDhDv26BI0q8" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2018-01-31_srt_OfficeBuildingMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5.07</ix:nonFraction></span>% per annum based on a year of 360 days; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_907_eus-gaap--DebtInstrumentMaturityDateDescription_c20180101__20180131__srt--MortgageLoansOnRealEstateDescriptionTypeOfPropertyAxis__srt--OfficeBuildingMember_zKcsMcz9Bhg" title="Debt instrument, maturity date, description"><ix:nonNumeric contextRef="From2018-01-012018-01-31_srt_OfficeBuildingMember" name="us-gaap:DebtInstrumentMaturityDateDescription">Due
    in January 2033</ix:nonNumeric></span>.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
principal amount of the Company&#8217;s commercial mortgage was $<span id="xdx_903_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20211231__srt--MortgageLoansOnRealEstateDescriptionTypeOfPropertyAxis__srt--OfficeBuildingMember_z6vHkr6KNNxh" title="Debt instrument, face amount"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2021-12-31_srt_OfficeBuildingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">604</ix:nonFraction></span> and $<span id="xdx_90B_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20201231__srt--MortgageLoansOnRealEstateDescriptionTypeOfPropertyAxis__srt--OfficeBuildingMember_zsAfAbytiE4e" title="Debt instrument, face amount"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2020-12-31_srt_OfficeBuildingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">619</ix:nonFraction></span> as of December 31, 2021 and 2020, respectively. For the
years ended December 31, 2021 and 2020, interest expense was $<span id="xdx_90B_eus-gaap--InterestExpense_pn3n3_c20210101__20211231__srt--MortgageLoansOnRealEstateDescriptionTypeOfPropertyAxis__srt--OfficeBuildingMember_zDU4DXWI1iC7" title="Interest expense"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2021-01-012021-12-31_srt_OfficeBuildingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">32</ix:nonFraction></span> and $<span id="xdx_906_eus-gaap--InterestExpense_pn3n3_c20200101__20201231__srt--MortgageLoansOnRealEstateDescriptionTypeOfPropertyAxis__srt--OfficeBuildingMember_zFtPwD6sYsp7" title="Interest expense"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-01-012020-12-31_srt_OfficeBuildingMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">33</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Community
Loan</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
June 2020, we entered into a business loan agreement with Community Bank (&#8220;Community Loan&#8221;) with the following terms:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal
    not to exceed $<span id="xdx_908_eus-gaap--DebtInstrumentUnusedBorrowingCapacityAmount_iI_pn3n3_c20200630__us-gaap--TypeOfArrangementAxis__custom--BusinessLoanAgreementMember_zu84qjEIB3ri" title="Debt instrument, unused borrowing capacity, amount"><ix:nonFraction name="us-gaap:DebtInstrumentUnusedBorrowingCapacityAmount" contextRef="AsOf2020-06-30_custom_BusinessLoanAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">362</ix:nonFraction></span>;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">First
    principal payment due July 2023;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
    by certain of our foreclosed assets;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
    rate at <span id="xdx_90D_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20200630__us-gaap--TypeOfArrangementAxis__custom--BusinessLoanAgreementMember_ziNkh1GWsNr4" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2020-06-30_custom_BusinessLoanAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3.8</ix:nonFraction></span>% per annum based on a year of 360 days; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_900_eus-gaap--DebtInstrumentMaturityDateDescription_c20200601__20200630__us-gaap--TypeOfArrangementAxis__custom--BusinessLoanAgreementMember_zlehyaaGlTF2" title="Debt instrument, maturity date, description"><ix:nonNumeric contextRef="From2020-06-012020-06-30_custom_BusinessLoanAgreementMember" name="us-gaap:DebtInstrumentMaturityDateDescription">Due
    in July 2025</ix:nonNumeric></span>.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
principal amount for the Community Loan was $<span id="xdx_907_eus-gaap--LineOfCredit_iI_pn3n3_c20211231__us-gaap--TypeOfArrangementAxis__custom--BusinessLoanAgreementMember_zDwaFFHzsxEd" title="Long-term line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2021-12-31_custom_BusinessLoanAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">217</ix:nonFraction></span> and $<span id="xdx_90B_eus-gaap--LineOfCredit_iI_pn3n3_c20201231__us-gaap--TypeOfArrangementAxis__custom--BusinessLoanAgreementMember_zfahU5Td6tcg" title="Long-term line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2020-12-31_custom_BusinessLoanAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">362</ix:nonFraction></span> as of December 31, 2021 and 2020, respectively. Interest expense for the years
ended December 31, 2021 and 2020 was $<span id="xdx_90A_eus-gaap--InterestExpenseDebt_pn3n3_c20210101__20211231__us-gaap--TypeOfArrangementAxis__custom--BusinessLoanAgreementMember_z4hzXkE6HDg2" title="Interest expense, debt"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2021-01-012021-12-31_custom_BusinessLoanAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">11</ix:nonFraction></span> and $<span id="xdx_908_eus-gaap--InterestExpenseDebt_pn3n3_c20200101__20201231__us-gaap--TypeOfArrangementAxis__custom--BusinessLoanAgreementMember_zrKFTBY7W0kb" title="Interest expense, debt"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2020-01-012020-12-31_custom_BusinessLoanAgreementMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">8</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 119 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Secured
Deferred Financing Costs</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company had secured deferred financing costs of $<span id="xdx_90B_eus-gaap--DeferredCostsCurrentAndNoncurrent_iI_pn3n3_c20211231_zJUIz3liNm0g" title="Deferred costs"><ix:nonFraction name="us-gaap:DeferredCostsCurrentAndNoncurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">7</ix:nonFraction></span> and $<span id="xdx_907_eus-gaap--DeferredCostsCurrentAndNoncurrent_iI_pn3n3_c20201231_zdLdQtzBleZk" title="Deferred costs"><ix:nonFraction name="us-gaap:DeferredCostsCurrentAndNoncurrent" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">8</ix:nonFraction></span> as of December 31, 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Secured
Borrowings Secured by Loan Assets</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfSecuredBorrowingsTableTextBlock"><p id="xdx_897_ecustom--ScheduleOfSecuredBorrowingsTableTextBlock_zLOfPZpc24il" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Borrowings
secured by loan assets are summarized below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B8_z1clRnpPvR7f" style="display: none">Schedule of Secured Borrowings</span>&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2020</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Book Value of Loans which Served as Collateral</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Due from Shepherd&#8217;s Finance to Loan Purchaser or Lender</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold">Lender</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Jeff Eppinger</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Hardy Enterprises, Inc.</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98D_eus-gaap--PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue_iI_pdn3_c20211231__dei--LegalEntityAxis__custom--HardyEnterprisesIncMember_zQ1c8eXVk92h" title="Book Value of Loans which Served as Collateral" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1098">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_984_eus-gaap--DueFromRelatedParties_iI_pdn3_c20211231__dei--LegalEntityAxis__custom--HardyEnterprisesIncMember_zcGfL1j6gOKg" title="Hardy Enterprises, Inc" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1100">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98C_eus-gaap--PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue_iI_pn3n3_c20201231__dei--LegalEntityAxis__custom--HardyEnterprisesIncMember_ze6u7eTNi6s1" title="Book Value of Loans which Served as Collateral" style="text-align: right"><ix:nonFraction name="us-gaap:PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue" contextRef="AsOf2020-12-31_custom_HardyEnterprisesIncMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,590</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Gary Zentner</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_986_eus-gaap--PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue_iI_pn3n3_c20211231__srt--TitleOfIndividualAxis__custom--GaryZentnerMember_zUc5koP5kyLa" title="Book Value of Loans which Served as Collateral" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1106">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98A_eus-gaap--DueFromRelatedParties_iI_pn3n3_c20211231__srt--TitleOfIndividualAxis__custom--GaryZentnerMember_zw2AhXpeWlii" title="Gary Zentner" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1108">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98B_eus-gaap--PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue_iI_pn3n3_c20201231__srt--TitleOfIndividualAxis__custom--GaryZentnerMember_zBthtOj5hv9c" title="Book Value of Loans which Served as Collateral" style="text-align: right"><ix:nonFraction name="us-gaap:PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue" contextRef="AsOf2020-12-31_custom_GaryZentnerMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">424</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98D_eus-gaap--DueFromRelatedParties_iI_pn3n3_c20201231__srt--TitleOfIndividualAxis__custom--GaryZentnerMember_zrFqdMa07r9e" title="Gary Zentner" style="text-align: right"><ix:nonFraction name="us-gaap:DueFromRelatedParties" contextRef="AsOf2020-12-31_custom_GaryZentnerMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">250</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">R. Scott Summers</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_eus-gaap--PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue_iI_pn3n3_c20211231__srt--TitleOfIndividualAxis__custom--RScottSummersMember_zTgL9iiiObM6" title="Book Value of Loans which Served as Collateral" style="text-align: right"><ix:nonFraction name="us-gaap:PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue" contextRef="AsOf2021-12-31_custom_RScottSummersMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,475</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_eus-gaap--DueFromRelatedParties_iI_pn3n3_c20211231__srt--TitleOfIndividualAxis__custom--RScottSummersMember_zl9CONFDGcSh" title="R. Scott Summers" style="text-align: right"><ix:nonFraction name="us-gaap:DueFromRelatedParties" contextRef="AsOf2021-12-31_custom_RScottSummersMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">847</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_981_eus-gaap--PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue_iI_pn3n3_c20201231__srt--TitleOfIndividualAxis__custom--RScottSummersMember_zcSNCTLiKWyh" title="Book Value of Loans which Served as Collateral" style="text-align: right"><ix:nonFraction name="us-gaap:PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue" contextRef="AsOf2020-12-31_custom_RScottSummersMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,259</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98D_eus-gaap--DueFromRelatedParties_iI_pn3n3_c20201231__srt--TitleOfIndividualAxis__custom--RScottSummersMember_zmiu26gsg0V6" title="R. Scott Summers" style="text-align: right"><ix:nonFraction name="us-gaap:DueFromRelatedParties" contextRef="AsOf2020-12-31_custom_RScottSummersMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">847</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">John C. Solomon</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_980_eus-gaap--PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue_iI_pn3n3_c20211231__srt--TitleOfIndividualAxis__custom--JohnCSolomonMember_zMmw9zeAK034" title="Book Value of Loans which Served as Collateral" style="text-align: right"><ix:nonFraction name="us-gaap:PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue" contextRef="AsOf2021-12-31_custom_JohnCSolomonMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,139</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98E_eus-gaap--DueFromRelatedParties_iI_pn3n3_c20211231__srt--TitleOfIndividualAxis__custom--JohnCSolomonMember_z3zdYykKBCg5" title="John C. Solomon" style="text-align: right"><ix:nonFraction name="us-gaap:DueFromRelatedParties" contextRef="AsOf2021-12-31_custom_JohnCSolomonMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">563</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_eus-gaap--PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue_iI_pn3n3_c20201231__srt--TitleOfIndividualAxis__custom--JohnCSolomonMember_zFyDbkH0ikoj" title="Book Value of Loans which Served as Collateral" style="text-align: right"><ix:nonFraction name="us-gaap:PledgedAssetsSeparatelyReportedLoansPledgedAsCollateralAtFairValue" contextRef="AsOf2020-12-31_custom_JohnCSolomonMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">743</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_982_eus-gaap--DueFromRelatedParties_iI_pn3n3_c20201231__srt--TitleOfIndividualAxis__custom--JohnCSolomonMember_zkYFC0zNDK5" title="John C. Solomon" style="text-align: right"><ix:nonFraction name="us-gaap:DueFromRelatedParties" contextRef="AsOf2020-12-31_custom_JohnCSolomonMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">563</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt"> Swanson</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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</ix:nonNumeric><p id="xdx_8A0_zTudOmA8shKe" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Unsecured
Borrowings</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration: underline">Unsecured
Notes through the Public Offering (&#8220;Notes Program&#8221;)</span></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
effective interest rate on borrowings through our Notes Program at December 31, 2021 and 2020 was <span id="xdx_90B_eus-gaap--DebtInstrumentInterestRateEffectivePercentage_iI_pid_dp_uPure_c20211231__us-gaap--DebtInstrumentAxis__custom--NotesProgramMember_zAUHNcb473a4" title="Debt instrument interest rate, effective percentage"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" contextRef="AsOf2021-12-31_custom_NotesProgramMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">9.28</ix:nonFraction></span>% and <span id="xdx_908_eus-gaap--DebtInstrumentInterestRateEffectivePercentage_iI_pid_dp_uPure_c20201231__us-gaap--DebtInstrumentAxis__custom--NotesProgramMember_zpkVhnDlmh06" title="Debt instrument interest rate, effective percentage"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" contextRef="AsOf2020-12-31_custom_NotesProgramMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10.38</ix:nonFraction></span>%, respectively, not
including the amortization of deferred financing costs. There are limited rights of early redemption. We generally offer four durations
at any given time, ranging from 12 to 48 months. The following table shows the roll forward of our Notes Program:</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfDebtTableTextBlock"><p id="xdx_891_eus-gaap--ScheduleOfDebtTableTextBlock_zaTjELSn2v5j" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-right: 0; margin-bottom: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BF_zKhfeavvyp82" style="display: none">Schedule of Roll Forward of Notes Outstanding</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Notes issued</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_982_eus-gaap--ProceedsFromNotesPayable_pn3n3_c20210101__20211231_zqnz0lU2r7lb" title="Notes issued" style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromNotesPayable" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">7,876</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_985_eus-gaap--RepaymentsOfNotesPayable_iN_pn3n3_di_c20210101__20211231_zPOt5Mg7OAD1" title="Note repayments / redemptions" style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:RepaymentsOfNotesPayable" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">8,722</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_983_eus-gaap--RepaymentsOfNotesPayable_iN_pn3n3_di_c20200101__20201231_zrZM0Ahl0Gn9" title="Note repayments / redemptions" style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:RepaymentsOfNotesPayable" contextRef="From2020-01-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">6,517</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_981_eus-gaap--DeferredFinanceCostsNet_iNI_pn3n3_di_c20211231_z1MIvJASQM94" title="Less deferred financing costs, net" style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:DeferredFinanceCostsNet" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">367</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_985_eus-gaap--DeferredFinanceCostsNet_iNI_pn3n3_di_c20201231_zixevalNUSX" title="Less deferred financing costs, net" style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:DeferredFinanceCostsNet" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">416</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98A_eus-gaap--NotesPayableCurrent_iI_pn3n3_c20211231_zGWO1Nkq2UJh" title="Notes outstanding, net" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:NotesPayableCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">20,269</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98B_eus-gaap--NotesPayableCurrent_iI_pn3n3_c20201231_z1bKicSPMqQ6" title="Notes outstanding, net" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:NotesPayableCurrent" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">21,066</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A4_zEVTpwSxpzG6" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfRollForwardOfDeferredFinancingCostsTableTextBlock"><p id="xdx_89D_ecustom--ScheduleOfRollForwardOfDeferredFinancingCostsTableTextBlock_z9xNUZMYkY68" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a roll forward of deferred financing costs:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B4_z03vxStngiNc" style="display: none">Schedule of Roll Forward of Deferred Financing Costs</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</ix:nonNumeric><p id="xdx_8AD_zgPhxNnJ9l7c" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 120 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfRollForwardOfAccumulatedAmortizationOfDeferredFinancingCostsTableTextBlock"><p id="xdx_89C_ecustom--ScheduleOfRollForwardOfAccumulatedAmortizationOfDeferredFinancingCostsTableTextBlock_zP81Ki8lbb5g" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a roll forward of the accumulated amortization of deferred financing costs:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BC_zklb8Pj2PYDj" style="display: none">Schedule of Roll Forward of Accumulated Amortization of Deferred Financing Costs</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 56%; text-align: left">Accumulated amortization, beginning balance</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt">Additions</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; padding-left: 10pt">Disposals</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_981_ecustom--DisposalsOfDeferredFinancingCost_pn3n3_c20210101__20211231_zVbTwXQ3pGTk" title="Disposals" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1208">-</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Accumulated amortization, ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98A_eus-gaap--AccumulatedAmortizationDeferredFinanceCosts_iE_pn3n3_c20210101__20211231_zwaKJMTSGobb" title="Accumulated amortization, ending balance" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AccumulatedAmortizationDeferredFinanceCosts" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">694</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98F_eus-gaap--AccumulatedAmortizationDeferredFinanceCosts_iE_pn3n3_c20200101__20201231_zYhAoLbtvSf8" title="Accumulated amortization, ending balance" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AccumulatedAmortizationDeferredFinanceCosts" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">526</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8A8_ziGD21auewUj" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Other
Unsecured Debts</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfOtherUnsecuredLoansTableTextBlock"><p id="xdx_89B_ecustom--ScheduleOfOtherUnsecuredLoansTableTextBlock_zcoo4SvWcffa" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
other unsecured debts are detailed below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span id="xdx_8BD_zpO8R86AS383" style="display: none">Schedule of Other Unsecured Loans</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Principal Amount Outstanding as of</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Loan</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Maturity</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Date</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td>
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31,<br />
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31,<br />
 </b></span><b>2020</b></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 30%; text-align: left">Unsecured Note with Seven Kings Holdings, Inc.</td><td style="width: 2%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right"><span id="xdx_90C_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--UnsecuredNoteWithSevenKingsMember_fKDEp_zqFJ0cRfzS5g" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_UnsecuredNoteWithSevenKingsMember" id="Fact001220" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">9.5</ix:nonFraction></span></td><td style="width: 1%; text-align: left">%</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Unsecured Line of Credit from Swanson</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_90C_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--UnsecuredLineofCreditfromSwansonMember_z6jW0tvlXttg" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_UnsecuredLineofCreditfromSwansonMember" name="us-gaap:DebtInstrumentMaturityDateDescription">July 2022</ix:nonNumeric></span></td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Unsecured Line of Credit from Builder Finance, Inc.</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_906_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--UnsecuredLineofCreditfromBuliderFinanceMember_zccuHduC5z43" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_UnsecuredLineofCreditfromBuliderFinanceMember" name="us-gaap:DebtInstrumentMaturityDateDescription">January 2023</ix:nonNumeric></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_983_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--UnsecuredLineofCreditfromBuliderFinanceMember_zJBOxDAqu3s7" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_UnsecuredLineofCreditfromBuliderFinanceMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">750</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--UnsecuredLineofCreditfromBuliderFinanceMember_z1kO5V5QOsya" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1240">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_90D_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteOneMember_z75Ov8q6DiEe" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteOneMember" name="us-gaap:DebtInstrumentMaturityDateDescription">December 2021</ix:nonNumeric></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_987_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteOneMember_zZBQpnWdkFj5" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteOneMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">146</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_90D_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwoMember_zn7S7eDatJc9" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteTwoMember" name="us-gaap:DebtInstrumentMaturityDateDescription">April 2024</ix:nonNumeric></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_98E_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwoMember_zizh51qRnf8d" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteTwoMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">100</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_984_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwoMember_zkxHpzQXycL5" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteTwoMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">100</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_900_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteThreeMember_zjnCnYYmFYwe" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteThreeMember" name="us-gaap:DebtInstrumentMaturityDateDescription">April 2021</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_907_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteThreeMember_fKDEp_zggTAYb9a8ga" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteThreeMember" id="Fact001260" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteThreeMember_zzgNGsNjlTs7" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1262">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_981_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteThreeMember_z5YHeKNELhZ9" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteThreeMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">174</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_909_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFourMember_zoOgMbovhz9i" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteFourMember" name="us-gaap:DebtInstrumentMaturityDateDescription">August 2022</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90B_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFourMember_fKDEp_zsKWTx0K7ifk" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteFourMember" id="Fact001268" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">11.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_981_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFourMember_zMWJgGBZAfU4" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteFourMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">200</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_981_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFourMember_zttD0usvcW4k" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteFourMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">200</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_908_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFiveMember_z8XnEnHfF0li" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteFiveMember" name="us-gaap:DebtInstrumentMaturityDateDescription">March 2023</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_906_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFiveMember_fKDEp_zphV3u84xdu7" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteFiveMember" id="Fact001276" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">11.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_984_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFiveMember_zeNGvxXSEgae" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1278">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_986_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFiveMember_z4aHK0fYHSEg" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteFiveMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">169</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_902_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSixMember_zD49SDT2S3Pe" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteSixMember" name="us-gaap:DebtInstrumentMaturityDateDescription">February 2023</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_903_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSixMember_fKDEp_zBl8yZbHLFE5" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteSixMember" id="Fact001284" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98F_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSixMember_zw5R8eTaOGk" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteSixMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">600</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_980_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSixMember_zQbQp7518iq6" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1288">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_907_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSevenMember_zAMPclECGIRh" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteSevenMember" name="us-gaap:DebtInstrumentMaturityDateDescription">June 2023</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_907_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSevenMember_fKDEp_z3oxLurxOtJe" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteSevenMember" id="Fact001292" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_982_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSevenMember_zvOvjljTAaN" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteSevenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">400</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSevenMember_zG21kRnnIeI8" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1296">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_90A_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteEightMember_z9n0n7NzjvAh" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteEightMember" name="us-gaap:DebtInstrumentMaturityDateDescription">February 2021</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_905_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteEightMember_fKDEp_z0xUKkDyQjQ9" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteEightMember" id="Fact001300" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">11.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_981_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteEightMember_ziA4B4SW57Rf" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1302">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98C_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteEightMember_zPtjHKpH2NCl" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteEightMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">600</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_909_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteNineMember_z1jDpoAUvPLa" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteNineMember" name="us-gaap:DebtInstrumentMaturityDateDescription">Demand</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_905_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteNineMember_fKDEp_zPLgFryswmA2" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteNineMember" id="Fact001308" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_985_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteNineMember_z36ekfRHcZ8j" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1310">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_986_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteNineMember_zpGFuNFRnTNa" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1312">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_906_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTenMember_zRqCSo8ceyjh" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteTenMember" name="us-gaap:DebtInstrumentMaturityDateDescription">December 2022</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90D_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTenMember_fKDEp_zp9DcDrVh1d3" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteTenMember" id="Fact001316" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_987_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTenMember_zO8PIOrNxKAc" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteTenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_986_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteElevenMember_zk271zRUMU51" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteElevenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">20</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98A_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteElevenMember_zsdg2hUlGCaj" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteElevenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">20</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_901_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwelveMember_zSCRfv6JhWC2" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteTwelveMember" name="us-gaap:DebtInstrumentMaturityDateDescription">February 2024</ix:nonNumeric></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_98A_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwelveMember_zQRmbCIYoeL1" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteTwelveMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">20</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwelveMember_zIpVrNEpaBvd" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteTwelveMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">20</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_900_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteThirteenMember_zGjdZ9TKldz7" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteThirteenMember" name="us-gaap:DebtInstrumentMaturityDateDescription">January 2025</ix:nonNumeric></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_982_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteThirteenMember_zunR0AL9aXYe" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteThirteenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">15</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_989_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteThirteenMember_z57J7isfGK5k" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1344">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_90D_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFourteenMember_z0icmTTDai8a" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteFourteenMember" name="us-gaap:DebtInstrumentMaturityDateDescription">November 2021</ix:nonNumeric></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_983_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFourteenMember_zEp9vDFheIja" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1350">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_986_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFourteenMember_zy2gvQwnwKO1" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteFourteenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">200</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_901_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFifteenMember_zKmqwOMh2Mpk" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteFifteenMember" name="us-gaap:DebtInstrumentMaturityDateDescription">November 2023</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_903_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFifteenMember_fKDEp_zOzpQwXjbxIf" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteFifteenMember" id="Fact001356" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">9.5</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_981_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFifteenMember_zTnp6WzWcmaf" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteFifteenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">200</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteFifteenMember_zt3fzov9wJrl" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1360">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_90F_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSixteenMember_zqAIHct5T5Fe" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteSixteenMember" name="us-gaap:DebtInstrumentMaturityDateDescription">October 2024</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_908_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSixteenMember_fKDEp_zcSv6tV08Er1" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteSixteenMember" id="Fact001364" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_989_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSixteenMember_z4HmrtIZAcEh" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteSixteenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">700</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_984_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSixteenMember_zSrjISVRxAF9" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteSixteenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">700</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_900_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSeventeenMember_zw98PLB5uk54" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteSeventeenMember" name="us-gaap:DebtInstrumentMaturityDateDescription">December 2024</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90D_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSeventeenMember_fKDEp_zRUXFAwalnC8" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteSeventeenMember" id="Fact001372" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98B_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSeventeenMember_z5i8Ig38h5h1" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteSeventeenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">100</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98D_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteSeventeenMember_z98wHnAYCiB8" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SubordinatedPromissoryNoteSeventeenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">100</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_907_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteEighteenMember_zqhuk0mr7pPf" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteEighteenMember" name="us-gaap:DebtInstrumentMaturityDateDescription">April 2025</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_905_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteEighteenMember_fKDEp_z8DRzRi25QU9" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteEighteenMember" id="Fact001380" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteEighteenMember_zHX3usSQuBy9" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteEighteenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">202</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_985_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteEighteenMember_zJIGm8mnTVOi" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1384">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_902_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteNineteenMember_z7zMssiTtaC" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteNineteenMember" name="us-gaap:DebtInstrumentMaturityDateDescription">July 2023</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_900_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteNineteenMember_fKDEp_zkqtlVqUE9oh" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteNineteenMember" id="Fact001388" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">8.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_981_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteNineteenMember_zTXXa4k8zvP6" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteNineteenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">100</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_985_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteNineteenMember_zBuXgYTSZAl2" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1392">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_902_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyMember_z9REaRQBf4B9" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteTwentyMember" name="us-gaap:DebtInstrumentMaturityDateDescription">July 2024</ix:nonNumeric></span></td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_90C_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyOneMember_zXpCf4uEoc41" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteTwentyOneMember" name="us-gaap:DebtInstrumentMaturityDateDescription">September 2023</ix:nonNumeric></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_989_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyOneMember_zh7l9gQv9asi" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteTwentyOneMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">94</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98D_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyOneMember_zkzxDEet6Ce9" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1408">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_905_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyTwoMember_zRx7suzgOlQ8" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteTwentyTwoMember" name="us-gaap:DebtInstrumentMaturityDateDescription">October 2023</ix:nonNumeric></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_902_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyTwoMember_fKDEp_zI4EoiVql6F" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteTwentyTwoMember" id="Fact001412" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">7.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_98C_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyTwoMember_zZP2DUCcpe2g" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1416">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span id="xdx_90A_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyThreeMember_zxzZIRg7PIH5" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SubordinatedPromissoryNoteTwentyThreeMember" name="us-gaap:DebtInstrumentMaturityDateDescription">December 2025</ix:nonNumeric></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td id="xdx_986_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyThreeMember_zCg4aBbvzEj2" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SubordinatedPromissoryNoteTwentyThreeMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">180</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98A_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SubordinatedPromissoryNoteTwentyThreeMember_z9l7HLb6yQx3" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1424">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Senior Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90F_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteMember_fKDMp_zd32lzEDVooa" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SeniorSubordinatedPromissoryNoteMember" id="Fact001426" name="us-gaap:DebtInstrumentMaturityDateDescription">March 2022</ix:nonNumeric></span><sup id="xdx_F57_z9lHqoyuq758">(3)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_903_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteMember_fKDEp_z8RnefBQGlT2" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SeniorSubordinatedPromissoryNoteMember" id="Fact001428" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteMember_zkjb2Y1xlnua" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SeniorSubordinatedPromissoryNoteMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">334</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98D_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteMember_zExICjQUULO3" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SeniorSubordinatedPromissoryNoteMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">352</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Senior Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_908_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteOneMember_fKDQp_zdCOwu7ZULha" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SeniorSubordinatedPromissoryNoteOneMember" id="Fact001434" name="us-gaap:DebtInstrumentMaturityDateDescription">March 2022</ix:nonNumeric></span><sup id="xdx_F5B_zWdSpolc24Oc">(4)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90F_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteOneMember_fKDEp_zIT7T5mKWqF1" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SeniorSubordinatedPromissoryNoteOneMember" id="Fact001436" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteOneMember_zSv1attJTRzd" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1438">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_989_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteOneMember_zvRWEel2RSZ5" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SeniorSubordinatedPromissoryNoteOneMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">728</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Junior Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_905_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--JuniorSubordinatedPromissoryNoteMember_fKDQp_zGFl29dOctr6" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_JuniorSubordinatedPromissoryNoteMember" id="Fact001442" name="us-gaap:DebtInstrumentMaturityDateDescription">March 2022</ix:nonNumeric></span><sup id="xdx_F5C_zuzpBU7dLpzd">(4)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_904_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--JuniorSubordinatedPromissoryNoteMember_fKDEp_z53e1uHTLYxh" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_JuniorSubordinatedPromissoryNoteMember" id="Fact001444" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">22.5</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_980_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--JuniorSubordinatedPromissoryNoteMember_z1f2DwNCrkdf" title="Other Unsecured Loans" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1446">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_989_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--JuniorSubordinatedPromissoryNoteMember_zGNUM86H9li5" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_JuniorSubordinatedPromissoryNoteMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">417</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Senior Subordinated Promissory Note</td><td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90D_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteTwoMember_fKDUp_zhG3U8ebBdzf" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SeniorSubordinatedPromissoryNoteTwoMember" id="Fact001450" name="us-gaap:DebtInstrumentMaturityDateDescription">October 2024</ix:nonNumeric></span><sup id="xdx_F56_zRbD9eIIWLgl">(5)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90F_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteTwoMember_fKDEp_zMoZz60hJaOi" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_SeniorSubordinatedPromissoryNoteTwoMember" id="Fact001452" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.0</ix:nonFraction></span></td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_984_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteTwoMember_zVQU0dSNF7A" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_SeniorSubordinatedPromissoryNoteTwoMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">720</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98A_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--SeniorSubordinatedPromissoryNoteTwoMember_zDX341eSkmj8" title="Other Unsecured Loans" style="text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_SeniorSubordinatedPromissoryNoteTwoMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">720</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Junior Subordinated Promissory Note</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_909_eus-gaap--DebtInstrumentMaturityDateDescription_dt_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--JuniorSubordinatedPromissoryNoteOneMember_fKDUp_zmvennSiStac" title="Maturity Date"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_JuniorSubordinatedPromissoryNoteOneMember" id="Fact001458" name="us-gaap:DebtInstrumentMaturityDateDescription">October 2024</ix:nonNumeric></span><sup id="xdx_F56_zyOiV1rJiBJ">(5)</sup></span></td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right"><span id="xdx_90F_eus-gaap--DebtInstrumentInterestRateDuringPeriod_pid_dp_uPure_c20210101__20211231__us-gaap--DebtInstrumentAxis__custom--JuniorSubordinatedPromissoryNoteOneMember_fKDEp_zQFBYcLifY02" title="Interest Rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateDuringPeriod" contextRef="From2021-01-012021-12-31_custom_JuniorSubordinatedPromissoryNoteOneMember" id="Fact001460" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">20.0</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left">%</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_981_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--JuniorSubordinatedPromissoryNoteOneMember_zT2hHevRnO7a" title="Other Unsecured Loans" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_JuniorSubordinatedPromissoryNoteOneMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">447</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_98B_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--JuniorSubordinatedPromissoryNoteOneMember_zR1BQZWDheE9" title="Other Unsecured Loans" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_JuniorSubordinatedPromissoryNoteOneMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">447</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 2.5pt">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; text-align: right">&#160;</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98A_ecustom--OtherUnsecuredLoans_iI_c20211231__us-gaap--DebtInstrumentAxis__custom--OtherUnsecuredDebtMember_zZE9hc1EDBg6" title="Other Unsecured Loans" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2021-12-31_custom_OtherUnsecuredDebtMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">7,444</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_ecustom--OtherUnsecuredLoans_iI_c20201231__us-gaap--DebtInstrumentAxis__custom--OtherUnsecuredDebtMember_zfG8Wpna8j11" title="Other Unsecured Loans" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="SHEP:OtherUnsecuredLoans" contextRef="AsOf2020-12-31_custom_OtherUnsecuredDebtMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">5,911</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span id="xdx_F09_zRROtEmcsaFc" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
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annum, based upon actual days outstanding and a 365/366-day year.</ix:footnote></span></td>
</tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span id="xdx_F0B_zsBh4AtVyb0a" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
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after lender gives notice.</ix:footnote></span></td>
</tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.15in; text-align: left; text-indent: -0.15in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span id="xdx_F03_z302kjL8UsAa" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
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</tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.15in; text-align: left; text-indent: -0.15in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span id="xdx_F07_zEayChc8HaJl" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td><td style="width: 5pt"></td><td style="text-align: justify"><span id="xdx_F18_zirBKYI716ce" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001474" xml:lang="en-US">These notes were
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</tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.15in; text-align: left; text-indent: -0.15in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span id="xdx_F0C_zue2fPipb5hi" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</span></td><td style="width: 5pt"></td><td style="text-align: justify"><span id="xdx_F11_zORNQRoTzwE6" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001479" xml:lang="en-US">These notes were
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</ix:nonNumeric><p id="xdx_8A3_zKXLzbXpWK2g" style="margin-top: 0; margin-bottom: 0">&#160;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
February 2021, we borrowed approximately $<span id="xdx_900_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20210228__us-gaap--DebtInstrumentAxis__custom--PaycheckProtectionProgramMember_z5Rbg6wNKGA7" title="Debt instrument, face amount"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2021-02-28_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">361</ix:nonFraction></span> pursuant to the Paycheck Protection Program (&#8220;PPP&#8221;), created under the Coronavirus
Aid, Relief, and Economic Security Act, or CARES Act. The PPP is intended to provide loans to qualified businesses to cover payroll and
certain other identified costs. Funds from the loan may only be used for certain purposes, including payroll, benefits, rent, and utilities.
All or a portion of the loan may be forgivable, as provided by the terms of the PPP.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2021, the full principal amount of the PPP loan or $<span id="xdx_900_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20210831__us-gaap--DebtInstrumentAxis__custom--PaycheckProtectionProgramMember_zMLdEQQrRarb" title="Debt instrument, face amount"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2021-08-31_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">361</ix:nonFraction></span> and the accrued interest were forgiven by the U.S. Small Business Administration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
April 2020, the Company received a grant under the Economic Injury Disaster Loan Emergency Advance (the &#8220;EIDL Advance&#8221;) of
$<span id="xdx_901_eus-gaap--DebtInstrumentDecreaseForgiveness_pn3n3_c20200401__20200430__us-gaap--DebtInstrumentAxis__custom--PaycheckProtectionProgramMember_zsevWol0rCbd" title="Debt instrument, forgiveness"><ix:nonFraction name="us-gaap:DebtInstrumentDecreaseForgiveness" contextRef="From2020-04-012020-04-30_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">10</ix:nonFraction></span> which was used for payroll and other certain operating expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
February 2021, the full EIDL Advance of $<span id="xdx_90C_eus-gaap--DebtInstrumentDecreaseForgiveness_pn3n3_c20210201__20210228__us-gaap--DebtInstrumentAxis__custom--PaycheckProtectionProgramMember_ze2uRvwcNqj8" title="Debt instrument, forgiveness"><ix:nonFraction name="us-gaap:DebtInstrumentDecreaseForgiveness" contextRef="From2021-02-012021-02-28_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">10</ix:nonFraction></span> and accrued interest were forgiven by the U.S. Small Business Administration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
May 2020, we borrowed approximately $<span id="xdx_904_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20200531__us-gaap--DebtInstrumentAxis__custom--PaycheckProtectionProgramMember_zsv5afjtgrmd" title="Debt instrument, face amount"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2020-05-31_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">361</ix:nonFraction></span> pursuant to the PPP which was used for payroll and other certain operating expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
November 2020, the full principal amount of the PPP loan or $<span id="xdx_90B_eus-gaap--DebtInstrumentDecreaseForgiveness_pn3n3_c20201101__20201130__us-gaap--DebtInstrumentAxis__custom--PaycheckProtectionProgramMember_zTEc1F9QKB44" title="Debt Instrument, Decrease, Forgiveness"><ix:nonFraction name="us-gaap:DebtInstrumentDecreaseForgiveness" contextRef="From2020-11-012020-11-30_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">361</ix:nonFraction></span> and the accrued interest were forgiven by the U.S. Small Business Administration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.15in; text-align: left; text-indent: -0.15in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:PreferredStockTextBlock"><p id="xdx_808_eus-gaap--PreferredStockTextBlock_z6lF8UpMAZP" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>8.
<span id="xdx_82F_zJ9dwtDS9vj">Redeemable Preferred Equity</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Series
C cumulative preferred units (&#8220;Series C Preferred Units&#8221;) are redeemable by the Company at any time, upon a change of control
or liquidation, or by the investor any time after 6 years from the initial date of purchase. T<span id="xdx_907_ecustom--EquityDividendDistributionDescription_c20210101__20211231__us-gaap--StatementEquityComponentsAxis__custom--SeriesCPreferredUnitsMember_zjJEjmgqBSg5" title="Equity dividend distribution, description"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SeriesCPreferredUnitsMember" name="SHEP:EquityDividendDistributionDescription">he Series C Preferred Units have a fixed
value which is their purchase price and preferred liquidation and distribution rights. Yearly distributions of 12% of the Series C Preferred
Units&#8217; value (provided profits are available) will be made on a quarterly basis. This rate may increase if any interest rate on
our public Notes offering rises above 12%. Dividends may be reinvested monthly into additional Series C Preferred Units.</ix:nonNumeric></span> The Series C
Preferred Units have the same preferential rights as the Series B Preferred Units as more fully described in the following note.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfRollForwardOfRedeemablePreferredEquityTableTextBlock"><p id="xdx_89F_ecustom--ScheduleOfRollForwardOfRedeemablePreferredEquityTableTextBlock_zUtJXDGMS0Vj" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Roll
forward of redeemable preferred equity:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0; margin-right: 0; margin-bottom: 0"><span id="xdx_8B5_zMA2HAUJcvT6" style="display: none">Schedule of Roll Forward of Redeemable Preferred Equity</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2020</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 56%; text-align: left">Beginning balance</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_980_ecustom--RedeemablePreferredEquity_iS_pn3n3_c20210101__20211231_zGIGomz28hV7" title="Series C Cumulative Preferred Equity, beginning balance" style="width: 18%; text-align: right"><ix:nonFraction name="SHEP:RedeemablePreferredEquity" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,582</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_985_ecustom--RedeemablePreferredEquity_iS_pn3n3_c20200101__20201231_z4VVbRZZKIuk" title="Series C Cumulative Preferred Equity, beginning balance" style="width: 18%; text-align: right"><ix:nonFraction name="SHEP:RedeemablePreferredEquity" contextRef="AsOf2019-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,959</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Additions from new investment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_981_eus-gaap--InvestmentsInAndAdvancesToAffiliatesAtFairValueGrossAdditions_pn3n3_c20210101__20211231_z9BseV5Ov70b" title="Additions from new investment" style="text-align: right"><ix:nonFraction name="us-gaap:InvestmentsInAndAdvancesToAffiliatesAtFairValueGrossAdditions" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt">Distributions</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_983_ecustom--InvestmentsInAndAdvancesToAffiliatesRedemptionsDistributions_pn3n3_c20210101__20211231_zkfQB05E2z0e" title="Distributions" style="text-align: right">(<ix:nonFraction name="SHEP:InvestmentsInAndAdvancesToAffiliatesRedemptionsDistributions" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">101</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Additions from reinvestment</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_98B_ecustom--AdditionsFromReinvestment_pn3n3_c20210101__20211231_zgBT2neVV2d6" title="Additions from reinvestment" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:AdditionsFromReinvestment" contextRef="From2021-01-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">533</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_98E_ecustom--AdditionsFromReinvestment_pn3n3_c20200101__20201231_ztI2pfeVM7Ei" title="Additions from reinvestment" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:AdditionsFromReinvestment" contextRef="From2020-01-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">372</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_ecustom--RedeemablePreferredEquity_iE_pn3n3_c20210101__20211231_zg6IDY0NI3qd" title="Series C Cumulative Preferred Equity, ending balance" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="SHEP:RedeemablePreferredEquity" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">5,014</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_ecustom--RedeemablePreferredEquity_iE_pn3n3_c20200101__20201231_zfk2kIHzmNPj" title="Series C Cumulative Preferred Equity, ending balance" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="SHEP:RedeemablePreferredEquity" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,582</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AF_zfixrlqmG2p3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:ScheduleOfRedemptionOptionForInvestorsTableTextBlock"><p id="xdx_897_ecustom--ScheduleOfRedemptionOptionForInvestorsTableTextBlock_zMNZnf9jByH1" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table shows the earliest redemption options for investors in Series C Preferred Units as of December 31, 2021:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B7_zBV4mjPWLPr" style="display: none">Schedule of Redemption Option for Investors</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Year Maturing</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Total</b></span></p>
                                                                                 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Amount</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Redeemable</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 78%; text-align: justify">2024</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_98C_ecustom--RedeemablePreferredEquity_iI_pn3n3_c20211231__us-gaap--AwardDateAxis__custom--RedemptionOptionsMaturityYearTwoThousandTwentyFourMember_zjLe6Yhrbdj2" title="2024" style="width: 18%; text-align: right"><ix:nonFraction name="SHEP:RedeemablePreferredEquity" contextRef="AsOf2021-12-31_custom_RedemptionOptionsMaturityYearTwoThousandTwentyFourMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,244</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">2025</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98D_ecustom--RedeemablePreferredEquity_iI_pn3n3_c20211231__us-gaap--AwardDateAxis__custom--RedemptionOptionsMaturityYearTwoThousandTwentyFiveMember_zXrUH6b1lPWa" title="2025" style="text-align: right"><ix:nonFraction name="SHEP:RedeemablePreferredEquity" contextRef="AsOf2021-12-31_custom_RedemptionOptionsMaturityYearTwoThousandTwentyFiveMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">402</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">2026</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_985_ecustom--RedeemablePreferredEquity_iI_pn3n3_c20211231__us-gaap--AwardDateAxis__custom--RedemptionOptionsMaturityYearTwoThousandTwentySixMember_zecOhKBXGg8e" title="2026" style="text-align: right"><ix:nonFraction name="SHEP:RedeemablePreferredEquity" contextRef="AsOf2021-12-31_custom_RedemptionOptionsMaturityYearTwoThousandTwentySixMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">309</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 1.5pt">2027</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_982_ecustom--RedeemablePreferredEquity_iI_pn3n3_c20211231__us-gaap--AwardDateAxis__custom--RedemptionOptionsMaturityYearTwoThousandTwentySevenMember_zDK7j0COi8Ag" title="2027" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:RedeemablePreferredEquity" contextRef="AsOf2021-12-31_custom_RedemptionOptionsMaturityYearTwoThousandTwentySevenMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,059</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_980_ecustom--RedeemablePreferredEquity_iI_pn3n3_c20211231_zVMod7JFzGTb" title="Total" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="SHEP:RedeemablePreferredEquity" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">5,014</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A8_zvCkd1WClcAe" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:MembersEquityNotesDisclosureTextBlock"><p id="xdx_80A_eus-gaap--MembersEquityNotesDisclosureTextBlock_zZfGk0lfnCUi" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9.
<span id="xdx_82B_zxAWsmu2mc22">Members&#8217; Capital</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are currently two classes of equity units outstanding that the Company classifies as Members&#8217; Capital: Class A common units (&#8220;Class
A Common Units&#8221;) and Series B cumulative preferred units (&#8220;Series B Preferred Units&#8221;).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, the Class A Common Units are held by eight members, all of whom have no personal liability. All Class A common
members have voting rights in proportion to their capital account. There were <span id="xdx_90F_eus-gaap--CommonUnitOutstanding_iI_c20211231__us-gaap--StatementClassOfStockAxis__custom--ClassACommonUnitsMember_zyBMZZ0qtp12" title="Common unit, outstanding"><span id="xdx_90D_eus-gaap--CommonUnitOutstanding_iI_c20201231__us-gaap--StatementClassOfStockAxis__custom--ClassACommonUnitsMember_z3kohgzTxnxb" title="Common unit, outstanding"><ix:nonFraction name="us-gaap:CommonUnitOutstanding" contextRef="AsOf2021-12-31_custom_ClassACommonUnitsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonUnitOutstanding" contextRef="AsOf2020-12-31_custom_ClassACommonUnitsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">2,629</ix:nonFraction></ix:nonFraction></span></span> Class A Common Units outstanding at both December
31, 2021 and 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90C_ecustom--NumberOfUnitsAgreedToPurchase1_c20151201__20151231__us-gaap--StatementClassOfStockAxis__custom--SeriesBPreferredUnitsMember_zO1tbktyMS8a" title="Number of units agreed to purchase"><ix:nonNumeric contextRef="From2015-12-012015-12-31_custom_SeriesBPreferredUnitsMember" name="SHEP:NumberOfUnitsAgreedToPurchase1">The
Series B Preferred Units were issued to the Hoskins Group through a reduction in a loan issued by the Hoskins Group to the Company. In
December 2015, the Hoskins Group agreed to purchase 0.1 Series B Preferred Units for $<span id="xdx_90C_ecustom--NumberOfPreferredUnitsValueToPurchaseDuringPeriod_c20151201__20151231__us-gaap--StatementClassOfStockAxis__custom--SeriesBPreferredUnitsMember_zJuoP5RW4SLl" title="Number Of Preferred Units Value To Purchase"><ix:nonNumeric contextRef="From2015-12-012015-12-31_custom_SeriesBPreferredUnitsMember" name="SHEP:NumberOfPreferredUnitsValueToPurchaseDuringPeriod">10</ix:nonNumeric></span> at each closing of a lot to a third party in
the Hamlets and Tuscany subdivision</ix:nonNumeric></span>. As of December 31, 2021, and 2020, the Hoskins Group owns a total of <span id="xdx_90C_eus-gaap--PreferredUnitsIssued_iI_pid_c20211231__us-gaap--StatementClassOfStockAxis__custom--SeriesBPreferredUnitsMember_zEA8MqeBJGDh" title="Preferred units, issued"><ix:nonFraction name="us-gaap:PreferredUnitsIssued" contextRef="AsOf2021-12-31_custom_SeriesBPreferredUnitsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">17.2</ix:nonFraction></span> and <span id="xdx_90D_eus-gaap--PreferredUnitsIssued_iI_pid_c20201231__us-gaap--StatementClassOfStockAxis__custom--SeriesBPreferredUnitsMember_zV8AOOCXDted" title="Preferred units, issued"><ix:nonFraction name="us-gaap:PreferredUnitsIssued" contextRef="AsOf2020-12-31_custom_SeriesBPreferredUnitsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">16.3</ix:nonFraction></span> Series B Preferred
Units, respectively, which were issued for a total of $<span id="xdx_904_eus-gaap--LimitedLiabilityCompanyLLCPreferredUnitIssuanceValue_iI_pn3n3_c20211231_znQB3gdMcTU3" title="Series B preferred equity, issuance value"><ix:nonFraction name="us-gaap:LimitedLiabilityCompanyLLCPreferredUnitIssuanceValue" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,720</ix:nonFraction></span> and $<span id="xdx_90B_eus-gaap--LimitedLiabilityCompanyLLCPreferredUnitIssuanceValue_iI_pn3n3_c20201231_zeDXfkgdTy6f" title="Series B preferred equity, issuance value"><ix:nonFraction name="us-gaap:LimitedLiabilityCompanyLLCPreferredUnitIssuanceValue" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,630</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Both
the Series B Preferred Units and the Series C Preferred Units have the same basic preferential status as compared to the Class A Common
Units, and are pari passu with each other. Both Preferred Unit types include a liquidation preference and a dividend preference, as well
as a 12-month recovery period for a shortfall in earnings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are two additional authorized unit classes: Class A preferred units and Class B profit units. Once Class B profit units are issued, the
existing Class A common units will become Class A preferred units. Class A Preferred units will receive preferred treatment in terms
of distributions and liquidation proceeds.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p id="xdx_808_eus-gaap--RelatedPartyTransactionsDisclosureTextBlock_z7WOSmuuWWMl" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.
<span id="xdx_820_zeaTLhezSYvj">Related Party Transactions</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has two loan agreements with Daniel M. Wallach, our CEO, and his wife, pursuant to which they provide the Company with the Wallach
LOC and the Wallach Trust LOC. The agreements lay out the terms under which those members can lend money to us, providing that we desire
the funds and the members wish to lend. The interest rate on both the Wallach LOC and the Wallach Trust LOC generally equals prime plus
<span id="xdx_90A_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20211231__us-gaap--TypeOfArrangementAxis__custom--LoanAgreementMember__us-gaap--RelatedPartyTransactionAxis__custom--WallachLOCMember__us-gaap--VariableRateAxis__custom--PrimePlusMember_zVlfPiQgnAGk" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2021-12-31_custom_LoanAgreementMember_custom_WallachLOCMember_custom_PrimePlusMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3</ix:nonFraction></span>%, as more fully described in Note 7.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has a loan agreement with William Myrick, our EVP (the &#8220;Myrick LOC Agreement&#8221;), pursuant to which Mr. Myrick provides
us with the Myrick LOC. The Myrick LOC Agreement lays out the terms under which Mr. Myrick can lend money to us, providing that we desire
the funds and Mr. Myrick wish to lend. The rate on the Myrick LOC generally equals prime plus <span id="xdx_907_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20211231__us-gaap--TypeOfArrangementAxis__custom--LoanAgreementMember__us-gaap--RelatedPartyTransactionAxis__custom--MyrickLOCMember__us-gaap--VariableRateAxis__custom--PrimePlusMember_zpDjnap9X8gj" title="Debt Instrument, Interest Rate, Stated Percentage"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2021-12-31_custom_LoanAgreementMember_custom_MyrickLOCMember_custom_PrimePlusMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3</ix:nonFraction></span>%, as more fully described in Note 7.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Two
of our managers each own <span id="xdx_909_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_dp_uPure_c20211231__srt--TitleOfIndividualAxis__custom--OneIndependentManagersMember__us-gaap--StatementClassOfStockAxis__custom--ClassACommonUnitsMember_zPIoAsVr0aBg" title="Equity method investment, ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2021-12-31_custom_OneIndependentManagersMember_custom_ClassACommonUnitsMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1</ix:nonFraction></span>% of our Class A common units. Barbara L. Harshman, our EVP of Operations, owns <span id="xdx_900_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_dp_uPure_c20211231__srt--TitleOfIndividualAxis__custom--ExecutiveVicePresidentOfOperationsOneMember__us-gaap--StatementClassOfStockAxis__custom--ClassACommonUnitsMember_zSPMnFVWz317" title="Equity method investment, ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2021-12-31_custom_ExecutiveVicePresidentOfOperationsOneMember_custom_ClassACommonUnitsMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">2</ix:nonFraction></span>% of our Class A common units.
Mr. Myrick owns <span id="xdx_904_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_dp_uPure_c20211231__srt--TitleOfIndividualAxis__custom--ExecutiveVicePresidentOfSalesMember__us-gaap--StatementClassOfStockAxis__custom--ClassACommonUnitsMember_zIpLuhZU6oUl" title="Equity method investment, ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2021-12-31_custom_ExecutiveVicePresidentOfSalesMember_custom_ClassACommonUnitsMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">15.3</ix:nonFraction></span>% of our Class A common units.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90D_eus-gaap--PreferredUnitsDescription_c20210101__20211231__us-gaap--StatementClassOfStockAxis__custom--SeriesCPreferredUnitsMember_zqC4aqm0QKG5" title="Preferred units, description"><ix:nonNumeric contextRef="From2021-01-012021-12-31_custom_SeriesCPreferredUnitsMember28129000" name="us-gaap:PreferredUnitsDescription">Mr.
Wallach and his wife&#8217;s parents own 18.05 and 1.45 of our Series C Preferred Units, respectively. One of our managers, Gregory L.
Sheldon, owns 6.31 of our Series C Preferred Units</ix:nonNumeric></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has a Senior Subordinated Promissory Note with the parents of Mr. Wallach for $<span id="xdx_909_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20211231__srt--TitleOfIndividualAxis__custom--SeniorSubordinatedPromissoryNoteMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DanielMrWallachMember_zwqLoJQgXZjj" title="Debt instrument, face amount"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2021-12-31_custom_SeniorSubordinatedPromissoryNoteMember_custom_DanielMrWallachMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">333</ix:nonFraction></span>. The interest rate on the promissory note
is <span id="xdx_902_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20211231__srt--TitleOfIndividualAxis__custom--SeniorSubordinatedPromissoryNoteMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DanielMrWallachMember_zCyDNFKVBEa" title="Debt instrument interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2021-12-31_custom_SeniorSubordinatedPromissoryNoteMember_custom_DanielMrWallachMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10</ix:nonFraction></span>% and the lender may require us to repay $<span id="xdx_90C_eus-gaap--RepaymentsOfDebt_pn3n3_c20210101__20211231__srt--TitleOfIndividualAxis__custom--SeniorSubordinatedPromissoryNoteMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DanielMrWallachMember_zLiG4Id5dv1" title="Repayments of debt"><ix:nonFraction name="us-gaap:RepaymentsOfDebt" contextRef="From2021-01-012021-12-31_custom_SeniorSubordinatedPromissoryNoteMember_custom_DanielMrWallachMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">20</ix:nonFraction></span> of principal and all unpaid interest with 10 days&#8217; notice, as more fully described
in Note 7.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
son of one of our Managers is a minor participant in the Shuman LOC, which is more fully described in Note 7. In addition, Mr. Summers&#8217;
son is a lender to the Company pursuant to a New LOC Agreement, with principal not to exceed $<span id="xdx_900_ecustom--LoanPrincipalAmountNotExceed_pn3n3_c20210101__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSummersMember_z7xwfpMDJg02" title="Loan principal amount not exceed"><ix:nonFraction name="SHEP:LoanPrincipalAmountNotExceed" contextRef="From2021-01-012021-12-31_custom_MrSummersMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,000</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
September 2018, the Company sold <span id="xdx_90B_ecustom--NumberOfLoansSold_iI_dc_uInteger_c20180930__srt--TitleOfIndividualAxis__custom--CEOMember_zjYgLh7cGxXf" title="Number of loans sold"><ix:nonFraction name="SHEP:NumberOfLoansSold" contextRef="AsOf2018-09-30_custom_CEOMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Integer">three</ix:nonFraction></span> loans to Mr. Wallach at their gross loans receivable balance of $<span id="xdx_901_ecustom--LoansReceivablesNet_pn3n3_c20180901__20180930__srt--TitleOfIndividualAxis__custom--CEOMember_zLJHh8FscyO6" title="Loans receivable"><ix:nonFraction name="SHEP:LoansReceivablesNet" contextRef="From2018-09-012018-09-30_custom_CEOMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">281</ix:nonFraction></span>, and as such, no gain or
loss was recognized on the sale. Cash received was $<span id="xdx_908_eus-gaap--ProceedsFromRelatedPartyDebt_pn3n3_c20180901__20180930__srt--TitleOfIndividualAxis__custom--CEOMember_zKNID4zGZyH3" title="Cash received from related party"><ix:nonFraction name="us-gaap:ProceedsFromRelatedPartyDebt" contextRef="From2018-09-012018-09-30_custom_CEOMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">104</ix:nonFraction></span> and the remaining purchase price was funded through a $<span id="xdx_90C_ecustom--ReductionInLineOfCredit_pn3n3_c20180901__20180930__srt--TitleOfIndividualAxis__custom--CEOMember_zvgrLkiVPLv" title="Reduction In Line of Credit"><span><ix:nonFraction name="SHEP:ReductionInLineOfCredit" contextRef="From2018-09-012018-09-30_custom_CEOMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">177</ix:nonFraction></span></span> reduction in the principal
balance of the line of credit extended by Mr. Wallach to the Company. The Company continued to service these loans.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2019, two of the loans owned by Mr. Wallach paid off for approximately $<span id="xdx_90E_eus-gaap--RepaymentsOfRelatedPartyDebt_pn3n3_c20190601__20190630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrWallachMember_zp2dI2fYT4Q8" title="Repayment of loans"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2019-06-012019-06-30_custom_MrWallachMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">375</ix:nonFraction></span>. Additionally, during June 2019, Mr. Wallach purchased
<span id="xdx_90F_ecustom--NumberOfLoansSold_iI_dc_uInteger_c20190630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrWallachMember_zeWIWbRtAhT3" title="Number of loans sold"><ix:nonFraction name="SHEP:NumberOfLoansSold" contextRef="AsOf2019-06-30_custom_MrWallachMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Integer">two</ix:nonFraction></span> additional loans for approximately $<span id="xdx_907_eus-gaap--PaymentsToPurchaseLoansHeldForSale_pn3n3_c20190601__20190630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrWallachMember_zyELJBPeJuL1" title="Payments to purchase loans held-for-sale"><ix:nonFraction name="us-gaap:PaymentsToPurchaseLoansHeldForSale" contextRef="From2019-06-012019-06-30_custom_MrWallachMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">286</ix:nonFraction></span>. During December 2019, Mr. Wallach sold one of his loans to Mr. Myrick for approximately
$<span id="xdx_904_eus-gaap--ProceedsFromSaleOfLoansHeldForSale_pn3n3_c20190101__20191231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrWallachMember_zRXkFPGGs3tf" title="Proceeds from sale of loans held-for-sale"><ix:nonFraction name="us-gaap:ProceedsFromSaleOfLoansHeldForSale" contextRef="From2019-01-012019-12-31_custom_MrWallachMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">254</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
July 2020, the Company purchased <span id="xdx_908_ecustom--NumberOfLoansSold_iI_dc_uInteger_c20200731__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrWallachMember_z33lQz49B66g" title="Number of loans sold"><ix:nonFraction name="SHEP:NumberOfLoansSold" contextRef="AsOf2020-07-31_custom_MrWallachMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Integer">two</ix:nonFraction></span> loans at cost from Mr. Wallach for approximately $<span id="xdx_90A_eus-gaap--LoansPayable_iI_pn3n3_c20200731__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrWallachMember_zRkZm3gnjeoi" title="Loans payable"><ix:nonFraction name="us-gaap:LoansPayable" contextRef="AsOf2020-07-31_custom_MrWallachMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">198</ix:nonFraction></span>. As of December 31, 2021, no loans serviced
by the Company were owned by Mr. Wallach.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
September 2018, we sold <span id="xdx_90B_ecustom--NumberOfLoansSold_iI_dc_uInteger_c20180930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_z7gl3ZtF8xY9" title="Number of loans sold"><ix:nonFraction name="SHEP:NumberOfLoansSold" contextRef="AsOf2018-09-30_custom_WilliamMyrickMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Integer">two</ix:nonFraction></span> loans to Mr. Myrick at their gross loan&#8217;s receivable balance of $<span id="xdx_901_ecustom--LoansReceivablesNet_pn3n3_c20180901__20180930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_zvSDhDhtHlO4" title="Loans receivables"><ix:nonFraction name="SHEP:LoansReceivablesNet" contextRef="From2018-09-012018-09-30_custom_WilliamMyrickMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">394</ix:nonFraction></span> and as such, no gain or loss was
recognized on the sale. Cash received was $<span id="xdx_907_eus-gaap--ProceedsFromRelatedPartyDebt_pn3n3_c20180901__20180930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_zwcQsnhWLvx9" title="Cash received from related party"><ix:nonFraction name="us-gaap:ProceedsFromRelatedPartyDebt" contextRef="From2018-09-012018-09-30_custom_WilliamMyrickMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">94</ix:nonFraction></span> and the remaining purchase price was funded through a $<span id="xdx_902_ecustom--ReductionInLineOfCredit_pn3n3_c20180901__20180930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_zMUsEB2Wgka6" title="Reduction in line of credit"><ix:nonFraction name="SHEP:ReductionInLineOfCredit" contextRef="From2018-09-012018-09-30_custom_WilliamMyrickMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">300</ix:nonFraction></span> reduction in the principal balance
of the line of credit extended by Mr. Myrick to the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, during 2019 Mr. Myrick purchased <span id="xdx_906_ecustom--NumberOfLoansSold_iI_dc_uInteger_c20191231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_ztLIahu2vEe7" title="Number of loans sold"><ix:nonFraction name="SHEP:NumberOfLoansSold" contextRef="AsOf2019-12-31_custom_WilliamMyrickMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Integer">two</ix:nonFraction></span> loans from the Company for approximately $<span id="xdx_905_eus-gaap--PaymentsToPurchaseLoansHeldForSale_pn3n3_c20190101__20191231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_zRKhHpnFzRU9" title="Payments to purchase loans held-for-sale"><ix:nonFraction name="us-gaap:PaymentsToPurchaseLoansHeldForSale" contextRef="From2019-01-012019-12-31_custom_WilliamMyrickMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">456</ix:nonFraction></span>. In December 2019, Mr. Myrick purchased
one loan from Mr. Wallach for approximately $<span id="xdx_900_eus-gaap--ProceedsFromSaleOfLoansHeldForSale_pn3n3_c20191201__20191231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_zIXENDwNWXQc" title="Proceeds from sale of loans held-for-sale"><ix:nonFraction name="us-gaap:ProceedsFromSaleOfLoansHeldForSale" contextRef="From2019-12-012019-12-31_custom_WilliamMyrickMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">254</ix:nonFraction></span>. During 2020 and 2019, one and four of Mr. Myrick&#8217;s loans paid off for approximately
$<span id="xdx_902_eus-gaap--RepaymentsOfRelatedPartyDebt_pn3n3_c20200101__20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_z0NpBCuJn95d" title="Repayment of loans"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2020-01-012020-12-31_custom_WilliamMyrickMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">245</ix:nonFraction></span> and $<span id="xdx_906_eus-gaap--RepaymentsOfRelatedPartyDebt_pn3n3_c20190101__20191231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_z18efqxNhH5l" title="Repayment of loans"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2019-01-012019-12-31_custom_WilliamMyrickMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">765</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
2021, Mr. Myrick purchased <span id="xdx_90D_ecustom--NumberOfLoansSold_iI_dc_uInteger_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_zpbeSEBrW3od" title="Number of loans sold"><ix:nonFraction name="SHEP:NumberOfLoansSold" contextRef="AsOf2021-12-31_custom_WilliamMyrickMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Integer">two</ix:nonFraction></span> loans for approximately $<span id="xdx_90B_eus-gaap--PaymentsToPurchaseLoansHeldForSale_pn3n3_c20210101__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WilliamMyrickMember_z4GUBksgeJZd" title="Loans payable"><ix:nonFraction name="us-gaap:PaymentsToPurchaseLoansHeldForSale" contextRef="From2021-01-012021-12-31_custom_WilliamMyrickMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">141</ix:nonFraction></span> and both loans were serviced by the company as of December 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
2021, one of our managers purchased <span id="xdx_903_ecustom--NumberOfLoansSold_iI_dc_uInteger_c20211231__srt--TitleOfIndividualAxis__custom--IndependentManagersMember_z7WUFOcqy1jd" title="Number of loans sold"><ix:nonFraction name="SHEP:NumberOfLoansSold" contextRef="AsOf2021-12-31_custom_IndependentManagersMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Integer">one</ix:nonFraction></span> loan from the Company for $<span id="xdx_90B_eus-gaap--PaymentsToPurchaseLoansHeldForSale_pn3n3_c20210101__20211231__srt--TitleOfIndividualAxis__custom--IndependentManagersMember_zWY4F9FpnoK6" title="Payments to purchase loans held-for-sale"><ix:nonFraction name="us-gaap:PaymentsToPurchaseLoansHeldForSale" contextRef="From2021-01-012021-12-31_custom_IndependentManagersMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">405</ix:nonFraction></span> and the loan was serviced by the company as of December 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Hoskins Group has a preferred equity interest in the Company. In addition, the Company has issued Series B Preferred Units to the Hoskins
Group, as more fully described in Note 9 <i>&#8211; </i>Members&#8217; Capital.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has accepted investments under the Notes Program from employees, managers, members, and relatives of managers and members, with
$<span id="xdx_90A_eus-gaap--NotesPayableRelatedPartiesCurrentAndNoncurrent_iI_pn3n3_c20211231__srt--TitleOfIndividualAxis__custom--NotesProgramFromEmployeesManagersMembersAndRelativesOfManagersAndMembersMember_z9brsFSlJOm6" title="Notes payable, related parties"><ix:nonFraction name="us-gaap:NotesPayableRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2021-12-31_custom_NotesProgramFromEmployeesManagersMembersAndRelativesOfManagersAndMembersMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">3,989</ix:nonFraction></span> outstanding at December 31, 2021. For the years ended December 31, 2021 and 2020 our investments from affiliates which exceed
$<span id="xdx_902_eus-gaap--InvestmentsInAndAdvancesToAffiliatesAtFairValue_iI_pn3n3_c20211231__srt--TitleOfIndividualAxis__custom--NotesProgramFromEmployeesManagersMembersAndRelativesOfManagersAndMembersMember_z1LSQB2Rydti" title="Investments in and Advances to Affiliates, at Fair Value"><span id="xdx_902_eus-gaap--InvestmentsInAndAdvancesToAffiliatesAtFairValue_iI_pn3n3_c20201231__srt--TitleOfIndividualAxis__custom--NotesProgramFromEmployeesManagersMembersAndRelativesOfManagersAndMembersMember_zO9kv3thzhfj" title="Investments in and Advances to Affiliates, at Fair Value"><ix:nonFraction name="us-gaap:InvestmentsInAndAdvancesToAffiliatesAtFairValue" contextRef="AsOf2021-12-31_custom_NotesProgramFromEmployeesManagersMembersAndRelativesOfManagersAndMembersMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD"><ix:nonFraction name="us-gaap:InvestmentsInAndAdvancesToAffiliatesAtFairValue" contextRef="AsOf2020-12-31_custom_NotesProgramFromEmployeesManagersMembersAndRelativesOfManagersAndMembersMember" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">120</ix:nonFraction></ix:nonFraction></span></span> through our Notes Program and other unsecured debt are detailed below:</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfRelatedPartyTransactionsTableTextBlock"><p id="xdx_899_eus-gaap--ScheduleOfRelatedPartyTransactionsTableTextBlock_zYOFpjdrcSE1" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B3_zj45CL8nJ5Zd" style="display: none">Schedule of Related Party Transactions</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: center">Relationship to</td><td style="text-align: center; font-weight: bold">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center">Amount invested as of</td><td style="text-align: center; font-weight: bold">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Weighted</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>average</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>interest rate</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>as of</b></span></p></td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="6" style="text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Interest</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>earned during</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>the year ended</b></span></p></td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: center">Shepherd&#8217;s</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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</ix:nonNumeric><p id="xdx_8A8_zUT5XXEdLpPg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 124 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p id="xdx_801_eus-gaap--CommitmentsAndContingenciesDisclosureTextBlock_zG2JPNhHr1qk" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>11.
<span id="xdx_825_z5BIKoFVNmKl">Commitments and Contingencies</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the normal course of business there may be outstanding commitments to extend credit that are not included in the consolidated financial
statements. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established
in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since
many of the commitments are expected to expire without being drawn upon and some of the funding may come from the earlier repayment of
the same loan (in the case of revolving lines), the total commitment amounts do not necessarily represent future cash requirements. The
financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the consolidated
financial statements. The Company evaluates each customer&#8217;s creditworthiness on a case-by-case basis. Unfunded commitments to extend
credit, which have similar collateral, credit risk and market risk to our outstanding loans, were $<span id="xdx_902_eus-gaap--LineOfCreditFacilityFairValueOfAmountOutstanding_iI_pn3n3_c20211231_zslKV9q0eym2" title="Letter of credit, amount outstanding"><ix:nonFraction name="us-gaap:LineOfCreditFacilityFairValueOfAmountOutstanding" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">22,902</ix:nonFraction></span> and $<span id="xdx_90F_eus-gaap--LineOfCreditFacilityFairValueOfAmountOutstanding_iI_pn3n3_c20201231_zJTyNBNdS0F9" title="Letter of credit, amount outstanding"><ix:nonFraction name="us-gaap:LineOfCreditFacilityFairValueOfAmountOutstanding" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">19,495</ix:nonFraction></span> at December 31,
2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:QuarterlyFinancialInformationTextBlock"><p id="xdx_80A_eus-gaap--QuarterlyFinancialInformationTextBlock_zdykbe2ZaPh6" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>12.
<span id="xdx_821_zO2Sv4UdCdG2">Selected Quarterly Condensed Consolidated Financial Data (Unaudited)</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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unaudited quarterly condensed consolidated financial data for the quarters of 2021 and 2020 are as follows:</span></p>

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    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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  <tr id="xdx_40F_eus-gaap--InterestIncomeExpenseNet_pn3n3_z7cTbGKXgMKe" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_407_eus-gaap--ProvisionForLoanLeaseAndOtherLosses_pn3n3_zvsYyOOsTIda" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40F_ecustom--GainOnSaleForeclosedAssets_ztkh1OhjbXt6" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Gain on sale of foreclosed assets</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1763">&#8211;</span></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_ecustom--GainOnForeclosedAssets_pn3n3_ziXxWnlQxbV4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1766">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40B_ecustom--ImpairmentGainOnForeclosedAssets_pn3n3_zfLeGZ1QvGZ7" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Impairment gains on foreclosed assets</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:ImpairmentGainOnForeclosedAssets" contextRef="From2020-07-012020-09-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">95</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40D_eus-gaap--GainsLossesOnExtinguishmentOfDebt_pn3n3_zZJPYmXkM3G3" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Gain on extinguishment of debt</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1785">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1788">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1789">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_406_eus-gaap--SellingGeneralAndAdministrativeExpense_pn3n3_zS7NzbntM0Og" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">SG&amp;A expense</td><td>&#160;</td>
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  <tr id="xdx_400_eus-gaap--Depreciation_pn3n3_zk3P8dWtCv9c" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Depreciation and amortization</td><td>&#160;</td>
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  <tr id="xdx_408_ecustom--LossFromSaleOfForeclosedAssets_pn3n3_ztFtsk4slwy7" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Loss on sale of foreclosed assets</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1811">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:LossFromSaleOfForeclosedAssets" contextRef="From2021-01-012021-03-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">18</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:LossFromSaleOfForeclosedAssets" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">16</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:LossFromSaleOfForeclosedAssets" contextRef="From2020-07-012020-09-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">51</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1816">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:LossFromSaleOfForeclosedAssets" contextRef="From2020-01-012020-03-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">35</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_ecustom--LossOnForeclosureOfAssets_pn3n3_zlfr2TXKadSk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Loss on foreclosure of assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:LossOnForeclosureOfAssets" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">47</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1820">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1821">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1822">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SHEP:LossOnForeclosureOfAssets" contextRef="From2020-07-012020-09-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1825">&#8211;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1826">&#8211;</span></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_ecustom--ImpairmentLossOnForeclosedAssets_pn3n3_z0ESsd1xHS6l" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Impairment loss on foreclosed assets</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1828">&#8211;</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1829">&#8211;</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1830">&#8211;</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:ImpairmentLossOnForeclosedAssets" contextRef="From2021-01-012021-03-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">10</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:ImpairmentLossOnForeclosedAssets" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">241</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:ImpairmentLossOnForeclosedAssets" contextRef="From2020-07-012020-09-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">4</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:ImpairmentLossOnForeclosedAssets" contextRef="From2020-04-012020-06-30" id="Fact001834" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">91</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="SHEP:ImpairmentLossOnForeclosedAssets" contextRef="From2020-01-012020-03-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">109</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_404_eus-gaap--ProfitLoss_pn3n3_zfUos6D5zeDh" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Net income (loss)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">283</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2021-07-012021-09-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">677</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2021-04-012021-06-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">91</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2021-01-012021-03-31" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">286</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">244</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2020-07-012020-09-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">104</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2020-04-012020-06-30" id="Fact001843" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="USD">2,359</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2020-01-012020-03-31" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">82</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A3_zcmBsr9CQAed" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup id="xdx_F01_zExbMKATiu3e">(1)</sup></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span id="xdx_F15_za76OtTfP9P9" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001845" xml:lang="en-US">During
    the quarter ended June 30, 2020, net interest income after loan loss provision was reduced due to COVID-19 by $<span id="xdx_90E_ecustom--NetInterestIncomeAfterLoanLossProvision_pn3n3_c20200401__20200630_zSE4wXvVCI24" title="Net interest income after loan loss provision" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNlbGVjdGVkIFF1YXJ0ZXJseSBDb25kZW5zZWQgQ29uc29saWRhdGVkIEZpbmFuY2lhbCBEYXRhIChEZXRhaWxzKSAoUGFyZW50aGV0aWNhbCkA"><ix:nonFraction name="SHEP:NetInterestIncomeAfterLoanLossProvision" contextRef="From2020-04-012020-06-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">1,492</ix:nonFraction></span>. In addition,
    the Company wrote off $<span id="xdx_908_ecustom--WriteoffInterestIncome_pn3n3_c20200401__20200630_zXZBV0deNQQa" title="Writeoff interest income" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNlbGVjdGVkIFF1YXJ0ZXJseSBDb25kZW5zZWQgQ29uc29saWRhdGVkIEZpbmFuY2lhbCBEYXRhIChEZXRhaWxzKSAoUGFyZW50aGV0aWNhbCkA"><ix:nonFraction name="SHEP:WriteoffInterestIncome" contextRef="From2020-04-012020-06-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">469</ix:nonFraction></span> of interest income directly related to COVID-19. During the quarter ended June 30, 2020, impairment loss
    on foreclosed assets of $<span id="xdx_900_ecustom--ImpairmentLossesOnForeclosedAssets_pn3n3_c20200401__20200630_zxC74zrzLpYk" title="Impairment losses on foreclosed assets" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNlbGVjdGVkIFF1YXJ0ZXJseSBDb25kZW5zZWQgQ29uc29saWRhdGVkIEZpbmFuY2lhbCBEYXRhIChEZXRhaWxzKSAoUGFyZW50aGV0aWNhbCkA"><ix:nonFraction name="SHEP:ImpairmentLossesOnForeclosedAssets" contextRef="From2020-04-012020-06-30" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">91</ix:nonFraction></span> was due to the impact of COVID-19.</ix:footnote></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="SHEP:SellingGeneralAndAdministrativeExpenseTextBlock"><p id="xdx_808_ecustom--SellingGeneralAndAdministrativeExpenseTextBlock_zxF5t8dofWU4" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>13.
<span id="xdx_82F_zZDnJqlAtwi2">Non-Interest Expense Detail</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfOtherNonoperatingIncomeExpenseTableTextBlock"><p id="xdx_899_eus-gaap--ScheduleOfOtherNonoperatingIncomeExpenseTableTextBlock_zViDnt4rzSIk" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table displays our selling, general and administrative expenses for the years ended December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-right: 0; margin-bottom: 0; text-align: left"><span id="xdx_8BC_zHGVJBhpQU22" style="display: none">Schedule of Selling General and Administrative Expenses</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr id="xdx_407_eus-gaap--TravelAndEntertainmentExpense_pn3n3_maSGAAEzZDv_zEjuqKMJ5UNj" style="vertical-align: bottom; background-color: White">
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    <td style="padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left; padding-bottom: 2.5pt">Total SG&amp;A</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  </table>

</ix:nonNumeric><p id="xdx_8A1_z9JCOPoe60De" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-12-31" escape="true" name="us-gaap:SubsequentEventsTextBlock"><p id="xdx_802_eus-gaap--SubsequentEventsTextBlock_zwxIXg9OLTm7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>14.
<span id="xdx_82E_zQTP0IYwKta7">Subsequent Events</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
of the Company has evaluated subsequent events through March 10, 2022, the date these consolidated financial statements were issued.</span></p>

</ix:nonNumeric><p id="xdx_81F_zVaQr6ZbjD8" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="forms-1_001.jpg" alt="" style="height: 52px; width: 341px" /></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>$70,000,000
in Fixed Rate Subordinated Notes</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PROSPECTUS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>[__],
2022</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PART
II</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>INFORMATION
NOT REQUIRED IN PROSPECTUS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
13. Other Expenses of Issuance and Distribution.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth all expenses to be paid by the Registrant, other than estimated underwriting discounts and commissions, in
connection with this offering. All amounts shown are estimates except for the SEC registration fee.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-left: auto; border-collapse: collapse; width: 70%; margin-right: auto">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount to be Paid</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 70%; text-align: left">SEC Registration Fee</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 26%; text-align: right">4,172</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Legal Fees and Expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">521,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accounting Fees and Expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">25,500</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Printing and Engraving Expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6,700</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Blue Sky Fees and Expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">60,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Trustee Fees</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">56,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Total*</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">673,372</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
Assumes the maximum offering amount is raised.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
14. Indemnification of Directors and Officers.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None
of the Registrant&#8217;s managers nor its officers shall be liable to the Registrant or any other manager or officer for any loss, damage
or claim incurred by reason of any action taken or omitted to be taken by such person in good faith and with the belief that such action
or omission is in, or not opposed to, the best interest of the Registrant, so long as such action or omission does not constitute fraud,
gross negligence or willful misconduct by such person.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the fullest extent permitted by Delaware law, the Registrant shall indemnify, hold harmless, defend, pay and reimburse each of its managers
and its officers against any and all losses, claims, damages, judgments, fines or liabilities, including reasonable legal fees or other
expenses incurred in investigating or defending against such losses, claims, damages, judgments, fines or liabilities, and any amounts
expended in settlement of any claims to which such person may become subject by reason of:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)
Any act or omission or alleged act or omission performed or omitted to be performed on behalf of the Registrant, any of its members or
any direct or indirect subsidiary of the foregoing in connection with the business of the Registrant; or</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)
The fact that such person is or was acting in connection with the business of the Registrant as a partner, member, stockholder, controlling
affiliate, manager, director, officer, employee or agent of the Registrant, any of its members, or any of their respective controlling
affiliates, or that such person is or was serving at the request of the Registrant as a partner, member, manager, director, officer,
employee or agent of any person including the Registrant or any subsidiary of the Registrant;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">provided,
that (x) such person acted in good faith and in a manner believed by such person to be in, or not opposed to, the best interests of the
Registrant and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful, and (y) such person&#8217;s
conduct did not constitute fraud, gross negligence or willful misconduct, in either case as determined by a final, nonappealable order
of a court of competent jurisdiction. In connection with the foregoing, the termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of <i>nolo contendere</i> or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith or, with respect to any criminal proceeding, had reasonable cause to believe that such person&#8217;s
conduct was unlawful, or that the person&#8217;s conduct constituted fraud, gross negligence or willful misconduct.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Registrant shall promptly reimburse (and/or advance to the extent reasonably required) each of its managers and its officers for reasonable
legal or other expenses (as incurred) of such person in connection with investigating, preparing to defend or defending any claim, lawsuit
or other proceeding relating to any losses for which such person may be indemnified; provided, that if it is finally judicially determined
that such person is not entitled to the indemnification, then such person shall promptly reimburse the Registrant for any reimbursed
or advanced expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;), may be permitted
pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Securities and Exchange Commission
(the &#8220;SEC&#8221;) such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Registrant may maintain liability insurance, which insures against liabilities that its managers or its officers may incur in such capacities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
15. Recent Sales of Unregistered Securities.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Issuances
of Series B Cumulative Redeemable Preferred Units</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, the Hoskins Group (consisting of Benjamin Marcus Homes, L.L.C., Investor&#8217;s Mark Acquisitions, LLC, and Mark
L. Hoskins) owns a total of 17.2 Series B cumulative preferred units (&#8220;Series B Preferred Units&#8221;), which the Registrant issued
for a total of $1,720,000. Of that total, 0.9, 1.6, and 1.5 Series B Preferred Units were issued to the Hoskins Group during 2021, 2020,
and 2019, respectively, pursuant to an agreement whereby the Hoskins Group agreed to purchase 0.1 Series B Preferred Units upon each
closing of a lot sale in the subdivisions in which the Registrant lends the Hoskins Group development funds.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the sale of the Series B Preferred Units in these transactions were used for the funding of construction loans.
The transactions in Series B Preferred Units described above were effected in private transactions exempt from the registration requirements
of the Securities Act under Section 4(a)(2) of the Securities Act. The transactions described above did not involve any public offering,
were made without general solicitation or advertising, and the buyer represented to the Registrant that the buyer is an &#8220;accredited
investor&#8217;&#8217; within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, with access to all relevant
information necessary to evaluate the investment in the Series B Preferred Units.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Issuances
of Series C Cumulative Redeemable Preferred Units</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Registrant initially issued Series C cumulative preferred units (&#8220;Series C Preferred Units&#8221;) in 2017 to various investors.
Investors in the Series C Preferred Units may elect to reinvest their distributions in additional Series C Preferred Units (the &#8220;Series
C Reinvestment Program&#8221;). Pursuant to the Series C Reinvestment Program, the Registrant issued a total of 1.727 additional Series
C Preferred Units from March 31, 2017 to June 30, 2018 for a total purchase price of $172,700. On July 31, 2018, the Registrant redeemed
all of the then-outstanding Series C Preferred Units.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 7, 2019, the Registrant sold two of its Series C Preferred Units to two joint investors for the total price of $200,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 13, 2019, the Registrant sold one of its Series C Preferred Units to Gregory L. Sheldon, one of the Registrant&#8217;s independent
managers, and his wife, Madeline M. Sheldon, for the total price of $100,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 7, 2020, the Registrant sold three of its Series C Preferred Units to an investor for the total price of $300,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 10, 2021, the Registrant sold three of its Series C Preferred Units to two joint investors for the total price of $300,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 1, 2021, the Registrant sold five of its Series C Preferred Units to two joint investors for the total price of $500,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 11, 2021, the Registrant sold two of its Series C Preferred Units to Gregory L. Sheldon, one of the Registrant&#8217;s
independent managers, and his wife, Madeline M. Sheldon, for the total price of $200,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Investors in the Series C Preferred
Units have also received additional Series C Preferred Units as a result of their participation in the Series C Reinvestment Program
during the preceding three years. Pursuant to the Series C Reinvestment Program, the Registrant has issued approximately 10.05
Series C Preferred Units for distribution proceeds of approximately $1.0 million during such period.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the sale of the Series C Preferred Units in these transactions were used for the funding of construction loans.
The transactions in Series C Preferred Units described above were effected in private transactions exempt from the registration requirements
of the Securities Act under Section 4(a)(2) of the Securities Act. The transactions described above did not involve any public offering,
were made without general solicitation or advertising, and the buyer represented to the Registrant that the buyer is an &#8220;accredited
investor&#8217;&#8217; within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, with access to all relevant
information necessary to evaluate the investment in the Series C Preferred Units.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of September 2, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 2, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $562,500. This Subordinated Promissory
Note bears interest at the rate of 9.5% per annum, based upon actual days outstanding and a 365/366 day year and matured on October 25,
2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of October 7, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 7, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $98,736. This Subordinated Promissory
Note bears interest at the rate of 10.0% per annum, based upon actual days outstanding and a 365/366 day year and matured on April 7,
2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of October 7, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 7, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $75,504. This Subordinated Promissory
Note bears interest at the rate of 10.0% per annum, based upon actual days outstanding and a 365/366 day year and matured on April 7,
2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of November 4, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 4, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $500,000. This Subordinated Promissory
Note bears interest at the rate of 6.5% per annum, based upon actual days outstanding and a 365/366 day year and matured on April 1,
2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of November 15, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 15, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 5.0% per annum, based upon actual days outstanding and a 365/366 day year and matured on November
15, 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of November 15, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 15, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $400,000. This Senior Subordinated
Promissory Note bears interest at the rate of 5.0% per annum, based upon actual days outstanding and a 365/366 day year and matured on
November 15, 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Senior Subordinated Promissory Note were used for the funding of construction loans. The transaction described
above was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising,
and the purchasers represented to the Registrant that they are an &#8220;accredited investor&#8221; within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of December 2, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 2, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $3,000. This Subordinated Promissory
Note bears interest at the rate of 5.0% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of December 10, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 10, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $20,000. This Subordinated Promissory
Note bears interest at the rate of 11.0% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Notes of December 23, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 23, 2019, the Registrant issued three Subordinated Promissory Notes in the total principal amount of $600,000. These Senior
Subordinated Promissory Notes bear interest at the rate of 11% per annum, based upon actual days outstanding and a 365/366 day year and
matured on February 23, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Notes were used for the funding of construction loans. The transactions described
above were effected in private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transactions described above did not involve any public offering, were made without general solicitation or advertising,
and the purchasers represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investments.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of December 25, 2019</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 25, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $146,232. This Subordinated Promissory
Note bears interest at the rate of 10.5% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of February 5, 2020</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 5, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $20,000. This Subordinated Promissory
Note bears interest at the rate of 11% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of April 20, 2020</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 20, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Junior
Subordinated Promissory Note of October 5, 2020</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 5, 2020, the Registrant issued a Junior Subordinated Promissory Note in the principal amount of $447,346. This Junior Subordinated
Promissory Note bears interest at the rate of 20% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Junior Subordinated Promissory Note were used for the funding of construction loans. The transaction described
above was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Senior
Subordinated Promissory Note of October 5, 2020</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 5, 2020, the Registrant issued a Senior Subordinated Promissory Note in the principal amount of $719,607. This Senior Subordinated
Promissory Note bears interest at the rate of 1% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Senior Subordinated Promissory Note were used for the funding of construction loans. The transaction described
above was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of October 21, 2020</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 21, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $700,000. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of November 7, 2020</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 7, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $200,580. This Subordinated Promissory
Note bears interest at the rate of 9.5% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of December 7, 2020</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 7, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 10.0% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of January 13, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 13, 2021, the Registrant issued a Subordinated Promissory Note in the principal amount of $15,000. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Notes of February 24, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 24, 2021, the Registrant issued three Subordinated Promissory Notes in the total principal amount of $600,000. These Subordinated
Promissory Notes bear interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Notes were used for the funding of construction loans. The transactions described
above were effected in private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transactions described above did not involve any public offering, were made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investments.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of April 8, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 8, 2021, the Registrant issued a Subordinated Promissory Note in the principal amount of $114,660. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of April 8, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 8, 2021, the Registrant issued a Subordinated Promissory Note in the principal amount of $87,681. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Notes of June 24, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 24, 2021, the Registrant issued two Subordinated Promissory Notes in the total principal amount of $400,000. These Subordinated
Promissory Notes bear interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Notes were used for the funding of construction loans. The transactions described
above were effected in private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transactions described above did not involve any public offering, were made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investments.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of July 1, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 1, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $1,500,000. This Subordinated Promissory
Note bears interest at the rate of 5% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of July 20, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 20, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 8% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of September 16, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 16, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $93,869. This Subordinated
Promissory Note bears interest at the rate of 7% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of October 26, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 26, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 7% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of December 26, 2021</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 26, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $180,293. This Subordinated
Promissory Note bears interest at the rate of 8% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Note of January 12, 2022</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 12, 2022, the Registrant issued a Subordinated Promissory Note in the total principal amount of $10,000. This Subordinated Promissory
Note bears interest at the rate of 8% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subordinated
Promissory Notes of March 1, 2022</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 1, 2022, the Registrant issued five Subordinated Promissory Notes in the total principal amount of $500,000. These Subordinated
Promissory Notes bear interest at the rate of 9.75% per annum, based upon actual days outstanding and a 365/366 day year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds received from the Subordinated Promissory Notes were used for the funding of construction loans. The transactions described
above were effected in private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transactions described above did not involve any public offering, were made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an &#8220;accredited investor&#8221; within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investments.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
16. Exhibits and Financial Statement Schedules.</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)
<i>Exhibits</i>:</span></p>

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    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit
    No.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.1in; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name
    of Exhibit</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex31.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certificate of Conversion, incorporated by reference to Exhibit 3.1 to the Registrant&#8217;s Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.3</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.4</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1544190/000149315219006650/ex3-4.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of the Registrant, incorporated by reference to Exhibit 3.4 to the Registrant&#8217;s Quarterly Report on Form 10-Q, filed May 9, 2019, Commission File No. 333-203707</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.5</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1544190/000149315220005511/ex3-1.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment No. 2 to Second Amended and Restated Limited Liability Company Agreement of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant&#8217;s Current Report on Form 8-K, filed March 31, 2020, Commission File No. 333-224557</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.1**</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indenture
    Agreement dated [__], 2022 (including Form of Note)</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.1**</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Opinion
    of Nelson Mullins Riley &amp; Scarborough LLP (&#8220;Nelson Mullins&#8221;) as to the legality of securities</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.2</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex104.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Open-End Mortgage dated December 30, 2011 between Benjamin Marcus Homes, L.L.C. and Shepherd&#8217;s Finance, LLC, related to the Hamlets of Springdale, incorporated by reference to Exhibit 10.4 to the Registrant&#8217;s Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.3</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex105.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Open-End Mortgage dated December 30, 2011 between Investor&#8217;s Mark Acquisitions, LLC and Shepherd&#8217;s Finance, LLC, related to the Tuscany Subdivision, incorporated by reference to Exhibit 10.5 to the Registrant&#8217;s Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.4</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1544190/000119312512228466/d315903dex106.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Commercial Guaranty dated December 30, 2011 by Mark L. Hoskins, Investor&#8217;s Mark Acquisitions, LLC, and Benjamin Marcus Homes, L.L.C. in favor of Shepherd&#8217;s Finance, LLC, incorporated by reference to Exhibit 10.6 to the Registrant&#8217;s Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.5</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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</table>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex23-1.htm">Consent of Warren Averett, LLC</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">XBRL
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">XBRL
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">XBRL
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">XBRL
    Taxonomy Extension Definition Linkbase Document</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">XBRL
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">XBRL
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
Filed herewith.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">**
To be filed by amendment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">***
Pursuant to Regulation 406T of Regulation S-T, these Interactive data files are deemed not filed or part of a registration statement
or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act
of 1934, as amended, and are otherwise not subject to liability.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)
<i>Financial Statements:</i> The following financial statements are filed as part of this registration statement and included in the
prospectus:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Consolidated
Financial Statements: </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Audited
Financial Statements </i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)
Report of Independent Registered Public Accounting Firm on Financial Statements</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)
Consolidated Balance Sheets as of December 31, 2021 and 2020</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)
Consolidated Statements of Changes in Members&#8217; Capital for the Years Ended December 31, 2021 and 2020</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(6)
Notes to Consolidated Financial Statements</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
17. Undertakings.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
undersigned Registrant hereby undertakes:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
    of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if,
    in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth
    in the &#8220;Calculation of Registration Fee&#8221; table in the effective registration statement; </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    include any material information with respect to the plan of distribution not previously disclosed in the registration statement
    or any material change to such information in the registration statement.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">That,
    for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a
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    deemed to be the initial bona fide offering thereof.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">That,
    for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b)
    as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
    prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date
    it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is
    part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
    or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first
    use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration
    statement or made in any such document immediately prior to such date of first use.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 48px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
    the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the
    securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant
    to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
    are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller
    to the purchaser and will be considered to offer or sell such securities to such purchaser:</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule
    424;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
    free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant
    or its securities provided by or on behalf of the undersigned Registrant; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iv)</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to managers, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a manager, officer
or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such manager, officer
or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
undersigned Registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act of 1939, as amended, in accordance with the rules and regulations prescribed
by the SEC under Section 305(b)(2) thereof.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b>SIGNATURES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Jacksonville, State of Florida, on March 22, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SHEPHERD&#8217;S FINANCE, LLC</b></span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 50%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 3%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 47%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Daniel M. Wallach</i></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Daniel
    M. Wallach</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Executive Officer and Manager</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span id="poa_001"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center; width: 26%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Signature</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center; width: 54%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Title</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center; width: 16%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Date</b></span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Daniel M. Wallach</i></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">March
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Daniel
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Principal
    Executive Officer)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Financial Officer</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">March
    22, 2022</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Catherine
    Loftin </span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Principal
    Financial Officer and Principal Accounting Officer)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Kenneth R. Summers*</i></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Manager
    </span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">March
    22, 2022</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Kenneth
    R. Summers</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Eric A. Rauscher*</i></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    </span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">March
    22, 2022</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Eric
    A. Rauscher</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Gregory L. Sheldon*</i></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Manager</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">March
    22, 2022</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<p style="margin-top: 0; margin-bottom: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 50%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Daniel
    M. Wallach</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Attorney-in-Fact,
    pursuant to Power of Attorney dated March 21, 2022.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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[{"type": "S-1", "sequence": "1", "filename": "forms-1.htm", "secsgml_size_bytes": 2663368}]
{"company-data": {"conformed-name": "Shepherd's Finance, LLC", "cik": "0001544190", "assigned-sic": "6153", "irs-number": "364608739", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-263759", "film-number": "22759516"}, "business-address": {"street1": "12276 SAN JOSE BLVD, SUITE 108", "city": "JACKSONVILLE", "state": "FL", "zip": "32223", "phone": "9045033989"}, "mail-address": {"street1": "12276 SAN JOSE BLVD, SUITE 108", "city": "JACKSONVILLE", "state": "FL", "zip": "32223"}}
As
filed with the Securities and Exchange Commission on March 22, 2022
Registration
No. 333-[__]
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
Shepherd's
Finance, LLC
(Exact
name of registrant as specified in its charter)
Delaware
(State
    or other jurisdiction
of
    incorporation or organization)
6153
(Primary
    Standard Industrial
Classification
    Code Number)
36-4608739
(I.R.S.
    Employer
Identification
    No.)
13241
Bartram Park Blvd.
,
Suite 2401
Jacksonville
,
Florida
32258
(302)
752-2688
(Address,
including zip code, and telephone number, including area code, of registrant's principal executive offices)
Daniel
M. Wallach
Chief
Executive Officer
13241
Bartram Park Blvd
.
,
Suite 2401
Jacksonville
,
Florida
32258
(302)
752-2688
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
of all communications, including copies of all communications sent to agent for service, should be sent to:
Michael
K. Rafter
, Esq.
Erin
Reeves McGinnis, Esq.
Nelson
Mullins Riley & Scarborough LLP
Atlantic
Station
201
17th Street
NW
Suite
1700
Atlanta,
Georgia 30363
Telephone:
(404) 322-6000
Facsimile:
(404) 322-6050
Approximate
date of commencement of proposed sale to the public:
As
soon as practicable following the effectiveness of this Registration Statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 (the "Securities Act") check the following box. [X]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. [  ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]
Indicate
by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934.
Large
    accelerated filer [  ]
Accelerated
    filer [  ]
Non-accelerated
    filer
[X]
Smaller
    reporting company
[X]
Emerging
    growth company
[X]
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
[X]
Pursuant
to Rule 415(a)(6) under the Securities Act of 1933, as amended, the securities registered pursuant to this Registration Statement include
unsold securities previously registered for sale pursuant to the Registrant's Registration Statement on Form S-1 (File No. 333-224557)
initially filed by the Registrant on May 1, 2018 (the "Prior Registration Statement"). The Prior Registration Statement registered
securities with a maximum offering price of $70 million for sale pursuant to the Registrant's offering, and included securities
that remained unsold from the Issuer's preceding Registration Statement on Form S-1 (File No. 333-203707) filed by the Registrant
on April 29, 2015. Of the amount being registered by this Registration Statement, approximately $25 million of offering securities
remain unsold from the Prior Registration Statement. This unsold amount is being carried forward to this Registration Statement and the
filing fees paid with respect to the prior registration of the unsold securities is being used to offset filing fees that would otherwise
be due in connection with the filing of this Registration Statement. Pursuant to Rule 415(a)(6), the offering of unsold securities under
the Prior Registration Statement will be deemed terminated as of the date of effectiveness of this Registration Statement. As of March
16, 2022 we have issued Notes with an aggregate principal amount of approximately $36 million under the Prior Registration Statement.
The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant files a further amendment which specifically states that this Registration Statement will thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration Statement becomes effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
The
information in this preliminary prospectus is not complete and may be changed. We may not sell the
securities
described herein pursuant to this preliminary prospectus until the registration statement filed with the Securities and Exchange Commission
is effective. This preliminary prospectus is not an offer to sell the securities and it is not soliciting an offer to buy these securities
in any state where the offer or sale of the securities is not permitted.
SUBJECT
TO COMPLETION
PRELIMINARY
PROSPECTUS DATED MARCH 22, 2022
$70,000,000
in Fixed Rate Subordinated Notes
Shepherd's
Finance, LLC is offering up to $70,000,000 in aggregate principal amount of our Fixed Rate Subordinated Notes ("Notes") on
a continuous basis. The initial minimum investment amount required is $500. From time to time, we may, however, change the minimum investment
amount that is required. The maximum investment amount per investor is $1,000,000 aggregate principal amount, or $1,000,000 per Note,
but a higher maximum investment amount may be approved on a case-by-case basis. As of March 16, 2022, we have issued Notes in our previous
public offerings with an aggregate principal amount of approximately $67,153,000. The term "Notes," as used throughout this
prospectus, can mean both the Notes offered in this offering and Notes offered in prior or future offerings of the Company.
We
issue the Notes in varying purchase amounts and maturities that we establish from time to time. The Notes will initially be offered with
maturities ranging from 12 months to 48 months from the date of issuance. For each maturity, we also establish an interest rate. The
interest rates will vary within the predetermined interest rate ranges, as described in this prospectus, but annual interest rates as
of the date of this prospectus are as follows: 6% for 12-month Notes; 7% for 24-month Notes; 4% for 36-month Notes; and 8% for 48-month
Notes. See "Prospectus Summary — The Offering — Interest Rate." Interest will be calculated based on the actual
number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365/366 day year. When you make an
investment, your rate will be fixed throughout the duration of your investment.
We
may market our Notes in many ways, including but not limited to, publishing the then current features (e.g., the maturities and interest
rates currently offered by us) of the Notes in advertising on the internet, newspapers, and through direct mail campaigns. At any time,
you also may obtain the then applicable features of the Notes from our website at
www.shepherdsfinance.com
or by calling (302)
752-2688 (30-ASK-ABOUT). However, the information on our website is not a part of this prospectus. Any substantive change to the features
of the Notes that does not constitute a fundamental change will be included in a Rule 424(b)(3) prospectus supplement.
We
are offering the Notes directly, without an underwriter or placement agent, and on a continuous basis. We do not have to sell any minimum
amount of Notes to accept and use the proceeds of this offering. Therefore, once you purchase a Note, we may immediately use the proceeds
of your investment and your investment will be returned only if we repay your Note. We cannot assure you that all or any portion of the
Notes we are offering will be sold. We have not made any arrangement to place any of the proceeds from this offering in an escrow, trust,
or similar account. The Notes are not listed on any securities exchange and there will not be any public trading market for the Notes.
We have the right to reject any investment, in whole or in part, for any reason.
We
may redeem any Note, in whole or in part, at any time prior to maturity, upon 30 to 60 days' written notice, for a redemption price
equal to the principal amount plus any earned but unpaid interest thereon to the date of redemption. Subject to certain restrictions,
a holder of a Note with a 36-month maturity purchased on or after February 4, 2020 may require the Company to redeem all or a portion
of such Note. Additionally, you may request early redemption of a Note purchased by you at any time on or after 180 calendar days after
issuance of a Note, but we reserve the right to decline your request for any reason. If we grant your redemption request, we will mail
you a payment equal to the principal amount plus any earned but unpaid interest to the date of redemption, minus a 180-day interest penalty.
Furthermore, unless the subordination provisions in the indenture restrict our ability to make the redemption, a holder of a Note may
also require us to redeem all or a portion of their Note, regardless of amount, for a redemption price equal to the principal amount
plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date, upon one business day's
advance notice to us, but only if the holder immediately upon redemption invests the entirety of the proceeds from such redemption in
another Note or another security then-offered by us, if any. In such event, the holder will not be subject to a holding period requirement
or an interest penalty.
The
                                            Notes mature between one and four years from the date of issuance. Between 30 to 60 days
                                            prior to the maturity date, we will mail to you a letter notifying you of the upcoming maturity
                                            date. Upon maturity, principal and any earned but unpaid interest will be paid to you.
You
should read this prospectus and any applicable prospectus supplement carefully before you invest in the Notes. The Notes are our general
unsecured obligations and are subordinated in right of payment to all of our present and future senior debt. As of December 31, 2021,
we had approximately $42,963,000 in debt outstanding that ranks equal or senior to the Notes, including approximately $20,636,000 in
Notes issued pursuant to our prior offerings of Notes. We expect to incur additional debt in the future, including, without limitation,
the Notes offered pursuant to this prospectus and senior debt.
The
Notes are not certificates of deposit or similar obligations guaranteed by any depository institution and are not insured by the Federal
Deposit Insurance Corporation (FDIC) or any governmental or private insurance fund, or any other entity. We do not contribute funds to
a separate account such as a sinking fund to repay the Notes upon maturity.
We
are an "emerging growth company" and "smaller reporting company" under the federal securities laws and are subject
to reduced public company reporting requirements. See "Risk Factors" beginning on page 13 for significant factors
you should consider before buying the Notes. The most significant risks include the following:
●
Our
    Notes are not insured or guaranteed by the FDIC or any third party, so repayment of your Note depends upon our equity (which may
    be limited at times), our experience, the collateral securing our loans, and our ability to manage our business and generate adequate
    cash flows.
●
The
    Notes are risky speculative investments. Therefore, you should not invest in the Notes unless you are able to afford the loss of
    your entire investment.
●
There
    will not be any market for the Notes, so you should only purchase them if you do not have any need for your money prior to the maturity
    of the Note.
●
You
    will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company as is customarily performed
    in underwritten offerings.
●
We
    have the right to pay your investment back to you before the stated maturity of your investment. If we do, you may not be able to
    reinvest the proceeds at comparable rates and you will stop earning interest on your investment.
●
Our
    business is not industry-diversified. The United States economy experienced a slow recovery after the significant downturn in the
    homebuilding industry beginning in 2007, which was one of the worst credit and liquidity crises since the 1930s. Deterioration in
    the homebuilding industry or economic conditions, including as a result of COVID-19, could decrease demand and pricing for new homes
    and residential home lots. A decline in housing values similar to the national downturn in the real estate market that began in 2007
    would have a negative impact on our business. Smaller value declines will also have a negative impact on our business. These factors
    may decrease the likelihood we will be able to generate enough cash to repay the Notes.
●
Currently,
    we are reliant on a single developer and homebuilder, the Hoskins Group, who is concentrated in the Pittsburgh, Pennsylvania market,
    for a significant portion of our revenues and a portion of our capital. Our second largest customer is in the Orlando, Florida market
    and is also a significant portion of our portfolio.
●
Most
    of our assets are commercial construction loans to homebuilders and/or developers which are a higher than average credit risk, and
    therefore could expose us to higher rates of loan defaults, which could impact our ability to repay amounts owed to you.
●
We
    have entered into loan purchase and sale agreements with third parties to sell them portions of some of our loans. This increases
    our leverage. While the agreements are intended to increase our profitability, large loan losses and/or idle cash could actually
    reduce our profitability, which could impair our ability to pay principal and/or interest on the Notes.
●
We
    depend on the availability of significant sources of credit to meet our liquidity needs and our failure to maintain these sources
    of credit could materially and adversely affect our liquidity in the future.
●
We
    have unfunded commitments to builders as of December 31, 2021. If every builder borrowed every amount allowed (which would mean all
    of their homes were complete) and no builders paid us back, we would need to fund that amount. While some of that amount would automatically
    come from our loan purchase and sale agreements, the rest would have to come from our Notes Program and/or our lines of credit. Therefore,
    we may not have the ability to fund our commitments to builders.
●
We
    have a significant amount of debt and expect to incur a significant amount of additional debt in the future, including issuance of
    the Notes, which will subject us to increased risk of loss. Our present and future senior debt may make it difficult to repay the
    Notes.
●
Our
    operations are not subject to the stringent banking regulatory requirements designed to protect investors, so repayment of your investment
    is completely dependent upon our successful operation of our business.
●
Our
    Chief Executive Officer (who is also on our board of managers) and Executive Vice President will face conflicts of interest as a
    result of the secured lines of credit made to us, which could result in actions that are not in the best interests of our Note holders.
●
The
    indenture and terms of our Notes do not restrict our use of leverage. A relatively small loss can cause over leveraged companies
    to suffer a material adverse change in their financial position. If this happened to us, it may make it difficult to repay the Notes.
These
securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission, and neither
the Securities and Exchange Commission nor any state securities commission has passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
Price
    to Public
Underwriting
    Discount and Commission
(1)
Proceeds
                                            to
Company
(2)
Per Note
100
%
None
100
%
Total
$
70,000,000
None
$
70,000,000
(1)
The
    Notes are not being offered or sold pursuant to any underwriting or similar agreement, and no commissions or other remuneration will
    be paid in connection with their sale. The Notes will be sold at face value.
(2)
We
    will receive all of the net proceeds from the sale of the Notes, which, if we sell all of the Notes covered by this prospectus, we
    estimate will total approximately $69,326,628 after expenses.
The
date of this prospectus is [__], 2022.
SUITABILITY
STANDARDS
An
investment in our Notes involves significant risks and is only suitable for persons who have adequate financial means, desire a relatively
long-term investment and will not need liquidity from their investment. This investment is not suitable for persons who seek liquidity
or guaranteed income.
We
have not established general suitability standards for investors in our Notes; however, certain states in which we intend to sell the
Notes have established special suitability standards. Notes will be sold only to investors in these states who meet the special suitability
standards set forth below:
●
For
    Alabama Residents –
Notes will only be sold to residents of the State of Alabama representing that they have (i) an annual
    gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. Further, investors in the State of Alabama
    may not invest more than 10% of their liquid net worth in us or our affiliates.
●
For
    Alaska Residents –
Notes will only be sold to residents of the State of Alaska representing that they have (i) a minimum
    annual gross income of $70,000 and a minimum net worth of $70,000, or (ii) a minimum net worth of $250,000. In each case, net worth
    is to be calculated exclusive of an individual's principal automobile, principal residence, and home furnishings.
●
For
    California Residents –
Notes will only be sold to residents of the State of California representing that they have (i)
    a gross income of $65,000 and net worth of $250,000, or (ii) a net worth of $500,000.
●
For
    Idaho and Kentucky Residents –
Notes will only be sold to residents of the States of Idaho and Kentucky representing that
    they have (i) a liquid net worth of $85,000 and annual gross income of $85,000, or (ii) a liquid net worth of $300,000. Additionally,
    the investor's total investment in the Notes shall not exceed 10% of his or her liquid net worth. Liquid net worth is that
    portion of net worth consisting of cash, cash equivalents and readily marketable securities.
●
For
    Indiana Residents –
Notes will only be sold to residents of the State of Indiana representing that they have (i) an annual
    gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. In each case, net worth is to be calculated
    exclusive of an individual's principal automobile, principal residence, and home furnishings.
●
For
    Iowa Residents –
Notes will only be sold to residents of the State of Iowa representing that they have (i) a liquid net
    worth of $85,000 and annual gross income of $85,000, or (ii) a liquid net worth of $300,000. Additionally, the investor's total
    investment in the Notes shall not exceed 10% of his or her liquid net worth. Liquid net worth is that portion of net worth consisting
    of cash, cash equivalents and readily marketable securities.
●
For
    Kansas Residents –
It is recommended by the Office of the Kansas Securities Commissioner that Kansas investors limit their
    aggregate investment in the securities of the Issuer and other similar programs to not more than 10% of their liquid net worth. For
    these purposes, liquid net worth shall be defined as that portion of total net worth (total assets minus liabilities) that is comprised
    of cash, cash equivalents and readily marketable securities, as determined in conformity with U.S. Generally Accepted Accounting
    Principles.
i
●
For
    Maine Residents –
The Maine Office of Securities recommends that an investor's aggregate investment in this offering
    and similar offerings not exceed 10% of the investor's liquid net worth. For this purpose, "liquid net worth" is
    defined as that portion of net worth that consists of cash, cash equivalents and readily marketable securities.
●
For
    Massachusetts and New Mexico Residents –
It is required by the Securities Divisions of each of Massachusetts and New Mexico
    that Massachusetts and New Mexico investors limit their aggregate investment in our Notes and other similar programs to not more
    than 10% of their liquid net worth. For these purposes, liquid net worth shall be defined as that portion of total net worth (total
    assets minus liabilities) that is comprised of cash, cash equivalents and readily marketable securities, as determined in conformity
    with U.S. Generally Accepted Accounting Principles. It is further required by the Securities Divisions of each of Massachusetts and
    New Mexico that Massachusetts and New Mexico investors have (i) a net income of at least $200,000 in each of the two most recent
    years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the
    current year, or (ii) an individual net worth, or joint net worth with that person's spouse, in excess of $1,000,000, excluding
    the value of the person's primary residence.
●
For
    Missouri Residents –
No more than 10% of any one Missouri investor's liquid net worth shall be invested in the Notes.
●
For
    North Dakota and Oregon Residents –
Notes will only be sold to residents of the States of North Dakota and Oregon representing
    that they have (i) an annual gross income of $70,000 and a liquid net worth of $70,000, or (ii) a net worth of $250,000. Further,
    investors in the States of North Dakota or Oregon may not invest more than 10% of their liquid net worth in the offering.
●
For
    Tennessee Residents –
An investment by a Tennessee resident must not exceed ten percent (10%) of their liquid net worth.
●
For
    Vermont Residents –
Accredited investors in Vermont, as defined in 17 C.F.R. § 230.501, may invest freely in this
    offering. In addition to the suitability standards described above, non-accredited Vermont investors may not purchase an amount in
    this offering that exceeds 10% of the investor's liquid net worth. For these purposes, "liquid net worth" is defined
    as an investor's total assets (not including home, home furnishings, or automobiles) minus total liabilities.
ii
SHEPHERD'S
FINANCE, LLC
TABLE
OF CONTENTS
SUITABILITY STANDARDS
i
QUESTIONS AND ANSWERS
1
PROSPECTUS SUMMARY
7
Our Company and Our Business
7
The Offering
8
SUMMARY OF PRINCIPAL RISK FACTORS
11
RISK FACTORS
13
Risks Related to Our Offering and Business
13
Risks Related to Conflicts of Interest
23
Risks Related to Liquidity
24
FORWARD-LOOKING STATEMENTS
30
USE OF PROCEEDS
31
BUSINESS
32
Overview
32
Investment Objectives and Opportunity
33
Loan Portfolio
38
Other Investments
39
Credit Quality Information
39
Debt Summary and Sources of Liquidity
40
Competition
46
Human Capital Resources
46
Regulatory Matters
46
Legal Proceedings
47
Reports to Security Holders
47
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
48
Overview
48
Critical Accounting Estimates
50
Consolidated Results of Operations
52
Consolidated Financial Position
57
Secured Borrowings
64
Unsecured Borrowings
68
Priority of Borrowings
70
Liquidity and Capital Resources
70
Inflation, Interest Rates, and Housing Starts
72
Recent Accounting Pronouncements
74
Subsequent Events
74
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
74
Interest Income on the Notes
74
Treatment of Dispositions of Notes
75
Non-U.S. Holders
75
Reporting and Backup Withholding
75
Foreign Account Tax Compliance Withholding
75
CERTAIN EMPLOYEE BENEFIT PLAN CONSIDERATIONS
76
General Fiduciary Matters
76
Prohibited Transaction Issues
76
Representation
77
MANAGEMENT
77
Executive Officers and Board of Managers
77
Committees of the Board of Managers
79
Limited Liability and Indemnification of Directors, Officers, Employees, and Other Agents
80
EXECUTIVE COMPENSATION
81
Executive Officer Compensation
81
Board of Managers Compensation
82
PRINCIPAL SECURITY HOLDERS
83
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
84
Transactions with Affiliates
84
Affiliate Transaction Policy
87
Board of Managers Independence
87
DESCRIPTION OF NOTES
88
General
88
Established Features of the Notes
88
Subordination
89
Redemption by Us Prior to Maturity
89
Redemption at the Request of the Holder Prior to Maturity
89
Redemption upon Your Death
90
Additional Redemption Options for Notes with a 36-Month Maturity
90
No Restrictions on Additional Debt or Business
90
Modification of Indenture
90
Place, Method, and Time of Payment
91
Events of Default
91
Satisfaction and Discharge of Indenture
92
Reports
92
Service Charges
92
Book Entry Record of Your Ownership
92
Transfer
92
Concerning the Trustee
92
PLAN OF DISTRIBUTION
93
CHARITABLE MATCH PROGRAM
94
LEGAL MATTERS
94
EXPERTS
94
WHERE YOU CAN FIND MORE INFORMATION
94
INDEX TO FINANCIAL STATEMENTS
F-1
iii
You
should rely only upon the information contained in this prospectus. We have not authorized anyone to provide you with information different
from that contained in this prospectus. We are offering to sell the Notes only in jurisdictions where offers and sales are permitted.
QUESTIONS
AND ANSWERS
Below
we have provided some of the more frequently asked questions and answers relating to the offering of the Notes. Please see the "Prospectus
Summary" and the remainder of the prospectus for more information about the offering of the Notes.
Q:
Who
    is Shepherd's Finance, LLC?
A:
Shepherd's
    Finance, LLC, along with our consolidated subsidiary, ("Shepherd's Finance," "we," "our,"
    "us," or the "Company") is a finance company organized as a limited liability company in the State of Delaware.
    Our business is focused on commercial lending to participants in the residential construction and development industry. Our Chief
    Executive Officer ("CEO"), who is also on our board of managers, is Daniel M. Wallach. Mr. Wallach is responsible for
    overseeing our day-to-day operations. Our office is located in Jacksonville, Florida. As of December 31, 2021, we have 66 customers
    in 20 states. As of December 31, 2021, Mr. Wallach and his wife, directly or indirectly, own 80.7% of our outstanding common membership
    interests, which constitute our voting membership interests. Therefore, Mr. Wallach is able to exercise significant control over
    our business, including with respect to the composition of our board of managers. A manager may be removed by a vote of holders of
    80% of our outstanding voting membership interests.
Q:
What
    are your primary business activities?
A:
We
    extend and service commercial loans to small-to-medium sized homebuilders for the purchase of lots and/or the construction of homes
    thereon. In some circumstances, the lot is purchased with an older home on the lot which is then either removed or rehabilitated.
    If the home is rehabilitated, the loan is referred to as a "rehab" loan. As we continue to grow our business, we are
    focusing some of our efforts on our rehab loan program, which we believe in the long run will face less bank competition and have
    more stable demand than our new construction program. We also extend and service loans for the purchase of lots and undeveloped land
    and the development of that land into residential building lots. Most of the loans are for "spec homes" or "spec
    lots," meaning they are built or developed speculatively (with no specific end-user homeowner in mind). The loans are generally
    secured, and the collateral is the land, lots, and constructed items thereon, as well as additional collateral, as we deem appropriate.
    As of December 31, 2021, we had 224 construction loans in 20 states with 66 borrowers and 15 development loans in six states with
    12 borrowers. We intend to continue expanding our lending activity and further diversifying our loan portfolio.
Q:
What
    is your experience in this type of lending?
A:
Since
                                            2011, we have extended and serviced commercial loans to small-to-medium sized homebuilders
                                            for the purchase of lots and/or the construction of homes thereon. We have also extended
                                            rehab loans to homebuilders in instances when the lot has an existing home which is either
                                            removed or rehabilitated. We also extend and service loans for the purchase of lots and undeveloped
                                            land and the development of that land into residential building lots. We have originated
                                            approximately $266,382,000 of loans from December 2011 through December 2021. As of December
                                            31, 2021, we had 224 construction loans in 20 states with 66 borrowers and 15 development
                                            loans in six states with 12 borrowers.
Our
    CEO, Daniel M. Wallach, has been in the housing industry since 1985. For 11 years, he was the Chief Financial Officer of 84 Lumber
    Company ("84 Lumber"), a multi-billion dollar supplier of building materials to home builders. He also was responsible
    for 84 Lumber's lending business for 20 years. During those years, he was responsible for the creation and implementation of
    many secured lending programs to builders, some of which were performed fully by 84 Lumber, and some of which were performed in partnership
    with banks. In general, both the creation of all loans and the resolution of defaulted loans were Mr. Wallach's responsibility,
    whether the loans were company loans or loans in partnership with banks. Through these programs, he was responsible for the creation
    of approximately $2,000,000,000 in loans which generated interest spread of $50,000,000 after deducting for loan losses. Through
    the years, Mr. Wallach managed the development of systems for reducing and managing the risks and losses on defaulted loans. Mr.
    Wallach also was responsible for 84 Lumber's unsecured debt to builders, which reached over $300,000,000 at its peak. He also
    gained experience in securing defaulted unsecured debt.
1
Q:
Why
    will your potential customers want to borrow from you?
A:
While
    the number of housing starts dropped to historically low levels in 2007, they have been recovering since and there were approximately
    1,130,000 new single family homes with construction started in the United States in 2021. See "Management's Discussion
    and Analysis of Financial Condition and Results of Operations — Inflation, Interest Rates, and Housing Starts." Many
    small-to-medium sized home builders can build homes for customers who have their own financing, but are unable to obtain or supply
    any or enough of their own financing to build speculative or model homes. The ability to have available either a speculative home
    or a model home can greatly increase the total number of homes a builder can sell per year, so despite the high cost of providing
    financing to builders today, we believe that there is a significant demand. Banks, which historically have been the most popular
    provider of financing for builders, are mostly not in that business today, or are in the business at a reduced level. We believe
    that this void in supply gives us the opportunity to profit in this niche business of providing financing to small-to-medium sized
    home builders. In addition, we believe that this is a good time to extend commercial loans to builders in the residential real estate
    market because many of our competitors have sustained losses due to the impact of the COVID-19 pandemic and, therefore, are currently
    reluctant to lend in this space.
Q:
What
    is the role of the Board of Managers?
A:
While
    our CEO and other executive officers are responsible for our day-to-day operations, our board of managers is responsible for governance
    over our business. Our board of managers is comprised of Daniel M. Wallach, who is also our CEO, and three independent managers,
    Eric A. Rauscher, Kenneth R. Summers, and Gregory L. Sheldon.
Q:
What
    kind of offering is this and how many Notes are outstanding?
A:
We
    are offering up to $70,000,000 in Notes. As of December 31, 2021, we have approximately $20,636,000 of Notes outstanding, consisting
    of Notes issued pursuant to our prior offerings. We previously engaged in three public offering of Notes, the most recent of which
    terminated on [__], 2022. Notes issued in our prior offerings rank equally to the Notes offered in this offering.
Q:
How
    are the Notes sold?
A:
The
    Notes are offered directly by us without an underwriter or placement agent. We may market the Notes by advertisements on the internet,
    advertisements in local and/or national newspapers, roadway sign advertisements, or through direct mail campaigns and other miscellaneous
    media in states in which we have properly registered the offering or qualified for an exemption from registration.
2
Q:
What
    are the proposed terms of the Notes you are offering?
A:
The
    Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance. The interest rates
    will vary within the predetermined interest rate ranges, as described in this prospectus, but annual interest rates as of the date
    of this prospectus are as follows: 6% for 12-month Notes; 7% for 24-month Notes; 4% for 36-month Notes; and 8% for 48-month Notes.
    Interest will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly
    based on a 365/366 day year. When you make an investment, your rate will be fixed throughout the duration of your investment.
Q:
How
    is the interest rate determined?
A:
From
    time to time, we will establish the interest rate(s) we are offering for various maturities. By referring to the features (e.g.,
    the maturities and interest rates) which are in effect at the time, you will see the interest rate(s) and maturities we are currently
    offering. The interest rate offered on the Notes depends on which maturity you select and is subject to a range, as follows:
Note Maturity
Minimum
Rate
Ceiling
12-Month
5
%
10
%
24-Month
6
%
10
%
36-Month
3
%
6
%
48-Month
8
%
12
%
The
interest rate on a Note purchased by you is fixed and will not change over the term of the Note.
Q:
What
    will you do with the proceeds raised from this offering?
A:
If
    all of the Notes offered by this prospectus are sold, we expect to receive approximately $69,326,628 in net proceeds (after
    deducting all costs and expenses associated with this offering). We intend to use substantially all of the net proceeds from this
    offering as follows and in the following order of priority:
●
to
    make payments on other borrowings, including loans from affiliates;
●
to
    pay Notes on their scheduled due date and Notes that we are required to redeem early;
●
to
    make interest payments on the Notes; and
●
to
    the extent we have remaining net proceeds and adequate cash on hand, to fund any one or more of the following activities:
○
to
    extend commercial construction loans to homebuilders to build single or multi-family homes, develop lots, or rehabilitate an older
    home on an existing lot;
○
to
    make distributions to equity owners, including distributions on our preferred equity;
○
for
    working capital and other corporate purposes provided, however, no more than 20% of the proceeds will be used for such purposes;
○
to
    purchase defaulted secured debt from financial institutions at a discount;
○
to
    purchase defaulted unsecured debt from suppliers to homebuilders at a discount and then secure it with real estate or other collateral;
○
to
    purchase real estate, in which we will operate our business (one such purchase occurred in February 2017); and
○
to
    redeem Notes which we have decided to redeem prior to maturity.
3
Q:
What
    is a Note?
A:
A
    Note is our promise to pay you a specified rate of interest for a specific period of time and to repay your principal investment
    upon maturity. The Notes are our general unsecured obligations and are subordinate in right of payment to all present and future
    senior debt. "Subordinated" means that if we are unable to pay our debts as they come due, all of the senior debt would
    be paid in full first. After the senior debt is paid in full, any remaining money would be used to repay the Notes and other subordinated
    debt that are equal to the Notes in priority. As of December 31, 2021, we had $22,327,000 in senior debt and approximately $25,776,000
    in subordinated debt. We expect to incur debt in the future, including, but not limited to, more senior debt and the Notes offered
    pursuant to this offering.
Q:
What
    is an indenture?
A:
As
    required by United States federal law, the Notes will be governed by a document called an "indenture." An indenture is
    a contract between us and a trustee. The main role of the trustee is to enforce your rights against us if we are in default of our
    obligations under the Notes. Defaults are described in this prospectus under "Description of Notes — Events of Default."
    There are some limitations on the extent to which the trustee acts on your behalf. These limitations are described in this prospectus
    under "Description of Notes — Events of Default."
The
    Notes will be issued under an indenture dated [__], 2022, between us and [__], as trustee. The indenture does not limit the principal
    amount of debt securities that we may issue under it. The indenture is governed by Delaware law and is qualified under the Trust
    Indenture Act of 1939.
Q:
Is
    my investment in the Notes insured or guaranteed?
A:
No,
    the Notes are:
●
NOT
    certificates of deposit with an insured financial institution;
●
NOT
    guaranteed by any depository institution; and
●
NOT
    insured by the FDIC or any governmental or private insurance fund, or any other person or entity.
The
    Notes are backed only by the faith and credit of our Company and our operations. You are dependent upon our ability to effectively
    manage our business to generate sufficient cash flow, including cash flow from our commercial lending activities, for the repayment
    of principal at maturity and the ongoing payment of interest on the Notes.
4
Q:
How
    is interest calculated and paid to me?
A:
Interest
    will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based
    on a 365-day year (366-day in case of a leap year). Interest will be earned daily, and we will pay interest to you monthly or at
    maturity as you request. If you choose to be paid interest at maturity rather than monthly, the interest will be compounded monthly.
    If any day on which a payment is due with respect to a Note is not a business day, then you will not be entitled to payment of the
    amount due until the following business day, and no additional interest will be due as a result of such delay. If you elect to be
    paid interest monthly, interest on your Note will be paid on the first business day of every month. Your first interest payment date
    will be the month following the month in which the Note is issued, except that if a new Note is issued within the last 10 days preceding
    an interest payment date, the first interest payment will be made on the next succeeding interest payment date (i.e., approximately
    35–40 days after issuance). No payments under $50 will be made, with any interest payment being accrued to your benefit and
    earning interest on a monthly compounding basis until the payment due to you is at least $50 on an interest payment date.
Q:
If
    I elect to have interest on the Note paid in one lump sum at maturity, can I change my election later?
A:
Yes,
    we will allow you to change your election so that you receive monthly payments of earned and unpaid interest instead. You should
    contact us at (302) 752-2688 (30-ASK-ABOUT) or use our website,
www.shepherdsfinance.com
, to learn the steps you should take
    to change your election.
Q:
When
    do the Notes mature?
A:
The
    Notes will generally mature based on the maturity date you select at the time of purchase, unless the Company chooses to redeem your
    Note prior to its stated maturity or, in certain circumstances, you require us to redeem your Note prior to its stated maturity.
Q:
May
    I redeem a Note prior to maturity?
A:
Beginning
                                            180 calendar days after the issuance date, you may request, in writing, that we redeem the
                                            Note. Your request, however, is subject to our consent and we may decline your request at
                                            our choosing. If we agree to your redemption request, a 180-day interest penalty will be
                                            imposed. This means that you will not receive the last 180 days' worth of interest
                                            and, if the accrued and unpaid interest is not sufficient to cover the amount of the penalty,
                                            then any remaining amount of the penalty shall be deducted from the principal amount of the
                                            Note (i.e., we will subtract the remaining interest penalty from your original investment).
Holders
    of a Note with a 36-month maturity purchased on or after February 4, 2020 may require us to redeem all or a portion of such Note
    for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated
    rate to the redemption date, subject to certain restrictions primarily related to how much advance notice is provided to us. Furthermore,
    unless the subordination provisions in the indenture restrict our ability to make the redemption, a holder of a Note may also require
    us to redeem all or a portion of their Note, regardless of amount and without any interest penalty, for a redemption price equal
    to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date,
    upon one business day's advance notice to us, but only if the holder immediately upon redemption invests the entirety of the
    proceeds from such redemption in another Note or another security then-offered by us, if any. The restriction requiring you to wait
    until 180 days have passed from the issuance of your Note to request a redemption does not apply to the redemptions described in
    this paragraph. See the "Description of Notes — Additional Redemption Options for Notes" section of this prospectus
    for additional information.
Q:
What
    happens if I die prior to the maturity date?
A.
At
    the written request of the executor or administrator of your estate (or if your Note is held jointly with another investor, the joint
    owner of your Note), we will redeem any Note at any time after death. The redemption price will be equal to the principal amount
    plus earned but unpaid interest payable on the Note, without any interest penalty. We will seek to honor any such request as soon
    as reasonably possible based on our cash position at the time and our then current cash needs, but generally within two weeks of
    the request. It is possible that the subordination provisions in the indenture may restrict our ability to honor your request.
5
Q:
Can
    you force me to redeem my Note?
A:
Yes.
    At any time we may call all or a portion of your Note for redemption. We will give you 30 to 60 days' notice of the mandatory
    redemption and repay your Note for a price equal to the principal amount plus earned but unpaid interest to the day we repay your
    Note.
Q:
Are
    there any JOBS Act considerations?
A.
We
                                            are an "emerging growth company," as defined in the Jumpstart Our Business Startups
                                            Act, or the JOBS Act, and are eligible to take advantage of certain exemptions from, or reduced
                                            disclosure obligations relating to, various reporting requirements that are normally applicable
                                            to public companies. Such exemptions include, among other things, not being required to comply
                                            with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
                                            disclosure obligations relating to executive compensation in proxy statements and periodic
                                            reports, and exemptions from the requirement to hold a non-binding advisory vote on executive
                                            compensation and obtain shareholder approval of any golden parachute payments not previously
                                            approved.
Additionally,
    under Section 107 of the JOBS Act, an "emerging growth company" may take advantage of the extended transition period
    provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. This means an
    "emerging growth company" can delay adopting certain accounting standards until such standards are otherwise applicable
    to private companies. However, we have elected to "opt out" of such extended transition period, and will therefore comply
    with new or revised accounting standards on the applicable dates on which the adoption of such standards are required for non-emerging
    growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition period for compliance
    with new or revised accounting standards is irrevocable.
We
    will remain an "emerging growth company" until the earliest of (i) the last day of the first fiscal year in which we
    have total annual gross revenues of $1.07 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of
    the date of the first sale of our common equity securities pursuant to an effective registration statement, (iii) the date on which
    we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act (which would occur if the market
    value of our common equity held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently
    completed second fiscal quarter), or (iv) the date on which we have, during the preceding three year period, issued more than $1
    billion in non-convertible debt.
Q:
What
    are some of the significant risks of my investment in the Notes?
A:
You
    should carefully read and consider all risk factors beginning on page 13 of this prospectus prior to investing. A summary
    of the principal risk factors we face is also contained in the "Summary of Principal Risk Factors" section of this prospectus.
Q:
How
    do I purchase a Note?
A.
You
                                            may purchase a Note from us by visiting our website at
www.shepherdsfinance.com
and
                                            following the instructions under the heading "Investors" and then "Our
                                            Investment Process" or by calling (302) 752-2688 (30-ASK-ABOUT) to request a copy of
                                            the prospectus along with an investment application. Upon receipt of your application and
                                            investment check and the acceptance and posting of your investment, we will send you a confirmation,
                                            which describes, among other things, the term, interest rate, and principal amount of your
                                            Note.
We
    reserve the right to reject any investment. Among other reasons, we may reject an investment if the information in your investment
    application is incorrect or incomplete, or if the interest rate or maturity you have selected has not been offered by us in the past
    seven calendar days for your desired investment amount at the time we receive your investment documents.
Q:
Whom
    may I contact for more information?
A:
You
    can obtain additional copies of this prospectus and review the established features of the Notes at
www.shepherdsfinance.com
or by calling (302) 752-2688 (30-ASK-ABOUT). However, the information contained on our website is not part of this prospectus. If
    you have questions about the suitability of an investment in the Notes for you, you should contact your own investment, tax, and
    other financial advisors.
6
PROSPECTUS
SUMMARY
This
summary highlights selected information, most of which was not otherwise addressed in the "Questions and Answers" section
of this prospectus. For more information about us, you should carefully read the entire prospectus, including the section entitled "Risk
Factors," the consolidated financial statements and other consolidated financial data, any related prospectus supplement, and the
documents we have referred you to in the "Where You Can Find More Information" section. There will be no trading market for
the Notes, so you will not be able to use the money you invest until the maturity or other repayment of the Note. Your right to be repaid
prior to maturity is at our sole discretion, except upon your death and except for holders of certain 36-month Notes.
Our
Company and Our Business
Our
business is focused on commercial lending to participants in the residential construction and development industry. We believe this market
is underserved because of the lack of traditional lenders currently participating in the market. We are located in Jacksonville, Florida.
We are organized as a Delaware limited liability company and our operations are governed pursuant to our limited liability company agreement.
The
commercial loans we extend are secured by mortgages on the underlying real estate. We extend and service commercial loans to small-to-medium
sized homebuilders for the purchase of lots and/or the construction of homes thereon. In some circumstances, the lot is purchased with
an older home on the lot which is then either removed or rehabilitated. If the home is rehabilitated, the loan is referred to as a "rehab"
loan. As we continue to grow our business, we are focusing some of our efforts on our rehab loan program, which we believe in the long
run will face less bank competition and have more stable demand than our new construction program. We also extend and service loans for
the purchase of lots and undeveloped land and the development of that land into residential building lots. In addition, we may, depending
on our cash position and the opportunities available to us, do none, any or all of the following: purchase defaulted unsecured debt from
suppliers to homebuilders at a discount (and then secure that debt with real estate or other collateral), purchase defaulted secured
debt from financial institutions at a discount, purchase real estate in which we will operate our business (one such purchase occurred
in February 2017), and conduct other business related to or in coordination with extending loans to homebuilders and developers. Our
investment policies may be amended or changed at any time by our board of managers.
We
had $46,943,000 and $46,405,000 in loan assets as of December 31, 2021 and December 31, 2020, respectively. As of December 31, 2021,
we had 224 construction loans in 20 states with 66 borrowers and 15 development loans in six states with 12 borrowers. As of December
31, 2021, four of the development loans are with a borrower in Pittsburgh, Pennsylvania. We have various sources of capital, detailed
below:
(All dollar [$] amounts shown in table in thousands.)
December 31, 2021
December 31, 2020
Capital Source
Purchase and sale agreements and other secured borrowings
$
19,165
$
22,968
Secured line of credit from affiliates
859
–
Unsecured line of credit (senior)
1,250
500
EIDL advance
-
10
Unsecured Notes through our Notes Program, gross
20,636
21,482
Other unsecured debt
6,193
5,411
Preferred equity, Series C units
5,014
3,582
Preferred equity, Series B units
1,720
1,630
Common equity
(130
)
47
Total
$
54,707
$
55,630
7
Economic
and Industry Dynamics
We
found a niche in the home construction financing industry, to become the lender of choice or secondary lender to residential homebuilders
during the absence of sufficient lending at the homebuilder's local financial institution or community bank. Our customers increase
their sales and profits by borrowing from us and, in return we generate positive returns on secured loans we make to them.
Risk
and Mitigation
We
believe that while creating speculative construction loans is a high-risk venture, the reduction in competition, the differences in our
lending versus typical small bank lending, and our loss mitigation techniques will all help this to continue to be a profitable business.
We
engage in various activities to try to mitigate the risks inherent in this type of lending by:
●
Keeping
    the loan-to-value ratio, or LTV, between 60% and 75% on a portfolio basis, however, individual loans may, from time to time, have
    a greater LTV;
●
Generally
    using deposits from the builder on home construction loans to ensure the completion of the home. Lending losses on defaulted loans
    are usually a higher percentage when the home is not built, or is only partially built;
●
Having
    a higher yield than other forms of secured real estate lending;
●
Using
    interest escrows from our loans;
●
Paying
    major subcontractors and suppliers directly, which reduces the frequency of liens on the property (liens generally hurt the net realized
    value of loss mitigation techniques);
●
Aggressively
    working with builders who are in default on their loan before and during foreclosure. This technique generally yields a reduced realized
    loss; and
●
Market
    grading. We review all lending markets, analyzing their historic housing start cycles. Then, the current position of housing starts
    is examined in each market. Markets are classified into volatile, average, or stable, and then graded based on that classification
    and our opinion of where the market is in its housing cycle. This grading is then used to determine the builder deposit amount, the
    LTV, and the yield.
The
Offering
Securities
    Offered
We
    are offering up to $70,000,000 in aggregate principal amount of our Notes in this public offering (the "Notes Program").
    The Notes will be governed by an indenture between us and [__], as trustee. The Notes will not have the benefit of a sinking fund
    and will not be guaranteed by the FDIC or any governmental or private insurance fund, or any other person or entity.
Minimum
    Investment (in whole dollars)
A
    minimum investment of $500 is required.
Maximum
    Investment (in whole dollars)
The
    maximum investment is $1,000,000 per Note, or $1,000,000 in the aggregate per investor, but a higher maximum investment amount may
    be approved by us on a case-by-case basis.
8
Interest
    Rate
Various
    rates will be offered by us from time to time, which will be impacted by the maturity selected by you (see "Maturity,"
    below), and will be subject to a range, as follows:
Note Maturity
Minimum Rate
Ceiling
12-Month
5
%
10
%
24-Month
6
%
10
%
36-Month
3
%
6
%
48-Month
8
%
12
%
The
    Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance. The interest rates
    will vary within the predetermined interest rate ranges, but annual interest rates as of the date of this prospectus are as follows:
    6% for 12-month Notes; 7% for 24-month Notes; 4% for 36-month Notes; and 8% for 48-month Notes. Interest will be calculated based
    on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365/366 day year.
    When you make an investment your interest rate will be fixed throughout the duration of your investment.
Payment
    of Interest
Interest
    will be calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based
    on a 365/366 day year. Interest will be earned daily, and we will pay interest to you monthly or at maturity as you request. If you
    choose to be paid interest at maturity rather than monthly, the interest will be compounded monthly. If any day on which a payment
    is due with respect to a Note is not a business day, then you will not be entitled to payment of the amount due until the following
    business day, and no additional interest will be due as a result of such delay. If you elect to be paid interest monthly, interest
    on your Note will be paid on the first business day of every month. Your first interest payment date will be the month following
    the month in which the Note is issued, except that if a new Note is issued within the last 10 days preceding an interest payment
    date, the first interest payment will be made on the next succeeding interest payment date (i.e., approximately 35–40 days
    after issuance). No payments under $50 will be made, with any interest payment being accrued to your benefit and earning interest
    on a monthly compounding basis until the payment due to you is at least $50 on an interest payment date.
Maturity
Ranging
    from 12 months to 48 months from the date of issuance.
Redemption
    by You
Subject
    to our agreement in our sole discretion, you may request that we redeem a Note purchased by you at any time beginning 180 calendar
    days after the issuance date, with a 180-day interest penalty. This means that you will not receive the last 180 days' worth
    of interest and, if the accrued and unpaid interest is not sufficient to cover the amount of the penalty, then any remaining amount
    of the interest penalty shall be deducted from the principal amount of the Note (i.e., we will subtract the remaining interest penalty
    from your original investment).
Holders
    of a Note with a 36-month maturity purchased on or after February 4, 2020 may require us to redeem all or a portion of such Note
    for a redemption price equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated
    rate to the redemption date, subject to certain restrictions primarily related to how much advance notice is provided to us. Furthermore,
    unless the subordination provisions in the indenture restrict our ability to make the redemption, a holder of a Note may also require
    us to redeem all or a portion of their Note, regardless of amount and without any interest penalty, for a redemption price equal
    to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption date,
    upon one business day's advance notice to us, but only if the holder immediately upon redemption invests the entirety of the
    proceeds from such redemption in another Note or another security then-offered by us, if any. The restriction requiring you to wait
    until 180 days have passed from the issuance of your Note to request a redemption does not apply to the redemptions described in
    this paragraph. See the "Description of Notes — Additional Redemption Options for Notes" section of this prospectus
    for additional information.
9
Redemption
    in the Event of Death
Unless
    the subordination provisions in the indenture restrict our ability to make the redemption, at the written request of the executor
    or administrator of your estate (or if your Note is jointly held with another investor, at the written request of your joint investor),
    we will redeem the Note at any time after death for a redemption price equal to the principal amount plus earned but unpaid interest
    payable on the Note, without any interest penalty. We will seek to honor any such redemption request as soon as reasonably possible,
    based on our then current cash position and needs, but generally within two weeks of the request.
Redemption
    by Us
At
    any time we may call your Note for redemption upon 30 to 60 days' notice. The redemption price will be equal to the principal
    amount plus accrued and unpaid interest to the date of the redemption.
Subordination
The
    Notes are subordinated, in all rights to payment and in all other respects, to all of our senior debt. Senior debt includes, without
    limitation, all of our bank debt, our secured lines of credit from affiliates, our unsecured line of credit, senior subordinated
    debt, and any debt we obtain in the future. This means that if we are unable to pay our debts when due, all of the senior debt would
    be paid first, before any payment would be made on the Notes.
Events
    of Default
Under
    the indenture, an event of default is generally defined as (1) a default in the payment of principal or interest on the Notes that
    is not cured for 30 days, (2) bankruptcy or insolvency, or (3) our failure to comply with provisions of the Notes or the indenture
    if such failure is not cured or waived within 60 days after the receipt of a specific notice.
Transfer
    Restrictions
Transfer
    of a Note is effective only upon the receipt of valid transfer instructions from the Note holder of record.
Trustee
[__]
Plan
    of Distribution
This
    offering is being conducted directly by us, without any underwriter or placement agent.
Charitable
    Match Program
We
    offer a charitable match program for interest payments that you elect to give to a qualifying charity. If you choose to participate
    in the program and donate all or a portion of your interest payments to charity, when we calculate your interest we will deduct the
    percentage of interest you selected and keep track of that amount separate from your information. After interest is calculated for
    all Note holders at the beginning of December of each year, all of the money for each charity will be totaled up and sent in one
    check to each charity. Each check will have the name and address of each contributor, and the amount each contributed. Our matching
    portion will be included in the total check. We will match your interest payment donation up to 10% of your interest.
Risk
    Factors
See
    "Risk Factors" beginning on page 13 and other information included in this prospectus and any prospectus supplement
    for a discussion of factors you should carefully consider before investing in the Notes.
10
SUMMARY
OF PRINCIPAL RISK FACTORS
Below
is a summary of the principal risk factors we face. Please read it carefully and refer to the more detailed descriptions of the risk
factors in the "Risk Factors" section of this prospectus.
●
Our
    Notes are not insured or guaranteed by the FDIC or any third party, so repayment of your Note depends upon our equity (which may
    be limited at times), our experience, the collateral securing our loans, and our ability to manage our business and generate adequate
    cash flows.
●
The
    Notes are risky speculative investments. Therefore, you should not invest in the Notes unless you are able to afford the loss of
    your entire investment.
●
There
    will not be any market for the Notes, so you should only purchase them if you do not have any need for your money prior to the maturity
    of the Note.
●
You
    will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company as is customarily performed
    in underwritten offerings.
●
We
    have the right to pay your investment back to you before the stated maturity of your investment. If we do, you may not be able to
    reinvest the proceeds at comparable rates and you will stop earning interest on your investment.
●
Our
    business is not industry-diversified. The United States economy experienced a slow recovery after the significant downturn in the
    homebuilding industry beginning in 2007, which was one of the worst credit and liquidity crises since the 1930s. Deterioration in
    the homebuilding industry or economic conditions, including as a result of COVID-19, could decrease demand and pricing for new homes
    and residential home lots. A decline in housing values similar to the national downturn in the real estate market that began in 2007
    would have a negative impact on our business. Smaller value declines will also have a negative impact on our business. These factors
    may decrease the likelihood we will be able to generate enough cash to repay the Notes.
●
Currently,
    we are reliant on a single developer and homebuilder, the Hoskins Group, who is concentrated in the Pittsburgh, Pennsylvania market,
    for a significant portion of our revenues and a portion of our capital. Our second largest customer is in the Orlando, Florida market
    and is also a significant portion of our portfolio.
●
Most
    of our assets are commercial construction loans to homebuilders and/or developers which are a higher than average credit risk, and
    therefore could expose us to higher rates of loan defaults, which could impact our ability to repay amounts owed to you.
●
If
    we lose or are unable to hire or retain key personnel, we may be delayed or unable to implement our business plan, which would adversely
    affect our ability to repay the Notes.
●
We
    have entered into loan purchase and sale agreements with third parties to sell them portions of some of our loans. This increases
    our leverage. While the agreements are intended to increase our profitability, large loan losses and/or idle cash could actually
    reduce our profitability, which could impair our ability to pay principal and/or interest on the Notes.
●
Management
    has broad discretion over the use of proceeds from this offering, and it is possible that the funds will not be used effectively
    to generate enough cash for payment of principal and interest on the Notes.
●
If
    a large number of our current and prospective borrowers are unable to repay their loans within a normal average number of months,
    we will experience a significant reduction in our income and liquidity, and may not be able to repay the Notes as they become due.
    Due to the impact from COVID-19, some of our borrowers have been unable to repay their loans within a normal average number of months
    and it is possible that additional borrowers may also be unable to repay their loans within a normal average number of months.
11
●
We
    depend on the availability of significant sources of credit to meet our liquidity needs and our failure to maintain these sources
    of credit could materially and adversely affect our liquidity in the future.
●
We
    have unfunded commitments to builders as of December 31, 2021. If every builder borrowed every amount allowed (which would mean all
    of their homes were complete) and no builders paid us back, we would need to fund that amount. While some of that amount would automatically
    come from our loan purchase and sale agreements, the rest would have to come from our Notes Program and/or our lines of credit. Therefore,
    we may not have the ability to fund our commitments to builders.
●
We
    have a significant amount of debt and expect to incur a significant amount of additional debt in the future, including issuance of
    the Notes, which will subject us to increased risk of loss. Our present and future senior debt may make it difficult to repay the
    Notes.
●
Payment
    on the Notes is subordinate to the payment of our outstanding present and future senior debt, if any. Since there is no limit to
    the amount of senior debt we may incur, our present and future senior debt may make it difficult to repay the Notes.
●
Our
    operations are not subject to the stringent banking regulatory requirements designed to protect investors, so repayment of your investment
    is completely dependent upon our successful operation of our business.
●
Our
    Chief Executive Officer (who is also on our board of managers) and Executive Vice President will face conflicts of interest as a
    result of the secured lines of credit made to us, which could result in actions that are not in the best interests of our Note holders.
●
The
    indenture and terms of our Notes do not restrict our use of leverage. A relatively small loss can cause over leveraged companies
    to suffer a material adverse change in their financial position. If this happened to us, it may make it difficult to repay the Notes.
12
RISK
FACTORS
Our
operations and your investment in the Notes are subject to a number of risks. You should carefully read and consider these risks, together
with all other information in this prospectus, before you decide to buy the Notes. If any of these risks occur in the future, our business,
consolidated financial condition, operating results, and cash flows and our ability to repay the Notes could be materially adversely
affected.
Risks
Related to Our Offering and Business
Our
Notes are not insured or guaranteed by the FDIC or any third party, so repayment of your Note depends upon our equity (which may be limited
at times), our experience, the collateral securing our loans, and our ability to manage our business and generate adequate cash flows.
Our
Notes are not certificates of deposit or similar obligations or guaranteed by any depository institution and are not insured by the FDIC
or any governmental or private insurance fund, or any other entity. Therefore, you are dependent upon our ability to manage our business
and generate adequate cash flows. If we are unable to generate sufficient cash flow to repay our debts, you could lose your entire investment.
The
Notes are risky speculative investments. Therefore, you should not invest in the Notes unless you are able to afford the loss of your
entire investment.
The
Notes may not be a suitable investment for you, and we advise you to consult with your investment, tax, and other professional financial
advisors prior to deciding whether to invest in the Notes. The characteristics of the Notes, including the maturity and interest rate,
may not satisfy your investment objectives. The Notes may not be a suitable investment for you based on your ability to withstand a loss
of interest or principal or other aspects of your financial situation, including your income, net worth, financial needs, investment
risk profile, return objectives, investment experience, and other factors. Before deciding whether to purchase Notes, you should consider
your investment allocation with respect to the amount of your contemplated investment in the Notes in relation to your other investments
and the diversity of those holdings.
If you cannot afford to lose all of your investment, you should not invest in these Notes.
There
will not be any market for the Notes, so you should only purchase them if you do not have any need for your money prior to the maturity
of the Note.
The
Notes are not listed on a national securities exchange or authorized for quotation on the Nasdaq stock market, or any securities exchange.
The Notes do not have a CUSIP identification number. There is no trading market for the Notes. It is unlikely that the Notes will be
able to be used as collateral for a loan. Except as described elsewhere in this prospectus, you have no right to require redemption of
the Notes. You should only purchase these Notes if you do not have the need for your money prior to the maturity of the Note.
You
will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company as is customarily performed
in underwritten offerings.
The
Notes are being offered by our Executive Vice President of Operations without an underwriter or placement agent. Therefore, you
will not have the benefit of an independent review of the terms of the Notes, the prospectus, or our Company. Accordingly, you should
consult your investment, tax, and other professional financial advisors prior to deciding whether to invest in the Notes.
13
Our
business is not industry-diversified. The United States economy experienced a slow recovery after the significant downturn in the homebuilding
industry beginning in 2007, which was one of the worst credit and liquidity crises since the 1930s. Deterioration in the homebuilding
industry or economic conditions, including as a result of COVID-19, could decrease demand and pricing for new homes and residential home
lots. A decline in housing values similar to the national downturn in the real estate market that began in 2007 would have a negative
impact on our business. Smaller value declines will also have a negative impact on our business. These factors may decrease the likelihood
we will be able to generate enough cash to repay the Notes.
Developers
and homebuilders to whom we may make loans use the proceeds of our loans to develop raw land into residential home lots and construct
homes. The developers obtain the money to repay our development loans by selling the residential home lots to homebuilders or individuals
who will build single-family residences on the lots, or by obtaining replacement financing from other lenders. A developer's ability
to repay our loans is based primarily on the amount of money generated by the developer's sale of its inventory of single-family
residential lots. Homebuilders obtain the money to repay our loans by selling the homes they construct or by obtaining replacement financing
from other lenders, and thus, the homebuilders' ability to repay our loans is based primarily on the amount of money generated
by the sale of such homes.
The
homebuilding industry is cyclical and is significantly affected by changes in industry conditions, as well as in general and local economic
conditions, such as:
●
employment
    level and job growth;
●
demographic
    trends, including population increases and decreases and household formation;
●
availability
    of financing for homebuyers;
●
interest
    rates;
●
affordability
    of homes;
●
consumer
    confidence;
●
levels
    of new and existing homes for sale, including foreclosed homes and homes held by investors and speculators; and
●
housing
    demand generally.
These
conditions may occur on a national scale or may affect some of the regions or markets in which we operate more than others.
We
generally lend a percentage of the values of the homes and lots. These values are determined shortly prior to the lending. If the values
of homes and lots in markets in which we lend drop fast enough to cause the builders losses that are greater than their equity in the
property, we will be forced to liquidate the loan in a fashion which will cause us to lose money. If these losses when combined and added
to our other expenses are greater than our revenue from interest charged to our customers, we will lose money overall, which will hurt
our ability to pay interest and principal on the Notes. Values are typically affected by demand for homes, which can change due to many
factors, including but not limited to, demographics, interest rates, the overall economy, which can be impacted by outbreaks of communicable
illnesses, including the ongoing COVID-19 pandemic, cost of building materials and labor, availability of financing for end-users, inventory
of homes available and governmental action or inaction. If there is a tightening of the credit markets, it would be more difficult for
potential homeowners to obtain financing to purchase homes. If housing prices decline or sales in the housing market decline, our customers
may have a hard time selling their homes at a profit. This could cause the amount of defaulted loans that we will own to increase. An
increase in defaulted loans would reduce our revenue and could lead to losses on our loans. A decline in housing prices will further
increase our losses on defaulted loans. If the amount of defaulted loans or the loss per defaulted loan is large enough, we will operate
at a loss, which will decrease our equity. This could cause us to become insolvent, and we will not be able to pay back your principal
and interest on the Notes.
14
We
face risks related to an epidemic, pandemic or other health crisis, such as the novel coronavirus (COVID-19 pandemic), which could have
a material adverse effect on our business, financial condition, liquidity, results of operations, and prospects.
We
face risks related to an epidemic, pandemic, or other health crisis. COVID-19 has spread globally and the pandemic has caused significant
disruptions to the economy. We have been impacted and continue to face risks related to COVID-19, which has caused disruptions to the
economy and in all of the markets in which we lend. Our operating results depend significantly on the homebuilding industry. The pandemic
may cause decreases in demand for the sales of homes in those areas and others in the future, which could negatively affect our homebuilding
customers and their ability to repay our loans. In such event, our business, financial condition, liquidity, results of operations, and
prospects could be adversely impacted, including our ability to repay our Notes. The ultimate extent of the impact of the COVID-19 pandemic
on our business, financial condition, liquidity, results of operations, and prospects will depend on future developments, which are highly
uncertain and cannot be predicted, including the effectiveness of vaccines against COVID-19 and its variants, public adoption rates of
vaccines, and the uncertainty of new variants of the virus, among others. As we emerge from the pandemic, housing trends may shift in
a negative direction in some or all of our markets.
As
a result of the potential impact of COVID-19, we suspended originations of new loans as of March 20, 2020 in order to maintain our liquidity
and based on our expectation that home values would likely decrease in the near future. We initially told all of our borrowers that we
would fund all loans where the underlying home was already under construction, and advised them to build as quickly as possible to bring
the homes on the market as soon as possible. For loans where the borrower had not yet begun construction of the underlying home, we initially
told them that we would not fund construction and they should therefore not start construction.
On
May 7, 2020, we made the decision to reopen lending under normal, pre-COVID-19 terms for a limited group of certain of its customers.
In addition, the decision was made to allow rehab loans to builders at terms that are less conservative than those established in April
2020 but more conservative than terms prior to the arrival of COVID-19. At that point, we were offering normal terms to approximately
40% of our customers, and restricted terms to approximately 60% of its customers. In the second half of 2020, the Company slowly increased
the percentage of customers with normal terms to near 100% by the end of the year. The initial negative impact of COVID-19 can be seen
in our financial statements, predominantly in 2020.
Due
to the continued cases of the COVID-19 pandemic, there are still economic uncertainties that could negatively impact net income (loss).
Other financial impacts could occur though such potential impact is unknown at this time.
The
homebuilding industry could experience adverse conditions, and the industry's implementation of strategies in response to such
conditions may not be successful.
The
United States homebuilding industry experienced a significant downturn beginning in 2007. During the course of the downturn, many homebuilders
focused on generating positive operating cash flow, resizing and reshaping their product for a more price-conscious consumer and adjusting
finished new home inventories to meet demand, and did so in many cases by significantly reducing the new home prices and increasing the
level of sales incentives. Notwithstanding these strategies, homebuilders continued to experience an elevated rate of sales contract
cancelations, as many of the factors that affect new sales and cancelation rates are beyond the control of the homebuilding industry.
Although the homebuilding industry has experienced positive gains over the last decade, there can be no assurance that these gains will
continue, and these gains may be impacted if negative economic conditions occur as a result of COVID-19, or if there is a negative impact
on the homebuilding industry's expectations for future home sales. The homebuilding industry could suffer similar, or worse, adverse
conditions in the future. Decreases in new home sales would increase the likelihood of defaults on our loans and, consequently, reduce
our ability to repay your investment in the Notes.
We
have $46,943,000 of loan assets as of December 31, 2021. A 35% reduction in total collateral value would reduce our earnings and net
worth by $2,828,000. Larger reductions would result in lower earnings and lower net worth.
As
of December 31, 2021, we had $46,943,000 of loan assets on our books. These assets are recorded on our balance sheet at the lower of
the loan amount or the value of the collateral after deduction for expected selling expenses. A reduction in the value of the underlying
collateral could result in significant losses. A 35% reduction, for instance, would result in a $2,828,000 loss. Accordingly, our business
is subject to risk of a loss of a portion of our Note holders' investments if such a reduction were to occur.
15
We
have $7,657,000 of development loan assets as of December 31, 2021, which unlike our construction loans, are long term loans. This longer
duration as well as the nature of collateral (raw ground and lots) creates more risk for that portion of our portfolio.
Development
loans are riskier than construction loans for two reasons: the duration of the loan and the nature of the collateral. The duration (being
three to five years as compared to generally less than one year on construction loans) allows for a greater period of time over which
the collateral value could decrease. Also, the collateral value of development loans is more likely to change in greater percentages
than that of built homes. For example, during a 70% reduction in housing starts, newly completed homes still have value, but lots may
be worthless. This added risk to this portion of our portfolio adds risk to our investors as our net worth would be significantly impacted
by losses.
Currently,
we are reliant on a single developer and homebuilder, the Hoskins Group, who is concentrated in the Pittsburgh, Pennsylvania market,
for a significant portion of our revenues and a portion of our capital. Our second largest customer is in the Orlando, Florida market
and is also a significant portion of our portfolio.
As
of December 31, 2021, 26% of our outstanding loan commitments consisted of loans made to Benjamin Marcus Homes, LLC and Investor's
Mark Acquisitions, LLC, both of which are owned by Mark Hoskins (collectively all three parties are referred to herein as the "Hoskins
Group"). We refer to the loans to the Hoskins Group as the "Pennsylvania Loans." The Hoskins Group is concentrated
in the Pittsburgh, Pennsylvania market. The Hoskins Group also has a preferred equity interest in us, and in January 2021 we invested
approximately $500,000 in Series A Preferred Units in Benjamin Marcus Homes, LLC. Therefore, currently, we are reliant upon a single
developer and homebuilder who is concentrated in a single city, for a significant portion of our revenues and a portion of our capital.
Any event of bankruptcy, insolvency, or general downturn in the business of this developer and homebuilder or in the Pittsburgh housing
market generally will have a substantial adverse financial impact on our business and our ability to pay back your investments in the
Notes in the long term. Adverse conditions affecting the local housing market could include, but are not limited to, declines in new
housing starts, declines in new home prices, declines in new home sales, increases in the supply of available building lots or built
homes available for sale, increases in unemployment, and unfavorable demographic changes. One of our independent managers, Gregory L.
Sheldon, also serves an advisor to the Hoskins Group and, consequently, Mr. Sheldon may face conflicts of interest in the advice that
he provides to us and the Hoskins Group, including if any such adverse condition were to materialize.
Also,
as of December 31, 2021, 7% of our outstanding loan commitments consisted of loans made to a customer in Orlando, Florida.
We
have foreclosed assets as of December 31, 2021, which unlike our loans, are recorded on our balance sheet at the value of the collateral,
net of estimated selling expenses.
A
reduction in the value of the underlying collateral of our foreclosed assets could result in significant losses. For example, a 35% reduction
in the value of the underlying collateral (net of estimated selling expenses) would result in a $953,000 loss. Our business is subject
to increased risk of not being able to repay timely your investment in the Notes if such a reduction were to occur.
Increases
in interest rates, reductions in mortgage availability, or increases in other costs of home ownership could prevent potential customers
from buying new homes and adversely affect our business and financial results.
Most
new home purchasers finance their home purchases through lenders providing mortgage financing. Immediately prior to 2007, interest rates
were at historically low levels and a variety of mortgage products were available. As a result, home ownership became more accessible.
The mortgage products available included features that allowed buyers to obtain financing for a significant portion or all of the purchase
price of the home, had very limited underwriting requirements or provided for lower initial monthly payments. Accordingly, more people
were qualified for mortgage financing.
16
Since
2007, the mortgage lending industry has experienced significant instability, beginning with increased defaults on subprime loans and
other nonconforming loans and compounded by expectations of increasing interest payment requirements and further defaults. This, in turn,
resulted in a decline in the market value of many mortgage loans and related securities. Lenders, regulators and others questioned the
adequacy of lending standards and other credit requirements for several loan products and programs offered in those years. Credit requirements
tightened, and investor demand for mortgage loans and mortgage-backed securities declined. In general, fewer loan products, tighter loan
qualifications, and a reduced willingness of lenders to make loans make it more difficult for many buyers to finance the purchase of
homes. These factors served to reduce the pool of qualified homebuyers and made it more difficult to sell to first-time and move-up buyers.
Mortgage
rates may rise significantly over the next several years. The benefit of recent trends loosening credit to potential end users of homes
may be outweighed by the rise of interest rates for those borrowers, which might lower demand for new homes. In response to the COVID-19
pandemic, the Federal Open Market Committee cut short-term interest rates to a record low range of 0% to 0.25%. The Federal Reserve has
indicated it expects rates to increase five times through 2022. If short-term interest rates continue to remain at their historically
low levels for a prolonged period and assuming longer-term interest rates fall further, we could experience a reduced interest spread
as our interest-earning assets would continue to reprice downward while our interest-bearing liability rates could fail to decline in
tandem, which would have an adverse effect on our net interest income.
A
reduction in the demand for new homes may reduce the amount and price of the residential home lots sold by the developers and homebuilders
to which we loan money and/or increase the amount of time such developers and homebuilders must hold the home lots in inventory. These
factors increase the likelihood of defaults on our loans, which would adversely affect our business and consolidated financial results.
Most
of our assets are commercial construction loans to homebuilders and/or developers which are a higher-than-average credit risk, and therefore
could expose us to higher rates of loan defaults, which could impact our ability to repay amounts owed to you
.
Our
primary business is extending commercial construction loans to homebuilders, along with some loans for land development. These loans
are considered higher risk because the ability to repay depends on the homebuilder's ability to sell a newly built home. These
homes typically are not sold by the homebuilder prior to commencement of construction. Therefore, we may have a higher risk of loan default
among our customers than other commercial lending companies. If we suffer increased loan defaults in any given period, our operations
could be materially adversely affected, and we may have difficulty making our principal and interest payments on the Notes.
Our
underwriting standards and procedures are more lenient than conventional lenders.
We
invest in loans with borrowers who will not be required to meet the credit standards of conventional mortgage lenders, which is riskier
than investing in loans made to borrowers who are required to meet those higher credit standards. Because we generally approve loans
more quickly than some other lenders or providers of capital, there may be a risk that the due diligence we perform as part of our underwriting
procedures will not reveal the need for additional precautions. If so, the interest rate that we charge and the collateral that we require
may not adequately protect us or generate adequate returns for the risk undertaken.
If
we lose or are unable to hire or retain key personnel, we may be delayed or unable to implement our business plan, which would adversely
affect our ability to repay the Notes.
We
do not have an employment agreement with any of our employees and cannot guarantee that they will remain affiliated with us. Although
we have purchased key person life insurance on our Chief Executive Officer, we do not have key person insurance on any of our other employees.
If any of our key employees were to cease their affiliation with us, our consolidated operating results could suffer. We believe that
our future success depends, in part, upon our ability to hire and retain additional personnel. We cannot assure you that we will be successful
in attracting and retaining such personnel, which could hinder our ability to implement our business plan.
17
Employee
misconduct could harm us by subjecting us to monetary loss, significant legal liability, regulatory scrutiny, and reputational harm.
Our
reputation is critical to maintaining and developing relationships with our existing and potential customers and third parties with whom
we do business. There is a risk that our employees could engage in misconduct that adversely affects our business. For example, if an
employee were to engage - or be accused of engaging - in illegal or suspicious activities including fraud or theft, we could suffer direct
losses from the activity, and in addition we could be subject to regulatory sanctions and suffer serious harm to our reputation, financial
condition, customer relationships, and ability to attract future customers or employees. Employee misconduct could prompt regulators
to allege or to determine based upon such misconduct that we have not established adequate supervisory systems and procedures to inform
employees of applicable rules or to detect and deter violations of such rules. It is not always possible to deter employee misconduct,
and the precautions we take to detect and prevent misconduct may not be effective in all cases. Misconduct by our employees, or even
unsubstantiated allegations of misconduct, could result in a material adverse effect on our reputation and our business.
A
failure in, or breach of, our operational or security systems or infrastructure, or those of our third-party vendors, including as a
result of cyber-attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage
our reputation, increase our costs, and cause losses.
We
rely heavily on communications and information systems to conduct our business. Information security risks for our business have generally
increased in recent years in part because of the proliferation of new technologies; the use of the Internet and telecommunications technologies
to process, transmit, and store electronic information, including the management and support of a variety of business processes, including
financial transactions and records, personally identifiable information, and customer and investor data; and the increased sophistication
and activities of organized crime, hackers, terrorists, activists, and other external parties. As customer, public, and regulatory expectations
regarding operational and information security have increased, our operating systems and infrastructure must continue to be safeguarded
and monitored for potential failures, disruptions, and breakdowns. Certain of our software and technology systems have been developed
internally and may be vulnerable to unauthorized access or disclosure. Our business, financial, accounting, and data processing systems,
or other operating systems and facilities, may stop operating properly or become disabled or damaged as a result of a number of factors,
including events that are wholly or partially beyond our control. For example, there could be electrical or telecommunication outages;
natural disasters such as earthquakes, tornadoes, and hurricanes; disease pandemics; events arising from local or larger scale political
or social matters, including terrorist acts; and, as described below, cyber-attacks.
Our
business relies on its digital technologies, computer and email systems, software, and networks to conduct its operations. Although we
have information security procedures and controls in place, our technologies, systems, and networks and, because the nature of our business
involves the receipt and retention of personal information about our customers, our customers' personal accounts may become the
target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse,
loss, or destruction of our customers', or other third parties' confidential information. Third parties with whom we do business
or who facilitate our business activities, including intermediaries or vendors that provide service or security solutions for our operations,
and other third parties, could also be sources of operational and information security risk to us, including from breakdowns or failures
of their own systems or capacity constraints. In addition, hardware, software, or applications we develop or procure from third parties
may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.
While
we have disaster recovery and other policies and procedures designed to prevent or limit the effect of the failure, interruption, or
security breach of our information systems, there can be no assurance that any such failures, interruptions, or security breaches will
not occur or, if they do occur, that they will be adequately addressed. Our risk and exposure to these matters remain heightened because
of the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of our controls, processes,
and practices designed to protect our systems, computers, software, data, and networks from attack, damage, or unauthorized access remain
a focus for us. As threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance our
protective measures or to investigate and remediate information security vulnerabilities. Disruptions or failures in the physical infrastructure
or operating systems that support our business and customers, or cyber-attacks or security breaches of the networks or systems, could
result in regulatory fines, penalties or intervention, reputation damage, reimbursement or other compensation costs, and/or additional
compliance costs, any of which could have a material effect on our results of operations or financial condition. Furthermore, if such
attacks are not detected immediately, their effect could be compounded.
18
We
are susceptible to customer fraud, which could cause us to suffer losses on our loan portfolio.
Because
most of our customers do not publicly report their financial condition and therefore typically are not required to be audited on a regular
basis, we are susceptible to a customer's fraud, which could cause us to suffer losses on our loan portfolio. The failure of a
customer to accurately report its financial position, compliance with loan covenants, or eligibility for additional borrowings could
result in our providing loans that do not meet our underwriting criteria, defaults in loan payments, and the loss of some or all of the
principal of a particular loan or loans. Customer fraud can come in other forms, including but not limited to fraudulent invoices for
work done, appraisal fraud, and fraud related to inspections done by third parties.
We
have entered into loan purchase and sale agreements with third parties to sell them portions of some of our loans. This increases our
leverage. While the agreements are intended to increase our profitability, large loan losses and/or idle cash could actually reduce our
profitability, which could impair our ability to pay principal and/or interest on the Notes.
The
loan purchase and sale agreements we entered into have allowed us to increase our loan assets and debt. If loans that we create have
significant losses, the benefit of larger balances can be outweighed by the additional loan losses. Also, while these transactions are
booked as secured financing, they are not lines of credit. Accordingly, we will have increased our loan balances without increasing our
lines of credit, which can cause a decrease in liquidity. One solution to this liquidity problem is having idle cash for liquidity, which
then could reduce our profitability. If either of these problems is persistent and/or significant, our ability to pay interest and principal
on our Notes may be impaired.
Management
has broad discretion over the use of proceeds from this offering, and it is possible that the funds will not be used effectively to generate
enough cash for payment of principal and interest on the Notes.
We
expect to use the proceeds from this offering for purposes detailed in the "Questions and Answers" and "Use of Proceeds"
sections. Because no specific allocation of the proceeds is required in the indenture, our management will have broad discretion in determining
how the proceeds of the offering will be used.
Additional
competition may decrease our profitability, which would adversely affect our ability to repay the Notes.
We
may experience increased competition for business from other companies and financial institutions that are willing to extend the same
types of loans that we extend at lower interest rates and/or fees. These competitors also may have substantially greater resources, lower
cost of funds, and a better-established market presence. If these companies increase their marketing efforts to our market niche of borrowers,
or if additional competitors enter our markets, we may be forced to reduce our interest rates and fees in order to maintain or expand
our market share. Any reduction in our interest rates, interest income, or fees could have an adverse impact on our profitability and
our ability to repay the Notes.
Our
real estate loans are illiquid, which could restrict our ability to respond rapidly to changes in economic conditions.
The
real estate loans we currently hold and intend to extend are illiquid. As a result, our ability to sell under-performing loans in our
portfolio or respond to changes in economic, financial, investment, and other conditions may be very limited. We cannot predict whether
we will be able to sell any real estate loan for the price or on the terms set by us, or whether any price or other terms offered by
a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to
close the sale of a loan. The relative illiquidity of our loan assets may impair our ability to generate sufficient cash to make required
interest and principal payments on the Notes.
19
Our
systems and procedures might be inadequate to handle our potential growth. Failure to successfully improve our systems and procedures
would adversely affect our ability to repay the Notes.
We
may experience growth that could place a significant strain upon our operational systems and procedures. Initially, all of our computer
systems used electronic spreadsheets and we utilized other methods that a small company would use. Over time, we added a loan document
system which many banks use to produce closing documents for loans. In 2018, we replaced our previous electronic spreadsheet system for
Notes investors with a proprietary system. In addition, in 2019, we replaced our loan asset tracking system with a new proprietary system.
In 2021 we replaced our loan production systems with a new proprietary system. If any of these systems fail, it could have a material
adverse effect on our business, financial condition, results of operations, and, ultimately, our ability to repay principal and interest
on the Notes.
If
we do not meet the requirements to maintain effective internal controls over financial reporting, our ability to raise new capital will
be harmed.
If
we do not maintain effective internal controls over our financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act
of 2002, then it could result in delaying future SEC filings or future offerings. If future SEC filings or future offerings are delayed,
it could have an extreme negative impact on our cash flow causing us to default on our obligations, including on the Notes.
We
are required to devote resources to comply with various provisions of the Sarbanes-Oxley Act, including Section 404 relating to internal
controls testing, and this may reduce the resources we have available to focus on our core business.
Pursuant
to Section 404 of the Sarbanes-Oxley Act and the related rules adopted by the SEC and the Public Company Accounting Oversight Board,
or PCAOB, our management is required to report on the effectiveness of our internal controls over financial reporting. We may encounter
problems or delays in completing any changes necessary to our internal controls over financial reporting. Among other things, we may
not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section
404. Any failure to comply with the various requirements of the Sarbanes-Oxley Act may require significant management time and expenses
and divert attention or resources away from our core business. In addition, we may encounter problems or delays in completing the implementation
of any requested improvements provided by our independent registered public accounting firm.
We
are subject to risk of significant losses on our loans because we do not require our borrowers to insure the title of their collateral
for our loans.
It
is customary for lenders extending loans secured by real estate to require the borrower to provide title insurance with minimum coverage
amounts set by the lender. We do not require most of our homebuilders to provide title insurance on their collateral for our loans to
them. This represents an additional risk to us as the lender. The homebuilder may have a title problem which normally would be covered
by insurance, but may result in a loss on the loan because insurance proceeds are not available.
The
collateral securing our real estate loans may not be sufficient to pay back the principal amount in the event of a default by the borrowers.
In
the event of default, our real estate loan investments are generally dependent entirely on the loan collateral to recover our investment.
Our loan collateral consists primarily of a mortgage on the underlying property. In the event of a default, we may not be able to recover
the premises promptly and the proceeds we receive upon sale of the property may be adversely affected by risks generally related to interests
in real property, including changes in general or local economic conditions and/or specific industry segments, declines in real estate
values, increases in interest rates, real estate tax rates and other operating expenses including energy costs, changes in governmental
rules, regulations and fiscal policies (including environmental legislation), acts of God, and other factors which are beyond our or
our borrowers' control. Current market conditions may reduce the proceeds we are able to receive in the event of a foreclosure
on our collateral. Our remedies with respect to the loan collateral may not provide us with a recovery adequate to recover our investment.
20
If
a large number of our current and prospective borrowers are unable to repay their loans within a normal average number of months, we
will experience a significant reduction in our income and liquidity, and may not be able to repay the Notes as they become due.
Construction
loans that we extend are expected to be repaid in a normal average number of months, typically nine months, depending on the size of
the loan. Development loans are expected to last for many years. We have interest paid on a monthly basis, but also charge a fee which
will be earned over the life of the loan. If these loans are repaid over a longer period of time, the amount of income that we receive
on these loans expressed as a percentage of the outstanding loan amount will be reduced, and fewer loans with new fees will be able to
be made, since the cash will not be available. This will reduce our income as a percentage of the Notes, and if this percentage is significantly
reduced it could impair our ability to pay principal and interest on the Notes.
Our
cost of funds is substantially higher than that of banks.
Because
we do not offer FDIC insurance, and because we want to grow our Notes Program faster than most banks want to grow their CD base, our
Notes offer significantly higher rates than bank CDs. Our cost of funds is higher than banks' cost of funds due to, among other
factors, the higher rate that we pay on our Notes and other sources of financing. This may make it more difficult for us to compete against
banks when they rejoin our niche lending market in large numbers. This could result in losses which could impair or eliminate our ability
to pay interest and principal on our outstanding Notes.
We
are subject to the general market risks associated with real estate construction and development.
Our
financial performance depends on the successful construction and/or development and sale of the homes and real estate parcels that serve
as security for the loans we make to homebuilders and developers. As a result, we are subject to the general market risks of real estate
construction and development, including weather conditions, the price and availability of materials used in construction of homes and
development of lots, environmental liabilities and zoning laws, and numerous other factors that may materially and adversely affect the
success of the projects.
Our
operations are not subject to the stringent banking regulatory requirements designed to protect investors, so repayment of your investment
is completely dependent upon our successful operation of our business.
Our
operations are not subject to the stringent regulatory requirements imposed upon the operations of commercial banks, savings banks, and
thrift institutions, and are not subject to periodic compliance examinations by federal or state banking regulators. For example, we
will not be well diversified in our product risk, and we cannot benefit from government programs designed to protect regulated financial
institutions. Therefore, an investment in our Notes does not have the regulatory protections that the holder of a demand account or a
certificate of deposit at a bank does. The return on any Notes purchased by you is completely dependent upon our successful operations
of our business. To the extent that we do not successfully operate our business, our ability to pay interest and principal on your Notes
will be impaired.
We
have the right to pay your investment back to you before the stated maturity of your investment. If we do, you may not be able to reinvest
the proceeds at comparable rates and you will stop earning interest on your investment.
At
any time, we may redeem all or a portion of the outstanding Notes purchased by you prior to their maturity. In the event we redeem any
part or all of your Notes early, you would have the risk of reinvesting the proceeds at the then-current market rates, which may be higher
or lower.
21
We
are an "emerging growth company" under the federal securities laws and are subject to reduced public company reporting requirements.
We
are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and are eligible
to take advantage of certain exemptions from, or reduced disclosure obligations relating to, various reporting requirements that are
normally applicable to public companies.
We
will remain an "emerging growth company" until the earliest of (1) the last day of the first fiscal year in which we have
total annual gross revenues of $1.07 billion or more, (2) the last day of the fiscal year following the fifth anniversary of the date
of the first sale of our common equity securities pursuant to an effective registration statement, (3) the date on which we become a
"large accelerated filer" as defined in Rule 12b-2 under the Exchange Act (which would occur if the market value of our common
equity held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently completed second fiscal
quarter, and we have been publicly reporting for at least 12 months), or (4) the date on which we have issued more than $1 billion in
non-convertible debt during the preceding three-year period. Under the JOBS Act, emerging growth companies are not required to (1) provide
an auditor's attestation report on management's assessment of the effectiveness of internal control over financial reporting,
pursuant to Section 404 of the Sarbanes-Oxley Act, (2) comply with new requirements adopted by the PCAOB which require mandatory audit
firm rotation or a supplement to the auditor's report in which the auditor must provide additional information about the audit
and the issuer's financial statements, (3) comply with new audit rules adopted by the PCAOB after April 5, 2012 (unless the SEC
determines otherwise), (4) provide certain disclosures relating to executive compensation generally required for larger public companies,
or (5) hold shareholder advisory votes on executive compensation.
Additionally,
the JOBS Act provides that an "emerging growth company" may take advantage of an extended transition period for complying
with new or revised accounting standards that have different effective dates for public and private companies. This means an "emerging
growth company" can delay adopting certain accounting standards until such standards are otherwise applicable to private companies.
However, we have elected to "opt out" of such extended transition period, and will therefore comply with new or revised accounting
standards on the applicable dates on which the adoption of such standards is required for non-emerging growth companies. Section 107
of the JOBS Act provides that our decision to opt out of such extended transition period for compliance with new or revised accounting
standards is irrevocable.
We
are exposed to risk of environmental liabilities with respect to properties of which we take title. Any resulting environmental remediation
expense may reduce our ability to repay the Notes.
In
the course of our business, we foreclose and take title to real estate that could be subject to environmental liabilities. We may be
held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred
by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances
or chemical release at any property. The costs associated with investigation or remediation activities could be substantial. In addition,
as the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs
resulting from environmental contamination emanating from the property. If we ever become subject to significant environmental liabilities,
our business, financial condition, liquidity, and results of operations could be materially and adversely affected.
Persons
investing the assets of employee benefit plans, qualified retirement plans, IRAs, and other tax-favored benefit accounts should consider
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and related risks of investing in the Notes.
ERISA
Section 406 and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), prohibit certain transactions
that involve (i) a pension, 401(k), or other qualified retirement plan or employee benefit plan subject to ERISA ("plan"),
or a tax-favored benefit account such as an individual retirement account or annuity, Archer MSA, health savings account, or Coverdell
education savings account ("account"), and (ii) any person who is a "party-in-interest" or "disqualified
person" with respect to such a plan or account. Consequently, the fiduciary of a plan or owner of an account contemplating an investment
in the Notes should consider whether we, any other person associated with the issuance of the Notes, or any of our or their affiliates,
is or might become a "party-in-interest" or "disqualified person" with respect to the plan or account and, if
so, whether an exemption from such prohibited transaction rules is applicable.
22
In
addition, if you are investing the assets of an individual retirement account or annuity ("IRA") or a qualified or nonqualified
pension or retirement plan, you should satisfy yourself that your investment (i) is consistent with your fiduciary obligations under
ERISA and other applicable law, (ii) is made in accordance with the documents and instruments governing your plan or IRA, including your
plan's investment policy, and (iii) satisfies any prudence and diversification requirements that may apply under ERISA or other
applicable law. You should also determine that your investment will not impair the liquidity of the plan's trust or the IRA and
will not produce UBTI for the plan's trust or the IRA; or, if it does produce UBTI, that the purchase and holding of the Notes
is still consistent with your fiduciary obligations. You should also satisfy yourself that you will be able to value the assets of the
plan annually or as otherwise required by ERISA or other applicable law.
For
further discussion of issues and risks associated with an investment in the Notes by plans, IRAs and other accounts, see the "Certain
Employee Benefit Plan Considerations" section of this prospectus.
Risks
Related to Conflicts of Interest
Our
CEO (who is also on our board of managers) and Executive Vice President will face conflicts of interest as a result of the secured lines
of credit made to us, which could result in actions that are not in your best interests.
We
have two lines of credit from Daniel M. Wallach (our CEO and chairman of the board of managers) and his affiliates, and one line of credit
from William Myrick (our Executive Vice President). The first line of credit has a maximum principal borrowing amount of $1,250,000 and
is payable to Mr. Wallach and his wife, Joyce S. Wallach, as tenants by the entirety (the "Wallach LOC"). The second line
of credit has a maximum principal borrowing amount of $250,000 and is payable to the 2007 Daniel M. Wallach Legacy Trust (the "Wallach
Trust LOC," and together with the Wallach LOC, the "Wallach Affiliate LOCs"). The third line of credit has a maximum
principal borrowing amount of $1,000,000 and is payable to Mr. Myrick (the "Myrick LOC"). As of December 31, 2021, there
was no amount outstanding pursuant to the Wallach Trust LOC, with availability on that line of credit of $250,000, there was no amount
outstanding pursuant to the Wallach LOC, with remaining availability on that line of credit of $1,250,000. As of December 31, 2021, the
amount outstanding pursuant to the Myrick LOC was $859,000 with availability on that line of credit of $141,000. The interest rates on
the Wallach Affiliate LOCs and the Myrick LOC generally equal the prime rate plus 3% and were 6.25% as of December 31, 2021. The Wallach
Affiliate LOCs and the Myrick LOC are collateralized by a lien against all of our assets. The Notes are subordinated in right of payment
to all secured debt, including these Wallach Affiliate LOCs and the Myrick LOC. Pursuant to the promissory note for each Wallach Affiliate
LOCs and the Myrick LOC, the lenders have the option of funding any amount up to the face amount of the note, in the lender's sole
and absolute discretion. Therefore, Mr. Wallach and Mr. Myrick will face conflicts of interest in deciding whether and when to exercise
any rights pursuant to the Wallach Affiliate LOCs and Myrick LOC, respectively. If Mr. Wallach or Mr. Myrick exercise their rights to
collect on their collateral upon a default by us, we could lose some or all of our assets, which could have a negative effect on our
ability to repay the Notes.
As
a result of his large equity ownership in the Company, our CEO will face a conflict of interest in deciding the number of distributions
to equity owners, which could result in actions that are not in the best interests of Note holders.
As
of December 31, 2021, our CEO (who is also on the board of managers) beneficially owned 80.7% of the common equity of the Company. He
and his wife also own 36.0% the Series C cumulative preferred units outstanding as of December 31, 2021. Since the Company is taxed as
a partnership for federal income tax purposes, all profits and losses flow through to the equity owners. Therefore, Mr. Wallach and his
affiliated equity owners of the Company will be motivated to distribute profits to the equity owners on an annual basis, rather than
retain earnings in the Company for Company purposes. There is currently no limit in the indenture or otherwise on the amount of funds
that may be distributed by the Company to its equity owners. If substantial funds are distributed to the equity owners, the liquidity
and capital resources of the Company will be reduced and our ability to repay the Notes may be negatively impacted.
23
Some
of our employees and managers may face conflicts of interest as a result of their and their relatives' investment in the Notes,
which could result in actions that are not in your best interests.
Employees,
managers, members, and relatives of managers and members have invested in the Notes, in the aggregate amount of $3,989,000 as of December
31, 2021. While investment in the Notes by our affiliates may align their interests with those of other Note holders, it could also create
conflicts of interest by influencing those employees' or managers' actions during times of financial difficulties. For example,
the fact that certain of our managers hold Notes, and the value of Notes they hold, could influence their decision to redeem Notes at
a time or times when it would be prudent to use our cash resources to build capital, pay down other outstanding obligations, or grow
our business. There may be other situations not presently foreseeable in which the ownership of Notes by related persons may create conflicts
of interest. These conflicts of interest could result in action or inaction by management that is adverse to other holders of the Notes.
See "Certain Relationships and Related Transactions — Transactions with Affiliates — Investments Pursuant to Public
Notes Offerings."
We
have three lines of credit from affiliates which allow us to incur a significant amount of secured debt. These lines are collateralized
by a lien against all of our assets. Our purchase and sale agreements function as secured debt as well. We expect to incur a significant
amount of additional debt in the future, including issuance of the Notes, which will subject us to increased risk of loss.
As
of December 31, 2021, we had $859,000 of secured debt outstanding on our senior debt lines of credit from affiliates of $2,500,000 and
the capacity to sell portions of many loans under the terms of our loan purchase and sale agreements. The affiliate loans are collateralized
by a lien against all of our assets. The loan purchase and sale agreements and other secured debt are with third-parties and are collateralized
by loans. In addition, we expect to incur a significant amount of additional debt in the future, including issuance of the Notes, borrowing
under credit facilities and other arrangements. The Notes will be subordinated in right of payment to all secured debt, including the
affiliate loans. Therefore, in the event of a default on the secured debt, affiliates of our Company, including Mr. Wallach, have the
right to receive payment ahead of Note holders, as do other secured debt holders, such as the loan purchasers under the purchase and
sale agreements. Accordingly, our business is subject to increased risk of a total loss of our Note holders' investments if we
are unable to repay all of our secured debt.
Risks
Related to Liquidity
We
depend on the availability of significant sources of credit to meet our liquidity needs and our failure to maintain these sources of
credit could materially and adversely affect our liquidity in the future.
We
plan to maintain our loan purchase and sale agreements and our lines of credit from affiliates so that we may draw funds when necessary
to meet our obligation to redeem maturing Notes, pay interest on the Notes, meet our commitments to lend money to our customers, and
for other general corporate purposes. Certain features of the loan purchase and sale agreements with third parties have added liquidity
and flexibility, which have lessened the need for the lines of credit from affiliates. If we fail to maintain liquidity through our loan
purchase and sale agreements and lines of credit for any reason, including a potential negative impact to the credit markets as a result
of an outbreak of a communicable illness such as COVID-19, we will be more dependent on the proceeds from the Notes for our continued
liquidity. If the sale of the Notes is significantly reduced or delayed for any reason and we fail to obtain or renew a line of credit,
or we default on any of our lines of credit, then our ability to meet our obligations, including our Note obligations, could be materially
adversely affected, and we may not have enough cash to pay back your investment.
In
addition, the borrowing capacity on two of our lines of credit is based on the amount outstanding on the underlying collateral loans.
If we are unable to find suitable investment opportunities, we may not be able to replace the underlying collateral loans with new loans
and, in such a situation, the borrowing capacity on those lines of credit would be reduced. Also, the failure to maintain an active line
of credit (and therefore using cash for liquidity instead of a borrowing line) will reduce our earnings, because we will be paying interest
on the Notes, while we are holding cash instead of reducing our borrowings.
24
We
have unfunded commitments to builders as of December 31, 2021. If every builder borrowed every amount allowed (which would mean all of
their homes were complete) and no builders paid us back, we would need to fund that amount. While some of that amount would automatically
come from our loan purchase and sale agreements, the rest would have to come from our Notes Program and/or our lines of credit. Therefore,
we may not have the ability to fund our commitments to builders.
As
of December 31, 2021, we have $22,902,000 of unfunded commitments to builders. If every builder borrowed every amount allowed and no
builders repaid us then we would need to fund that amount. Lines of credit, loan purchase and sale agreements, payoffs from builders,
and immediate investments in our Notes may not be enough to fund our commitments to builders as they become payable. If we default on
these obligations, then we may face any one or more of the following: a higher default rate, lawsuits brought by customers, an eventual
lack of business from borrowers, missed principal and interest payments to Note holders and holders of other debt, and a lack of desire
for investors to invest in our Notes Program. Therefore, we could default on our repayment obligations to our Note holders.
We
have two secured lines of credit which expire in 2022, and the unsecured portion of a line of credit which also expires in 2022. Failure
of those lines to renew could strain our ability to pay other obligations.
We
have a $1,325,000 line of credit (the "Shuman LOC"). As of December 31, 2021, the amount outstanding under the Shuman LOC
was $125,000 which is due in July 2022. We do not know whether the Shuman LOC will be renewed. We also have a $7,000,000 line of credit
(the "Swanson LOC"), a portion of which is unsecured (the "Unsecured Swanson LOC"). The balances on the Swanson
LOC that were secured and unsecured as of December 31, 2021 were $6,841,000 and $159,000 respectively. Both the secured and unsecured
portions of the Swanson LOC are due in July 2022. We do not know whether the Swanson LOC will be renewed. If we are unable to renegotiate
or extend these lines of credit, then we may default on one or both of those lines of credit. Therefore, we could default on repayment
obligations to some of our debt holders, including our Note holders.
We
have a significant amount of debt and expect to incur a significant amount of additional debt in the future, including issuance of the
Notes, which will subject us to increased risk of loss. Our present and future senior debt may make it difficult to repay the Notes.
We
have a significant amount of debt and expect to incur a significant amount of additional debt in the future. As of December 31, 2021,
we have approximately $47,729,000 of debt, net of deferred financing costs. Our primary sources of debt include our lines of credit,
loan purchase and sale agreements, and the Notes. As of December 31, 2021, we have a total outstanding balance of $9,876,000 on our lines
of credit and approximately $8,469,000 on our loan purchase and sale agreements. We also have the capacity to sell portions of many loans
under the terms of our loan purchase and sale agreements. The loan purchase and sale agreements and other secured debt are with third
parties and all but one of the lines of credit are collateralized by loans that we have issued to builders. The Notes are subordinate
and junior in priority to any and all of our senior debt and senior subordinated debt, and equal to any and all non-senior debt, including
other Notes. There are no restrictions in the indenture regarding the amount of senior debt or other indebtedness that we may incur.
As of December 31, 2021, we had approximately $7,074,000 in Notes coming due by December 2022, and we cannot be certain whether we will
be able to fund those Notes upon maturity. Upon the maturity of our senior debt, by lapse of time, acceleration or otherwise, the holders
of our senior debt have first right to receive payment, in full, prior to any payments being made to a Note holder or to other non-senior
debt. Therefore, upon such maturity of our senior debt Note holders would only be repaid in full if the senior debt is satisfied first
and, following satisfaction of the senior debt, if there is an amount sufficient to fully satisfy all amounts owed under the Notes and
any other non-senior debt.
In
addition, we expect to incur a significant amount of additional debt in the future, including issuance of the Notes, borrowing under
credit facilities, and other arrangements. The Notes will be subordinated in right of payment to all secured debt, including the Wallach
Affiliate LOCs, Myrick LOC, loan purchase and sale agreements, the senior subordinated note discussed in the prior paragraph, and the
line of credit discussed in the prior paragraph. Therefore, in the event of a default on the secured debt, affiliates of our Company,
including Mr. Wallach, have the right to receive payment ahead of Note holders, as do other secured debt holders, such as the loan purchasers
under the loan purchase and sale agreements. Accordingly, our business is subject to increased risk of a total loss of your investment
if we are unable to repay all of our secured debt.
25
If
the proceeds from the issuance of the Notes exceed the cash flow needed to fund the desirable business opportunities that are identified,
we may not be able to invest all of the funds in a manner that generates sufficient income to pay the interest and principal on the Notes.
Our
ability to pay interest on our debt, including the Notes, pay our expenses, and cover loan losses is dependent upon interest and fee
income we receive from loans extended to our customers. If we are not able to lend to a sufficient number of customers at high enough
interest rates, we may not have enough interest and fee income to meet our obligations, which could impair our ability to pay interest
and principal to you. If money brought in from new Notes and from repayments of loans from our customers exceeds our short-term obligations
such as expenses, Notes interest and redemptions, and line of credit principal and interest, then it is likely to be held as cash, which
will have a lower return than the interest rate we are paying on the Notes. This will lower earnings and may cause losses which could
impair our ability to repay the principal and interest on the Notes.
Increases
in interest rates would increase the amount of debt payments under the Wallach Affiliate LOCs and the Myrick LOC which could impair our
ability to repay the principal and interest on the Notes.
The
interest rate under the Wallach Affiliate LOCs and Myrick LOC is generally equal to the prime rate plus three percent. Increases in interest
rates will increase the applicable prime rate and therefore, the interest rate under the Wallach Affiliate LOCs and the Myrick LOC will
increase. An increase in the interest rate would increase the amount of debt payments under the Wallach Affiliate LOCs and Myrick LOC
which would reduce our cash flows and could impair our ability to repay the principal and interest on the Notes.
We
incurred indebtedness secured by our office property, which may result in foreclosure.
The
debt incurred by us in connection with our office property is secured by a mortgage. If we default on our secured indebtedness, the lender
may foreclose and the entire investment in the office property could be lost, which could adversely affect our ability to repay the principal
and interest on the Notes.
The
indenture does not contain the type of covenants restricting our actions, such as restrictions on creating senior debt, paying distributions
to our owners, merging, recapitalizing, and/or entering into highly leveraged transactions. The indenture does not contain provisions
requiring early payment of Notes in the event we suffer a material adverse change in our business or fail to meet certain financial standards.
Therefore, the indenture provides very little protection of your investment.
The
Notes do not have the benefit of extensive covenants. The covenants in the indenture are not designed to protect your investment if there
is a material adverse change in our consolidated financial condition, results of operations, or cash flows. For example, the indenture
does not contain any restrictions on our ability to create or incur senior debt or other debt to pay distributions to our equity holders,
including our Chief Executive Officer and our Executive Vice President. It also does not contain any financial covenants (such as a fixed
charge coverage or a minimum amount of equity) to help ensure our ability to pay interest and principal on the Notes. The indenture does
not contain provisions that permit Note holders to require that we redeem the Notes if there is a takeover, recapitalization or similar
restructuring. In addition, the indenture does not contain covenants specifically designed to protect you if we engage in a highly leveraged
transaction. Therefore, the indenture provides very little protection of your investment.
Payment
on the Notes is subordinate to the payment of our outstanding present and future senior debt, if any. Since there is no limit to the
amount of senior debt we may incur, our present and future senior debt may make it difficult to repay the Notes.
Our
loan purchase and sale agreements and secured lines of credit with third-parties also function as senior debt. The balance on those loan
purchase and sale agreements and other secured debt, net of deferred financing costs was $20,016,000 on December 31, 2021, and is expected
to grow in the future. In addition, we have $1,250,000 in senior unsecured lines of credit which were fully drawn as of December 31,
2021. We also have senior subordinated notes which are senior to the Notes of $1,054,000 as of December 31, 2021. The Notes are subordinate
and junior in priority to any and all of our senior debt and senior subordinated debt, and equal to any and all non-senior debt, including
other Notes. The Notes are senior to junior subordinated notes. There are no restrictions in the indenture regarding the amount of senior
debt or other indebtedness that we may incur. Upon the maturity of our senior debt, by lapse of time, acceleration or otherwise, the
holders of our senior debt have first right to receive payment, in full, prior to any payments being made to a Note holder or to other
non-senior debt. Therefore, upon such maturity of our senior debt Note holders would only be repaid in full if the senior debt is satisfied
first and, following satisfaction of the senior debt, if there is an amount sufficient to fully satisfy all amounts owed under the Notes
and any other non-senior debt.
26
Additional
competition for investment dollars may decrease our liquidity, which would adversely affect our ability to repay the Notes.
We
could experience increased competition for investment dollars from other companies and financial institutions that are willing to offer
higher interest rates. We may be forced to increase our interest rates in order to maintain or increase the issuance of Notes. Any increase
in our interest rates could have an adverse impact on our liquidity and our ability to meet a debt covenant under any future lines of
credit obtained and/or to repay the Notes.
If
we are unable to meet our Note maturity and redemption obligations, and we are unable to obtain additional financing or other sources
of capital, we may be forced to sell off our operating assets or we might be forced to cease our operations, and you could lose some
or all of your investment.
Our
Notes have maturities ranging from one year to four years. In addition, holders of our Notes may request redemption upon death and we
would be obligated to fulfill such redemption request. Holders of a 36-month Note issued on or after February 4, 2020 may request redemption
at any time and, subject to certain limitations, we would be obligated to fulfill such redemption request. We intend to pay our Note
maturity and redemption obligations using our normal cash sources, such as collections on our loans to customers, as well as proceeds
from the Notes Program. We may experience periods in which our Note maturity and redemption obligations are high. Since our loans are
generally repaid when our borrower sells a real estate asset, our operations and other sources of funds may not provide sufficient available
cash flow to meet our continued Note maturity and redemption obligations. While we have secured lines of credit from affiliates of up
to $2,500,000 with $859,000 borrowed as of December 31, 2021, our affiliates are not obligated to fund our borrowing requests. For all
of these reasons we may be substantially reliant upon the net offering proceeds we receive from the Notes Program to pay these obligations.
If we are unable to repay or redeem the principal amount of the Notes when due, and we are unable to obtain additional financing or other
sources of capital, we may be forced to sell off our operating assets or we might be forced to cease our operations, and you could lose
some or all of your investment.
There
is no "early warning" on the Notes if we perform poorly. Only interest and principal payment defaults on the Notes can trigger
a default on the Notes prior to a bankruptcy.
There
are a limited number of performance covenants to be maintained under the Notes and/or the indenture. Therefore, no "early warning"
of a possible default by us exists. Under the indenture, only (i) the non-payment of interest and/or principal on the Notes by us when
payments are due, (ii) our bankruptcy or insolvency, or (iii) a failure to comply with provisions of the Notes or the indenture (if such
failure is not cured or waived within 60 days after receipt of a specific notice) could cause a default to occur.
You
will not have the opportunity to evaluate our investments before they are made.
We
intend to use the net offering proceeds in accordance with the "Use of Proceeds" section of our prospectus, including investment
in secured real estate loans for the acquisition and development of parcels of real property as single-family residential lots and/or
the construction of single-family homes. Since we have not identified any investments that we will make with the net proceeds of this
offering, we are generally unable to provide you with information to evaluate the potential investments we may make with the net offering
proceeds before purchasing the Notes. You must rely on our management to evaluate our investment opportunities, and we are subject to
the risk that our management may not be able to achieve our objectives, may make unwise decisions, or may make decisions that are not
in our best interest.
27
A
portion of our collateral securing the Pennsylvania Loans is preferred equity in our Company. In the event of a foreclosure on the properties
securing the Pennsylvania Loans, a portion of our collateral is preferred equity in our Company, it would be difficult to sell the preferred
equity in order to reduce the loan balance.
Some
of the collateral securing the Pennsylvania Loans is preferred equity in our Company, which has a book value of $1,720,000 as of December
31, 2021. If the borrower defaults on any of the Pennsylvania Loans and we are forced to use collateral to repay any of the Pennsylvania
Loans, we will need to sell this preferred interest in us to a third party. There is no liquid market for this instrument, so we can
give no assurance as to our ability to generate any amount of proceeds from that collateral.
Because
we require a substantial amount of cash to service our debt, we may not be able to pay our obligations under the Notes.
To
service our total indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors, including
our successful financial and operating performance. We cannot assure you that our business plans will succeed or that we will achieve
our anticipated financial results, which may prevent us from being able to pay our obligations under the Notes.
The
indenture and terms of our Notes do not restrict our use of leverage. A relatively small loss can cause over leveraged companies to suffer
a material adverse change in their financial position. If this happened to us, it may make it difficult to repay the Notes.
Financial
institutions which are federally insured typically have 8-12% of their total assets in equity. A reduction in their loan assets due to
losses of 2% reduces their equity by roughly 20%. We had 14% and 11% of our loan assets in equity as of December 31, 2021 and 2020, respectively.
If we allow our assets to increase without increasing our equity, we could have a much lower equity as a percentage of assets than we
have today, which would increase our risk of nonpayment on the Notes. Note holders have no structural mechanism to protect them from
this action, and rely solely on us to keep equity at a satisfactory ratio.
We
expect to be substantially reliant upon the net offering proceeds we receive from the sale of our Notes to meet principal and interest
obligations on previously issued Notes.
We
intend to use the net offering proceeds from the sale of Notes to, among other things, make payments on other borrowings, fund redemption
obligations, make interest payments on the Notes, and to run our business to the extent that other sources of liquidity from our operations
(e.g., repayment of loans we have previously extended to our customers) and our credit lines are inadequate. However, these other sources
of liquidity are subject to risks. Our operations alone may not produce a sufficient return on investment to repay interest and principal
on our outstanding Notes. We may not be able to obtain an additional line of credit when needed or retain one or more of our existing
lines of credit. We may not be able to attract new investors, have sufficient loan repayments, or have sufficient borrowing capacity
when we need additional funds to repay principal and interest on our outstanding Notes or redeem our outstanding Notes. If any of these
things occur, our liquidity and capital needs may be severely affected, and we may be forced to sell off our loan receivables and other
operating assets, or we may be forced to cease our operations.
If
we default in our Note payment obligations, the indenture agreements provide that the trustee could accelerate all payments due under
the Notes, which would further negatively affect our consolidated financial position and cash flows.
Our
obligations with respect to the Notes are governed by the terms of indenture agreements with [__], as trustee. Under the indentures,
in addition to other possible events of default, if we fail to make a payment of principal or interest under any Note and this failure
is not cured within 30 days, then we will be deemed in default. Upon such a default, the trustee or holders of 25% in principal of the
outstanding Notes could declare all principal and accrued interest immediately due and payable. If our total assets do not cover these
payment obligations, then we would most likely be unable to make all payments under the Notes when due, and we might be forced to cease
our operations.
28
There
is no sinking fund to ensure repayment of the Notes at maturity, so you are totally reliant upon our ability to generate adequate cash
flows.
We
do not contribute funds to a separate account, commonly known as a sinking fund, to repay the Notes upon maturity. Because funds are
not set aside periodically for the repayment of the Notes over their respective terms, you must rely on our consolidated cash flows from
operations, investing and financing activities and other sources of financing for repayment, such as funds from sale of the Notes, loan
repayments, and other borrowings. To the extent cash flows from operations and other sources are not sufficient to repay the Notes, you
may lose all or part of their investment.
If
we have a large number of repayments on the Notes, whether because of maturity or redemption, we may be unable to make such repayments.
We
are obligated to redeem a Note without any interest penalty (i) upon the death of an investor, if requested by the executor or administrator
of the investor's estate (or if the Note is held jointly, by the surviving joint investor), and (ii) subject to certain limitations,
upon request by an investor holding a 36-month Note issued on or after February 4, 2020. Such redemption requests are not subject to
our consent but are subject to restrictions in the indenture. We may be faced with a large number of such redemption requests at one
time. We are also required to repay all of the Notes upon their maturity. If the amounts of those repayments are too high, and we cannot
offset them with loan repayments, secure new financing, or issue additional Notes, we may not have the liquidity to repay the investments.
29
FORWARD-LOOKING
STATEMENTS
This
prospectus contains forward-looking statements within the meaning of the federal securities laws. Words such as "may," "will,"
"expect," "anticipate," "believe," "estimate," "continue," "predict,"
or other similar words identify forward-looking statements. Forward-looking statements appear in a number of places in this prospectus,
including without limitation, "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business," and include statements regarding our intent, belief or current expectation
about, among other things, trends affecting the markets in which we operate, our business, financial condition and growth strategies.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, forward-looking
statements are not guarantees of future performance and involve risks and uncertainties. Important factors that could cause our actual
results to differ materially from the expectations reflected in these forward-looking statements include those set forth below, as well
as general economic, business and market conditions (including without limitation changes in the political and economic climate, economic
conditions and fiscal imbalances in the United States, and other major developments, including wars, natural disasters, epidemics and
pandemics, including the outbreak of novel coronavirus (COVID-19), military actions, and terrorist attacks), changes in federal and local
laws and regulations, and increased competitive pressures. In addition, actual results may differ materially from those predicted in
the forward-looking statements as a result of various factors, including but not limited to those set forth in the "Risk Factors"
section of this prospectus.
If
any of the events described in "Risk Factors" occur, they could have an adverse effect on our business, financial condition,
and results of operations. When considering forward-looking statements, you should keep these risk factors, as well as the other cautionary
statements in this prospectus in mind. You should not place undue reliance on any forward-looking statement. We are not obligated to
update forward-looking statements.
30
USE
OF PROCEEDS
(All
dollar [$] amounts shown in thousands.)
The
net proceeds we receive from this offering will be equal to the amount of the Notes we sell, less our offering expenses. If we sell the
maximum offering amount of the Notes, which is $70,000, we estimate that we will incur approximately $673 in initial expenses
and our net proceeds will be approximately $69,327.
We
receive cash proceeds in varying amounts from time to time as the Notes are sold. A number of factors prevent us from precisely calculating
the allocation of proceeds. The amount and timing from inflows depend on the sale of Notes, our customer loan repayments, and our borrowing
capacity. Further, the Notes have varying maturities and dates of issuance, which make it impossible to predict with any accuracy how
much of the proceeds will be used to redeem the Notes in any given year. We also cannot predict how many Notes will be sold or the amount
of interest expense that will be incurred. For these reasons, we cannot provide any specific allocation of proceeds we will use for any
particular purpose. However, we intend to use substantially all of the net offering proceeds as follows, in the following order of priority:
●
to
    make payments on other borrowings, including loans from affiliates;
●
to
    pay Notes on their scheduled due date and Notes that we are required to redeem early;
●
to
    make interest payments on the Notes; and
●
to
    the extent we have remaining net proceeds and adequate cash on hand, to fund any one or more of the following activities:
○
to
    extend commercial construction loans to homebuilders to build single or multi-family homes, develop lots, or rehabilitate an older
    home on an existing lot;
○
to
    make distributions to equity owners, including distributions on our preferred equity;
○
for
    working capital and other corporate purposes provided, however, no more than 20% of the proceeds will be used for such purposes;
○
to
    purchase defaulted secured debt from financial institutions at a discount;
○
to
    purchase defaulted unsecured debt from suppliers to homebuilders at a discount and then secure it with real estate or other collateral;
○
to
    purchase real estate, which we will operate our business in (one such purchase occurred in February 2017); and
○
to
    redeem Notes which we have decided to redeem prior to maturity.
There
is no minimum number or amount of the Notes that we must sell to receive and use the proceeds from the sale of the Notes, and we cannot
assure you that all or any portion of the Notes will be sold. In the event that we do not raise sufficient proceeds from our offerings
of Notes, we could curtail the amount of funds we loan to our customers, or we could wrap up operations and pay back our debt, including
the Notes. This might result in the Notes being paid back early. Please see "Risk Factors — Risks Related to Liquidity —
We expect to be substantially reliant upon the net offering proceeds we receive from the sale of our Notes to meet principal and interest
obligations on previously issued Notes," "Risk Factors — Risks Related to Liquidity — There is no sinking fund
to ensure repayment of the Notes at maturity, so you are totally reliant upon our ability to generate adequate cash flows," and
"Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources."
31
BUSINESS
Overview
Our
business is focused on commercial lending to participants in the residential construction and development industry. We believe this market
is underserved because of the lack of traditional lenders currently participating in the market. We are located in Jacksonville, Florida.
We are a Delaware limited liability company and were originally organized in 2007. Our operations are governed pursuant to our limited
liability company agreement.
We
began commercial lending to residential homebuilders in late 2011. Our current loan portfolio is described more fully in this section
under the sub heading "Commercial Construction and Development Loans." Our board of managers is comprised of Daniel M. Wallach
and three independent managers — Eric A. Rauscher, Kenneth R. Summers, and Gregory L. Sheldon. Our officers are responsible for
our day-to-day operations, while the board of managers is responsible for overseeing our business.
The
commercial loans we extend are secured by mortgages on the underlying real estate. We extend and service commercial loans to small-to-medium
sized homebuilders for the purchase of lots and/or the construction of homes thereon. In some circumstances, the lot is purchased with
an older home on the lot which is then either removed or rehabilitated. If the home is rehabilitated, the loan is referred to as a "rehab"
loan. We also extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential
building lots. In addition, we may, depending on our cash position and the opportunities available to us, do none, any or all of the
following: purchase defaulted secured debt from financial institutions at a discount, purchase defaulted unsecured debt from suppliers
to homebuilders at a discount (and then secure that debt with real estate or other collateral), and purchase real estate in which we
will operate our business (one such purchase occurred in February 2017).
Our
Chief Executive Officer ("CEO"), Mr. Wallach, has been in the housing industry since 1985. He was the CFO of a multi-billion
dollar supplier of building materials to home builders for 12 years. He also was responsible for that company's lending business
for 20 years. During those years, he was responsible for the creation and implementation of many secured lending programs to builders.
Some of these were performed fully by that company, and some were performed in partnership with banks. In general, the creation of all
loans, and the resolution of defaulted loans, was his responsibility, whether the loans were company loans or loans in partnership with
banks. Through these programs, he was responsible for the creation of approximately $2,000,000,000 in loans which generated interest
spread of $50,000,000, after deducting for loan losses. Through the years, he managed the development of systems for reducing and managing
the risks and losses on defaulted loans. Mr. Wallach also was responsible for that company's unsecured debt to builders, which
reached over $300,000,000 at its peak. He also gained experience in securing defaulted unsecured debt.
In
addition, our Executive Vice President of Operations has 16 years of experience in this type of lending. Our Chief Financial Officer
("CFO") has 16 years of accounting experience for SEC registrants. Our Executive Vice President has been in the housing industry
for over 37 years, including holding executive level positions for the majority of that time.
32
We
had $46,943,000 and $46,405,000 in loan assets as of December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, respectively,
we had 224 and 213 construction loans in 20 and 21 states with 66 and 67 borrowers. As of December 31, 2021 and 2020, respectively, we
had 15 and nine development loans in six and five states with 12 and eight borrowers. We have various sources of capital, detailed below:
(All dollar [$] amounts shown in table in thousands.)
December
31,
2021
December
31,
2020
Capital Source
Purchase and sale agreements and other secured borrowings
$
19,165
$
22,968
Secured lines of credit from affiliates
859
–
Unsecured line of credit (senior)
1,250
500
Economic Injury Disaster Loan Emergency Advance
-
10
Unsecured Notes through our Notes Program, gross
20,636
21,482
Other unsecured debt
6,193
5,411
Preferred equity, Series C units
5,014
3,582
Preferred equity, Series B units
1,720
1,630
Common equity
(130
)
47
Total
$
54,707
$
55,630
For
additional information related to the loan purchase and sale agreements and the lines of credit, please see "— Debt Summary
and Sources of Liquidity" below.
Investment
Objectives and Opportunity
Background
and Strategy
Finance
markets are highly fragmented, with numerous large, mid-size, and small lenders and investment companies, such as banks, savings and
loan associations, credit unions, insurance companies, and institutional lenders, all competing for investment opportunities. Many of
these market participants experienced losses, as a result of the housing market (which started to decline in 2006, reached its bottom
in 2008, and is now getting back to historical norms as of 2021), and their participation in lending in it. As a result of credit losses
and restrictive government oversight, the financial institutions are not participating in this market to the extent they had before the
credit crisis (as evidenced by the general lack of availability of construction financing and the higher cost of financing for the deals
actually done). We believe that these lenders, while increasing their willingness and capacity to lend, will be unable to satisfy the
current demand for residential construction financing, creating attractive opportunities for niche lenders such as us for many years
to come. Our goal is not to be a customer's only source of commercial lending, but an extra, more user-friendly piece of their
financing. In 2021, while more small banks returned to the construction lending market, the demand for our loan products has remained
relatively constant. We attribute this to our sales staff, a housing market which has been strong in 2021, and an increase in the number
of small home builders in the market. Housing starts in 2021 were at (for the year) the historical average of between 1,000,000 and 1,100,000
single family starts.
Our
loans are marketed by lending representatives who work for us and are driven to maintain long-term customer relationships. Compensation
for loan originators is focused on the profitability of loans originated, not simply the volume of loans originated. As of December 31,
2021, we have retained 20 employees (three of which are lending representatives) including our CEO. In his previous experience, our CEO
had a nationwide staff of 20 lenders working in the field.
Our
efforts are designed to create a loan portfolio that includes some or all of the following investment characteristics: (i) provides current
income; (ii) is well-secured by residential real estate; (iii) is short term in nature; and (iv) provides high interest spreads.
Our
investment policies may be amended or changed at any time by our board of managers. In the years ahead, we plan on continuing our expansion
of lending, increasing our geographic diversity, growing our rehab lending program, and improving our financial performance. We will
be adding systems and people to accomplish these goals.
33
As
we continue to grow our business, we are focusing some of our efforts on our rehab loan program, which we believe in the long run will
face less bank competition and have more stable demand than our new construction program.
We
engage in various activities to try to mitigate the risks inherent in this type of lending by:
●
Keeping
    the loan-to-value ratio ("LTV") between 60% and 75% on a portfolio basis, however, individual loans may, from time to
    time, have a greater LTV;
●
Generally
    using deposits from the builder on home construction loans to ensure the completion of the home. Lending losses on defaulted loans
    are usually a higher percentage when the home is not built, or is only partially built;
●
Having
    a higher yield than other forms of secured real estate lending;
●
Using
    interest escrows for some of our loans;
●
Aggressively
    working with builders who are in default on their loan before and during foreclosure. This technique generally yields a reduced realized
    loss; and
●
Market
    grading. We review all lending markets, analyzing their historic housing start cycles. Then, the current position of housing starts
    is examined in each market. Markets are classified into volatile, average, or stable, and then graded based on that classification
    and our opinion of where the market is in its housing cycle. This grading is then used to determine the builder deposit amount, LTV,
    and how much of the lot purchase the builder is required to fund.
The
following table contains items that we believe differentiate us from our competitors:
Item
Our
    Methods
Comments
Lending
    Regulation
We
    follow various state and federal laws, but are not regulated and controlled by bank examiners from the government. We follow best
    practices we have learned through our experience, some of which are required of banks.
For
    instance, banks are not required to buy title insurance by law, but typically banks do purchase title insurance for the properties
    on which they lend. We generally do not, as it is very difficult to collect on title policies. Instead, we use title searches to
    protect our interests.
FDIC
    Insurance
We
    do not offer FDIC insurance to our unsecured Notes investors.
Our
    yield to our customers, and our cost of funds, is typically higher than that of most banks. We charge our borrowers higher interest
    rates than do most banks. We also save money by not paying for FDIC insurance.
Capital
    Structure
Typically,
    our unsecured Notes offered through our Notes Program are due in one to four years, or when the Note matures.
This
    results in liquidity risk (i.e., funding borrowing requests or maturities of debt). Our assets typically turnover much quicker (about
    4 times faster) than our average unsecured debt does, and our unsecured debt is mostly prepayable. These items help keep liquidity
    stable.
Community
    Reinvestment Act (CRA)
(1)
We
    do not participate in the CRA.
Our
    sole purpose in making each individual loan is to maximize our returns while maintaining proper risk management.
34
Leverage
We
    try to maintain a 15% ratio of equity (including redeemable preferred equity) to loan assets.
Our
    equity to loan assets, net ratio was 14.1% as of December 31, 2021. The higher the percentage, the more potential losses the company
    can absorb without impacting debt holders.
Product
    Diversification
We
    generally make loans to builders to purchase lots and/or to construct or rehab homes.
We
    have extensive experience in our field.
Geographic
    Diversity
We
    lend in 20 states as of December 31, 2021.
We
    believe that this geographic diversity helps in down markets, as not all housing markets decrease at the same rate and time.
Governmental
    Bailouts
Most
    likely not eligible.
We
    are not likely to be eligible for bank bailouts, which have happened periodically. We maintain a better leverage ratio to counter
    this. We received two PPP loans, one in 2020, which was forgiven in 2020, and one in 2021, which was forgiven in 2021.
Underwriting
We
    focus on items that, in our experience, tend to predict risk.
These
    items include using collateral, controlling LTVs, controlling the number of loans in one subdivision, underwriting appraisals, conducting
    property inspections, and maintaining certain files and documents similar to those that a bank might maintain.
(1)
The
    CRA subjects a bank who receives FDIC insurance to regulatory assessment to determine if the bank meets the credit needs of its entire
    community, and to consider that determination in its evaluation of any application made by the bank for, among other things, approval
    of the acquisition or establishment of a bank branch.
Lines
of Business
Our
efforts are designed to create a portfolio that includes some or all of the following investment characteristics: (i) provides current
income; (ii) is well-secured by residential real estate; (iii) is short term in nature; and (iv) provides high interest spreads. While
we primarily provide commercial construction loans to homebuilders (for residential real estate), we may also purchase defaulted unsecured
debt from suppliers to homebuilders at a discount (and then secure that debt with real estate or other collateral), purchase defaulted
secured debt from financial institutions at a discount, and purchase real estate in which we will operate our business.
Our
investment policies may be amended or changed at any time by our board of managers.
Commercial
Construction Loans to Homebuilders
We
extend and service commercial loans to small-to-medium sized homebuilders for the purchase of lots and/or the construction of homes thereon.
Our customers generally benefit from doing business with us not just because they are able to sell additional homes (which we finance),
but because, as they build additional homes, they are able to increase sales of homes that are built as contracted homes, where the eventual
home owner obtains the loan. Builders generally have more success selling homes when a model or spec home is available for customers
to see. We also extend and service loans for the purchase of undeveloped land and the development of that land into residential building
lots. In addition, we lend money to purchase and rehabilitate older existing homes. Most of the loans are for "spec homes"
or "spec lots," meaning they are built or developed speculatively (with no specific end-user home owner in mind).
35
In
a typical home construction transaction, a homebuilder obtains a loan to purchase a lot and build a home on that lot. In some cases,
the builder has a contract with a customer to purchase the home upon its completion. In other cases, the home is built as a spec home,
but the homebuilder believes it will sell before or shortly after completion, and therefore, building the home before it is under contract
will increase the homebuilder's sales and profitability. The builder may also believe that the construction of a spec home will
increase the number of contract sales the homebuilder will have in a given year, as it may be easier to sell contract homes when the
customer can see the builder's work in the spec home. In some cases, these speculatively built homes are constructed with the intention
to keep them as a model for a period of time, to increase contract sales, and then be sold. These are called model homes. While we may
lend to a homebuilder for any of these types of new construction homes, through December 31, 2021, about 66% of our construction loans
have been spec homes and 34% have been contracts.
In
a typical rehab transaction, we fund all of the purchase price, and then all or a portion of the cost to complete the project. In some
circumstances, we are unable to see the inside of the home prior to closing, so we assume that anything from drywall to completion needs
to be redone, as well as what we can see from the outside. Because we are flexible in our need to see the inside of the home, and we
only use experienced builders as customers for this type of lending, we believe that this differentiates us from banks.
We
fund the loans that we originate using available cash resources that are generated primarily from borrowings, our loan purchase and sale
agreements, proceeds from the fixed rate subordinated notes ("Notes") offered pursuant to our public offering ("Notes
Program"), equity, and net operating cash flow. We intend to continue funding loans we originate using the same sources.
There
is a seasonal aspect to home construction, and this affects our monthly cash flow. In general, since the home construction loans we create
will last less than a year on average, and since we are geographically diverse, the seasonality impact is somewhat mitigated.
Generally,
our real estate loans are secured by one or more of the following:
●
the
    parcels of land to be developed;
●
finished
    lots;
●
new
    or rehabbed single-family homes; and/or
●
in
    most cases, personal guarantees of the principals of the borrower entity.
Most
of our lending is based on the following general policies:
Customer
    Type
Small-to-Medium
    Size Homebuilders
Loan
    Type
Commercial
Loan
    Purpose
Construction/Rehabilitation
    of Homes or Development of Lots
Security
Homes,
    Lots, and/or Land
Priority
Generally,
    our loans are secured by a first priority mortgage lien; however, we may make loans secured by a second or other lower priority mortgage
    lien.
Loan-to-Value
    Averages
60–75%
Loan
    Amounts
Average
    home construction loan is $300,000. Development loans vary greatly.
Term
Demand,
    however most home construction loans typically payoff in under one year, and development loans are typically three to five-year projects.
Rate
Cost
    of Funds ("COF") plus 3%, minimum rate of 7%
Origination
    Fee
5%
    for home construction loans, development loans on a case by case basis
Title
    Insurance
Only
    on high risk loans and rehabs
Hazard
    Insurance
Always
General
    Liability Insurance
Always
36
Credit
Builder
    should have significant building experience in the market, be building in the market currently, be able to make payments of interest,
    be able to make the required deposit, have acceptable personal credit, and have open lines of credit (unsecured) with suppliers reasonably
    within terms. Required deposits may be able to be avoided if we do not fund the purchase of land. We generally do not advertise to
    find customers, but use our loan representatives and our builder website, www.constructionspecloans.com.
Third
    Party Guarantor
None,
    however the loans are generally guaranteed by the owners of the borrower.
We
may change these policies at any time based on then-existing market conditions or otherwise, at the discretion of our CEO and the Loan
Policy Committee.
Commercial
Development Loans to Homebuilders
We
extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential buildings. In
a typical development transaction, a homebuilder/developer purchases a specific parcel or parcels of land. Developers must secure financing
in order to pay the purchase price for the land as well as to pay expenses incurred while developing the lots. This is the financing
we provide. Once financing has been secured, the lot developers create individual lots. Developers secure permits allowing the property
to be developed and then design and build roads and utility systems for water, sewer, gas, and electricity to service the property. The
individual lots are then sold before a home is built on them; paid off, built on and then sold; or built on, then sold and paid off (in
these cases, we may subordinate our loan to the home construction loan).
Purchases
and Securitization of Unsecured Debt from Suppliers to Homebuilders
Homebuilders
generally buy their construction materials from building supply companies, which offer unsecured credit lines for these purchases. Sometimes
the builder is unable to pay the principal on their line of credit when due, and in a small percentage of these cases, the builder owns
unencumbered real estate. When this is the case, the building supply company may convert the unsecured line of credit to secured, using
this real estate as security. In some of these situations, the building supply company is unwilling to complete this type of transaction,
and is willing to take a payment of a percentage of the balance of the unsecured line as full payment. If we pay the building supply
company a percentage of this debt, and then take the real estate as collateral for the whole amount of the original debt, management's
experience indicates we will be able to eventually collect from the builder, or from the sale of the property through foreclosure or
otherwise, creating a profit for the Company. We have not completed any of these transactions, but may choose to do so if the opportunity
presents itself.
Purchases
of Defaulted Secured Debt from Financial Institutions
Many
financial institutions have made loans to homebuilders. In some cases, these loans default, and eventually these loans result in collateral
foreclosure. After the foreclosure proceeding, the properties usually become the property of the financial institution, which then sells
the property, generally at a loss. While the loan is in the foreclosure process, and after the process while the real estate is owned
and for sale, the bank holds a nonperforming asset. Sometimes these nonperforming assets negatively impact the banks' profitability
and regulatory ratios. Some banks choose to cleanse their books of these items at a severe loss, allowing them to, while taking a loss,
get back to their commercial lending business. There are potential opportunities to purchase some portfolios of defaulted loans, and/or
real estate owned through foreclosure, at deep discounts compared to the actual value of the property. We have not completed any of these
transactions, but may choose to do so if the opportunity presents itself.
Acquisitions
of Real Estate
In
certain circumstances, the commercial construction loans described above may result in us owning commercial real property as a result
of a loan workout, foreclosure, or similar circumstances. Over the course of running our company since 2011 we have acquired and disposed
of properties for these reasons. The foreclosed assets line of our balance sheet shows the value of properties we have obtained through
this process that we have not yet disposed of. In addition, in February 2017 we purchased a commercial office in which we now operate.
We intend to manage and dispose of any real property assets we acquire in the manner that our management determines is most advantageous
to us.
37
Loan
Portfolio
Commercial
Loans – Construction Loan Portfolio Summary
The
following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2021:
(All
dollar [$] amounts shown in table in thousands.)
State
Number
of
Borrowers
Number
of
Loans
Value of
Collateral
(1)
Commitment
Amount
Gross
Amount
Outstanding
Loan to
Value
Ratio
(2)
Loan Fee
Arizona
2
3
$
995
$
697
$
390
70
%
5
%
Connecticut
2
4
1,535
1,084
719
71
%
5
%
Delaware
1
6
5,960
2,387
1,817
40
%
5
%
Florida
18
88
28,922
21,787
13,649
75
%
5
%
Georgia
2
2
1,130
631
366
56
%
5
%
Illinois
2
2
1,890
1,199
627
63
%
5
%
Indiana
1
1
624
436
347
70
%
5
%
Louisiana
2
3
590
387
125
66
%
5
%
Michigan
2
12
3,431
2,586
2,299
75
%
5
%
New Jersey
1
7
2,382
1,910
1,664
80
%
5
%
New York
1
1
525
378
305
72
%
5
%
North Carolina
8
14
7,141
4,349
2,105
61
%
5
%
Ohio
2
9
2,929
2,132
1,105
73
%
5
%
Oregon
2
2
923
646
440
70
%
5
%
Pennsylvania
2
20
21,867
13,487
10,078
62
%
5
%
South Carolina
10
32
8,353
5,793
3,579
69
%
5
%
Tennessee
2
2
940
582
319
62
%
5
%
Texas
2
5
2,873
1,750
549
61
%
5
%
Virginia
3
3
1,140
765
519
67
%
5
%
Washington
1
8
4,785
3,022
2,104
63
%
5
%
Total
66
224
$
98,935
$
66,008
$
43,106
67
%
(3)
5
%
(1)
The
    value is determined by the appraised value.
(2)
The
    loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.
(3)
Represents
    the weighted average loan to value ratio of the loans.
Commercial
Loans — Real Estate Development Loans
The
following is a summary of our loan portfolio to builders for land development as of December 31, 2021 and 2020. A significant portion
of our development loans consist of the Pennsylvania Loans. Our additional development loans are in Connecticut, Delaware, Florida, South
Carolina, and Texas.
38
(All
dollar [$] amounts shown in table and footnotes in thousands.)
Year
Number of
States
Number
of
Borrowers
Number
of
Loans
Gross Value
of
Collateral
(1)
Commitment Amount
(2)
Gross Amount
Outstanding
Loan to Value
Ratio
(3)
Interest Spread
2021
6
12
15
$
12,464
$
9,095
$
7,657
61
%
(4)
7
%
2020
5
8
9
$
11,628
$
10,815
$
8,230
71
%
(4)
7
%
(1)
The
    value is determined by the appraised value adjusted for remaining costs to be paid and third-party mortgage balances. Part of this
    collateral is $1,720 of preferred equity in our Company. In the event of a foreclosure on the property securing these loans, the
    portion of our collateral that is preferred equity in our Company might be difficult to sell, which could impact our ability to eliminate
    the loan balance.
(2)
The
    commitment amount does not include letters of credit.
(3)
The
    loan to value ratio is calculated by taking the outstanding amount and dividing by the appraised value calculated as described above.
(4)
Represents
    the weighted average loan to value ratio of the loans.
Other
Investments
In
January 2021, we invested $500,000 to purchase five Series A preferred membership interests (the "BMH Preferred Interests")
in Benjamin Marcus Homes, L.L.C. ("BMH"), a member of the Hoskins Group and currently our largest customer. The BMH Preferred
Interests carry an annual 7% cumulative dividend preference compounded annually, payable upon a liquidation event or dissolution and
when and as declared by BMH's board of managers, and have no voting rights. BMH generally is prohibited from paying a dividend
on any membership interests prior to the payment of dividends on the Series A preferred membership interests.
Credit
Quality Information
The
following table presents credit-related information at the "class" level in accordance with Financial Accounting Standards
Board ("FASB") Accounting Standards Codification Topic ("ASC") 310-10-50,
Disclosures about the Credit Quality
of Finance Receivables and the Allowance for Credit Losses
. A class is generally a disaggregation of a portfolio segment. In determining
the classes, the Company considered the finance receivable characteristics and methods it applies in monitoring and assessing credit
risk and performance.
The
following table summarizes finance receivables by the risk ratings that regulatory agencies utilize to classify credit exposure and which
are consistent with indicators the Company monitors. Risk ratings are reviewed on a regular basis and are adjusted as necessary for updated
information affecting the borrowers' ability to fulfill their obligations.
The
definitions of these ratings are as follows:
●
Pass
    – finance receivables in this category do not meet the criteria for classification in one of the categories below.
●
Special
    mention – a special mention asset exhibits potential weaknesses that deserve management's close attention. If left uncorrected,
    these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects.
●
Classified
    – a classified asset ranges from: 1) assets that are inadequately protected by the current sound worth and paying capacity
    of the borrower, and are characterized by the distinct possibility that some loss will be sustained if the deficiencies are not corrected
    to 2) assets with weaknesses that make collection or liquidation in full unlikely on the basis of current facts, conditions, and
    values. Assets in this classification can be accruing or on non-accrual depending on the evaluation of these factors.
39
Finance
Receivables – By risk rating:
(All
dollar [$] amounts shown in table in thousands.)
December
31,
2021
December
31,
2020
Pass
$
38,893
$
35,544
Special mention
2,344
3,089
Classified – accruing
–
–
Classified – nonaccrual
9,526
11,816
Total
$
50,763
$
50,449
Finance
Receivables – Method of impairment calculation:
(All
dollar [$] amounts shown in table in thousands.)
December
31,
2021
December
31,
2020
Performing loans evaluated individually
$
16,495
$
16,412
Performing loans evaluated collectively
24,742
22,221
Non-performing loans without a specific reserve
596
1,518
Non-performing loans with a specific reserve
8,930
10,298
Total evaluated collectively for loan losses
$
50,763
$
50,449
At
December 31, 2021 and 2020, there were no loans acquired with deteriorated credit quality. There were 23 impaired loan assets as of December
31, 2021 compared to 29 impaired loans assets as of December 31, 2020.
2022
Outlook
In
2022, we anticipate using proceeds from the Notes Program, the loan purchase and sale agreements, and other sources to generate additional
loans (mostly spec home construction loans), increase loan balances, and increase our customer and geographic diversity. We anticipate
that the rehab program will grow as a percentage of our origination volume.
Debt
Summary and Sources of Liquidity
Below
is a summary of some of our debt and sources of liquidity. The discussion below does not discuss all of our debt. Please see the "Management's
Discussion and Analysis of Financial Condition and Results of Operations" as well as our financial statements and the notes to
those financial statements contained elsewhere in this prospectus for additional information about debt and sources of liquidity.
Loan
Purchase and Sale Agreements
We
have two loan purchase and sale agreements where we are the seller of portions of loans we create. One loan purchase and sale agreement
is with Builder Finance, Inc. ("Builder Finance"), and the second loan purchase and sale agreement is with S.K. Funding,
LLC ("S.K. Funding"). These agreements are described below.
40
Loan
Purchase and Sale Agreement with Builder Finance
We
entered into a loan purchase and sale agreement (the "Builder Finance LPSA") with Builder Finance in February 2017. Pursuant
to the Builder Finance LPSA, Builder Finance has the right, from time to time, to purchase from us senior priority interests in certain
loans made to fund the vertical construction of one to four family residential dwellings ("Eligible Loans"). The Builder
Finance LPSA was made effective as of August 1, 2016. Each Eligible Loan is evidenced by notes secured by, among other things, mortgages
or deeds of trust encumbering the respective construction properties. The Builder Finance LPSA has been amended five times as of December
31, 2021, to allow for, among other things, the purchaser to retain their portion of the loan past the 12 month period described below.
As of December 31, 2021, the book value of loans which serve as collateral under the Builder Finance LPSA is approximately $4.8 million
and the amount due from us to Builder Finance under the Builder Finance LPSA is approximately $3.0 million. Builder Finance receives
the actual interest rate charged to the borrower on the loans or portions of loans that it purchases pursuant to the Builder Finance
LPSA.
Pursuant
to the procedures set forth in Sections 5.5 through 5.7 of the Builder Finance LPSA, we, upon written notice to Builder Finance, have
the right at any time (the "Call Option") to repurchase from Builder Finance the transferred rights to any senior loan. The
Call Option purchase price for each senior loan will be an amount equal to the then outstanding principal amount of the senior loan held
by Builder Finance plus accrued interest, provided that if the aggregate interest paid to Builder Finance in respect of such senior loan
as of the repurchase date will be less than 4% of the total commitment amount of Builder Finance in respect of such senior loan, then
the purchase price shall be increased by an amount equal to such shortfall. Similarly, Builder Finance, upon written notice to the us,
has the right at any time (the "Put Option"), to elect to require us to repurchase the transferred rights pertaining to any
senior loan, or any portion of a senior loan held by Builder Finance. The Put Option purchase price will be an amount equal to the outstanding
principal amount of the senior loan held by Builder Finance plus accrued interest, provided that the aggregate put prices payable in
respect of all senior loans put to us during any trailing 12 month period ending on the date of the put notice shall never exceed the
Put Option Limit, which is an amount equal to 10% of all fundings made by Builder Finance to us under the senior loans during such 12
month period.
We
agreed that until the prior payment of all amounts due to Builder Finance in respect of the senior loan and the transferred rights: (a)
all payments by us or Builder Finance from or on behalf of borrowers under or pursuant to the relevant loan documents will be applied
first
, to the payment of any amounts due to Builder Finance in respect of the senior loan and the transferred rights, and
second
,
to the payment of any amounts due to us in respect of the subordinated loan; (b) all payments received by us or Builder Finance in connection
with the foreclosure upon or other realization on any loan collateral will be applied
first
, to the payment of any amounts due
to Builder Finance in respect of the senior loan and the transferred rights, and
second
, to the payment of any amounts due to
us in respect of the subordinated loan; and (c) our rights in and to the loan collateral or any security interests granted under Loan
Documents will be subordinated to any and all rights of Builder Finance in and to such collateral and interests.
We
are generally the servicer of the loans. Unless otherwise agreed to in writing by the parties, the Builder Finance LPSA will terminate:
(a) when the entire indebtedness due under the relevant loan documents for all senior loans held by Builder Finance shall have been paid,
and we have paid to Builder Finance all amounts due under the Builder Finance LPSA, and no new amounts become due thereunder within 30
days thereafter; or (b) when all senior loans and subordinate loans and the rights under the Builder Finance LPSA relating thereto are
owned and held by one person, firm or corporation for its own account for a period exceeding 30 days.
Loan
Purchase and Sale Agreement with S.K. Funding
We
also entered into a loan purchase and sale agreement (the "S.K. Funding LPSA") with Seven Kings Holdings, Inc. ("7Kings")
in April 2015. However, on or about May 7, 2015, 7Kings assigned its right and interest in the S.K. Funding LPSA to S.K. Funding, which
is an affiliate of 7Kings. The S.K. Funding LPSA has been amended 11 times as of December 31, 2021, to allow for, among other things,
S.K. Funding to purchase numerous loans in amounts greater than that permitted by the original S.K. Funding LPSA. As of December 31,
2021, the book value of loans which serve as collateral under the S.K. Funding LPSA is approximately $8.1 million and the amount due
from us to S.K. Funding under the S.K. Funding LPSA is approximately $5.5 million.
As
of December 31, 2021, the weighted average interest rate of loans purchased by S.K. Funding under the S.K. Funding LPSA is approximately
10% per annum. We service all of the loans. There is an unlimited right for us to call any loan sold.
41
Lines
of Credit
We
have ten lines of credit, four of which are from affiliates, and a business loan agreement. As of December 31, 2021, we have a total
balance of approximately $10,893,000 across the lines of credit with remaining availability of approximately $5,995,000.
Lines
of Credit Extended by Mr. Wallach and His Affiliates
We
have two lines of credit from Daniel M. Wallach (our CEO and chairman of the board of managers) and his affiliates. The first line of
credit has a maximum principal borrowing amount of $1,250,000 and is payable to Mr. Wallach and his wife, Joyce S. Wallach, as tenants
by the entirety (the "Wallach LOC"). The second line of credit has a maximum principal borrowing amount of $250,000 and is
payable to the 2007 Daniel M. Wallach Legacy Trust (the "Wallach Trust LOC," and together with the Wallach LOC, the "Wallach
Affiliate LOCs"). The Notes are subordinated in right of payment to all secured debt, including these Wallach Affiliate LOCs. Pursuant
to the promissory note for each Wallach Affiliate LOC, the lenders have the option of funding any amount up to the face amount of the
note, in the lender's sole and absolute discretion. The Wallach Affiliate LOCs are due and payable upon demand by the lender. As
of December 31, 2021, there were no amounts borrowed against the Wallach LOC, with availability on that line of credit of $1,250,000,
and there were no amounts borrowed against the Wallach Trust LOC, with remaining availability on that line of credit of $250,000.
The
Wallach Affiliate LOCs are collateralized by a lien against all of our assets. The Notes are subordinated in right of payment to all
secured debt, including the Wallach Affiliate LOCs. The interest rate on the Wallach Affiliate LOCs generally equals the prime rate plus
3%. The interest rate on the Wallach Affiliate LOCs may not, however, exceed the maximum rate allowed by applicable law. As of December
31, 2021 and 2020, the interest rate was 6.25% and 6.25%, respectively, for both the Wallach LOC and the Wallach Trust LOC. We may, at
our option, choose to prepay the principal, interest, or other amounts due from us under the Wallach Affiliate LOCs in whole or in part
at any time.
The
Wallach Affiliate LOCs were approved by Mr. Wallach in his capacity as sole manager prior to the time we had independent managers. The
independent managers ratified and approved these transactions subsequent to the formation of the board of managers. In June 2018, we
entered into a First Amendment to the Wallach LOC and a First Amendment to the Wallach Trust LOC which modified the interest rates under
the Wallach Affiliate LOCs to generally equal the prime rate plus 3%. These amendments were approved by a majority of our independent
managers. See "Risk Factors — Risks Related to Conflicts of Interest — Our CEO (who is also on our board of managers)
and Executive Vice President will face conflicts of interest as a result of the secured lines of credit made to us, which could result
in actions that are not in the best interests of our Note holders."
Line
of Credit Extended by Swanson
In
October 2017, we entered into a line of credit agreement (as amended, the "Swanson LOC Agreement") with Paul Swanson, which
was subsequently assigned to Judith Swanson, as trustee of a trust. Pursuant to the Swanson LOC Agreement, the lender provides us with
a revolving line of credit (the "Swanson LOC") not to exceed $7,000,000. The balances on the unsecured portion and the secured
portion of the Swanson LOC are due in July 2022. As of December 31, 2021, the outstanding principal balance of the secured portion was
approximately $6,841,000 and the outstanding principal balance of the unsecured portion was approximately $159,000.
The
Swanson LOC requires monthly payments of interest only during the term of the Swanson LOC, with the principal balance due upon termination.
The unpaid principal amounts advanced on the Swanson LOC bear interest for each day until due at a fixed rate per annum (computed on
the basis of a year of 360 days for actual days elapsed) for each day at 9%. We may, at our option, choose to prepay the principal, interest,
or other amounts due from us under the Swanson LOC in whole or in part at any time.
We
are pledging, and will continue to pledge in the future, certain of our commercial loans as collateral for a portion of the Swanson LOC
(the "Swanson Collateral Loans") pursuant to the Collateral Assignment of Notes and Documents dated as of October 23, 2017.
The amount outstanding under the Swanson LOC may not exceed 67% of the aggregate amount outstanding on the Swanson Collateral Loans then
pledged to secure the Swanson LOC. Our obligation to repay the Swanson LOC is evidenced by a promissory note from us dated October 23,
2017.
42
The
lender may demand the unpaid principal amount under the Swanson LOC, along with interest accrued thereon and all other amounts owing
under the Swanson LOC upon an "event of default," as defined in the Swanson LOC Agreement. An "event of default"
includes our failing to pay payments within 10 days of when such payment is due, our failing to service the Swanson Collateral Loans
in a commercially reasonable manner, or our filing of a petition for bankruptcy.
R.
Scott Summers, P.L.L.C., a West Virginia professional limited liability company (the "Swanson LOC Custodian") serves as the
custodian to hold the Swanson Collateral Loans for the benefit of the Swanson lender pursuant to the Custodial Agreement dated as of
October 23, 2017 between us, the Swanson lender, and the Swanson LOC Custodian. The Swanson LOC Custodian is owned by R. Scott Summers,
an investor in our Notes Program, a lender under one of the New LOC Agreements (described below), and the son of Kenneth R. Summers,
one of our independent managers. The Swanson LOC Custodian is responsible for certifying to the Swanson lender that it has received the
relevant Swanson Collateral Loan assignment documentation from us. We are responsible for paying the Swanson LOC Custodian's monthly
fee, which is equal to 1% interest on the amount of the Swanson Collateral Loans outstanding in the Swanson LOC Custodian's custody.
Line
of Credit Extended by Shuman
In
July 2017, we entered into a line of credit agreement (the "Shuman LOC Agreement") with a group of lenders, and the Shuman
LOC Agreement is now held by Cindy K. Shuman as widow and devisee of Mr. Shuman (collectively, "Shuman"). Pursuant to the
Shuman LOC, Shuman provides us with a revolving line of credit (the "Shuman LOC") not to exceed $1,325,000. The Shuman LOC
is secured with assignments of certain notes and mortgages and carries a total annual cost of funds to us of 10%. The Shuman line of
credit is currently due in July 2022, although it may be extended for additional 12-month periods. As of December 31, 2021, the Shuman
LOC had an outstanding principal balance of $125,000.
The
Shuman LOC requires monthly payments of interest only during the term of the Shuman LOC, with the principal balance due upon termination.
The unpaid principal amounts advanced on the Shuman LOC bear interest for each day until due at a fixed rate per annum (computed on the
basis of a year of 360 days for actual days elapsed) for each day at 10%. We may, at our option, choose to prepay the principal, interest,
or other amounts due from us under the Shuman LOC in whole or in part at any time.
We
are pledging, and will continue to pledge in the future, certain of our commercial loans as collateral for the Shuman LOC (the "Shuman
Collateral Loans") pursuant to the Collateral Assignment of Notes and Documents dated as of July 11, 2017. The amount outstanding
under the Shuman LOC may not exceed 67% of the aggregate amount outstanding on the Shuman Collateral Loans then pledged to secure the
Shuman LOC. Our obligation to repay the Shuman LOC is evidenced by a promissory note from us dated July 11, 2017.
Shuman
may demand the unpaid principal amount under the Shuman LOC, along with interest accrued thereon and all other amounts owing under the
Shuman LOC upon an "event of default," as defined in the Shuman LOC Agreement. An "event of default" includes
our failing to pay payments within 10 days of when such payment is due, our failing to service the Shuman Collateral Loans in a commercially
reasonable manner, or our filing of a petition for bankruptcy.
R.
Scott Summers, P.L.L.C., a West Virginia professional limited liability company (the "Shuman LOC Custodian") serves as the
custodian to hold the Shuman Collateral Loans for the benefit of Shuman pursuant to the Custodial Agreement dated as of July 11, 2017
between us, Shuman, and the Shuman LOC Custodian. The Shuman LOC Custodian is owned by R. Scott Summers, an investor in our Notes Program,
a lender under one of the New LOC Agreements (described below), and the son of Kenneth R. Summers, one of our independent managers. The
Shuman LOC Custodian is responsible for certifying to Shuman that it has received the relevant Shuman Collateral Loan assignment documentation
from us. We are responsible for paying the Shuman LOC Custodian's monthly fee, which is equal to 1% interest on the amount of the
Shuman Collateral Loans outstanding in the Shuman LOC Custodian's custody.
43
Line
of Credit Extended by William Myrick
In
June 2018, we entered into a line of credit agreement (the "Myrick LOC Agreement") with our Executive Vice President, William
Myrick. Pursuant to the Myrick LOC Agreement, Mr. Myrick provides us with a line of credit (the "Myrick LOC") not to exceed
$1,000,000. The Myrick LOC is due and payable upon demand by the lender. As of December 31, 2021, the Myrick LOC had an outstanding principal
balance of $859,000.
The
Myrick LOC is collateralized by a lien against all of our assets. The interest rate on the Myrick LOC generally equals the prime rate
plus 3%. As of December 31, 2021 and 2020, the interest rate was 6.25% and 6.25%, respectively, for the Myrick LOC. We may, at our option,
choose to prepay the principal, interest, or other amounts due from us under the Myrick LOC in whole or in part at any time.
Mr.
Myrick may demand the unpaid principal amount under the Myrick LOC, along with interest accrued thereon and all other amounts owing under
the Myrick LOC upon an "event of default," as defined in the Myrick LOC Agreement. An "event of default" includes
our failing to pay payments within 10 days of when such payment is due, a default under the Myrick LOC Agreement's terms or obligations
or representations, or our filing of a petition for bankruptcy or a commencement of foreclosure proceedings.
The
Myrick LOC was approved by a majority of our independent managers as they determined the terms of the Myrick LOC to be in the best interests
of the Company and that the transaction is on terms no less favorable to us than could be obtained from an independent third party.
New
LOC Agreements
During
2020 and 2019, we entered into five line of credit agreements (the "New LOC Agreements") with lenders. Pursuant to the New
LOC Agreements, the lenders provide us with revolving lines of credit (the "New LOCs") not to exceed a total of approximately
$6,063,000. The New LOC Agreements are secured with assignments of certain notes and mortgages and carry a total annual interest rate
ranging from 9.0% to 11.0%. The terms generally allow the lenders to give one month notice of nonrenewal after which the principal balance
will reduce to zero over the next six months. As of December 31, 2021, we had borrowed $2,909,000 in principal on the New LOCs, with
availability on those lines of credit of approximately $3,154,000. The largest aggregate amount of principal outstanding on the New LOC
Agreements during 2021 was $3,859,000.
One
of the lenders of a New LOC Agreement is R. Scott Summers, the son of Kenneth R. Summers, one of our independent managers. The Company's
board of managers approved the Company entering into the New LOC Agreement with R. Scott Summers, which provides us with a line of credit
secured with assignments of certain notes and mortgages and a lien against all of our assets, and with principal not to exceed $2,000,000.
R. Scott Summers is also an investor in our Notes and serves as custodian under various lines of credit to us, as described above and
below.
The
New LOC Agreements require monthly payments of interest only during the term of each New LOC Agreement, with the principal balance due
upon termination. The unpaid principal amounts advanced on the New LOC Agreements bear interest for each day until due at a fixed rate
per annum (computed on the basis of a year of 360 days for actual days elapsed) for each day. We may, at our option, choose to prepay
the principal, interest, or other amounts due from us under the New LOC Agreements in whole or in part at any time.
We
are pledging, and will continue to pledge in the future, certain of our commercial loans as collateral for the New LOCs (the "New
LOC Collateral Loans") pursuant to Collateral Assignments of Notes and Documents.
The
lenders may demand the unpaid principal amount under their respective New LOC Agreement, along with interest accrued thereon and all
other amounts owing under such New LOC Agreement upon an "event of default," as defined in each New LOC Agreement. An "event
of default" includes our failing to pay payments within 10 days of when such payment is due, our failing to service the New LOC
Collateral Loans in a commercially reasonable manner, or our filing of a petition for bankruptcy.
44
R.
Scott Summers, P.L.L.C., a West Virginia professional limited liability company (the "New LOCs Custodian") also serves as
the custodian to hold the New LOC Collateral Loans for the benefit of the lenders of the New LOCs pursuant to the Custodial Agreement
dated as of July 30, 2019 between us and the New LOCs Custodian. We are responsible for paying the New LOCs Custodian's monthly
fee, which is equal to 1% interest on the amount of the New LOC Collateral Loans outstanding in the New LOCs Custodian's custody.
Loan
Extended by Community Bank
In
June 2020, we entered into a business loan agreement (the "Community Bank Loan") with Community Bank. Pursuant to the Community
Bank Loan, Community Bank provides us with a loan not to exceed a principal amount of $362,000. The Community Bank Loan is secured by
certain of our foreclosed assets and carries an annual interest rate of 3.8% based on a year of 360 days. The Community Bank Loan is
due in July 2025. As of December 31, 2021, we owed an outstanding principal balance of $217,000 pursuant to the Community Bank Loan.
The
Community Bank Loan requires monthly payments of interest only until July 2023, with principal payments then becoming due monthly. We
may, at our option, choose to prepay the principal, interest, or other amounts due from us under the Community Bank Loan in whole or
in part at any time.
Mortgage
In
January 2018, we entered into a commercial mortgage with Community Bank (the "Commercial Mortgage") on the office building
which we own and operate (our "Office Building") in an amount not to exceed $660,000. The Commercial Mortgage is due and
payable in January 2033. As of December 31, 2021, the principal amount of the Commercial Mortgage was $604,000.
The
Commercial Mortgage is secured by a first mortgage lien and an assignment of leases and rents on our Office Building. The annual interest
rate on the Commercial Mortgage is 5.07%. We may, at our option, choose to prepay the principal, interest, or other amounts due from
us under the Commercial Mortgage in whole or in part at any time.
The
following constitute events of default under the Commercial Mortgage: a failure to make any payment when due; a failure to comply with
or perform and other term, obligation, covenant or condition under the Commercial Mortgage; a default under any loan, extension of credit,
security agreement, purchase or sale agreement, or any other agreement, in favor of any other creditor or person that materially affect
any of our property or our ability to repay the Commercial Mortgage; and any false statements under the Commercial Mortgage.
Paycheck
Protection Program Loans
On
February 5, 2021, we entered into an agreement to borrow approximately $362,000 from LCA Bank Corporation pursuant to the Paycheck Protection
Program ("PPP"), originally created under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, and extended
to "second draw" PPP loans as described below. The PPP is intended to provide loans to qualified businesses to cover payroll
and certain other identified costs. Funds from the loan may only be used for certain purposes, including payroll, benefits, rent, and
utilities. All or a portion of the loan may be forgivable, as provided by the terms of the PPP. The loan has an interest rate of 1.0%
per annum and a term of 60 months. Payments will be deferred in accordance with the CARES Act, as modified by the Paycheck Protection
Program Flexibility Act of 2020; however, interest will accrue during the deferral period. If the loan is not forgiven in accordance
with the terms of the program, we will be obligated to make monthly payments of principal and interest to repay the loan in full prior
to maturity. The loan is evidenced by a promissory note, which contains customary events of default relating to, among other things,
payment defaults and breaches of representations. We may prepay the loan at any time prior to maturity with no prepayment penalties.
Previously,
in May 2020, we received a first draw PPP loan in the amount of approximately $362,000. In November 2020, the full principal amount of
the first draw PPP loan and the accrued interest were forgiven by the U.S. Small Business Administration (the "SBA"). In
December 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act was signed into law, extending the SBA's
authority to guarantee second draw PPP loans through March 31, 2021, pursuant to which we received the February 5, 2021 PPP loan. In
August 2021, the full principal amount of the February 5, 2021 PPP loan and the accrued interest were forgiven by the SBA.
45
Competition
Historically,
our industry has been highly competitive. We compete for opportunities with numerous public and private investment vehicles, including
financial institutions, specialty finance companies, mortgage banks, pension funds, opportunity funds, hedge funds, REITs, and other
institutional investors, as well as individuals. Many competitors are significantly larger than us, have well-established operating histories
and may have greater access to capital, resources and other advantages over us. These competitors may be willing to accept lower returns
on their investments or to modify underwriting standards and, as a result, our origination volume and profit margins could be adversely
affected.
We
believe that this is a good time to extend commercial loans to builders in the residential real estate market because, currently, this
market appears underserved, and many of our competitors have sustained losses due to the impact of the COVID-19 pandemic and, therefore,
are reluctant to lend in this space at this time. We expect our loans to be different than other lenders in the markets in which we are
active. Typically, the differences are:
●
our
    loans may have a higher fee;
●
our
    loans typically require a small deposit which is refundable, versus a large upfront payment for the lot which is not refundable;
    and
●
some
    of our loans may have lower costs as a result of not requiring title insurance.
Human
Capital Resources
As
of December 31, 2021, we have retained 20 full-time employees (three of which are lending representatives) including our CEO. The development,
attraction, and retention of employees is a strong focus for the Company, as is fostering and maintaining a strong, healthy corporate
culture. Additionally, as described in more detail in the "Executive Compensation — Executive Officer Compensation"
section of this prospectus, we have an executive compensation program designed to attract, retain, and motivate highly talented executives
and to align each executive's incentives with our short-term and long-term objectives, while maintaining a healthy and stable financial
position.
Regulatory
Matters
Financial
Regulation
Our
operations are not subject to the stringent regulatory requirements imposed upon the operations of commercial banks, savings banks, and
thrift institutions. We are not subject to periodic compliance examinations by federal or state banking regulators. Further, our Notes
are not certificates of deposit or similar obligations or guaranteed by any depository institution and are not insured by the FDIC or
any governmental or private insurance fund, or any other entity.
The
Investment Company Act of 1940
An
investment company is defined under the Investment Company Act of 1940, as amended (the "Investment Company Act"), to include
any issuer engaged primarily in the business of investing, reinvesting, or trading in securities. Absent an exemption, investment companies
are required to register as such with the SEC and to comply with various governance and operational requirements. If we were considered
an "investment company" within the meaning of the Investment Company Act, we would be subject to numerous requirements and
restrictions relating to our structure and operation. If we were required to register as an investment company under the Investment Company
Act and to comply with these requirements and restrictions, we may have to make significant changes in our structure and operations to
comply with exemption from registration, which could adversely affect our business. Such changes may include, for example, limiting the
range of assets in which we may invest. We intend to conduct our operations so as to fit within an exemption from registration under
the Investment Company Act for purchasing or otherwise acquiring mortgages and other liens on and interest in real estate. In order to
satisfy the requirements of such exemption, we may need to restrict the scope of our operations.
46
Environmental
Compliance
We
do not believe that compliance with federal, state, or local laws relating to the protection of the environment will have a material
effect on our business in the foreseeable future. However, loans we extend or purchase are secured by real property. In the course of
our business, we may own or foreclose and take title to real estate that could be subject to environmental liabilities with respect to
these properties. We (or our loan customers) may be held liable to a governmental entity or to third parties for property damage, personal
injury, investigation, and clean-up costs incurred by these parties in connection with environmental contamination or may be required
to investigate or clean up hazardous or toxic substances or chemical release at a property. The costs associated with the investigation
or remediation activities could be substantial. In addition, if we become the owner of or discover that we were formerly the owner of
a contaminated site, we may be subject to common law claims by third-parties based on damages and costs resulting from environmental
contamination emanating from the property. To date, we have not incurred any significant costs related to environmental compliance and
we do not anticipate incurring any significant costs for environmental compliance in the future. Generally, when we are lending on property
which is being developed into single family building lots, an environmental assessment is done by the builder for the various governmental
agencies. When we lend for new construction on newly developed lots, the lots have generally been reviewed while they were being developed.
We also perform our own physical inspection of the lot, which includes assessing potential environmental issues. Before we take possession
of a property through foreclosure, we again assess the property for possible environmental concerns, which, if deemed to be a significant
risk compared to the value of the property, could cause us to forego foreclosure on the property and to seek other avenues for collection.
Legal
Proceedings
As
of the date of this prospectus, we are not aware that we or our members are a party to any pending or threatened legal proceeding or
proceeding by a governmental authority that would have a material adverse effect on our business.
Reports
to Security Holders
We
are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
require us to file annual, quarterly, and special reports and other information with the SEC. All of these filings with the SEC are available
to the public over the Internet at the SEC's website at
www.sec.gov
. The annual reports we file with the SEC will contain
consolidated financial information that has been examined and reported upon, with an opinion expressed by an independent registered public
accounting firm. You may access this information online, at our website, at
www.shepherdsfinance.com
, or by calling us at (302)
752-2688 (30-ASK-ABOUT) or writing us at Shepherd's Finance, LLC, 13241 Bartram Park Blvd., Suite 2401, Jacksonville, Florida 32258
to have copies mailed to you at no cost. However, information contained on our website does not constitute part of this prospectus, and
you should rely only on the information contained in or specifically incorporated by reference into this prospectus in deciding whether
to invest in the Notes. We do not intend to deliver reports to security holders if such reports are not required pursuant to Section
15(d) of the Exchange Act.
47
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(All
dollar [$] amounts shown in thousands.)
The
following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with
our consolidated financial statements and the notes thereto contained elsewhere in this prospectus. See also the "Forward-Looking
Statements" section of this prospectus.
Overview
We
were organized in the Commonwealth of Pennsylvania in 2007 under the name 84 RE Partners, LLC and changed our name to Shepherd's
Finance, LLC on December 2, 2011. We converted to a Delaware limited liability company on March 29, 2012. Our business is focused on
commercial lending to participants in the residential construction and development industry. We believe this market is underserved because
of the lack of traditional lenders currently participating in the market. We are located in Jacksonville, Florida. Our operations are
governed pursuant to our limited liability company agreement.
The
commercial loans we extend are secured by mortgages on the underlying real estate. We extend and service commercial loans to small-to-medium
sized homebuilders for the purchase of lots and/or the construction of homes thereon. In some circumstances, the lot is purchased with
an older home on the lot which is then either removed or rehabilitated. If the home is rehabilitated, the loan is referred to as a "rehab"
loan. We also extend and service loans for the purchase of lots and undeveloped land and the development of that land into residential
building lots. In addition, we may, depending on our cash position and the opportunities available to us, do none, any or all of the
following: purchase defaulted unsecured debt from suppliers to homebuilders at a discount (and then secure that debt with real estate
or other collateral), purchase defaulted secured debt from financial institutions at a discount, and purchase real estate in which we
will operate our business.
Economic
and Industry Dynamics
During
2021, the Company continued to focus on specific issues that arose in 2020 primarily due to the pandemic, one of which was the reduction
of non-interest earning assets. As of December 31, 2021, loans classified as non-accrual were 23 or $9,526 compared to 29 or $11,816
for the same period in the prior year. In addition, as of December 31, 2021 we had 5 foreclosed assets or $2,724 compared to 17 and $4,449
for the same period of the prior year.
The
Company continues to lose interest income on assets that do not accrue interest. During the year ended December 31, 2021 the estimated
loss on interest income related to impaired and foreclosed assets was $1,715. Looking ahead, we expect this to decrease as we continue
to sell our remaining foreclosed assets in 2022.
While
the Company continues to face COVID-19 risks as it relates to the economy and the homebuilding industry, management made the decision
that during 2022 we will focus on the following five areas:
1.
Decrease
    the amount of non-interest-bearing assets, which includes cash, our foreclosed assets and classified non-accrual loans or impaired
    loans receivables;
2.
Increase
    loan originations which were lower during the year ended December 31, 2020 due primarily to COVID-19;
3.
Maintain
    liquidity to fund new loan originations and for the completion of construction costs for existing loans;
4.
Lowering
    our cost of funds (to keep us competitive in the market); and
5.
Raising
    our margin beyond simply eliminating nonperforming assets.
We
anticipate that for 2022, the housing market in most of the areas in which we do business will be strong despite the impact of COVID-19.
We also anticipate that the losses we incurred in principal related to COVID-19 will not continue, and that the lack of interest due
to non-performing assets from COVID-19 will decrease significantly in 2022. Short term interest rates as well as mortgage interest rates
are expected to rise. A rise in short term rates is likely to benefit the company as our competitors' rates will rise faster than
ours making us more competitive, but a rise in long term interest rates may negatively impact the housing industry as a whole, and therefore
us.
48
Perceived
Challenges and Anticipated Responses
The
following is not intended to represent a comprehensive list or description of the risks or challenges facing the Company. Currently,
our management is most focused on the following challenges along with the corresponding actions to address those challenges:
Perceived
    Challenges and Risks
Anticipated
    Management Actions/Response
Potential
    loan value-to-collateral value issues (i.e., being underwater on particular loans)
We
    manage this challenge by risk-rating both the geographic region and the builder, and then adjusting the loan-to-value (i.e., the
    loan amount versus the value of the collateral) based on risk assessments. Additionally, we collect a deposit up-front for construction
    loans. Despite these efforts, if values in a particular area of the country drop by 60%, we will have loaned more than the value
    of the collateral. We have found that the best solution to this risk is a speedy resolution of the loan, and helping the builder
    finish the home rapidly rather than foreclosing on the partially built home. Our experience in this area will help us limit, but
    not eliminate, the negative effects in the event of another economic downturn.
Concentration
    of loan portfolio (i.e., how many of the loans are of or with any particular type, customer, or geography)
As
    of December 31, 2021 and 2020, 26% and 29%, respectively, of our outstanding loan commitments consist of loans to one borrower, and
    the collateral is in one real estate market, Pittsburgh, Pennsylvania. Accordingly, the ultimate collectability of a significant
    portion of these loans is susceptible to changes in market conditions in that area. As of December 31, 2021, our next two largest
    customers make up 7% and 4% of our loan commitments, with loans in Orlando, Florida and Spokane, Washington, respectively. As of
    December 31, 2020, our next two largest customers made up 12% and 6% of our loan commitments, with loans in Orlando and Cape Coral,
    Florida, respectively. In the upcoming years, we plan on continuing to increase our geographic and builder diversity while continuing
    to focus on our residential homebuilder customers.
Not
    having funds available to us to service the commitments we have
As
                                            of December 31, 2021, our typical construction loan had about 65% of its loan amount outstanding
                                            on average. That means that on average, about 35% of the commitment is not loaned, usually
                                            because the house is not complete. As of December 31, 2021, unfunded commitments totaled
                                            $22,902, which we will fund along with our purchase and sale agreement participants. However,
                                            if we are short on cash, we could do the following:
●
    raise interest rates on the Notes we offer to our investors to attract new Note investments;
●
    sell more secured interest on our loans; or
●
    draw down on our lines of credit from our affiliates.
Nonpayment
    of interest by our customers
Most
    of our customers pay interest on a monthly basis, and these funds are used to, among other things, pay interest on our debt monthly.
    While we have the liquidity to withstand some nonpayment of interest, if a high percentage of our customers were not paying interest,
    it will impede our ability to pay our debts on time.
Nonperforming
    assets
As
    of December 31, 2021, nonperforming assets were approximately $10,425 (defined as impaired loans and/or loans on nonaccrual plus
    foreclosed assets net of reserves).
49
Critical
Accounting Estimates
To
assist in evaluating our consolidated financial statements, we describe below the critical accounting estimates that we use. We consider
an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly
uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period
to period, or use of different estimates that we reasonably could have used, would have a material impact on our consolidated financial
condition or results of operations.
Loan
Losses
Future
losses on current loans are estimated in our financial statements. This estimate is important because it is on our largest asset (loans
receivable). It is impossible to know what these losses will be, as the condition of the market cannot be determined, and specific situations
with each loan are unpredictable and change constantly. Loan losses, as applicable, are accounted for both on the consolidated balance
sheets and the consolidated statements of operations. On the consolidated statements of operations, management estimates the number of
losses to capture during the current year. This current period amount incurred is referred to as the loan loss provision. The calculation
of our allowance for loan losses, which appears on our consolidated balance sheets as a reduction to loans receivable, net and is detailed
in the notes to our financial statements, requires us to compile relevant data for use in a systematic approach to assess and estimate
the number of probable losses inherent in our commercial lending operations and to reflect that estimated risk in our allowance calculations.
We use the policy summarized as follows:
We
establish a collective reserve for all loans which are not more than 60 days past due at the end of each quarter. This collective reserve
includes both a quantitative and qualitative analysis. In addition to historical loss information, the analysis incorporates collateral
value, decisions made by management and staff, percentage of aging spec loans, policies, procedures, and economic conditions.
We
individually analyze for impairment all loans which are more than 60 days past are due at the end of each quarter. We also review for
impairment all loans to one borrower with greater than or equal to 10% of our total committed balances. If required, the analysis includes
a comparison of estimated collateral value to the principal amount of the loan.
For
impaired loans, if the value determined is less than the principal amount due (less any builder deposit), then the difference is included
in the allowance for loan loss. As values change, estimated loan losses may be provided for more or less than the previous period, and
some loans may not need a loss provision based on payment history. For homes which are partially complete, we appraise on an as-is and
completed basis and use the one that more closely aligns with our planned method of disposal for the property.
For
loans greater than 12 months in age that are individually evaluated for impairment, appraisals have been prepared within the last 13
months if construction is greater than 90% complete. If construction is less than 90% complete the Company uses the latest appraisal
on file. Certain times the Company may choose to use a broker's opinions of value ("BOV") as a replacement for an appraisal
if deemed more efficient by management. Appraised values are adjusted down for estimated costs associated with asset disposal. Broker's
opinion of selling price, use currently valid sales contracts on the subject property, or representative recent actual closings by the
builder on similar properties may be used in place of a broker's opinion of value.
Appraisers
are state certified, and are selected by first attempting to utilize the appraiser who completed the original appraisal report. If that
appraiser is unavailable or unreasonably expensive, we use another appraiser who appraises routinely in that geographic area. BOVs are
created by real estate agents. We try to first select an agent we have worked with, and then, if that fails, we select another agent
who works in that geographic area.
50
Currently,
fair value of collateral has the potential to impact the calculation of the loan loss provision. Specifically, relevant to the allowance
for loan loss reserve is the fair value of the underlying collateral supporting the outstanding loan balances. Fair value measurements
are an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. Due to a rapidly changing economic market, an erratic housing market, the various methods that could be
used to develop fair value estimates, and the various assumptions that could be used, determining the collateral's fair value requires
significant judgment.
December
                                               31, 2021
Loan Loss
Provision
Change in Fair Value Assumption
Higher/(Lower)
Increasing fair value of the real estate collateral by 35%*
$
–
Decreasing fair value of the real estate collateral by 35%**
$
2,828
*
Increases in the fair value of the real estate collateral do not impact the loan loss provision, as the value generally is not "written
up."
**
If the loans were nonperforming, assuming a book amount of the loans outstanding of $46,943, and the fair value of the real estate collateral
on all outstanding loans was reduced by 35%.
Foreclosed
Assets
Foreclosed
assets, as applicable, are accounted for both on the consolidated balance sheets and the consolidated statements of operations. On the
consolidated statements of operations, management estimates the amount of impairment to capture when a loan is converted to a foreclosed
asset, the impairment when the value of an asset drops below the carrying amount, and any loss or gain upon final disposition of the
asset. The calculation of the impairment, which appears on our consolidated balance sheets as a reduction in the asset, requires us to
compile relevant data for use in a systematic approach to assess and estimate the value of the asset and therefore any required impairment
thereof. We use the policy summarized as follows:
For
properties which exist in the condition in which we intend to sell them, we obtain an appraisal of the assets current value. We reduce
the appraised value by 10% to account for estimated selling costs. This amount is used to initially book the asset. Typically, prior
to the initial booking of the foreclosed asset, the loan has already been reserved to this level. If during ownership, the value of the
foreclosed asset drops, an additional impairment is recorded. For assets that need to be improved prior to sale, we adjust the portion
of the appraised value related to construction improvements for the percentage of the improvements which have not yet been made.
The
fair value of real estate will impact our foreclosed asset value, which is recorded at 100% of fair value (after selling costs are deducted).
Fair value measurements are an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants.
December 31, 2021
Foreclosed Assets
Change in Fair Value Assumption
Higher/(Lower)
Increasing fair value of the foreclosed asset by 35%*
$
–
Decreasing fair value of the foreclosed asset by 35%
$
953
*
Increases in the fair value of the foreclosed assets do not impact the carrying value, as the value generally is not "written up."
Those gains would be recognized at the sale of the asset. However, the increase in fair value may be recognized up to the cost basis
of the foreclosed asset which was determined at the foreclosure date.
51
Other
Loss Contingencies
Other
loss contingencies are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably
estimable. Disclosure is required when there is a reasonable possibility that the ultimate loss will exceed the recorded provision. Contingent
liabilities are often resolved over long time periods. Estimating probable losses requires analysis of multiple forecasts that often
depend on judgments about potential actions by third parties such as courts, arbitrators, juries, or regulators.
Accounting
and Auditing Standards Applicable to "Emerging Growth Companies"
We
are an "emerging growth company" under the JOBS Act. For as long as we are an "emerging growth company," we are
not required to: (1) comply with any new or revised financial accounting standards that have different effective dates for public and
private companies until those standards would otherwise apply to private companies, (2) provide an auditor's attestation report
on management's assessment of the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley
Act, (3) comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory
audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information
about the audit and the financial statements of the issuer or (4) comply with any new audit rules adopted by the PCAOB after April 5,
2012, unless the SEC determines otherwise. However, we have elected to "opt out" of the extended transition period discussed
in (4), and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards
is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition
period for compliance with new or revised accounting standards is irrevocable.
Other
Significant Accounting Policies
Other
significant accounting policies, not involving the same level of measurement uncertainties as those discussed above, are nevertheless
important to an understanding of the consolidated financial statements. Policies related to credit quality information, fair value measurements,
offsetting assets and liabilities, related party transactions and revenue recognition require difficult judgments on complex matters
that are often subject to multiple and recent changes in the authoritative guidance. Certain of these matters are among topics currently
under reexamination or have recently been addressed by accounting standard setters and regulators. Specific conclusions have not been
reached by these standard setters, and outcomes cannot be predicted with confidence. Also, see Note 2 of our consolidated financial statements,
as they discuss accounting policies that we have selected from acceptable alternatives.
Consolidated
Results of Operations
Key
financial and operating data for the years ended December 31, 2021 and 2020 are set forth below. For a more complete understanding of
our industry, the drivers of our business, and our current period results, this discussion should be read in conjunction with our consolidated
financial statements, including the related notes and the other information contained in this document.
Accounting
principles generally accepted in the United States of America (U.S. GAAP) require that we report financial and descriptive information
about reportable segments and how these segments were determined. Our management determines the allocation and performance of resources
based on operating income, net income and operating cash flows. Segments are identified and aggregated based on the products sold or
services provided and the market(s) they serve. Based on these factors, management has determined that our ongoing operations are in
one segment, commercial lending.
52
Below
is a summary of our statement of operations for the years ended December 31, 2021 and 2020:
(in thousands of dollars)
2021
2020
Net Interest Income
Interest and fee income on loans
$
7,944
$
8,209
Interest expense:
Interest related to secured borrowings
1,973
2,973
Interest related to unsecured borrowings
3,147
3,153
Interest expense
$
5,120
$
6,126
Net interest income
2,824
2,083
Less: Loan loss provision
588
1,805
Net interest income after loan loss provision
2,236
278
Non-Interest Income
Gain on sale of foreclosed assets
$
166
$
160
Gain on foreclosure of assets
67
52
Gain on the extinguishment of debt
371
361
Impairment gains on foreclosed assets
-
91
Total non-interest income
$
604
$
664
Income
2,840
942
Non-Interest Expense
Selling, general and administrative
$
1,873
$
2,185
Depreciation and amortization
53
85
Loss on the sale of foreclosed assets
92
102
Loss on foreclosure
47
54
Impairment loss on foreclosed assets
10
445
Total non-interest expense
2,075
2,871
Net income (loss)
$
765
$
(1,929
)
Earned distribution to preferred equity holders
701
525
Net income (loss) attributable to common equity holders
$
64
$
(2,454
)
Net
income for the year ended December 31, 2021 increased $2,694 to $765 when compared to the same period of 2020. The increase in net income
was primarily due to decreasing the economic effects stemming from the COVID-19 pandemic, most importantly nonperforming assets and loan
losses.
In
addition, we had $46,943 and $46,405 in loan assets, net as of December 31, 2021 and 2020, respectively. As of December 31, 2021, we
had 224 construction loans in 20 states with 66 borrowers and 15 development loans in six states with 12 borrowers.
53
Interest
Spread
The
following table displays a comparison of our interest income, expense, fees and spread for the years ended December 31, 2021 and 2020:
2021
2020
Interest Income
*
*
Estimated interest income
$
6,280
13
%
$
7,623
14
%
Estimated unearned interest income due to COVID-19
(926
)
(2
)%
(1,099
)
(2
)%
Write-offs due to COVID-19
-
-
%
(469
)
(1
)%
Interest income on loans
5,354
11
%
6,055
11
%
Fee income on loans
3,403
7
%
2,735
5
%
Deferred loan fees
(813
)
(2
)%
(581
)
(1
)%
Fee income on loans, net
2,590
5
%
2,154
4
%
Interest and fee income on loans
7,944
16
%
8,209
15
%
Interest expense – secured
1,973
4
%
2,973
5
%
Interest expense – unsecured
2,979
6
%
2,997
6
%
Offering costs amortization
168
-
%
156
-
%
Interest expense
5,120
10
%
6,126
11
%
Net interest income (spread)
2,824
6
%
2,083
4
%
Weighted average outstanding loan asset balance
$
50,730
$
55,189
*Annualized
amount as percentage of weighted average outstanding gross loan balance
There
are three main components that can impact our interest spread:
●
Difference between the interest rate received (on our loan assets) and the interest rate paid (on our borrowings).
The
loans we have originated have interest rates which are based on our cost of funds, with a minimum cost of funds of 7%. For most loans,
the margin is fixed at 3%; however, for our development loans the margin is generally fixed at 7%. This component is also impacted by
the lending of money with no interest cost (our equity).
Interest
income on loans was 11% for both the years ended December 31, 2021 and 2020. The Company expensed $469 in interest income during 2020
due to impairment of loans associated with four of our borrowers directly related to COVID-19. In addition, estimated interest not earned
during the year ended December 31, 2021 and 2020 related to those borrowers was approximately $926 and $1,099, respectively.
We
anticipate our standard margin to be 3% on all future construction loans and generally 7% on all development loans which yields a blended
margin of approximately 3.6%.
●
Fee income.
Our construction loan fee is 5% on the amount we commit to lend, which is amortized over the expected life
of each loan. We do not recognize a loan fee on our development loans. When loans terminate before than their expected life, the remaining
fee is recognized at the termination of the loan.
Fee
income on loans before deferred loan fee adjustments increased 2% to 7% for the year ended December 31, 2021 compared to 5% for the same
period of 2020. The increase of 2% primarily related to modification fees charged on certain loans during 2021.
54
Deferred
loan origination fees increased to (2)% for the year ended December 31, 2021 compared to (1)% for the same period of 2020. The increase
in deferred loan origination fees was primarily due to the number of closed and modified construction and development loans, which during
2021 and 2020, was 320 and 224, respectively.
●
Amount of nonperforming assets.
Generally, we can have two types of nonperforming assets that negatively affect interest
spread: loans not paying interest and foreclosed assets.
As
of December 31, 2021 and 2020, we had 23 impaired loans in the aggregate amount of $9,526 and 29 impaired loans in the aggregate amount
of $11,816 that were not paying interest, respectively. Non-performing assets not related to the impact of COVID-19 were $2,914 of the
$9,526 for 2021 and $1,229 of the $11,816 for 2020.
Due
to the impact of COVID-19, the Company transferred the loan receivables balance of $9,728 as of June 30, 2020 for one of our largest
borrowers into a non-performing asset. As of December 31, 2021, the amount due from this borrower is $6,612.
Foreclosed
assets do not provide a monthly interest return. As of December 31, 2021 and 2020, foreclosed assets were $2,724 and $4,449, respectively,
which resulted in a negative impact on our interest spread in both years.
The
amount of nonperforming assets is expected to decrease in the first half of 2022 as we continue to liquidate nonperforming loans and
foreclosed assets.
Cash
also does not yield a return. During the third quarter of 2021 we used cash to reduce the amount of debt while maintaining a responsible
level of liquidity to cover unfunded commitments on loans and cash needs for operations.
Loan
Loss Provision
Loan
loss provision (expense throughout the year) was $588 and $1,805 for the years ended December 31, 2021 and 2020, respectively.
The
allowance for loan losses at December 31, 2021 was $2,048 which primarily consisted of $163 for loans without specific reserves, $342
for loans with specific reserves, $60 for special mention loans and $1,483 for specific reserves due to the impact of COVID-19. During
the year ended December 31, 2021, we incurred $509 in direct charge offs.
The
allowance for loan losses at December 31, 2020 was $1,968, of which $151 is related to loans without specific reserves. The Company recorded
specific reserves for loans impaired due to impacts from COVID-19 of $1,532, special mention loans of $120 and impaired loans not due
to impacts from COVID-19 of $165. During the year ended December 31, 2020, we incurred $72 in direct charge offs.
Non-Interest
Income
Gain
on Sale of Foreclosed Assets
During
the years ended December 31, 2021 and 2020, we recognized $166 and $160, respectively, as a gain on the sale of foreclosed assets which
related to the sale of six and seven foreclosed assets during 2021 and 2020, respectively.
Gain
on Foreclosure of Assets
During
the years ended December 31, 2021 and 2020, we recognized $67 and $52 as a gain on the foreclosure of assets. We transferred one and
seven loan receivable assets to foreclosed assets which resulted in a gain on foreclosure during the years ended December 31, 2021 and
2020, respectively.
55
Impairment
Gains on Foreclosed Assets
During
the year ended December 31, 2021 and 2020, we recognized $0 and $91, respectively, as a gain on impairment of foreclosed assets. During
2020, the impairment gain related primarily to four certain foreclosed assets.
Gain
on the Extinguishment of Debt
We
borrowed approximately $361 in each of February 2021 and May 2020, pursuant to the Paycheck Protection Program ("PPP"), created
under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. The PPP is intended to provide loans to qualified businesses
to cover payroll and certain other identified costs. Funds from the loan may only be used for certain purposes, including payroll, benefits,
rent, and utilities. All or a portion of the loan may be forgivable, as provided by the terms of the PPP.
In
August 2021 and November 2020, the full principal amount of the PPP loans and the accrued interest were forgiven by the U.S. Small Business
Administration.
During
April 2020, the Company received a grant under the Economic Injury Disaster Loan Emergency Advance (the "EIDL Advance") of
$10 which was used for payroll and other certain operating expenses.
In
February 2021, the full EIDL Advance of $10 and accrued interest were forgiven by the U.S. Small Business Administration.
Non-Interest
Expense
Selling,
General and Administrative ("SG&A") Expenses
The
following table displays our SG&A expenses for the years ended December 31, 2021 and 2020:
2021
2020
Selling, general and administrative expenses
Legal and accounting
$
166
$
224
Salaries and related expenses
819
975
Board related expenses
99
99
Advertising
65
85
Rent and utilities
53
52
Loan and foreclosed asset expenses
348
498
Travel
154
140
Other
169
112
Total SG&A
$
1,873
$
2,185
SG&A
expenses decreased $312 to $1,873 for the year ended December 31, 2021 compared to $975 for the same period of 2020 due primarily to
the following:
●
During
    2021, salaries and related expenses decreased $156 to $819 compared to $975 for the same period of 2020. The decrease was primarily
    due to employee retention credit recognized during the second and third quarters of 2021 of $317, which was partially offset by profit
    share expense of $88. No profit share expense was recognized during 2020.
●
During
    2021, legal and accounting expenses decreased $58 to $166 compared to $224 for the same period of 2020. The decrease related primarily
    due to the addition of internal counsel during the second quarter of 2020.
56
Loss
on the Sale of Foreclosed Assets
During
the years ended December 31, 2021 and 2020, we recognized $92 and $102 as a loss on the sale of foreclosed assets which related to the
sale of seven and eight foreclosed assets during 2021 and 2020, respectively.
Loss
on Foreclosure of Assets
During
the years ended December 31, 2021 and 2020, we recognized $47 and $54 as a loss on the foreclosure of assets. We transferred one and
two loan receivable assets to foreclosed assets during 2021 and 2020, respectively.
Impairment
Loss on Foreclosed Assets
During
the year ended December 31, 2021 and 2020, we recognized $10 and $445 as a loss on impairment of foreclosed assets, respectively. During
2020, impairment loss on foreclosed assets included $91 recognized as a result of COVID-19.
Consolidated
Financial Position
Cash
and Cash Equivalents
We
try to avoid borrowing on our lines of credit from affiliates. To accomplish this, we must carry some cash for liquidity. This amount
generally grows as our Company grows. As of December 31, 2021 and 2020, our cash was $3,735 and $4,749, respectively. See our Liquidity
and Capital Resources section for more information.
Loans
Receivable
Commercial
Loans – Construction Loan Portfolio Summary
The
following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2021:
State
Number
of
Borrowers
Number
of
Loans
Value of
Collateral
(1)
Commitment
Amount
Gross
Amount
Outstanding
Loan to
Value
Ratio
(2)
Loan Fee
Arizona
2
3
$
995
$
697
$
390
70
%
5
%
Connecticut
2
4
1,535
1,084
719
71
%
5
%
Delaware
1
6
5,960
2,387
1,817
40
%
5
%
Florida
18
88
28,922
21,787
13,649
75
%
5
%
Georgia
2
2
1,130
631
366
56
%
5
%
Illinois
2
2
1,890
1,199
627
63
%
5
%
Indiana
1
1
624
436
347
70
%
5
%
Louisiana
2
3
590
387
125
66
%
5
%
Michigan
2
12
3,431
2,586
2,299
75
%
5
%
New Jersey
1
7
2,382
1,910
1,664
80
%
5
%
New York
1
1
525
378
305
72
%
5
%
North Carolina
8
14
7,141
4,349
2,105
61
%
5
%
Ohio
2
9
2,929
2,132
1,105
73
%
5
%
Oregon
2
2
923
646
440
70
%
5
%
Pennsylvania
2
20
21,867
13,487
10,078
62
%
5
%
South Carolina
10
32
8,353
5,793
3,579
69
%
5
%
Tennessee
2
2
940
582
319
62
%
5
%
Texas
2
5
2,873
1,750
549
61
%
5
%
Virginia
3
3
1,140
765
519
67
%
5
%
Washington
1
8
4,785
3,022
2,104
63
%
5
%
Total
66
224
$
98,935
$
66,008
$
43,106
67
%
(3)
5
%
(1)
The
    value is determined by the appraised value.
(2)
The
    loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.
(3)
Represents
    the weighted average loan to value ratio of the loans.
57
The
following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2020:
State
Number
of
Borrowers
Number
of
Loans
Value of
Collateral
(1)
Commitment
Amount
Gross
Amount
Outstanding
Loan to
Value
Ratio
(2)
Loan Fee
Arizona
3
4
$
1,821
$
1,503
$
1,004
60
%
5
%
Connecticut
1
1
515
382
262
65
%
5
%
Delaware
1
1
585
409
187
70
%
5
%
Florida
16
80
25,779
21,193
16,201
82
%
5
%
Georgia
3
3
1,300
839
476
65
%
5
%
Illinois
2
2
1,890
1,199
474
60
%
5
%
Michigan
4
9
2,451
1,942
805
79
%
5
%
Mississippi
1
1
240
189
166
79
%
5
%
New Jersey
1
5
1,357
1,339
928
99
%
5
%
New York
3
2
1,184
814
845
69
%
5
%
North Carolina
6
18
4,519
3,123
2,059
69
%
5
%
Ohio
3
8
2,703
2,020
1,393
75
%
5
%
Oregon
1
2
1,217
852
238
70
%
5
%
Pennsylvania
3
24
22,791
13,593
9,825
60
%
5
%
South Carolina
8
27
7,284
4,930
3,195
68
%
5
%
Tennessee
3
5
2,169
1,463
509
67
%
5
%
Texas
3
8
2,806
2,106
1,191
75
%
5
%
Utah
2
6
2,583
1,822
1,542
71
%
5
%
Virginia
1
1
505
353
79
70
%
5
%
Washington
1
5
2,030
1,311
508
65
%
5
%
Wisconsin
1
1
539
332
332
62
%
5
%
Total
67
213
$
86,268
$
61,714
$
42,219
72
%
(3)
5
%
(1)
The
    value is determined by the appraised value.
(2)
The
    loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.
(3)
Represents
    the weighted average loan to value ratio of the loans.
58
Commercial
Loans – Real Estate Development Loan Portfolio Summary
The
following is a summary of our loan portfolio to builders for land development as of December 31, 2021:
States
Number
of Borrowers
Number
of
Loans
Value of Collateral
(1)
Commitment Amount
(2)
Gross
Amount
Outstanding
Loan to
Value Ratio
(3)
Interest
Spread
Pennsylvania
1
4
$
9,312
$
6,500
$
6,103
66
%
varies
Florida
5
5
816
1,297
611
75
%
7
%
Texas
1
1
70
125
77
110
%
7
%
Connecticut
1
1
350
180
180
51
%
7
%
Delaware
1
1
543
147
147
27
%
7
%
South Carolina
3
3
1,373
846
539
39
%
7
%
Total
12
15
$
12,464
$
9,095
$
7,657
61
%
(4)
7
%
(1)
The
    value is determined by the appraised value adjusted for remaining costs to be paid and third-party mortgage balances. Part of this
    collateral is $1,720 of preferred equity in our Company. In the event of a foreclosure on the property securing these loans, the
    portion of our collateral that is preferred equity in our Company might be difficult to sell, which could impact our ability to eliminate
    the loan balance.
(2)
The
    commitment amount does not include unfunded letters of credit.
(3)
The
    loan to value ratio is calculated by taking the outstanding amount and dividing by the appraised value calculated as described above.
(4)
Represents
    the weighted average loan to value ratio of the loans.
States
Number
of Borrowers
Number
of
Loans
Value of Collateral
(1)
Commitment Amount
(2)
Gross
Amount
Outstanding
Loan to
Value Ratio
(3)
Interest
Spread
Pennsylvania
1
2
$
7,361
$
8,200
$
6,175
84
%
7
%
Florida
3
3
1,373
1,193
1,029
87
%
7
%
New York
1
1
1,238
451
452
36
%
7
%
North Carolina
1
1
400
260
136
34
%
7
%
South Carolina
2
2
1,256
711
438
35
%
7
%
Total
8
9
$
11,628
$
10,815
$
8,230
71
%
(4)
7
%
(1)
The
    value is determined by the appraised value adjusted for remaining costs to be paid and third-party mortgage balances. Part of this
    collateral is $1,630 of preferred equity in our Company. In the event of a foreclosure on the property securing these loans, the
    portion of our collateral that is preferred equity in our Company might be difficult to sell, which could impact our ability to eliminate
    the loan balance.
(2)
The
    commitment amount does not include unfunded letters of credit.
(3)
The
    loan to value ratio is calculated by taking the outstanding amount and dividing by the appraised value calculated as described above.
(4)
Represents
    the weighted average loan to value ratio of the loans.
59
Financing
receivables are comprised of the following:
December 31,
2021
December 31,
2020
Loans receivable, gross
$
50,763
$
50,449
Less: Deferred loan fees
(1,143
)
(1,092
)
Less: Deposits
(934
)
(1,337
)
Plus: Deferred origination costs
305
353
Less: Allowance for loan losses
(2,048
)
(1,968
)
Loans receivable, net
$
46,943
$
46,405
Roll
forward of combined loans:
December 31,
2021
December 31,
2020
Beginning balance
$
46,405
$
55,369
Originations and modifications
45,395
46,177
Principal collections
(44,290
)
(50,079
)
Transferred to foreclosed assets
(791
)
(2,118
)
Transferred to real estate investments
-
(1,140
)
Change in builder deposit
403
16
Change in allowance for loan losses
(80
)
(1,733
)
Change in loan fees, net
(99
)
(87
)
Ending balance
$
46,943
$
46,405
Credit
Quality Information
Finance
Receivables – By risk rating:
December 31,
2021
December 31,
2020
Pass
$
38,893
$
35,544
Special mention
2,344
3,089
Classified – accruing
–
–
Classified – nonaccrual
9,526
11,816
Total
$
50,763
$
50,449
Finance
Receivables – Method of impairment calculation:
December 31,
2021
December 31,
2020
Performing loans evaluated individually
$
16,495
$
16,412
Performing loans evaluated collectively
24,742
22,221
Non-performing loans without a specific reserve
596
1,518
Non-performing loans with a specific reserve
8,930
10,298
Total evaluated collectively for loan losses
$
50,763
$
50,449
60
At
December 31, 2021 and 2020, there were no loans acquired with deteriorated credit.
The
following is a summary of our impaired non-accrual commercial construction loans as of December 31, 2021 and 2020:
December 31,
2021
December 31,
2020
Unpaid principal balance (contractual obligation from customer)
$
10,035
$
11,888
Charge-offs and payments applied
(509
)
(72
)
Gross value before related allowance
9,526
11,816
Related allowance
(1,825
)
(1,698
)
Value after allowance
$
7,701
$
10,118
Below
is an aging schedule of loans receivable as of December 31, 2021, on a recency basis:
No.
Loans
Unpaid
Balances
%
Current loans (current accounts and accounts on which more than 50% of an original contract payment was made in the last 59 days)
216
$
41,238
81.2
%
60-89 days
1
203
0.4
%
90-179 days
10
2,058
4.1
%
180-269 days
1
392
0.8
%
>270 days
11
6,872
13.5
%
Subtotal
239
$
50,763
100
%
Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days)
-
$
-
-
%
Partial Payment accounts (Accounts on which the total received in the last 60 days was less than 50% of the original contractual monthly payment. "Total received" to include interest on simple interest accounts, as well as late charges on deferment charges on pre-computed accounts.)
-
$
-
-
%
Total
239
$
50,763
100
%
61
Below
is an aging schedule of loans receivable as of December 31, 2020, on a recency basis:
No.
Loans
Unpaid
Balances
%
Current loans (current accounts and accounts on which more than 50% of an original contract payment was made in the last 59 days)
194
$
38,956
77.2
%
60-89 days
-
-
-
%
90-179 days
-
-
-
%
180-269 days
28
11,493
22.8
%
Subtotal
222
$
50,449
100
%
Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days)
-
$
-
-
%
Partial Payment accounts (Accounts on which the total received in the last 60 days was less than 50% of the original contractual monthly payment. "Total received" to include interest on simple interest accounts, as well as late charges on deferment charges on pre-computed accounts.)
-
$
-
-
%
Total
222
$
50,449
100
%
Below
is an aging schedule of loans receivable as of December 31, 2021, on a contractual basis:
No.
Loans
Unpaid
Balances
%
Contractual Terms - All current Direct Loans and Sales Finance Contracts with installments past due less than 60 days from due date.
216
$
41,238
81.2
%
60-89 days
1
203
0.4
%
90-179 days
10
2,058
4.1
%
180-269 days
1
392
0.8
%
>270 days
11
6,872
13.5
%
Subtotal
239
$
50,763
100
%
Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days)
-
$
-
-
%
Partial Payment accounts (Accounts on which the total received in the last 60 days was less than 50% of the original contractual monthly payment. "Total received" to include interest on simple interest accounts, as well as late charges on deferment charges on pre-computed accounts.)
-
$
-
-
%
Total
239
$
50,763
100
%
62
Below
is an aging schedule of loans receivable as of December 31, 2020, on a contractual basis:
No.
Loans
Unpaid
Balances
%
Contractual Terms - All current Direct Loans and Sales Finance Contracts with installments past due less than 60 days from due date.
194
$
38,956
77.2
%
60-89 days
-
-
-
%
90-179 days
-
-
-
%
180-269 days
28
11,493
22.8
%
Subtotal
222
$
50,449
100
%
Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days)
-
$
-
-
%
Partial Payment accounts (Accounts on which the total received in the last 60 days was less than 50% of the original contractual monthly payment. "Total received" to include interest on simple interest accounts, as well as late charges on deferment charges on pre-computed accounts.)
-
$
-
-
%
Total
222
$
50,449
100
%
Foreclosed
Assets
Roll
forward of foreclosed assets for the years ended December 31, 2021 and 2020:
December 31,
2021
December 31,
2020
Beginning balance
$
4,449
$
4,916
Additions from loans
791
2,118
Additions for construction/development
818
1,410
Sale proceeds
(3,418
)
(3,697
)
Loss on foreclosure
(47
)
(54
Loss on sale of foreclosed assets
(92
)
(102
)
Gain on foreclosure
67
52
Gain on sale of foreclosed assets
166
160
Impairment loss on foreclosed assets
(10
)
(290
Impairment loss on foreclosed assets due to COVID-19
-
(64
)
Ending balance
$
2,724
$
4,449
During
the year ended December 31, 2021 and 2020 we reclassed 2 and 4 loan receivable, net assets to foreclosed assets, respectively.
63
Real
Estate Investments
During
June 2020, we acquired two lots from a borrower in exchange for the transfer of loans secured by those lots. We extinguished the principal
balance for the loans on the lots in the amount of $640 and in addition, paid a $500 management fee for the development of homes on certain
of our lots that were previously carried as loan receivables. The management fee was paid through reducing the principal balance on a
current loan receivable with the borrower. Construction has started on 3 of the 4 homes, one of which has a sales contract to sell to
an end user once the home is complete.
The
following table is a roll forward of real estate investment assets:
December 31,
2021
December 31,
2020
Beginning balance
$
1,181
$
–
Transfers from loans
–
1,140
Deposits from real estate investments
(200
)
–
Additions for construction/development
670
41
Ending balance
$
1,651
$
1,181
Customer
Interest Escrow
The
Pennsylvania Loans call for a funded interest escrow account which was initially funded with proceeds from the Pennsylvania Loans. The
initial funding on that interest escrow was $450. The balance as of December 31, 2021 and 2020 was $203 and $250, respectively. To the
extent the balance is available in the interest escrow, interest due on certain loans is deducted from the interest escrow on the date
due. The interest escrow is increased by 20% of lot payoffs on the same loans, and by interest and/or distributions on a loan in which
we are the borrower and Investor's Mark Acquisitions, LLC is the lender and on the Series B preferred equity. All of these transactions
are noncash to the extent that the total escrow amount does not need additional funding.
We
had 47 and 29 other loans active as of December 31, 2021 and 2020, respectively, which also had interest escrows. The cumulative balance
of all interest escrows other than the Pennsylvania Loans was $276 and $259 as of December 31, 2021 and 2020, respectively.
Roll
forward of interest escrow for the years ended December 31, 2021 and 2020:
2021
2020
Beginning balance
$
510
$
643
Preferred equity dividends
230
83
Additions from Pennsylvania Loans
513
1,173
Additions from other loans
720
448
Interest, fees, principal or repaid to borrower
(1,494
)
(1,837
)
Ending balance
$
479
$
510
Secured
Borrowings
Loan
Purchase and Sale Agreements
We
have two loan purchase and sale agreements where we are the seller of portions of loans we create. The two purchasers are Builder Finance,
Inc. ("Builder Finance") and S.K. Funding, LLC ("S.K. Funding"). Generally, the purchasers buy between 50% and
75% of each loan sold. They receive interest rates ranging from our cost of funds to the interest rate charged to the borrower (interest
rates were between 6% and 13% for both 2021 and 2020). The purchasers generally do not receive any of the loan fees we charge. We have
the right to call some of the loans sold, with some restrictions. Once sold, the purchaser must fund their portion of the loans purchased.
We service the loans. Also, there are limited put options in some cases, whereby the purchaser can cause us to repurchase a loan. The
loan purchase and sale agreements are recorded as secured borrowings.
64
In
March 2018, we entered into the Seventh Amendment (the "Seventh Amendment") to our Loan Purchase and Sale Agreement with
S.K. Funding. The purpose of the Seventh Amendment was to allow S.K. Funding to purchase a portion of the Pennsylvania Loans.
The
timing of the Company's principal and interest payments to S.K. Funding under the Seventh Amendment, and S.K. Funding's obligation
to fund the Pennsylvania Loans, vary depending on the total principal amount of the Pennsylvania Loans outstanding at any time, as follows:
●
If
    the total principal amount exceeds $1,000, S.K. Funding must fund the amount between $1,000 and less than or equal to $4,500.
●
If
    the total principal amount is less than $4,500, then the Company will also repay S.K. Funding's principal as principal payments
    are received on the Pennsylvania Loans from the underlying borrowers in the amount by which the total principal amount is less than
    $4,500 until S.K. Funding's principal has been repaid in full.
●
The
    interest rate accruing to S.K. Funding under the Seventh Amendment is 10.5% calculated on a 365/366-day basis.
The
Seventh Amendment had a term of 24 months and automatically renews for additional six-month terms unless either party gives written notice
of its intent not to renew at least six months prior to the end of a term. S.K. Funding will have a priority position as compared to
the Company in the case of a default by any of the borrowers.
In
April 2021, we entered into the Eleventh Amendment (the "Eleventh Amendment") to our Loan Purchase and Sale Agreement with
S.K. Funding. The purpose of the Eleventh Amendment was to allow a principal increase to $2,000 from the original $1,000 in the Tenth
Amendment dated January 2019. In addition, if the collateral value drops then an unsecured portion or $400 may be used until the collateral
is increased back to $2,000.
The
Eleventh Amendment has a term of 12 months and will automatically renew for an additional six-month term unless either party gives written
notice of its intent not to renew at least five months prior to the end of a term. S.K. Funding will have a priority position as compared
to the Company in the case of a default by any of the borrowers.
Lines
of Credit
Lines
of Credit with Mr. Wallach and His Affiliates
During
June 2018, we entered into the First Amendment to the line of credit with our Chief Executive Officer and his wife (the "Wallach
LOC") which modified the interest rate on the Wallach LOC to generally equal the prime rate plus 3%. The interest rate for the
Wallach LOC was 6.25% as of December 31, 2021 and 2020. As of December 31, 2021, and 2020, the amount outstanding pursuant to the Wallach
LOC was $0. The maximum amount outstanding on the Wallach LOC is $1,250 and the loan is a demand loan.
During
June 2018, we also entered into the First Amendment to the line of credit with the 2007 Daniel M. Wallach Legacy Trust, which is our
CEO's trust (the "Wallach Trust LOC") which modified the interest rate on the Wallach Trust LOC to generally equal
the prime rate plus 3%. The interest rate for this borrowing was 6.25% as of December 31, 2021 and 2020. There were no amounts borrowed
against the Wallach Trust LOC as of December 31, 2021 and 2020. The maximum amount outstanding on the Wallach Trust LOC is $250 and the
loan is a demand loan.
65
Line
of Credit with William Myrick
During
June 2018, we entered into a line of credit agreement (the "Myrick LOC Agreement") with our Executive Vice President ("EVP"),
William Myrick. Pursuant to the Myrick LOC Agreement, Mr. Myrick provides us with a line of credit (the "Myrick LOC") with
the following terms:
●
Principal
    not to exceed $1,000;
●
Secured
    by a lien against all of our assets;
●
Cost
    of funds to us of prime rate plus 3%; and
●
Due
    upon demand.
As
of December 31, 2021 and 2020, the amount outstanding pursuant to the Myrick LOC was $859 and $0, respectively. For the years ended December
31, 2021 and 2020, interest expense was $6 and $19, respectively.
Line
of Credit with Shuman
During
July 2017, we entered into a line of credit agreement (the "Shuman LOC Agreement") with Steven K. Shuman, which is now held
by Cindy K. Shuman. Pursuant to the Shuman LOC Agreement, Shuman provides us with a revolving line of credit (the "Shuman LOC")
with the following terms:
●
Principal
    not to exceed $1,325;
●
Secured
    with assignments of certain notes and mortgages;
●
Cost
    of funds to us of 10%; and
●
Due
                                            in July 2022, but will automatically renew for additional 12-month periods, unless either
                                            party
gives
    notice to not renew.
As
of December 31, 2021 and 2020, the amount outstanding pursuant to the Shuman LOC was $125 and $1,325, respectively. Interest expense
was $77 and $135 for the years ended December 31, 2021 and 2020, respectively.
Line
of Credit with Swanson
During
December 2018, we entered into a Master Loan Modification Agreement (the "Swanson Modification Agreement") with Paul Swanson
which modified the line of credit agreement between us and Mr. Swanson dated October 23, 2017. Pursuant to the Swanson Modification Agreement,
Mr. Swanson provides us with a revolving line of credit (the "Swanson LOC") with the following terms:
●
Principal
    not to exceed $7,000;
●
Secured
    with assignments of certain notes and mortgages;
●
Cost
    of funds to us of 6%; and
●
Due
    in July 2022, but will automatically renew for additional 12-month periods, unless either party gives notice to not renew.
The
Swanson LOC was fully borrowed as of December 31, 2021 and 2020. Interest expense was $619 and $709 for the years ended December 31,
2021 and 2020, respectively.
During
December 2021, the full Swanson LOC was assigned to Judith Swanson, as trustee of a trust.
New
Lines of Credit
During
2020 and 2019, we entered into five line of credit agreements (the "New LOC Agreements"). Pursuant to the New LOC Agreements,
the lenders provide us with revolving lines of credit with the following terms:
●
Principal
    not to exceed $6,063;
●
Secured
    with assignments of certain notes and mortgages; and
●
Terms
    generally allow the lenders to give one month notice after which the principal balance of a New LOC Agreement will reduce to a zero
    over the next six months.
66
The
total balance of the New LOC Agreements was $2,909 and $4,159 as of December 31, 2021 and 2020, respectively. Interest expense was $262
and $341 for the year ended December 31, 2021 and 2020, respectively.
Mortgage
Payable
During
January 2018, we entered into a commercial mortgage on our office building with the following terms:
●
Principal
    not to exceed $660;
●
Interest
    rate at 5.07% per annum based on a year of 360 days; and
●
Due
    in January 2033.
The
principal amount of our commercial mortgage was $604 and $619 as of December 31, 2021 and 2020, respectively. For the years ended December
31, 2021 and 2020, interest expense was $32 and $33, respectively.
Community
Loan
During
June 2020, we entered into a business loan agreement with Community Bank ("Community Loan") with the following terms:
●
Principal
    not to exceed $362;
●
First
    principal payment due July 2023;
●
Secured
    by certain of our foreclosed assets;
●
Interest
    rate at 3.8% per annum based on a year of 360 days; and
●
Due
    in July 2025.
The
principal amount for the Community Loan was $217 and $362 as of December 31, 2021 and 2020, respectively. Interest expense for the years
ended December 31, 2021 and 2020 was $11 and $8, respectively.
Secured
Deferred Financing Costs
The
Company had secured deferred financing costs of $7 and $8 as of December 31, 2021 and 2020, respectively.
Secured
Borrowings Secured by Loan Assets
Borrowings
secured by loan assets are summarized below:
December 31, 2021
December 31, 2020
Book Value of Loans which Served as Collateral
Due from Shepherd's Finance to Loan Purchaser or Lender
Book Value of
Loans which Served as Collateral
Due from Shepherd's Finance to Loan Purchaser or Lender
Loan Purchaser
Builder Finance
$
4,847
$
2,969
$
7,981
$
5,919
S.K. Funding
8,084
5,500
4,551
3,898
Lender
Shuman
566
125
1,916
1,325
Jeff Eppinger
3,328
1,500
2,206
1,500
Hardy Enterprises, Inc.
-
-
1,590
1,000
Gary Zentner
-
-
424
250
R. Scott Summers
1,475
847
1,259
847
John C. Solomon
1,139
563
743
563
Swanson
9,803
6,841
9,381
6,685
Total
$
29,242
$
18,345
$
30,051
$
21,987
67
Unsecured
Borrowings
Unsecured
Notes through the Public Offering ("Notes Program")
The
effective interest rate on borrowings through our Notes Program at December 31, 2021 and 2020 was 9.28% and 10.38%, respectively, not
including the amortization of deferred financing costs. There are limited rights of early redemption. We generally offer four durations
at any given time, ranging from 12 to 48 months. The following table shows the roll forward of our Notes Program:
December 31, 2021
December 31, 2020
Gross notes outstanding, beginning of period
$
21,482
$
20,308
Notes issued
7,876
7,691
Note repayments / redemptions
(8,722
)
(6,517
)
Gross Notes outstanding, end of period
20,636
21,482
Less deferred financing costs, net
(367
)
(416
)
Notes outstanding, net
$
20,269
$
21,066
The
following is a roll forward of deferred financing costs:
December 31, 2021
December 31, 2020
Deferred financing costs, beginning balance
$
942
$
786
Additions
119
156
Deferred financing costs, ending balance
$
1,061
$
942
Less accumulated amortization
(694
)
(526
)
Deferred financing costs, net
$
367
$
416
The
following is a roll forward of the accumulated amortization of deferred financing costs:
December 31, 2021
December 31, 2020
Accumulated amortization, beginning balance
$
526
$
370
Additions
168
165
Disposals
-
(9
)
Accumulated amortization, ending balance
$
694
$
526
68
Other
Unsecured Debts
Our
other unsecured debts are detailed below:
Principal Amount Outstanding as of
Loan
Maturity
Date
Interest
Rate
(1)
December 31,
2021
December 31,
2020
Unsecured Note with Seven Kings Holdings, Inc.
Demand
(2)
9.5
%
$
500
$
500
Unsecured Line of Credit from Swanson
July 2022
6.0
%
159
315
Unsecured Line of Credit from Builder Finance, Inc.
January 2023
10.0
%
750
-
Subordinated Promissory Note
December 2021
10.5
%
-
146
Subordinated Promissory Note
April 2024
10.0
%
100
100
Subordinated Promissory Note
April 2021
10.0
%
-
174
Subordinated Promissory Note
August 2022
11.0
%
200
200
Subordinated Promissory Note
March 2023
11.0
%
-
169
Subordinated Promissory Note
February 2023
10.0
%
600
-
Subordinated Promissory Note
June 2023
10.0
%
400
-
Subordinated Promissory Note
February 2021
11.0
%
-
600
Subordinated Promissory Note
Demand
5.0
%
-
-
Subordinated Promissory Note
December 2022
5.0
%
3
3
Subordinated Promissory Note
December 2023
11.0
%
20
20
Subordinated Promissory Note
February 2024
11.0
%
20
20
Subordinated Promissory Note
January 2025
10.0
%
15
-
Subordinated Promissory Note
November 2021
9.5
%
-
200
Subordinated Promissory Note
November 2023
9.5
%
200
-
Subordinated Promissory Note
October 2024
10.0
%
700
700
Subordinated Promissory Note
December 2024
10
%
100
100
Subordinated Promissory Note
April 2025
10.0
%
202
-
Subordinated Promissory Note
July 2023
8.0
%
100
-
Subordinated Promissory Note
July 2024
5.0
%
1,500
-
Subordinated Promissory Note
September 2023
7.0
%
94
-
Subordinated Promissory Note
October 2023
7.0
%
100
-
Subordinated Promissory Note
December 2025
8.0
%
180
-
Senior Subordinated Promissory Note
March 2022
(3)
10.0
%
334
352
Senior Subordinated Promissory Note
March 2022
(4)
1.0
%
-
728
Junior Subordinated Promissory Note
March 2022
(4)
22.5
%
-
417
Senior Subordinated Promissory Note
October 2024
(5)
1.0
%
720
720
Junior Subordinated Promissory Note
October 2024
(5)
20.0
%
447
447
$
7,444
$
5,911
(1)
Interest rate per annum, based upon actual days outstanding and a 365/366-day year.
(2)
Due six months after lender gives notice.
(3)
Lender may require us to repay $20 of principal and all unpaid interest with 10 days' notice.
(4)
These notes were issued to the same holder and, when calculated together, yield a blended rate of 11% per annum.
(5)
These notes were issued to the same holder and, when calculated together, yield a blended rate of 10% per annum.
69
Priority
of Borrowings
The
following table displays our borrowings and a ranking of priority. The lower the number, the higher the priority:
Priority Rank
December 31, 2021
December 31, 2020
Borrowing Source
Purchase and sale agreements and other secured borrowings
1
$
19,165
$
22,968
Secured line of credit from affiliates
2
859
-
Unsecured line of credit (senior)
3
1,250
500
EIDL advance
3
-
10
Other unsecured debt (senior subordinated)
4
1,053
1,800
Unsecured Notes through our public offering, gross
5
20,636
21,482
Other unsecured debt (subordinated)
5
4,693
2,747
Other unsecured debt (junior subordinated)
6
447
864
Total
$
48,103
$
50,371
Liquidity
and Capital Resources
Our
primary liquidity management objective is to meet expected cash flow needs while continuing to service our business and customers. As
of December 31, 2021, and 2020, we had combined loans outstanding of 239 and 222, respectively. Gross loans outstanding were $50,763
and $50,449 as of December 31, 2021 and 2020, respectively.
Our
net cash provided by operating activities increased $779 to $1,549 as of December 31, 2021 compared to $770 for the same period of 2020.
The increase was primarily due to higher net income of $765 for the period ended December 31, 2021 compared to $(1,929) for the same
period of 2020 which was offset by lower accrued interest payable of $716 for the period ended December 31, 2021 compared to $1,422 for
the same period of 2020.
Unfunded
commitments to extend credit, which have similar collateral, credit and market risk to our outstanding loans, were $22,902 and $19,495
as of December 31, 2021 and 2020, respectively. As of December 31, 2021, other than unfunded commitments, we had no off-balance sheet
transactions, nor do we currently have any such arrangements or obligations.
We
anticipate a significant increase in our gross loan receivables over the 12 months subsequent to December 31, 2021 by directly increasing
originations to new and existing customers.
To
fund our combined loans, we rely on secured debt, unsecured debt, and equity, which are described in the following table:
Source
    of Liquidity
As
                                            of
December
    31,
2021
As
                                            of
December
    31,
2020
Secured
    debt, net of deferred financing costs
$
20,016
$
22,959
Unsecured
    debt, net of deferred financing costs
$
27,713
$
26,978
Equity*
$
6,604
$
5,259
Cash
$
3,735
$
4,749
*Equity
includes Members' Capital and Redeemable Preferred Equity.
70
As
of December 31, 2021 and 2020, cash was $3,735 and $4,749, respectively. During 2021, the Company made the decision to pay down secured
debt with high interest rates. The New Line of Credit Agreements decreased $1,250 to $2,909 as of December 31, 2021, compared to $4,159
for the same period of 2020. In addition, the Shuman Line of Credit Agreement decreased $1,200 to $125 as of December 31, 2021 compared
to $1,325 for the same period of 2020. Secured debt, net of deferred financing costs decreased $2,943 to $20,016 as of December 31, 2021
compared to $22,959 for the same period of 2020. We anticipate secured debt to increase as our loan receivable balances increase.
Unsecured
debt, net of deferred financing costs increased $735 to $27,713 as of December 31, 2021 compared to $26,978 for the same period of 2020.
The increase in unsecured debt primarily related to unsecured notes sold outside of our Notes Program.
We
borrowed approximately $361 in each of February 2021 and May 2020, pursuant to the PPP, which was to cover payroll and other identified
costs. During August 2021 and November 2020, the full principal amount of the PPP loans and the accrued interest were forgiven by the
U.S. Small Business Administration.
During
April 2020, the Company received an EIDL Advance of $10 which was used for payroll and other certain operating expenses. In February
2021, the full EIDL Advance of $10 and accrued interest were forgiven by the U.S. Small Business Administration.
Equity
increased $1,345 to $6,604 as of December 31, 2021 compared to $5,259 for the same period of 2020. The increase was due primarily to
Series C cumulative preferred equity. As of December 31, 2021, Series C cumulative preferred equity increased $1,432 to $5,014 compared
to $3,582 for the same period of 2020. The increase in equity was partially offset by a decrease in Class A common equity to a deficit
of $130 as of December 31, 2021 compared to equity of $47 for the same period of 2020.
We
anticipate an increase in our equity during the 12 months subsequent to December 31, 2021, through retaining earnings. If we are not
able to increase our equity through retained earnings, we will rely more heavily on raising additional funds through the Notes Program.
The
total amount of our debt maturing through year ending December 31, 2022 is $28,238, which consists of secured borrowings of $19,219 and
unsecured borrowings of $9,019.
Secured
borrowings maturing through the year ending December 31, 2022 significantly consists of loan purchase and sale agreements with two loan
purchasers (Builder Finance and S. K. Funding) and six lenders. These secured borrowings are listed as maturing over the next 12 months
due primarily to their related demand loan collateral. The following are secured facilities listed as maturing in 2022 with actual maturity
and renewal dates:
●
Swanson
    – $6,841 due July 2022 and automatically renews unless notice given;
●
Shuman
    – $125 due July 2022 and automatically renews unless notice is given;
●
S.
    K. Funding – $3,500 due July 2022 and automatically renews unless notice is given;
●
S.
    K. Funding – $2,000 of the total due January 2023;
●
Builder
    Finance, Inc – $2,969 with no expiration date;
●
New
    LOC Agreements - $2,909 generally one-month notice and six months to reduce principal balance to zero;
●
Myrick
    LOC - $859 and due upon demand; and
●
Mortgage
    Payable – $15 due monthly.
71
Unsecured
borrowings due by December 31, 2022 consist of Notes issued pursuant to the Notes Program and other unsecured debt of $7,074 and $1,945,
respectively. To the extent that Notes issued pursuant to the Notes Program are not reinvested upon maturity, we will be required to
fund the maturities, which we anticipate funding through the issuance of new Notes in our Notes Program. Historically, approximately
80% of our Note holders reinvest upon maturity. The 36 month Note in our Notes Program has a mandatory early redemption option, subject
to certain conditions. As of December 31, 2021, the 36-month Notes were $376. Our other unsecured debt has historically renewed. For
more information on other unsecured borrowings, see Note 7 – Borrowings. If other unsecured borrowings are not renewed in the future,
we anticipate funding such maturities through investments in our Notes Program.
Summary
We
have the funding available to address the loans we have today, including our unfunded commitments. We anticipate growing our assets through
the net sources and uses (12-month liquidity) listed above as well as future capital increases from debt, redeemable preferred equity,
and regular equity. Our expectation to grow loan asset balances is subject to changes due to changes in demand, competition, and COVID-19.
Although our secured debt is almost entirely listed as currently due because of the underlying collateral being demand notes, the vast
majority of our secured debt is either contractually set to automatically renew unless notice is given or, in the case of purchase and
sale agreements, has no end date as to when the purchasers will not purchase new loans (although they are never required to purchase
additional loans).
Inflation,
Interest Rates, and Housing Starts
Since
we are in the housing industry, we are affected by factors that impact that industry. Housing starts impact our customers' ability
to sell their homes. Faster sales mean higher effective interest rates for us, as the recognition of fees we charge is spread over a
shorter period. Slower sales mean lower effective interest rates for us. Slower sales are likely to increase the default rate we experience.
Housing
inflation has a positive impact on our operations. When we lend initially, we are lending a percentage of a home's expected value,
based on historical sales. If those estimates prove to be low (in an inflationary market), the percentage we loaned of the value actually
decreases, reducing potential losses on defaulted loans. The opposite is true in a deflationary housing price market. It is our opinion
that values are well above average in many of the housing markets in the U.S. today.
General
economic inflation has been a factor and seems like it will continue to be a factor in all businesses for now and going forward. This
impacts our customers and ourselves. One of our main focuses in 2021 and in 2022 is to increase our margin to counterbalance the cost
of inflation to our expenses.
Interest
rates have several impacts on our business. First, rates affect housing (starts, home size, etc.). High long-term interest rates may
decrease housing starts, having the effects listed above. Higher interest rates will also affect our investors. We believe that there
will be a spread between the rate our Notes yield to our investors and the rates the same investors could get on deposits at FDIC insured
institutions. We also believe that the spread may need to widen if these rates rise. For instance, if we pay 7% above average CD rates
when CDs are paying 1.5%, when CDs are paying 3%, we may need a larger than 7% difference. This may cause our lending rates, which are
based on our cost of funds, to be uncompetitive. High interest rates may also increase builder defaults, as interest payments may become
a higher portion of operating costs for the builder. Below is a chart showing three-year U.S. treasury rates, which are being used by
us here to approximate CD rates. Short term interest rates have risen slightly but are generally low historically.
72
Housing
prices are also generally correlated with housing starts, so that increases in housing starts usually coincide with increases in housing
values, and the reverse is generally true. Below is a graph showing single family housing starts from 2000 through today.
(Source:
U.S. Census Bureau)
73
To
date, changes in housing starts, CD rates, and inflation have not had a material impact on our business. The effect of significant long
term interest rate increases may be detrimental to our earnings
Recent
Accounting Pronouncements
See
Note 2 to our consolidated financial statements for a description of new or recent accounting pronouncements.
Subsequent
Events
See
Note 14 to our consolidated financial statements for subsequent events.
MATERIAL
FEDERAL INCOME TAX CONSEQUENCES
The
following discussion summarizes the material federal income tax consequences relating to the ownership and disposition of the Notes.
The discussion is based upon the current provisions of the Code, regulations issued under the Code and judicial or ruling authority,
all of which are subject to change that may be applied retroactively. The discussion assumes that the Notes are held as capital assets
and does not discuss the federal income tax consequences applicable to all categories of investors, some of which may be subject to special
rules such as banks, tax-exempt organizations, insurance companies, dealers in securities or currencies, persons that will hold a Note
as a position in hedging, straddle, or conversion transactions, or persons that have a functional currency other than the U.S. dollar.
If a partnership holds a Note, the tax treatment of a partner will generally depend on the status of the partner and on the activities
of the partnership. In addition, this discussion does not address holders other than original purchasers. Certain individuals, trusts,
and estates are subject to a Medicare tax of 3.8% on the lesser of (i) "net investment income", or (ii) the excess of modified
adjusted gross income over a threshold amount. Net investment income generally includes interest income and net gains from the disposition
of Notes, unless such interest payments or net gains are derived in the ordinary course of the conduct of a trade or business (other
than a trade or business that consists of certain passive or trading activities). In addition to the federal income tax consequences
described above, you should also consider the state income tax consequences of the acquisition, ownership, and disposition of the Notes.
State income tax law may differ substantially from the corresponding federal law, and this discussion does not purport to describe any
aspect of the income tax laws of any state. You are urged to consult your own tax advisor to determine the specific federal, state, local,
and any other tax consequences applicable to you relating to your ownership and disposition of the Notes.
Interest
Income on the Notes
Subject
to the discussion below applicable to "non-U.S. holders," unless the original issue discount or "OID" rules otherwise
require, interest paid on the Notes will generally be taxable to you as ordinary income in the year the interest is paid or accrued in
accordance with your method of accounting for tax purposes.
OID
is a form of interest that generally exists when a debt instrument's stated redemption price at maturity exceeds its issue price.
However, we do not believe that the Notes will give rise to OID since they are generally issued at a price equal to their redemption
amount. If OID were to exist, under the OID rules, the excess of total payments on a Note, including interest that is not unconditionally
payable at least annually throughout the term of the Note, will be currently deductible by the issuer and currently includible in income
by the holder, under the constant yield method. Under the constant yield method, you generally would be required to include in income
increasingly greater amounts of OID in successive accrual periods. You should consult with your tax or other professionals regarding
the existence and impact, if any, of OID on your investment and taxes. A cash method holder of a Note may be taxed differently than an
accrual method holder of a Note.
74
Treatment
of Dispositions of Notes
Upon
the sale, exchange, redemption, retirement, or other taxable disposition of a Note, you will recognize gain or loss in an amount equal
to the difference between the amount realized on the disposition and your adjusted tax basis in the Note. Your adjusted tax basis in
a Note generally will equal your original cost for the Note, increased by any accrued but unpaid interest, including OID, you previously
included in income with respect to the Note and reduced by any payments you previously received, other than interest that is unconditionally
payable at least annually throughout the term of the Note, with respect to the Note. Any gain or loss will be capital gain or loss, except
for gain representing accrued interest not previously included in your income. This capital gain or loss will be short-term or long-term
capital gain or loss, depending on whether the Note had been held for more than 12 months or for 12 months or less.
Non-U.S.
Holders
Generally,
if you are a nonresident alien individual or a non-U.S. corporation and do not hold the Note in connection with a United States trade
or business, interest paid and OID accrued on the Notes will be treated as "portfolio interest" and therefore will be exempt
from a 30% United States withholding tax. In that case, you will be entitled to receive interest payments on the Notes free of United
States federal income tax provided that you periodically provide a statement on applicable IRS forms certifying under penalty of perjury
that you are not a United States person and provide your name and address. In addition, in that case you will not be subject to United
States federal income tax on gain from the disposition of a Note unless you are an individual who is present in the United States for
183 days or more during the taxable year in which the disposition takes place and certain other requirements are met. Interest paid and
accrued OID paid to a non-U.S. person are not subject to withholding if they are effectively connected with a United States trade or
business conducted by that person and we are provided a properly executed IRS Form W-8ECI. They will, however, generally be subject to
the regular United States income tax. If you are a non-U.S. corporation, that portion of your earnings and profits that is effectively
connected with your U.S. trade or business also may be subject to a "branch profits tax" at a 30% rate, although an applicable
income tax treaty may provide for lower rate.
Reporting
and Backup Withholding
We
will report annually to the Internal Revenue Service and to holders of record that are not excepted from the reporting requirements any
information that may be required with respect to interest on the Notes.
Under
certain circumstances, as a holder of a Note, you may be subject to "backup withholding." Backup withholding may apply to
you if you are a United States person and, among other circumstances, you fail to furnish on IRS Form W-9 or a substitute Form W-9 your
Social Security number or other taxpayer identification number to us. Backup withholding may apply, under certain circumstances, if you
are a non-U.S. person and fail to provide us with the statement necessary to establish an exemption from federal income and withholding
tax on interest on the Note. Backup withholding, however, does not apply to payments on a Note made to certain exempt recipients, such
as corporations and tax-exempt organizations, and to certain non-U.S. persons. Backup withholding is not an additional tax and may be
refunded or credited against your United States federal income tax liability, provided that you furnish certain required information.
This
federal tax discussion is included for general information only and may not be applicable depending upon your particular situation. You
are urged to consult your own tax advisor with respect to the specific tax consequences to you of the ownership and disposition of the
Notes, including the tax consequences under state, local, foreign, and other tax laws and the possible effects of changes in federal
or other tax laws.
Foreign
Account Tax Compliance Withholding
Sections
1471 through 1474 of the Code, commonly known as the Foreign Account Tax Compliance Act ("FATCA"), impose a U.S. withholding
tax of a 30% on payments of interest on the Notes and, on or after January 1, 2017, the gross proceeds from a sale or other disposition
of the Notes paid to (i) a foreign financial institution (as the beneficial owner or as an intermediary for the beneficial owner), unless
such institution enters into an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information
regarding U.S. account holders of such institution (which would include certain equity and debt holders of such institution, as well
as certain account holders that are foreign entities with U.S. owners), and (ii) a foreign entity that is not a financial institution
(as the beneficial owner or as an intermediary for the beneficial owner), unless such entity provides the withholding agent with a certification
identifying the substantial U.S. owners of the entity, which generally includes any U.S. person who directly or indirectly owns more
than 10% of the entity. An intergovernmental agreement between the U.S. and the applicable foreign country may modify these requirements.
Prospective investors should consult their own tax advisors regarding the implications of FATCA with respect to their purchase, ownership,
and disposition of the Notes.
75
CERTAIN
EMPLOYEE BENEFIT PLAN CONSIDERATIONS
The
following is a summary of certain considerations relating to the ownership, holding, and disposition of the Notes by employee benefit
plans, IRAs, or other tax-favored benefit accounts that are subject to ERISA, Section 4975 of the Code, or any other federal, state,
local, non-U.S., or other laws, rules, or regulations that are similar to ERISA or such provisions of the Code (collectively, "Similar
Laws"), and entities whose underlying assets are considered to include "plan assets" (within the meaning of ERISA)
of any such plan or account (each, a "Plan").
General
Fiduciary Matters
ERISA
and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an
"ERISA Plan") and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested
parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an
ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other
compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.
In
considering an investment in the Notes by any Plan, a fiduciary should determine whether the investment is in accordance with the documents
and instruments governing the Plan and the applicable provisions of ERISA, the Code, or any Similar Law relating to a fiduciary's
duties to the Plan including, without limitation, the prudence, diversification, delegation of control, and prohibited transaction provisions
of ERISA, the Code, and any other applicable Similar Laws.
Prohibited
Transaction Issues
Section
406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving "plan assets"
with persons or entities who are "parties in interest," within the meaning of ERISA, or "disqualified persons,"
within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engaged
in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and/or the Code.
In addition, the fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited transaction may be subject to penalties and
liabilities under ERISA and the Code. The acquisition and/or holding of Notes by an ERISA Plan with respect to which we are considered
a party in interest or disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406
of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class,
or individual prohibited transaction exemption. In addition, Section 408(17) of ERISA and Section 4975(d)(20) of the Code provide relief
from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions if neither we nor any of our
affiliates (directly or indirectly) have or exercise any discretionary authority or control or render any investment advice for a fee
with respect to the assets of any ERISA Plan involved in the acquisition or holding of the Notes and provided further that the ERISA
Plan pays no more than adequate consideration in connection with the acquisition and holding of the Notes. There can be no assurance
that all of the conditions of any such exemptions will be satisfied.
Because
of the foregoing, the Notes should not be purchased or held by any person investing "plan assets" of any Plan, unless such
purchase and holding will not constitute a non-exempt prohibited transaction under ERISA and the Code or similar violation of any applicable
Similar Laws.
76
Representation
Accordingly,
by acceptance of a Note, each purchaser and subsequent transferee will be deemed to have represented and warranted that either (i) no
portion of the assets used by such purchaser or transferee to acquire or hold the Notes constitutes assets of any Plan or (ii) the purchase
and holding of the Notes by such purchaser or transferee will not constitute a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code or any similar violation under any applicable Similar Laws.
The
foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties
that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries or other
persons considering purchasing the Notes (and holding or disposing the Notes) on behalf of any Plan or otherwise with "plan assets,"
consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code, and any Similar Laws to such transactions
and whether an exemption would be applicable to the purchase, holding, and disposition of the Notes.
MANAGEMENT
Executive
Officers and Board of Managers
Included
below is certain information about our managers and executive officers. Pursuant to our limited liability company agreement, as amended,
our managers are initially appointed to terms of one year, two years, or three years. Following the expiration of these initial terms,
our managers are elected to staggered terms. Mr. Wallach was initially elected to a three-year term that expired in March 2016 and his
current three-year term expires in March 2025, Mr. Summers was initially elected to a two-year term that expired in March 2014 and his
current three-year term expires in March 2023, Mr. Rauscher was initially elected to a three-year term that expired in March 2018 and
his current three-year term expires in March 2024, and Mr. Sheldon was initially elected to a one-year term that expired in March 2020
and his current three-year term expires in March 2025.
Daniel
M. Wallach
, age 54, is our CEO and a manager. He has been our CEO since our Company was founded and, prior to the addition of two
independent managers in March 2012, he was our sole manager. Mr. Wallach has over 25 years of experience in finance and real estate.
Prior to his time with us, most recently, from May 2011 to July 2011, Mr. Wallach was an Executive Vice President for ProBuild Holdings,
a building material supplier to homebuilders. Before that, from 1985 to 1989, and 1990 to April 2011, Mr. Wallach held various positions
with 84 Lumber Company and affiliates, including Chief Financial Officer and Director. 84 Lumber is a building material supplier to homebuilders
and was, at that time, one of our affiliates. At 84 Lumber, Mr. Wallach oversaw the company's financial and accounting function,
including all aspects related to financial reporting, debt financing, customer financing, customer credit and management information
systems. Mr. Wallach was also intimately involved with the creation of 84 FINANCIAL, L.P., a finance company affiliated with and owned
by 84 Lumber, which had investment objectives similar to ours. Mr. Wallach has also held operational and finance positions with a mortgage
brokerage firm and a building contractor. He graduated from Washington and Jefferson College in Washington, Pennsylvania with a B.A.
in Business Administration.
Barbara
L. Harshman
, age 46, is our Executive Vice President of Operations, a position to which she was appointed in July 2015. She was hired
in August 2012 as Vice President of Operations. Prior to joining the Company, from 2005 to 2012, Ms. Harshman worked in various positions
in 84 Lumber Company's lending operations, including Vice President of Lending. Ms. Harshman also worked as a credit manager for
84 Lumber during 2004 and 2005, where she managed a portfolio of $35,000,000 of unsecured debt owed by builders. Ms. Harshman graduated
from Baylor University with a B.A. in Anthropology.
Mark
Reynolds,
age 47, was appointed Executive Vice President of Sales in April 2021. Mr. Reynolds, has over 19 years of experience in
the construction finance industry. He was previously our Regional Sales Manager from May 2016 until April 2021 and was also the National
Real Estate Owned ("REO") Manager from January 2020 until April 2021. Previously, Mr. Reynolds held various positions with
84 Lumber Company, including REO Specialist, where he worked with counsel to negotiate liens, finish building houses, and relieve as
much debt as possible while controlling losses (from 2008 through 2014), National Finance Manager, in residential financing (from 2006
through 2008), and Regional Finance Manager, in commercial financing, where he helped finance projects such as hotels, apartments, restaurants,
and casinos (from 2000 through 2004). Mr. Reynolds attended Indiana University at South Bend, where he studied Business Management.
77
Catherine
Loftin
, age 43, is our Chief Financial Officer, a position to which she was appointed in April 2021. Ms. Loftin previously served
as Acting Chief Financial Officer from July 2019 to April 2021 and as Chief Financial Officer from January 2018 to May 2019 and continued
to serve as our employee since May 2019. Ms. Loftin previously served as our Controller from November 2017 until her appointment as Chief
Financial Officer. Prior to joining the Company, Ms. Loftin was the Corporate Controller for Lucas Group from November 2017 to June 2018,
Division Controller for Pulte Group from July 2014 through November 2017 and Director of Financial Reporting for DS Services Holdings,
Inc. from November 2013 to April 2014. Ms. Loftin spent a majority of her career with Simmons Bedding Company as Manager of Financial
Reporting from 2006 to 2013. Ms. Loftin started her accounting career with PricewaterhouseCoopers with an internship in 1999 and an associate
in 2001. Ms. Loftin received her Bachelors of Business of Administration from the Terry College of Business School at the University
of Georgia in 2000, and her Masters of Accounting from Kennesaw State University's Cole's College of Business in 2001.
William
Myrick
, age 60, is our Executive Vice President, a position to which he was appointed on April 20, 2021. Mr. Myrick previously served
as Executive Vice President of Sales since March 2018. Mr. Myrick was one of our independent managers from March 2012 to March 2018.
He has been involved in lumber and building materials for over 35 years. From July 2012 through December 2017, Mr. Myrick was the CEO
of American Builders Supply, a building material supplier to homebuilders, where he was responsible for all aspects of the management
of that business. From January 2007 to July 2011, he held various executive officer positions with ProBuild Holdings, including, most
recently, CEO, and was responsible for all aspects of the management of ProBuild's business. From 1982 to January 2007, Mr. Myrick
was with 84 Lumber Company, where he held positions including, most recently, Chief Operating Officer. Mr. Myrick served as a director
of ProBuild from July 2010 to July 2011, and currently serves as a director of American Builders Supply, a position he has held since
July 2012. He is a graduate of the Advanced Management Program from Harvard Business School.
Kenneth
R. Summers
, age 75, is one of our independent managers, a position to which he was elected in March 2012. Mr. Summers retired from
United Bank, Inc. of Morgantown, West Virginia in December 2019. Prior to retirement, he had been an Executive Vice President for United
Bank since 2001. In that role he was responsible for the expansion and recognition of the bank's franchise in north central West
Virginia. Mr. Summers has over 30 years of experience as a community bank executive. He graduated from the University of Charleston with
a B.S. in Accounting and Management.
Eric
A. Rauscher
, age 56, is one of our independent managers, a position to which he was elected in March 2015. Mr. Rauscher is a licensed
insurance sales person and has worked in that industry since 1999. Prior to that, he spent over ten years as a field sales engineer.
He graduated from Case Western Reserve University with a B.S. in Electrical Engineering and Applied Physics, with a minor in Economics.
Gregory
L. Sheldon
, age 63, is one of our independent managers, a position to which he was elected in March 2019. Mr. Sheldon brings 41 years
of business experience building global corporations and integrating acquisitions across finance, supply chain, manufacturing, and the
corporate functions. Since March 2021 he has served as the Interim CIO for TherapeuticsMD, an innovative pharmaceutical company exclusively
committed to advancing women's health. His previous roles include Global Chief Information Officer for Mylan, Inc., from October
2008 to March 2013, the CIO for Duquesne Light Company from August 2013 to March 2015, and, from October 2018 until December 2019, as
the Interim CIO for MiMedx Group, Inc. Since July 2014, Mr. Sheldon has been an owner of two companies which invest in land acquisition,
development, and the construction of residential homes: White Column Investments, LLC, where he is the President and Managing Member,
and Sheldon Investments, LLC. Since 2017, he has served as a non-compensated advisor to Mark Hoskins, who owns Benjamin Marcus Homes,
LLC and Investor's Mark Acquisitions, LLC, which are companies that design, develop, and build single family homes, and which are
also two of our customers. Mr. Sheldon has been the owner of Greg Sheldon and Associates, LLC, a consultant, and strategic advisor to
clients in the life sciences, consumer products, technology, and manufacturing industries since April 2015. Mr. Sheldon has held multiple
leadership positions with leading, global companies including Kraft General Foods, Georgia-Pacific, and Pfizer Inc., and the start-up
of The Georgia Lottery. He graduated from Georgia State University with a Master of Science in Management and from Georgia Institute
of Technology with a Bachelor of Science in Industrial Management.
78
Committees
of the Board of Managers
The
board of managers has formed the five committees described below. Each of the committees, with the exception of the loan policy committee,
operates pursuant to a written charter adopted by the committee or our board of managers. Each charter sets forth the committee's
specific functions and responsibilities.
Audit
Committee
Our
board of managers has established an audit committee, which consists of Messrs. Summers, Rauscher, and Sheldon, our independent managers.
Mr. Summers is the Chairman of the audit committee. The purpose of the audit committee is to assist the board of managers in fulfilling
its oversight responsibilities relating to:
●
the
    integrity of our financial statements and other financial information to be provided to the members of the Company and others;
●
the
    Company's compliance with legal and regulatory requirements;
●
the
    system of internal controls which management of the Company has established;
●
the
    qualifications and independence of the Company's independent auditor;
●
the
    performance of the Company's internal audit function and independent auditors; and
●
the
    Company's audit and financial reporting processes.
Nominating
and Corporate Governance Committee
Our
board of managers has established a nominating and corporate governance committee, which consists of Messrs. Rauscher, Summers, and Sheldon,
our independent managers. Mr. Summers is the Chairman of the nominating and corporate governance committee. The primary responsibilities
of the nominating and corporate governance committee include:
●
identifying
    individuals qualified to serve on the board of managers, consistent with criteria approved by the board in accordance with the Company's
    limited liability company agreement;
●
developing
    and recommending to the board of managers a set of corporate governance policies and principles to be applicable to the Company;
●
overseeing
    an annual evaluation of the board of managers and each of its committees; and
●
considering
    and acting upon any conflicts of interest-related matter as required by the Company's limited liability company agreement or
    otherwise permitted by the Delaware Limited Liability Company Act where the exercise of independent judgment by any of the Company's
    managers (who is not an independent manager) could reasonably be compromised, including approval of any transaction involving the
    Company's affiliates.
Compensation
Committee
Our
board of managers has established a compensation committee, which consists of Messrs. Rauscher, Summers, and Sheldon, our independent
managers. Mr. Rauscher is the Chairman of the compensation committee. The compensation committee reviews and approves annually the corporate
goals and objectives applicable to the compensation of our officer, evaluates at least annually the officer's performance in light
of those goals and objectives, and determines and approves the officer's compensation level based on these evaluations, subject
to the approval of our members holding at least 60% of the votes eligible to be cast by the then-outstanding voting units.
79
Loan
Policy Committee
Our
board of managers has established a loan policy committee, which consists of Messrs. Wallach and Summers. Mr. Wallach is the Chairman
of the loan policy committee. The loan policy committee sets standards and procedures for the review and approval of loans made by the
Company, and approves significant loans and loans which differ from the standards and procedures it has established.
Technology
Committee
Our
board of managers has established a technology committee, which consists of Messrs. Sheldon, Wallach, and Rauscher. Mr. Sheldon is the
Chairman of the technology committee. The primary purpose of the technology committee is to assist the board of managers in evaluating
and overseeing technology matters for the Company.
Limited
Liability and Indemnification of Directors, Officers, Employees, and Other Agents
No
manager or officer shall be liable to us or any other manager or officer for any loss, damage or claim incurred by reason of any action
taken or omitted to be taken by such person in good faith and with the belief that such action or omission is in, or not opposed to,
our best interest, so long as such action or omission does not constitute fraud, gross negligence or willful misconduct by such person.
To
the fullest extent permitted by Delaware law, the Company shall indemnify, hold harmless, defend, pay and reimburse each of its managers
and its officer against any and all losses, claims, damages, judgments, fines or liabilities, including reasonable legal fees or other
expenses incurred in investigating or defending against such losses, claims, damages, judgments, fines or liabilities, and any amounts
expended in settlement of any claims to which such person may become subject by reason of:
●
Any
    act or omission or alleged act or omission performed or omitted to be performed on our behalf, or on behalf of any of our members
    or any direct or indirect subsidiary of the foregoing in connection with our business; or
●
The
    fact that such person is or was acting in connection with our business as our partner, member, stockholder, controlling affiliate,
    manager, director, officer, employee or agent, any our members, or any of our and any of our members' respective controlling
    affiliates, or that such person is or was serving at our request as a partner, member, manager, director, officer, employee or agent
    of any person including us or any subsidiary of us;
provided,
that (x) such person acted in good faith and in a manner believed by such person to be in, or not opposed to, our best interests and,
with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful, and (y) such person's
conduct did not constitute fraud, gross negligence or willful misconduct, in either case as determined by a final, nonappealable order
of a court of competent jurisdiction. In connection with the foregoing, the termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith or, with respect to any criminal proceeding, had reasonable cause to believe that such person's
conduct was unlawful, or that the person's conduct constituted fraud, gross negligence or willful misconduct.
We
shall promptly reimburse (and/or advance to the extent reasonably required) each of the managers and our officer for reasonable legal
or other expenses (as incurred) of such person in connection with investigating, preparing to defend or defending any claim, lawsuit
or other proceeding relating to any losses for which such person may be indemnified; provided, that if it is finally judicially determined
that such person is not entitled to the indemnification, then such person shall promptly reimburse us for any reimbursed or advanced
expenses.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted
pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
We
maintain liability insurance, which insures against liabilities that the managers or our officer may incur in such capacities.
80
EXECUTIVE
COMPENSATION
Executive
Officer Compensation
We
currently compensate our executive officers for services rendered to us. This discussion describes our compensation philosophy and policies.
Objectives
of Executive Officer Compensation Program
The
objectives of our executive compensation program are to attract, retain, and motivate highly talented executives and to align each executive's
incentives with our short-term and long-term objectives, while maintaining a healthy and stable financial position. Specifically, our
executive compensation program is designed to accomplish the following goals and objectives:
●
maintain
    a compensation program that is equitable in our marketplace;
●
provide
    opportunities that integrate pay with the short-term and long-term performance goals;
●
encourage
    and reward achievement of strategic objectives, while properly balancing a controlled risk-taking behavior; and
●
maintain
    an appropriate balance between base salary and short-term and long-term incentive opportunity.
Determining
Executive Officer Compensation
The
compensation committee of our board of managers is responsible for determining all aspects of our executive compensation program. The
determination and assessment of executive compensation are primarily driven by the following three factors: (1) market data based on
the compensation levels, programs, and practices of other comparable companies for comparable positions, (2) our financial performance,
and (3) executive officer performance. We believe these three factors provide a reasonably measurable assessment of executive performance
in light of building value and creating a healthy financial position for us. We rely upon the judgment of the members of the compensation
committee and not on rigid formulas or short-term changes in business performance in determining the amount and mix of compensation elements
and whether each element provides the appropriate incentive and reward for performance that sustains and enhances our long-term growth.
Executive
Officer Compensation Components
Base
Salary
We
provide each of our paid executive officers with a base salary to compensate such officer for services rendered throughout the year.
Salaries are established annually based on the individual's position, experience, performance, past and potential contribution
to us, and level of responsibility, as well as our overall financial performance. No specific weighting is applied to any one factor
considered, and the independent managers use their judgment and expertise in determining appropriate salaries within the parameters of
the compensation philosophy.
Bonus
We
pay each of our full-time executive officers a team bonus mostly based on our overall profitability, which rewarded each of them $1,300
in 2021 and $1,200 in 2020. In addition, we rewarded an annual bonus of $1,800 for both 2021 and 2020, which is extended to compensate
vacation expenses. Finally, each executive officer is eligible for a portion of net income earned, or profit share.
We
pay our EVP of Sales monthly bonus based on a percentage of all new sales and construction loan payoffs.
Membership
Interests
As
the beneficial owner of 80.7% (as of March 1, 2022) of our outstanding common membership interests, Mr. Wallach's interests are
closely aligned with our success. Our Executive Vice President of Operations owns 2% of our outstanding common membership interests and
our Executive Vice President owns 15.3% of our outstanding common membership interests. As we hire additional executive officers, we
may use membership interests in some fashion as part of their compensation.
81
The
following table provides a summary of the compensation received by our named executive officers for the last two completed fiscal years:
Name and Position
Year
Salary
Bonus
(1)
Stock Awards
Option Awards
Non-Equity Incentive Plan Compensation
Non-Qualified Deferred Compensation Earnings
All Other
Compensation
(2)
Total
Mr. Wallach
2021
$
72,240
$
1,300
–
–
–
–
49,460
$
123,000
2020
72,240
1,200
–
–
–
–
–
73,440
Ms. Harshman
2021
112,550
3,100
–
–
–
–
63,639
179,289
2020
115,817
1,200
–
–
–
–
–
117,017
Mr. Reynolds
(3)
2021
90,975
83,515
–
–
–
–
37,523
212,013
2020
60,000
61,373
–
–
–
–
10,000
(3)
131,373
(1)
Amounts in the Bonus column represent amounts earned in the period.
(2)
Qualified Retirement Plan Contributions are shown here when funds are earned.
(3)
Mr. Reynolds did not serve as an executive officer of the Company in 2020 and was appointed EVP of Sales in April 2021. In addition,
Mr. Reynolds received forgiveness for an employee loan for $20,000 and $10,000 in 2021 and 2020, respectively.
Changes
for 2022
Mr.
Wallach will receive a base salary of $72,240 for 2022. Ms. Harshman, our Executive Vice President of Operations, will receive a base
salary of $112,550 for 2022 and an annual bonus of $7,000. Mr. Reynolds, our EVP of Sales, will receive a base salary of $90,975 and
will receive a monthly bonus based on a percentage of all new sales and construction loan payoffs. In addition, Mr. Wallach, Ms. Harshman
and Mr. Reynolds will receive the team and vacation bonus, which will reward between $0 and $3,600 and $1,800, respectively.
Board
of Managers Compensation
The
following table provides a summary of the compensation received by our managers for the year ended December 31, 2021:
Name
Fees Earned or Paid in Cash
Stock Awards
Option
Awards
Non-Equity Incentive Plan Compensation
Change in Pension Value and Nonqualified Deferred Compensation
All Other Compensation
Total
Daniel M. Wallach
$
–
$
–
$
–
$
–
$
–
$
–
$
–
Kenneth R. Summers
33,000
–
–
–
–
–
33,000
Eric A. Rauscher
33,000
–
–
–
–
–
33,000
Gregory L. Sheldon
33,000
–
–
–
–
–
33,000
Total
$
99,000
$
–
$
–
$
–
$
–
$
–
$
99,000
We
paid each of the independent managers an annual retainer of $25,000. Our independent managers also receive fees of $2,000 for the first
day and $1,200 for any additional days for meetings of the board of managers and committees attended in person, all or a portion of which
may be allocated as reimbursement of expenses incurred in connection with attendance at meetings. The independent managers do not receive
separate reimbursement of out-of-pocket expenses incurred in connection with attendance at meetings. Mr. Wallach receives no compensation
for his services as a manager.
82
PRINCIPAL
SECURITY HOLDERS
The
following table sets forth the ownership of certain of our outstanding membership interests as of December 31, 2021:
Title of Class
Name and Address of Owner
(1)
Number of Units
Percent of Class
Dollar Value
Percentage of Total Equity
Class A Common Units
Daniel M. Wallach and Joyce S. Wallach
87.53
3.3
%
$
(4,316
)
(0.1
)%
Class A Common Units
2007 Daniel M. Wallach Legacy Trust
2,033.43
77.4
%
(100,264
)
(1.5
)%
Class A Common Units
Kenneth R. Summers
26.29
1.0
%
(1,296
)
-
%
Class A Common Units
Eric A. Rauscher
26.29
1.0
%
(1,296
)
-
%
Class A Common Units
William Myrick
402.88
15.3
%
(19,866
)
(0.3
)%
Class A Common Units
Barbara Harshman
52.58
2.0
%
(2,593
)
(0.1
)%
Subtotal of Common Voting Equity
2,629.00
100.0
%
(129,631
)
(2.0
)%
Series C Preferred Units
Daniel M. Wallach and Joyce S. Wallach
18.05
36.0
%
1,804,503
27.3
%
Series C Preferred Units
Gregory L. Sheldon and Madeline M. Sheldon
6.31
12.6
%
631,371
9.6
%
Series C Preferred Units
Other Holders of Series C Preferred Units
25.78
51.4
%
2,577,911
39.0
%
Subtotal of Series C Preferred Units
50.14
100.0
%
5,013,785
75.9
%
Series B Preferred Units
Holders of Series B Preferred Units
17.20
100.0
%
1,720,000
26.1
%
Total Members' Capital and Redeemable Preferred Equity
2,696.34
$
6,604,154
100.0
%
(1)
The
    addresses of each Class A Common Unit owner named above are:
The
    addresses of Daniel and Joyce Wallach, the 2007 Daniel M. Wallach Legacy Trust, William Myrick, and Barbara Harshman are 13241 Bartram
    Park Blvd., Suite 2401, Jacksonville, FL 32258; Kenneth R. Summers is P.O. Box 995, Morgantown, WV 26507; and Eric A. Rauscher is
    2706 South Park Rd., Bethel Park, PA 15102.
The
    address of each Series C Preferred Unit owner named above are:
Daniel
    and Joyce Wallach is 13241 Bartram Park Blvd., Suite 2401, Jacksonville, FL 32258; and Gregory L. Sheldon and Madeline M. Sheldon
    is 104 Windsor Ct., Venetia, PA 15367.
83
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions
with Affiliates
Lines
of Credit Extended by Mr. Wallach and His Affiliates
As
previously described, on December 30, 2011, we obtained two demand loans from Daniel M. Wallach (our CEO who is also on our board of
managers) and affiliates of Mr. Wallach to finance our operations. These demand loans are collateralized by a lien against all of our
assets and are senior in right of payment to the Notes. As of December 31, 2021, Mr. Wallach is also the beneficial owner of 80.7% of
our outstanding common membership interests.
The
first loan has a maximum principal borrowing amount of $1,250,000 and is payable to Daniel M. Wallach (our CEO and chairman of the board
of managers) and Joyce S. Wallach (Mr. Wallach's wife), as tenants by the entirety (the "Wallach LOC"). The second
loan has a maximum principal borrowing amount of $250,000 and is payable to the 2007 Daniel M. Wallach Legacy Trust (the "Wallach
Trust LOC," and together with the Wallach LOC, the "Wallach Affiliate LOCs"). As of December 31, 2021, there were no
amounts borrowed against the Wallach LOC, with availability on that line of credit of $1,250,000, and there were no amounts borrowed
against the Wallach Trust LOC, with remaining availability on that line of credit of $250,000. Each of the Wallach Affiliate LOCs is
evidenced by a promissory note, is payable upon demand of the lender and generally bears an interest rate equal to the prime rate plus
three percent. Pursuant to each promissory note, the lender has the option of funding any amount up to the face amount of the note, in
the lender's sole and absolute discretion. As of December 31, 2021, and 2020, the interest rate was 6.25% for both the Wallach
LOC and the Wallach Trust LOC.
The
original entries into the Wallach Affiliate LOCs were approved by Mr. Wallach in his capacity as sole manager prior to the time we had
independent managers. The independent managers ratified and approved these transactions subsequent to the formation of the board of managers.
In June 2018, we entered into a First Amendment to the Wallach LOC and a First Amendment to the Trust LOC (the "Wallach Affiliate
LOCs First Amendments") which modified the interest rates under the Wallach Affiliate LOCs to generally equal the prime rate plus
three percent. The Wallach Affiliate LOCs First Amendments were approved by a majority of our independent managers. See "Risk Factors
— Risks Related to Conflicts of Interest — Our CEO (who is also on our board of managers) and Executive Vice President will
face conflicts of interest as a result of the secured lines of credit made to us, which could result in actions that are not in the best
interests of our Note holders."
Line
of Credit Extended by Mr. Myrick
As
previously described, in June 2018, we obtained into a line of credit from our Executive Vice President, William Myrick to finance our
operations (the "Myrick LOC"). The Myrick LOC is collateralized by a lien against all of our assets.
The
Myrick LOC has a maximum principal borrowing amount of $1,000,000 and is payable to Mr. Myrick. As of December 31, 2021, we had borrowed
$859,000 against the Myrick LOC, with availability on that line of credit of $141,000. The Myrick LOC is evidenced by a promissory note,
is payable upon demand of the lender and generally bears an interest rate equal to the prime rate (defined in the promissory note as
the daily rate equal to the "Prime Rate" of interest published in The Wall Street Journal from time to time) plus three percent.
Pursuant to the promissory note, Mr. Myrick has the option of funding any amount up to the face amount of the note, in Mr. Myrick's
sole and absolute discretion. As of December 31, 2021 and 2020, the interest rate was 6.25% for the Myrick LOC.
The
Myrick LOC was approved by a majority of our independent managers as they determined the terms of the Myrick LOC to be in the best interests
of the Company and that the transaction is on terms no less favorable to us than could be obtained from an independent third party.
84
Line
of Credit Extended by R. Scott Summers
As
previously described, in September 2019, we obtained into a line of credit (the "Summers LOC") from R. Scott Summers. R.
Scott Summers is an investor in our Notes Program and is the son of Kenneth R. Summers, one of our independent managers. The Summers
LOC is secured with assignments of certain notes and mortgages.
The
Summers LOC has a maximum principal borrowing amount of $2,000,000 and is payable to R. Scott Summers. As of December 31, 2021, we had
borrowed $847,000 on the Summers LOC, with availability on that line of credit of $1,153,000. The largest aggregate amount of principal
outstanding on the Summers LOC during 2021 was $847,000. The Summers LOC is evidenced by a promissory note and bears a fixed annual interest
rate of 9%. The Summers LOC requires monthly payments of interest only during the term of the Summers LOC, with the principal balance
due upon termination.
The
Summers LOC was approved by a majority of our independent managers not interested in the transaction as they determined the terms of
the Summers LOC to be in the best interests of the Company and that the transaction is on terms no less favorable to us than could be
obtained from an independent third party.
Investments
Pursuant to Public Notes Offerings
The
Company has accepted new investments under the Notes Program from employees, managers, members, and relatives of managers and members,
with $3,989,000 outstanding at December 31, 2021. For the years ended December 31, 2021 and 2020 our investments from affiliates which
exceed $120,000 through our Notes Program and other unsecured debt are detailed below:
(All
dollar [$] amounts shown in table in thousands.)
Relationship to
Amount invested as of
Weighted
average
interest rate
as of
Interest
earned during
the year ended
Shepherd's
December 31,
December 31,
December 31,
Investor
Finance
2021
2020
2021
2021
2020
Eric A. Rauscher
Independent Manager
$
475
$
475
10.00
%
$
36
$
47
Capture HD Inc., Defined Benefit Plan & Trust
Sponsor is Brother of Employee
1,000
1,000
11.00
%
149
142
David Wallach Living Trust
Father of Member
571
577
10.23
%
58
60
Gregory L. Sheldon
Independent Manager
577
1,053
10.22
%
59
112
Joseph Rauscher
Parent of Independent Manager
195
195
11.00
%
21
14
Kenneth Summers
Independent Manager
100
189
4.00
%
1
20
Schultz Family Revocable Living Trust
Trustee is Mother-in-Law of Member
148
132
9.88
%
15
14
Kimberly Bedford
Employee
148
160
10.88
%
16
16
Lamar Sheldon
Parent of Independent Manager
253
217
9.03
%
23
21
85
Other
Notes Investments
The
Company has a Senior Subordinated Promissory Note to the father of Mr. Wallach in the principal amount of $333,000. The annual interest
rate on that promissory note is 10% and the lender may require us to repay $20,000 of principal and all unpaid interest with 10 days'
notice. As of December 31, 2021 and 2020, the amount outstanding pursuant to the promissory note was $333,000 and $352,000, respectively.
The largest aggregate amount of principal outstanding on the promissory note during 2021 and 20020 was $352,000 and $400,000, respectively.
Interest expense was $32,000 and $40,000 for the years ended December 31, 2021 and 2020, respectively.
Common
Equity Owned by Independent Managers and Our Executive Officers
Two
of our independent managers, Messrs. Summers and Rauscher, each own 1% of our common equity, which they purchased from S.K. Funding,
LLC, an affiliate of Seven Kings Holdings, Inc., on March 31, 2017. Our Executive Vice President, William Myrick, owns 15.3% of our common
equity, of which he purchased 14.3% of from Daniel and Joyce Wallach on March 1, 2018, and the remaining 1% of which he purchased from
Seven Kings Holdings, Inc. Our Executive Vice President of Operations, Barbara L. Harshman, owns 2% of our common equity, 0.5% of which
Ms. Harshman purchased from S.K. Funding, LLC on March 31, 2017, 1% of which she purchased from the Wallachs on January 1, 2018, and
0.5% of which she purchased from Catherine Loftin on May 15, 2019.
Hoskins
Group's Series B Preferred Equity
The
Series B cumulative preferred membership units ("Series B Preferred Units") of our membership interests were first issued
to the Hoskins Group through a reduction in the amount owed by us on a loan in which a member of the Hoskins Group is the lender. They
are redeemable only at the option of the Company or upon a change or control or liquidation. The Series B Preferred Units have a fixed
value which is their purchase price, and preferred liquidation and distribution rights. Yearly distributions of 10% of the Series B Preferred
Units' value (providing profits are available) will be made quarterly. The Hoskins Group's Series B Preferred Units are also
used as collateral for that group's loans to the Company. There is no liquid market for the Series B Preferred Units, so we can
give no assurance as to our ability to generate any amount of proceeds from that collateral. In December 2015, the Hoskins Group agreed
to purchase 0.1 Series B Preferred Units upon each closing of a lot sale in the subdivisions in which we lend the Hoskins Group development
funds. The Hoskins Group purchased 0.9 and 1.6 Series B Preferred Units in 2021 and 2020, respectively.
Series
C Preferred Equity
As
of December 31, 2021, Daniel M. Wallach, our Chief Executive Officer and chairman of our board of managers, and his wife, Joyce S. Wallach,
own 18.05 of our Series C cumulative preferred interests ("Series C Preferred Units"). As of December 31, 2021, Gregory L.
Sheldon, one of our independent managers, and his wife, Madeline M. Sheldon, own 6.31 Series C Preferred Units. On October 13, 2019,
we issued one Series C Preferred Unit to Mr. Sheldon for the total purchase price of $100,000.
86
Investors
in the Series C cumulative preferred units ("Series C Preferred Units") may elect to reinvest their distributions in additional
Series C Preferred Units (the "Series C Reinvestment Program"). Pursuant to the Series C Reinvestment Program, as of December
31, 2021, we have issued approximately 2.03 Series C Preferred Units to Daniel M. Wallach, our CEO, for distribution proceeds of approximately
$203,000 and we have issued approximately 0.51 Series C Preferred Units to Gregory L. Sheldon for distribution proceeds of approximately
$51,000. During 2021, Mr. Sheldon invested an additional $200,000 in Series C Preferred Equity.
The
Series C Preferred Units have a fixed value which is their purchase price and preferred liquidation and distribution rights. Yearly distributions
of 12% of the Series C Preferred Units' value (provided profits are available) will be made on a quarterly basis. This rate can
increase if any interest rate on our public Notes offering rises above 12%. Dividends can be reinvested monthly into additional Series
C Preferred Units. The Series C Preferred Units have the same preferential rights as the Series B Preferred Units as more fully described
above.
Sale
of Commercial Loans
During
November and December 2021, the Company serviced two construction loans for William Myrick (the Company's Executive President).
The funding for construction fees and services for both Loans were provided by Mr. Myrick's LOC. As of December 31, 2021, the Company
continued to service both loans.
During
December 2021, the Company sold one loan to Gregory Sheldon (one of the Company's Mangers) for approximately $405,000. As of December
31, 2021, the Company continued to service the loan.
In
July 2020, the Company purchased two loans at cost from Daniel M. Wallach (the Company's Chief Executive Officer and Chairman of
the board of managers) for approximately $198,000. Those loans had previously been purchased from the Company by Mr. Wallach. As of December
31, 2021, the Company continued to service both loans.
Affiliate
Transaction Policy
Our
limited liability company agreement provides that any future transaction involving us and an affiliate must be approved by a majority
vote of independent managers not otherwise interested in the transaction upon a determination of such independent managers that the transaction
is on terms no less favorable to us than could be obtained from an independent third party. An approval pursuant to this policy shall
be set forth in the minutes of the Company and shall include a description of the transaction approved. The responsibility for reviewing
and approving affiliate transactions has been delegated to the nominating and corporate governance committee of our board of managers,
which is comprised entirely of independent managers.
Pursuant
to our limited liability company agreement, we must provide the independent managers with access, at our expense, to our legal counsel
or independent legal counsel, as needed.
Board
of Managers Independence
We
have no securities listed for trading on a national securities exchange or in an automated inter-dealer quotation system of a national
securities association, which has requirements that a majority of our board of managers be independent. For purposes of complying with
the disclosure requirements of the Securities and Exchange Commission, we have adopted the definition of independence used by the New
York Stock Exchange ("NYSE"). Under the NYSE's definition of independence, Messrs. Summers, Rauscher, and Sheldon each
meet the definition of "independent."
87
DESCRIPTION
OF NOTES
General
The
Notes will be issued under an indenture dated as of [__], 2022 between us and [__], as trustee. The indenture will be filed as an exhibit
to the registration statement. You can also obtain a copy of the indenture from us. We have summarized material aspects of the indenture
below. The summary is not complete, and you should read the indenture for provisions that may be important to you. The capitalized terms
used in the summary have the meanings specified in the indenture.
The
Notes are our direct obligations but are not secured. The Notes are registered and issued without coupons. We may change the interest
rates and the maturities of the Notes as they are offered, provided that no such change shall affect any Note issued prior to the date
of change. We may, at our discretion, limit the maximum amount any investor or related investors may maintain in outstanding Notes.
The
total aggregate maximum principal amount of the Notes offered under this prospectus is $70,000,000. The maximum investment amount per
Note is $1,000,000 or $1,000,000 in the aggregate per investor, but a higher maximum investment amount may be approved by us on a case-by-case
basis. The minimum investment amount is $500; however, from time to time, we may change the minimum investment amount that is required.
Established
Features of the Notes
Interest
is calculated based on the actual number of days your Note is outstanding. Interest is calculated and compounded monthly based on a 365-day
year (366-day in case of a leap year). Interest is earned daily, and we will pay interest to you monthly or at maturity as you request.
If you choose to be paid interest at maturity rather than monthly, the interest will be compounded monthly. If any day on which a payment
is due with respect to a Note is not a business day, then you will not be entitled to payment of the amount due until the following business
day, and no additional interest will be due as a result of such delay. If you elect to be paid interest monthly, interest on your Note
will be paid on the first business day of every month. Your first interest payment date will be the month following the month in which
the Note is issued, except that if a new Note is issued within the last 10 days preceding an interest payment date, the first interest
payment will be made on the next succeeding interest payment date (i.e., approximately 35–40 days after issuance). No payments
under $50 will be made, with any interest payment being accrued to your benefit and earning interest on a monthly compounding basis until
the payment due to you is at least $50 on an interest payment date.
Any
change to your original request may be made to us by contacting us at (302) 752-2688 (30-ASK-ABOUT) or by using our website
www.shepherdsfinance.com
to find out what you need to do to change your election. The Notes mature one to four years from the date of issuance, as offered
by us and selected by you. Principal and unpaid interest will be paid to you upon maturity.
From
time to time we will establish varying interest rates and maturities for the Notes. The interest rates offered may vary depending on
the maturity of the Notes. Upon purchase of a Note, the then-applicable interest rate for the maturity purchased will be fixed for the
term of such Note. The Notes will initially be offered with maturities ranging from 12 months to 48 months from the date of issuance.
For each maturity, we also establish an interest rate, subject to a range, as follows:
Note Maturity
Minimum Rate
Ceiling
12-Month
5
%
10
%
24-Month
6
%
10
%
36-Month
3
%
6
%
48-Month
8
%
12
%
The
interest rates will vary within the ranges but annual interest rates as of the date of this prospectus are as follows: 6% for 12-month
Notes; 7% for 24-month Notes; 4% for 36-month Notes; and 8% for 48-month Notes.
88
Investments
by check will be credited and interest will begin to accrue on the first business day after our bank receives a check in proper form
if the check is received prior to 9:00 a.m. Eastern time, and on the second business day following receipt if the check is received after
9:00 a.m. Eastern time. Checks are accepted subject to collection at full face value in U.S. funds.
Investments
by ACH debit transfer and Wire will be credited and interest will begin to accrue on the first business day after our bank receives funds.
Notes
with the current established features are available until they are superseded by new established features. The current established features
are applicable to all Notes sold by us during the period the current established features are in effect. We intend to publish this information
on our website at
www.shepherdsfinance.com
or it may be obtained by calling (302) 752-2688 (30-ASK-ABOUT). We will also file with
the SEC a Rule 424(b)(3) prospectus supplement setting forth the established features upon any change in the established features.
Subordination
Our
obligation to repay the principal of and make interest payments on the Notes is subordinate in right of payment to all senior debt. This
means that if we are unable to pay our debts when due, all of the senior debt would be paid first, before any payment of principal or
interest would be made on the Notes and related party debt which is equal in priority to the Notes.
The
term "senior debt" means all of our debt created, incurred, assumed, or guaranteed by us, except debt that by its terms expressly
provides that such debt is not senior in right of payment to the Notes. Debt is any indebtedness, contingent or otherwise, in respect
of borrowed money, or evidenced by bonds, notes, Notes, or similar instruments or letters of credit and shall include any guarantee of
any such indebtedness. Senior debt includes, without limitation, the demand loans from our members and any line of credit we may incur
in the future. The Notes are subordinate to all of our senior debt. We may at any time borrow money on a secured or unsecured basis that
would have priority over the Notes. The Notes are not senior debt. As of December 31, 2021, the outstanding debt to which the Notes were
subordinated was approximately $22,327,000.
Redemption
by Us Prior to Maturity
We
may redeem any Note, in whole or in part, at any time following the first 180 calendar days after the date of issuance of the Note for
a redemption price equal to the principal amount plus any unpaid interest thereon to the date of redemption. We will notify Note holders
whose Notes are to be redeemed by mail 30 to 60 days prior to the date of redemption. Residents of the Commonwealth of Pennsylvania will
be notified by registered mail 30 to 60 days prior to the date of redemption.
Redemption
at the Request of the Holder Prior to Maturity
At
your written request but subject to the subordination provisions and our consent (which may be withheld in our sole discretion), we will
redeem any Note at any time following the first 180 calendar days after the date of issuance of the Note for a redemption price equal
to the principal amount plus unpaid interest equal to the stated rate of interest minus a penalty in an amount equal to the interest
earned over the last 180 days immediately prior to the redemption date. The penalty will be taken first from any interest accrued but
not yet paid on the Note, and to the extent such accrued and unpaid interest does not cover the entire penalty amount, the remainder
of the penalty amount shall be reduced from the principal amount of the Note.
Additionally,
unless the subordination provisions in the indenture restrict our ability to make the redemption, Note holders may require us to redeem
all or a portion of their Note, regardless of amount, for a redemption price equal to the principal amount plus an amount equal to the
unpaid interest thereon for such Note at the stated rate to the redemption date, upon one business day's advance notice to us,
but only if the holder immediately upon redemption invests the entirety of the proceeds from such redemption in another Note or another
security then-offered by us, if any. In such event, the Note holder will not be subject to a holding period requirement or an interest
penalty.
89
Redemption
upon Your Death
At
the written request of the executor of your estate or, if your Note is held jointly with another investor, the surviving joint holder,
but subject to the subordination provisions, we will redeem any Note at any time after death for a redemption price equal to the principal
amount plus unpaid interest equal to the stated rate of interest, without any penalty. We will seek to honor any such redemption request
as soon as reasonably possible based on our cash situation at the time, but generally within two weeks of the request. In order for a
Note to be redeemed upon your death, the Note to be redeemed must have been registered in your name since the date of issuance.
Additional
Redemption Options for Notes with a 36-Month Maturity
Unless
the subordination provisions in the indenture restrict our ability to make the redemption, for Notes with a 36-month maturity only purchased
on or after February 4, 2020, the holder of such a Note may require us to redeem all or a portion of such Note for a redemption price
equal to the principal amount plus an amount equal to the unpaid interest thereon for such Note at the stated rate to the redemption
date, as follows:
(1)
Upon
    seven days' advance notice to us, the holder may require redemption of up to $10,000 of such Note;
(2)
Upon
    30 days' advance notice to us, the holder may require redemption of up to an additional $90,000 of such Note;
(3)
Upon
    90 days' advance notice to us, the holder may require redemption of any remaining amount of such Note requested to be redeemed;
    and
(4)
Upon
    one business day's advance notice to the Company, the holder may require redemption of all or a portion of the Note, regardless
    of amount, but only if the Holder immediately upon redemption invests the entirety of the proceeds from such redemption in another
    security then-offered by us, including in a Note issued in this offering.
For
purposes of determining the length of time within which we must redeem all or a portion of a Note as described above, the dollar amount
of a given redemption request will be added to any amount or amounts of such Note previously requested to be redeemed that were redeemed
by us. The restriction requiring you to wait until 180 days have passed from the issuance of your Note to request a redemption do not
apply to redemptions of 36-month Notes as described in this section.
These
redemption options are in addition to the redemption options described elsewhere in this prospectus.
No
Restrictions on Additional Debt or Business
The
indenture does not restrict us from issuing additional securities or incurring additional debt (including senior debt or other secured
or unsecured obligations) or the manner in which we conduct our business.
Modification
of Indenture
We,
together with the trustee, may modify the indenture at any time with the consent of the holders of not less than a majority in principal
amount of the Notes that are then outstanding. However, we and the trustee may not modify the indenture without the consent of each holder
affected if the modification:
●
reduces
    the principal or rate of interest, changes the fixed maturity date or time for payment of interest, or waives any payment of interest
    on any Note;
●
reduces
    the percentage of Note holders whose consent to a waiver or modification is required;
●
affects
    the subordination provisions of the indenture in a manner that adversely affects the rights of any holder; or
●
waives
    any event of default in the payment of principal of, or interest on, any Note.
90
Without
action by you, we and the trustee may amend the indenture or enter into supplemental indentures to clarify any ambiguity, defect, or
inconsistency in the indenture, to provide for the assumption of the Notes by any successor to us, to make any change to the indenture
that does not adversely affect the legal rights of any Note holders, or to comply with the requirements of the Trust Indenture Act of
1939. We will give written notice to you of any amendment to the indenture.
Place,
Method, and Time of Payment
We
will pay principal and interest on the Notes at our principal executive offices or at such other place as we may designate for that purpose;
provided, however, that if we make payments by check, they will be mailed to you at your address appearing in our Note register. Any
payment of principal and interest that is due on a non-business day will be payable by us on the next business day immediately following
that non-business day.
Events
of Default
An
event of default is defined in the indenture as follows:
●
a
    default in payment of principal or interest on the Notes when due or payable if such default has not been cured for 30 days;
●
our
    becoming subject to events of bankruptcy or insolvency; or
●
our
    failure to comply with any agreements or covenants in or provisions of the Notes or the indenture if such failure is not cured or
    waived within 60 days after we have received notice of such failure from the trustee or from the holders of at least 25% in principal
    amount of the outstanding Notes.
If
an event of default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then-outstanding
Notes may declare the principal of and the accrued interest on all outstanding Notes due and payable. If such a declaration is made,
we are required to pay the principal of and interest on all outstanding Notes immediately, so long as the senior debt has not matured
by lapse of time, acceleration or otherwise. We are required to file annually with the trustee an officers' certificate that certifies
the absence of defaults under the terms of the indenture.
The
indenture provides that the holders of a majority of the aggregate principal amount of the Notes at the time outstanding may, on behalf
of all holders, waive any existing event of default or compliance with any provision of the indenture or the Notes, except a default
in payment of principal or interest on the Notes. In addition, the trustee may waive an existing event of default or compliance with
any provision of the indenture or Notes, except in payments of principal or interest on the Notes, if the trustee in good faith determines
that a waiver or consent is in the best interests of the holders of the Notes.
If
an event of default occurs and is continuing, the trustee is required to exercise the rights and duties vested in it by, and subject
to, the indenture and to use the same degree of care and skill as a prudent person would exercise under the circumstances in the conduct
of his or her affairs. The trustee however, is under no obligation to perform any duty or exercise any right under the indenture at the
request, order, or direction of Note holders unless the trustee receives indemnity satisfactory to it against any loss, liability, or
expense. Subject to such provisions for the indemnification of the trustee, the holders of a majority in principal amount of the Notes
at the time outstanding have the right to direct the time, method, and place of conducting any proceeding for any remedy available to
the trustee. The indenture effectively limits the right of an individual Note holder to institute legal proceedings in the event of our
default.
91
Satisfaction
and Discharge of Indenture
The
indenture may be discharged upon the payment of all Notes outstanding thereunder or upon deposit in trust of funds sufficient for such
payment and compliance with the formal procedures set forth in the indenture.
Reports
We
file annual reports containing audited consolidated financial statements and quarterly reports containing unaudited consolidated financial
information for the first three fiscal quarters of each fiscal year with the SEC while the registration statement containing this prospectus
is effective and as long thereafter as we are required to do so. Copies of such reports will be sent to any Note holder upon written
request.
Service
Charges
We
reserve the right to assess service charges and fees to issue a replacement interest payment check, and, in the event we permit transfer
or assignment in our discretion, to transfer or assign a Note.
Book
Entry Record of Your Ownership
The
Notes will be issued in uncertificated form. If you purchase a Note, an account showing the principal amount of your Note will be established
in your name on our books. Interest accrued on your Note will also be credited to your account. The interest rate on your Note will be
determined on the date that your account is established. In determining your interest rate, we will use the rate in effect at the time
you: (1) submitted your subscription agreement online; (2) printed the subscription agreement from our website, provided that the rate
was offered by us with that maturity in the seven days prior to our receipt of your subscription agreement; or (3) signed and mailed
a subscription agreement, which we mailed to you, provided that the rate was offered by us with that maturity in the seven days prior
to our receipt of your subscription agreement. You will not receive any certificate or other instrument evidencing our indebtedness to
you. Upon purchase of your Note, we will send you a confirmation, which describes, among other things, the term, interest rate, and principal
amount.
Transfer
You
may not transfer any Note until we (as registrar) have received, among other things, appropriate endorsements and transfer documents
and any taxes and fees required by law or permitted by the indenture. We are not required to transfer any Note for a period beginning
15 days before the date notice is mailed of the redemption or the maturity of such Note and ending on the date of redemption of such
Note.
Concerning
the Trustee
The
indenture contains limitations on the trustee's right, should it become one of our creditors, to obtain payment of claims in certain
cases, or to realize on property with respect to any such claim as security or otherwise. The trustee will be permitted to engage in
other transactions; however, if it acquires conflicting interests and if any of the indenture securities are in default, it must eliminate
such conflict or resign.
92
PLAN
OF DISTRIBUTION
We
are offering up to $70,000,000 in aggregate principal amount of the Notes. We offer the Notes directly to the public, without an underwriter
or placement agent, and on a continuous basis.
We
may market our Notes in many ways, including but not limited to, publishing the established features in a newspaper or through direct
mail in states in which we have properly registered the offering or qualified for an exemption from registration. Viewers of print advertising
are referred to our website at
www.shepherdsfinance.com
. The established features are available to investors on our website at
www.shepherdsfinance.com
or by calling (302) 752-2688 (30-ASK-ABOUT). If, upon review of our website, a potential investor becomes
interested in purchasing the Notes, a prospectus will be sent upon request. We may also make oral solicitations in limited circumstances
and use other methods of marketing the offering, all in compliance with applicable laws and regulations, including securities laws. Our
employees and independent managers have been instructed not to solicit offers to purchase Notes or provide advice regarding the purchase
of the Notes.
Our
Executive Vice President of Operations, Barbara Harshman, markets the Notes in reliance on Rule 3a4-1 under the Exchange Act, which permits
officers, directors, and employees to participate in the sale of the Notes without registering as a broker-dealer under certain circumstances.
Ms. Harshman is not subject to a statutory disqualification as such term is defined in Section 3(a)(39) of the Exchange Act. Ms. Harshman
serves as an executive officer and primarily performs substantial duties for or on our behalf otherwise than in connection with transactions
in securities and will continue to do so at the end of the offering. She is familiar with the selling practices permitted to officers
relying on Rule 3a4-1. Ms. Harshman has not been a broker or dealer, or an associated person of a broker or dealer, within the preceding
12 months, and has not nor will not participate in the sale of securities for any issuer more than once every 12 months, other than on
behalf of us in reliance on Rule 3a4-1. Ms. Harshman is not compensated in connection with any participation in the offering by the payment
of commissions or other remuneration based either directly or indirectly on the transactions in the Notes. Ms. Harshman has been instructed
in the limitations of the selling practices allowed under Rule 3a4-1.
The
information contained on our website is not part of this prospectus. If you have questions about the suitability of an investment in
the Notes for you, you should consult with your own investment, tax, or other professional financial advisor. Prospective investors will
be required to complete an application prior to investing in the Notes. We reserve the right to reject any investment.
You
will not know at the time of investment whether we will be successful in completing the sale of all of the Notes. We reserve the right
to withdraw or cancel the offering at any time. In the event of a withdrawal or cancellation, investments received prior to such withdrawal
or cancellation will be irrevocable and will be repaid in accordance with the terms of the Notes.
The
Notes are not listed on any securities exchange, and there is no established trading market for the Notes. We do not expect any trading
market to develop for the Notes.
93
CHARITABLE
MATCH PROGRAM
We
offer a charitable match program for interest payments that you elect to give to a qualifying charity. If you choose to participate in
the program and donate all or a portion of your interest payments to charity, when we calculate your interest we will deduct the percentage
of interest you selected and keep track of that amount separate from your information. After interest is calculated for all Note holders
at the beginning of December of each year, all of the money for each charity will be totaled up and sent in one check to each charity.
Each check will have the name and address of each contributor, and the amount each contributed. Our matching portion will be included
in the total check. We will match your interest payment donation up to 10% of your interest.
The
charity must be an Internal Revenue Code Section 501(c)(3) qualifying organization. We reserve the right to either not match your contribution,
or not make payments on your behalf to certain charities with missions contrary to our corporate philosophy. Upon your initial subscription,
if you select one of these charities, and we notify you that we will not match your donation to such an organization or will not make
a contribution on your behalf, you have the option of refund of your investment, donating without our matching contribution (assuming
we are just not willing to match your donation to that charity), or investing and not donating to the organization.
LEGAL
MATTERS
The
validity of the Notes being offered by this prospectus will be passed upon for us by Nelson Mullins Riley & Scarborough LLP, Atlanta,
Georgia.
EXPERTS
The
consolidated financial statements as of and for the years ended December 31, 2021 and 2020 appearing in this prospectus and registration
statement have been audited by Warren Averett, LLC ("Warren Averett"), an independent registered public accounting firm,
and are included herein in reliance upon such report, given on the authority of such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed a registration statement on Form S-1 with the SEC with respect to the Notes offered by this prospectus. This prospectus is
a part of that registration statement, as amended, and does not contain all of the information set forth in the registration statement
and the exhibits and schedules thereto. Certain items are omitted in accordance with the rules and regulations of the SEC. For further
information about us and the Notes sold in this offering, refer to the registration statement and the exhibits and schedules filed therewith.
Statements contained in this prospectus about the contents of any contract or other document referred to are not necessarily complete
and, in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement.
We
file annual, quarterly and special reports and other information with the SEC. The registration statement is, and all of these filings
with the SEC are, available to the public over the Internet at the SEC's website at
www.sec.gov
. You can also access documents
that will be incorporated by reference into this prospectus at the website we maintain at
www.shepherdsfinance.com
. There is additional
information about us at our website, but unless specifically incorporated by reference herein, the contents of that site are not incorporated
by reference in or otherwise a part of this prospectus.
94
INDEX
TO FINANCIAL STATEMENTS
Audited
    Consolidated Financial Statements as of and for the years ended December 31, 2021 and 2020:
Report
    of Independent Registered Public Accounting Firm on Financial Statements
(PCAOB ID: 2226)
F-2
Consolidated Balance Sheets as of December 31, 2021 and 2020
F-3
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020
F-4
Consolidated Statements of Changes in Members' Capital for the Years Ended December 31, 2021 and 2020
F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020
F-6
Notes to Consolidated Financial Statements
F-7
F-
1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Managers and
Members
of Shepherd's Finance, LLC
Jacksonville,
Florida
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Shepherd's Finance, LLC as of December 31, 2021 and 2020 and the related
consolidated statements of operations, changes in members' capital, and cash flows for the years then ended, and the related notes
(collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of Shepherd's Finance, LLC as of December 31, 2021 and 2020, and the results of
its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United
States of America.
Basis
for Opinion
These
consolidated financial statements are the responsibility of Shepherd's Finance, LLC's management. Our responsibility is to
express an opinion on Shepherd's Finance, LLC's consolidated financial statements based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect
to Shepherd's Finance, LLC in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express
no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.
/s/
Warren Averett, LLC
We
have served as Shepherd's Finance, LLC's auditor since 2018.
PCAOB
#2226
Birmingham,
Alabama
March
10, 2022
F-
2
Shepherd's
Finance, LLC
Consolidated
Balance Sheets
As
of December 31, 2021, and 2020
(in thousands of dollars)
2021
2020
Assets
Cash and cash equivalents
$
3,735
$
4,749
Accrued interest receivable
598
601
Loans receivable, net
46,943
46,405
Real estate investments
1,651
1,181
Foreclosed assets
2,724
4,449
Premises and equipment
875
903
Other assets
1,089
981
Total assets
$
57,615
$
59,269
Liabilities and Members' Capital
Customer interest escrow
$
479
$
510
Accounts payable and accrued expenses
296
289
Accrued interest payable
2,464
3,158
Notes payable secured, net of deferred financing costs
20,016
22,959
Notes payable unsecured, net of deferred financing costs
27,713
26,978
PPP loan and EIDL advance
-
10
Due to preferred equity members
43
106
Total liabilities
$
51,011
$
54,010
Commitments and Contingencies (Note 11)
Redeemable Preferred Equity
Series C preferred equity
$
5,014
$
3,582
Members' Capital
Series B preferred equity
1,720
1,630
Class A common (deficit) equity
(
130
)
47
Members' capital
$
1,590
$
1,677
Total liabilities, redeemable preferred equity and members' capital
$
57,615
$
59,269
The
accompanying notes are an integral part of these consolidated financial statements.
F-
3
Shepherd's
Finance, LLC
Consolidated
Statements of Operations
For
the years ended December 31, 2021 and 2020
(in thousands of dollars)
2021
2020
Net Interest Income
Interest and fee income on loans
$
7,944
$
8,209
Interest expense:
Interest related to secured borrowings
1,973
2,973
Interest related to unsecured borrowings
3,147
3,153
Interest expense
$
5,120
$
6,126
Net interest income
2,824
2,083
Less: Loan loss provision
588
1,805
Net interest income after loan loss provision
2,236
278
Non-Interest Income
Gain on sale of foreclosed assets
$
166
$
160
Gain on foreclosure of assets
67
52
Gain on the extinguishment of debt
371
361
Impairment gains on foreclosed assets
-
91
Total non-interest income
$
604
$
664
Income
2,840
942
Non-Interest Expense
Selling, general and administrative
$
1,873
$
2,185
Depreciation and amortization
53
85
Loss on the sale of foreclosed assets
92
102
Loss on foreclosure
47
54
Impairment loss on foreclosed assets
10
445
Total non-interest expense
2,075
2,871
Net income (loss)
$
765
$
(
1,929
)
Earned distribution to preferred equity holders
701
525
Net income (loss) attributable to common equity holders
$
64
$
(
2,454
)
The
accompanying notes are an integral part of these consolidated financial statements.
F-
4
Shepherd's
Finance, LLC
Consolidated
Statements of Changes in Members' Capital
For
the years ended December 31, 2021 and 2020
(in thousands of dollars)
2021
2020
Members' capital, beginning balance
$
1,677
$
4,188
Net income (loss) less distributions to Series C preferred equity holders of $
533
and $
372
232
(
2,301
)
Contributions from Series B preferred equity holders
90
160
Earned distributions to Series B preferred equity holders
(
168
)
(
153
)
Distributions to common equity holders
(
241
)
(
217
)
Members' capital, ending balance
$
1,590
$
1,677
The
accompanying notes are an integral part of these consolidated financial statements.
F-
5
Shepherd's
Finance, LLC
Consolidated
Statements of Cash Flows
For
the years ended December 31, 2021 and 2020
(in thousands of dollars)
2021
2020
Cash flows from operations
Net income (loss)
$
765
$
(
1,929
)
Adjustments to reconcile net income (loss) to net cash provided by operating
    activities
Amortization of deferred financing costs
168
158
Provision for loan losses
588
1,805
Change in loan origination fees, net
99
87
Depreciation and amortization
53
85
Impairment of foreclosed assets, net
10
354
Gain on foreclosed assets
(
67
)
(
52
)
Gain on sale of foreclosed assets, net
(
166
)
(
160
)
Loss on foreclosed assets
47
54
Loss on sale of foreclosed assets
92
102
Gain on extinguishment of debt
(
371
)
(
361
)
Net change in operating assets and liabilities:
Other assets
(
133
)
(
831
)
Accrued interest receivable
3
430
Customer interest escrow
(
262
)
(
217
)
Accrued interest payable
716
1,422
Accounts payable and accrued expenses
7
(
177
)
Net cash provided by operating activities
1,549
770
Cash flows from investing activities
Loan originations and principal collections, net
(
2,016
)
3,814
Investment in foreclosed assets
(
818
)
(
1,410
)
Additions for construction in real estate investments
(
670
)
(
41
)
Deposits for construction in real estate investments
200
-
Proceeds from sale of foreclosed assets
3,418
3,697
Net cash provided by investing activities
114
6,060
Cash flows from financing activities
Contributions from preferred B equity holders
90
160
Contributions from preferred C equity holders
1,000
300
Distributions to redeemable preferred equity holders
(
101
)
(
49
)
Distributions to common equity holders
(
241
)
(
217
)
Proceeds from secured note payable
9,319
12,927
Repayments of secured note payable
(
12,420
)
(
18,379
)
Proceeds from unsecured notes payable
9,088
10,103
Redemptions/repayments of unsecured notes payable
(
9,655
)
(
9,018
)
Proceeds from PPP loan and EIDL advance
361
371
Deferred financing costs paid
(
118
)
(
162
)
Net cash used in financing activities
(
2,677
)
(
3,964
)
Net change in cash and cash equivalents
(
1,014
)
2,866
Cash and cash equivalents
Beginning of period
4,749
1,883
End of period
$
3,735
$
4,749
Supplemental disclosure of cash flow information
Cash paid for interest
$
5,814
$
5,501
Non-cash investing and financing activities
Earned by Series B preferred equity holders but not distributed to customer interest escrow
$
43
$
106
Earned by Series B preferred equity holders and distributed to customer interest escrow
$
231
$
83
Foreclosure of assets transferred from loans receivable, net
$
791
$
2,118
Earned but not paid distributions of Series C preferred equity holders
$
503
$
372
Secured and unsecured notes payable transfers
$
158
$
1,424
Accrued interest payable transferred to unsecured notes payable
$
1,410
$
797
Construction loans funded through the reduction of Secured LOC from
    affiliates
$
141
$
-
Transfer of loan receivables to real estate investments
$
-
$
1,140
PPP forgiveness in reduction of debt
$
371
$
361
The
accompanying notes are an integral part of these interim condensed consolidated financial statements.
F-
6
Shepherd's
Finance, LLC
Notes
to Consolidated Financial Statements
Information
presented throughout these notes to the consolidated financial statements is in thousands of dollars.
1.
Description of Business
Shepherd's
Finance, LLC and subsidiary (the "Company", "we", or "our") was originally formed as a Pennsylvania
limited liability company on May 10, 2007. We are the sole member of one consolidating subsidiary, Shepherd's
Stable Investments, LLC. The Company operates pursuant to its Second Amended and Restated Limited Liability Company Agreement by and
among Daniel M. Wallach and the other members of the Company effective as of March 16, 2017, and as subsequently amended.
The
Company extends commercial loans to residential homebuilders (in 20 states as of December 31, 2021) to:
●
construct
    single family homes,
●
develop
    undeveloped land into residential building lots, and
●
purchase
    and improve for sale older homes.
2.
Summary of Significant Accounting Policies
Principles
of Consolidation
These
consolidated financial statements include the consolidated accounts of the Company's subsidiary and reflect all adjustments (all
of which are normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the consolidated
financial position, operating results, and cash flows for the periods. All intercompany balances and transactions have been eliminated.
Use
of Estimates
The
preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible
that market conditions could deteriorate, which could materially affect our consolidated financial position, results of operations and
cash flows. Among other effects, such changes could result in the need to increase the amount of our allowance for loan losses and impair
our foreclosed assets.
Operating
Segments
Financial
Accounting Standards Board ("FASB") Accounting Standards Codification Topic ("ASC") 280,
Segment Reporting
,
requires that the Company report financial and descriptive information about reportable segments and how these segments were determined.
We determine the allocation of resources and performance of business units based on operating income, net income and operating cash flows.
Segments are identified and aggregated based on products sold or services provided. Based on these factors, we have determined that the
Company's operations are in one segment, commercial lending.
Revenue
Recognition
Interest
income generally is recognized on an accrual basis. The accrual of interest is generally discontinued on all loans past due 90 days or
more. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income,
unless management believes that the accrued interest is recoverable through liquidation of collateral. Interest received on nonaccrual
loans is applied against principal. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria
for nonaccrual status. Our construction loans charge a fee on the amount that we commit to lend, which is amortized over the expected
life of each of those loans.
F-
7
The
Company records revenue when control of the promised services is transferred to the customer, in an amount that reflects the consideration
we expect to be entitled to receive in exchange for those products or services. Our performance obligations to customers are primarily
satisfied over time as the services are performed and provided to the customer.
Advertising
Advertising
costs are expensed as incurred and are included in selling, general and administrative. Advertising expenses were $
65
and $
85
for the
years ended December 31, 2021 and 2020, respectively.
Cash
and Cash Equivalents
Management
considers highly-liquid investments with original maturities of three months or less to be cash equivalents. The Company maintains its
cash account in a deposit account which, at times, may exceed federally insured limits. The Company monitors this bank account and does
not expect to incur any losses from such account.
Fair
Value Measurements
The
Company follows the guidance of FASB ASC 825,
Financial Instruments
(ASC 825), and FASB ASC 820,
Fair Value Measurements
(ASC
820). ASC 825 permits entities to measure many financial instruments and certain other items at fair value. The objective is to improve
financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related
assets and liabilities differently without having to apply complex hedge accounting provisions. ASC 820 clarifies that fair value is
an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. Under this guidance, fair value measurements are not adjusted for transaction costs. This guidance establishes
a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements).
Loans
Receivable
Loans
are stated at the amount of unpaid principal, net of any allowances for loan losses, and adjusted for (1) the net unrecognized portion
of direct costs and nonrefundable loan fees associated with lending, and (2) deposits made by the borrowers used as collateral for a
loan and due back to the builder at or prior to loan payoff. The net amount of nonrefundable loan origination fees and direct costs associated
with the lending process, including commitment fees, is deferred and accreted to interest income over the lives of the loans using a
method that approximates the interest method.
A
loan is classified as nonaccrual, and the accrual of interest on such loan is discontinued, when the contractual payment of principal
or interest becomes 90 days past due. In addition, a loan may be placed on nonaccrual at any other time management has serious doubts
about further collectability of principal or interest according to the contractual terms, even though the loan is currently performing.
A loan may remain on accrual status if it is in the process of collection or well-secured (i.e., the loan has sufficient collateral value).
Loans are restored to accrual status when the obligation is brought current or has performed in accordance with the contractual terms
for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.
A
loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect
the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impaired loans, or
portions thereof, are charged off when deemed uncollectible. Once a loan is 90 days past due, management begins a workout plan with the
borrower or commences its foreclosure process on the collateral.
Allowance
for Loan Losses
The
allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses inherent in the loan portfolio.
F-
8
The
Company establishes a collective reserve for all loans which are not more than 60 days past due at the end of each quarter. This collective
reserve includes both a quantitative and qualitative analysis. In addition to historical loss information, the analysis incorporates
collateral value, decisions made by management and staff, percentage of aging spec loans, policies, procedures, and economic conditions.
The
Company individually analyzes for impairment all loans which are more than 60 days past are due at the end of each quarter. We also review
for impairment all loans to one borrower with greater than or equal to 10% of our total committed balances. If required, the analysis
includes a comparison of estimated collateral value to the principal amount of the loan.
Impaired
loans, if the value determined is less than the principal amount due (less any builder deposit), then the difference is included in the
allowance for loan loss. As values change, estimated loan losses may be provided for more or less than the previous period, and some
loans may not need a loss provision based on payment history. As for homes which are partially complete, the Company will appraise on
an as-is and completed basis, and use the appraised value that more closely aligns with our planned method of disposal for the property.
Impaired
Loans
A
loan is considered to be impaired when it is probable the Company will be unable to collect all principal and interest payments due in
accordance with the contractual terms of the loan agreement.
Foreclosed
Assets
When
a foreclosed asset is acquired in the settlement of a loan, the asset is recorded at the as-is fair value minus expected selling costs
establishing a new cost basis. The gain or loss is recorded on our consolidated statement of operations as non-interest income or expense.
If the fair value of the asset declines, a write-down is recorded through non-interest expense. While the initial valuation is done on
an as-is basis, subsequent values are based on our plan for the asset. Assets which are not going to be improved are still evaluated
on an as-is basis. Assets we intend to improve, are improving, or have improved are appraised based on the to-be-completed value, minus
reasonable selling costs, and we adjust the portion of the appraised value related to construction improvements for the percentage of
the improvements which have not yet been made. Subsequently, if a foreclosed asset has an increase in fair value the increase may be
recognized up to the cost basis which was determined at the foreclosure date.
Deferred
Financing Costs, Net
Deferred
financing costs consist of certain costs associated with financing activities related to the issuance of debt securities (deferred financing
costs). These costs consist primarily of professional fees incurred related to the transactions. Deferred financing costs are amortized
into interest expense over the life of the related debt. The deferred financing costs are reflected as a reduction in the unsecured notes
offering liability.
Income
Taxes
The
entities included in the consolidated financial statements are organized as pass-through entities under the Internal Revenue Code. As
such, taxes are the responsibility of the members. Other significant taxes for which the Company is liable are recorded on an accrual
basis.
The
Company applies FASB ASC 740,
Income Taxes
(ASC 740). ASC 740 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the consolidated financial statements and requires the evaluation of tax positions taken or expected
to be taken in the course of preparing the Company's consolidated financial statements to determine whether the tax positions are
"more-likely-than-not" to be sustained by the applicable tax authority. Tax positions with respect to income tax at the LLC
level not deemed to meet the "more-likely-than-not" threshold would be recorded as a tax benefit or expense in the appropriate
period. Management concluded that there are no uncertain tax positions that should be recognized in the consolidated financial statements.
With few exceptions, the Company is no longer subject to income tax examinations for years prior to 2014.
The
Company's policy is to record interest and penalties related to taxes in interest expense on the consolidated statements of operations.
There have been no significant interest or penalties assessed or paid.
Reclassifications
Certain
reclassifications have been made to the prior period's financial statements and disclosures to conform to the current period's
presentation.
F-
9
Risks
and Uncertainties
The
Company is subject to many of the risks common to the commercial lending and real estate industries, such as general economic conditions,
decreases in home values, decreases in housing starts, increases in interest rates, and competition from other lenders. At December 31,
2021, our loans were significantly concentrated in a suburb of Pittsburgh, Pennsylvania, so the housing starts and prices in that area
are more significant to our business than other areas until and if more loans are created in other markets.
Concentrations
Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of loans receivable. Our concentration
risks for our top three customers listed by geographic real estate market are summarized in the table below:
December 31, 2021
December 31, 2020
Percent of
Percent of
Borrower
Loan
Borrower
Loan
City
Commitments
City
Commitments
Highest concentration risk
Pittsburgh, PA
26
%
Pittsburgh, PA
29
%
Second highest concentration risk
Orlando, FL
7
%
Orlando, FL
12
%
Third highest concentration risk
Spokane, WA
4
%
Cape Coral, FL
6
%
Recent
Accounting Pronouncements
The
FASB issued ASU 2018-13, "
Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements
for Fair Value Measurement
." This ASU amends the disclosure requirements of Topic 820, Fair Value Measurement, to remove disclosure
of transfers between Level 1 and Level 2 of the fair value hierarchy and to include disclosure of the range and weighted average used
in Level 3 fair value measurements, among other amendments. The ASU applies to all entities that are required to provide disclosures
about recurring or non-recurring fair value measurements. Amendments should be applied retrospectively to all periods presented, except
for certain amendments, which should be applied prospectively for only the most recent interim or annual period presented in the initial
fiscal year of adoption. ASU 2018-13 became effective for the Company on January 1, 2020. The adoption of ASU 2018-13 did not have a
material impact on the Company's consolidated financial statements.
ASU
2016-13, "
Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments
". The amendments
in ASU 2016-13 introduce a new current expected credit loss ("CECL") model for certain financial assets, including mortgage
loans and reinsurance receivables. The new model will not apply to debt securities classified as available-for-sale. For assets within
the scope of the new model, an entity will recognize as an allowance against earnings its estimate of the contractual cash flows not
expected to be collected on day one of the asset's acquisition. The allowance may be reversed through earnings if a security recovers
in value. This differs from the current impairment model, which requires recognition of credit losses when they have been incurred and
recognizes a security's subsequent recovery in value in other comprehensive income. ASU 2016-13 also makes targeted changes to
the current impairment model for available-for-sale debt securities, which comprise the majority of the Company's invested assets.
Similar to the CECL model, credit loss impairments will be recorded in an allowance against earnings that may be reversed for subsequent
recoveries in value. The amendments in ASU 2016-13, along with related amendments in ASU No. 2018-19 - Codification Improvements to Topic
326, Financial Instruments-Credit Losses, are effective for annual and interim periods beginning after December 15, 2019 on a modified
retrospective basis. For smaller reporting companies, the effective date for annual and interim periods is January 1, 2023. The Company
is reviewing its policies and processes to ensure compliance with the requirements in ASU 2016-13.
F-
10
3.
Fair Value
Utilizing
ASC 820, the Company has established a framework for measuring fair value under U.S. GAAP using a hierarchy, which requires the Company
to maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are an exit price, representing
the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
Three levels of inputs are used to measure fair value, as follows:
Level
    1 –
quoted
    prices in active markets for identical assets or liabilities;
Level
    2 –
quoted
    prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or
Level
    3 –
unobservable
    inputs, such as discounted cash flow models or valuations.
A
financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair
value measurement.
Fair
Value Measurements of Non-Financial Instruments on a Recurring Basis
The
Company has no non-financial instruments measured at fair value on a recurring basis.
Fair
Value Measurements of Non-Financial Instruments on a Non-recurring Basis
Certain
assets are measured at fair value on a non-recurring basis when there is evidence of impairment. The fair values of impaired loans with
specific allocations of the allowance for loan losses are generally based on recent real estate appraisals of the collateral less estimated
cost to sell. Declines in the fair values of other real estate owned subsequent to their initial acquisitions are also based on recent
real estate appraisals less selling costs.
Impaired
Loans
The
appraisals used to establish the value of impaired loans are based on similar properties at similar times; however due to the differences
in time and properties, the impaired loans are classified as Level 3. There were 23 and 29 impaired loan assets as of December 31, 2021
and December 31, 2020, respectively
.
Foreclosed
Assets
Foreclosed
assets (upon initial recognition or subsequent impairment) are measured at fair value on a non-recurring basis.
Foreclosed
assets, upon initial recognition, are measured and reported at fair value less cost to sell. Each reporting period, the Company remeasures
the fair value of its significant foreclosed assets. Fair value is based upon independent market prices, appraised values of the foreclosed
assets or management's estimates of value, which the Company classifies as a Level 3 evaluation.
The
following tables present the balances of non-financial instruments measured at fair value on a non-recurring basis as of December 31,
2021 and 2020:
Quoted Prices
in Active
Markets for
Significant Other
Significant
December 31, 2021
Identical
Observable
Unobservable
Carrying
Estimated
Assets
Inputs
Inputs
Amount
Fair Value
Level 1
Level 2
Level 3
Foreclosed assets
$
2,724
$
2,724
$
–
$
–
$
2,724
Impaired loans due to COVID-19, net
5,129
5,129
–
–
5,129
Other impaired loans, net
2,572
2,572
–
–
2,572
Total
$
10,425
$
10,425
$
–
$
–
$
10,425
F-
11
Quoted Prices
in Active
Markets for
Significant Other
Significant
December 31, 2020
Identical
Observable
Unobservable
Carrying
Estimated
Assets
Inputs
Inputs
Amount
Fair Value
Level 1
Level 2
Level 3
Foreclosed assets
$
4,449
$
4,449
$
–
$
–
$
4,449
Impaired loans due to COVID-19, net
9,054
9,054
–
–
9,054
Other impaired loans, net
1,064
1,064
–
–
1,064
Total
$
14,567
$
14,567
$
–
$
–
$
14,567
Fair
Value of Financial Instruments
ASC
825 requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet,
for which it is practicable to estimate that value. The following methods and assumptions were used by the Company in estimating the
fair value of its financial instruments:
Cash
and Cash Equivalents
The
carrying amount approximates fair value because of the short maturity of these instruments.
Loans
Receivable and Commitments to Extend Credit
For
variable rate loans that reprice frequently with no significant change in credit risk, estimated fair values of collateral are based
on carrying values at both December 31, 2021 and 2020. Because the loans are demand loan and therefore have no known time horizon, there
is no significant impact from fluctuating interest rates. For unfunded commitments to extend credit, because there would be no adjustment
between fair value and carrying amount for the amount if actually loaned, there is no adjustment to the amount before it is loaned. The
amount for commitments to extend credit is not listed in the tables below because there is no difference between carrying value and fair
value, and the amount is not recorded on the consolidated balance sheets as a liability.
Interest
Receivable
Interest
receivable from our customers is due approximately 15 days after it is billed; therefore, the carrying amount approximates fair value
for the years ended December 31, 2021 and 2020.
Customer
Interest Escrow
The
customer interest escrow does not yield interest to the customer, but the fair value approximates the carrying value at both December
31, 2021 and 2020 because: 1) the customer loans are demand loans, 2) it is not possible to estimate how long the escrow will be in place,
and 3) the interest rate which could be used to discount this amount is negligible.
Borrowings
under Credit Facilities
The
fair value of the Company's borrowings under credit facilities is estimated based on the expected cash flows discounted using the
current rates offered to the Company for debt of the same remaining maturities. As all of the borrowings under credit facilities or the
Notes are either payable on demand or at similar rates to what the Company can borrow funds for today, the fair value of the borrowings
is determined to approximate carrying value at both December 31, 2021 and 2020. The interest on our Notes offering is paid to our Note
holders either monthly or at the end of their investment, compounded on a monthly basis. For the same reasons as the determination for
the principal balances on the Notes, the fair value approximates the carrying value for the interest as well.
F-
12
The
table below is a summary of fair value estimates for financial instruments:
December 31, 2021
December 31, 2020
Carrying
Estimated
Carrying
Estimated
Amount
Fair Value
Amount
Fair Value
Financial Assets
Cash and cash equivalents
$
3,735
$
3,735
$
4,749
$
4,749
Loans receivable, net
46,943
46,943
46,405
46,405
Accrued interest on loans
598
598
601
601
Financial Liabilities
Customer interest escrow
479
479
510
510
Notes payable secured, net
20,016
20,016
22,959
22,959
Notes payable unsecured, net
27,713
27,713
26,978
26,978
Accrued interest payable
2,464
2,464
3,158
3,158
4.
Real Estate Investment Assets
During
June 2020, the Company acquired two lots from a borrower in exchange for the transfer of loans secured by those lots. The Company extinguished
the principal balance for the loans on the lots in the amount of $
640
and in addition, paid a $
500
management fee for the development
of homes on certain of the Company's lots that were previously carried as loan receivables. The management fee was paid through
reducing the principal balance on a current loan receivable with the borrower.
The
following table is a roll forward of real estate investment assets:
December 31, 2021
December 31, 2020
Beginning balance
$
1,181
$
–
Transfers from loans
–
1,140
Deposits from real estate investments
(
200
)
–
Additions for construction/development
670
41
Ending balance
$
1,651
$
1,181
5.
Financing Receivables
Financing
receivables are comprised of the following as of December 31, 2021 and 2020:
December 31, 2021
December 31, 2020
Loans receivable, gross
$
50,763
$
50,449
Less: Deferred loan fees
(
1,143
)
(
1,092
)
Less: Deposits
(
934
)
(
1,337
)
Plus: Deferred origination costs
305
353
Less: Allowance for loan losses
(
2,048
)
(
1,968
)
Loans receivable, net
$
46,943
$
46,405
The
allowance for loan losses at December 31, 2021 was $
2,048
which primarily consisted of $
163
for loans without specific reserves, $
342
for loans with specific reserves, $
60
for special mention loans and $
1,483
for specific reserves due to the impact of COVID-19. During
the year ended December 31, 2021, we incurred $
509
in direct charge offs.
The
allowance for loan losses at December 31, 2020 was $
1,968
, of which $
151
is related to loans without specific reserves. The Company recorded
specific reserves for loans impaired due to impacts from COVID-19 of $
1,532
, special mention loans of $
120
and impaired loans not due
to impacts from COVID-19 of $
165
. During the year ended December 31, 2020, we incurred $
72
in direct charge offs.
F-
13
Commercial
Construction and Development Loans
Construction
Loan Portfolio Summary
As
of December 31, 2021, we have 66 borrowers, all of whom borrow money for the purpose of building new homes. The loans typically involve
funding of the lot and a portion of construction costs, for a total of between
50
% and
70
% of the completed value of the new home. As
the home is built during the course of the loan, the loan balance increases. The loans carry an interest rate of
3
% above our cost of
funds. In addition, we charge a
5
% loan fee. The cost of funds was
10.91
% as of December 31, 2021 and the interest rate charged to most
customers was
13.91
%. The loans are demand loans. Most have a deposit from the builder during construction to help offset the risk of
partially built homes, and some have an interest escrow to offset payment of monthly interest risk.
The
following is a summary of the loan portfolio to builders for home construction loans as of December 31, 2021 and 2020:
Year
Number of
States
Number
of
Borrowers
Number of
Loans
Value of
Collateral
(1)
Commitment Amount
Gross
Amount
Outstanding
Loan to Value
Ratio
(2)
Loan Fee
2021
20
66
224
$
98,935
$
66,008
$
43,106
67
%
(3)
5
%
2020
21
67
213
$
86,268
$
61,714
$
42,219
72
%
5
%
(1)
The
    value is determined by the appraised value.
(2)
The
    loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.
(3)
Represents
    the weighted average loan to value ratio of the loans.
Real
Estate Development Loan Portfolio Summary
The
following is a summary of our loan portfolio to builders for land development as of December 31, 2021 and 2020:
Year
Number of
States
Number
of
Borrowers
Number
of
Loans
Gross Value
of
Collateral
(1)
Commitment
Amount
(3)
Gross Amount
Outstanding
Loan to Value
Ratio
(2)
Interest Spread
2021
6
12
15
$
12,464
$
9,095
$
7,657
61
%
(4)
varies
2020
5
8
9
$
11,628
$
10,815
$
8,230
71
%
7
%
(1)
The
    value is determined by the appraised value adjusted for remaining costs to be paid. A portion of this collateral is $
1,720
and $
1,630
as of December 31, 2021 and 2020, respectively, of preferred equity in our Company. In the event of a foreclosure on the property
    securing these loans, the portion of our collateral that is preferred equity might be difficult to sell, which may impact our ability
    to recover the loan balance. In addition, a portion of the collateral value is estimated based on the selling prices anticipated
    for the homes.
(2)
The
    loan to value ratio is calculated by taking the outstanding amount and dividing by the appraised value calculated as described above.
(3)
The
    commitment amount does not include letters of credit and cash bonds.
(4)
Represents
    the weighted average loan to value ratio of the loans.
Credit
Quality Information
The
following table presents credit-related information at the "class" level in accordance with FASB ASC 310-10-50,
Disclosures
about the Credit Quality of Finance Receivables and the Allowance for Credit Losses
. A class is generally a disaggregation of a portfolio
segment. In determining the classes, the Company considered the finance receivable characteristics and methods it applies in monitoring
and assessing credit risk and performance.
F-
14
The
following table summarizes finance receivables by the risk ratings that regulatory agencies utilize to classify credit exposure and which
are consistent with indicators the Company monitors. Risk ratings are reviewed on a regular basis and are adjusted as necessary for updated
information affecting the borrowers' ability to fulfill their obligations.
The
definitions of these ratings are as follows:
●
Pass
    – finance receivables in this category do not meet the criteria for classification in one of the categories below.
●
Special
    mention – a special mention asset exhibits potential weaknesses that deserve management's close attention. If left uncorrected,
    these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects.
●
Classified
    – a classified asset ranges from: 1) assets that are inadequately protected by the current sound worth and paying capacity
    of the borrower, and are characterized by the distinct possibility that some loss will be sustained if the deficiencies are not corrected
    to 2) assets with weaknesses that make collection or liquidation in full unlikely on the basis of current facts, conditions, and
    values. Assets in this classification can be accruing or on non-accrual depending on the evaluation of these factors.
Finance
Receivables – By risk rating:
December 31, 2021
December 31, 2020
Pass
$
38,893
$
35,544
Special mention
2,344
3,089
Classified – accruing
–
–
Classified – nonaccrual
9,526
11,816
Total
$
50,763
$
50,449
Finance
Receivables – Method of impairment calculation:
December 31, 2021
December 31, 2020
Performing loans evaluated individually
$
16,495
$
16,412
Performing loans evaluated collectively
24,742
22,221
Non-performing loans without a specific reserve
596
1,518
Non-performing loans with a specific reserve
8,930
10,298
Total evaluated collectively for loan losses
$
50,763
$
50,449
At
December 31, 2021 and 2020, there were no loans acquired with deteriorated credit quality.
The
following is a summary of our impaired non-accrual commercial construction loans as of December 31, 2021 and 2020:
December 31, 2021
December 31, 2020
Unpaid principal balance (contractual obligation from customer)
$
10,035
$
11,888
Charge-offs and payments applied
(
509
)
(
72
)
Gross value before related allowance
9,526
11,816
Related allowance
(
1,825
)
(
1,698
)
Value after allowance
$
7,701
$
10,118
F-
15
6.
Foreclosed Assets
Roll
forward of foreclosed assets for the years ended December 31, 2021 and 2020:
December 31, 2021
December 31, 2020
Beginning balance
$
4,449
$
4,916
Additions from loans
791
2,118
Additions for construction/development
818
1,410
Sale proceeds
(
3,418
)
(
3,697
)
Loss on foreclosure
(
47
)
(
54
)
Loss on sale of foreclosed assets
(
92
)
(
102
)
Gain on foreclosure
67
52
Gain on sale of foreclosed assets
166
160
Impairment loss on foreclosed assets
(
10
)
(
290
)
Impairment loss on foreclosed assets due to COVID-19
-
(
64
)
Ending balance
$
2,724
$
4,449
7.
Borrowings
The
following table displays our borrowings and a ranking of priority:
Priority
Rank
December 31, 2021
December
31,
2020
Borrowing Source
Purchase and sale agreements and other secured borrowings
1
$
19,165
$
22,968
Secured line of credit from affiliates
2
859
-
Unsecured line of credit (senior)
3
1,250
500
EIDL advance
3
-
10
Other unsecured debt (senior subordinated)
4
1,053
1,800
Unsecured Notes through our public offering, gross
5
20,636
21,482
Other unsecured debt (subordinated)
5
4,693
2,747
Other unsecured debt (junior subordinated)
6
447
864
Total
$
48,103
$
50,371
The
following table shows the maturity of outstanding debt as of December 31, 2021:
Year
    Maturing
Total
    Amount Maturing
Public
    Offering
Other
    Unsecured
Secured
Borrowings
2022
$
28,238
$
7,074
$
1,945
$
19,219
2023
5,060
3,475
1,514
71
2024
8,716
5,002
3,587
127
2025
5,565
5,085
398
82
2026
    and thereafter
524
-
-
524
Total
$
48,103
$
20,636
$
7,444
$
20,023
Secured
Borrowings
Loan
Purchase and Sale Agreements
We
have two loan purchase and sale agreements where we are the seller of portions of loans we create. The two purchasers are Builder Finance,
Inc. ("Builder Finance") and S.K. Funding, LLC ("S.K. Funding"). Generally, the purchasers buy between
50
% and
75
% of each loan sold. They receive interest rates ranging from our cost of funds to the interest rate charged to the borrower (interest
rates were between
6
% and
11
% for both 2021 and 2020). The purchasers generally do not receive any of the loan fees we charge. We have
the right to call some of the loans sold, with some restrictions. Once sold, the purchaser must fund their portion of the loans purchased.
We service the loans. Also, there are limited put options in some cases, whereby the purchaser can cause us to repurchase a loan. The
loan purchase and sale agreements are recorded as secured borrowings.
F-
16
In March 2018, we entered into the Seventh Amendment (the "Seventh Amendment") to our Loan Purchase and Sale Agreement with S.K. Funding. The purpose of the Seventh Amendment was to allow S.K. Funding to purchase a portion of the Pennsylvania Loans.
The timing of the Company's principal and interest payments to S.K. Funding under the Seventh Amendment, and S.K. Funding's obligation to fund the Pennsylvania Loans, vary depending on the total principal amount of the Pennsylvania Loans outstanding at any time, as follows:
●
If the total principal amount exceeds $1,000, S.K. Funding must fund the amount between $1,000 and less than or equal to $4,500.
●
If the total principal amount is less than $4,500, then the Company will also repay S.K. Funding's principal as principal payments are received on the Pennsylvania Loans from the underlying borrowers in the amount by which the total principal amount is less than $4,500 until S.K. Funding's principal has been repaid in full.
●
The interest rate accruing to S.K. Funding under the Seventh Amendment is
10.5
% calculated on a 365/366-day basis.
The
Seventh Amendment had a term of 24 months and automatically renews for additional six-month terms unless either party gives written notice
of its intent not to renew at least six months prior to the end of a term. S.K. Funding will have a priority position as compared to
the Company in the case of a default by any of the borrowers.
In
April 2021, we entered into the Eleventh Amendment (the "Eleventh Amendment") to our Loan Purchase and Sale Agreement with
S.K. Funding. The purpose of the Eleventh Amendment was to allow a principal increase to $
2,000
from the original $
1,000
in the Tenth
Amendment dated January 2019. In addition, if the collateral value drops then an unsecured portion or $
400
may be used until the collateral
is increased back to $
2,000
.
The
Eleventh Amendment has a term of 12 months and will automatically renew for an additional six-month term unless either party gives written
notice of its intent not to renew at least five months prior to the end of a term. S.K. Funding will have a priority position as compared
to the Company in the case of a default by any of the borrowers.
Lines
of Credit
Lines
of Credit with Mr. Wallach and His Affiliates
During
June 2018, we entered into the First Amendment to the line of credit with our Chief Executive Officer and his wife (the "Wallach
LOC") which modified the interest rate on the Wallach LOC to generally equal the prime rate plus
3
%. The interest rate for the
Wallach LOC was
6.25
% as of December 31, 2021 and 2020. As of December 31, 2021, and 2020, the amount outstanding pursuant to the Wallach
LOC was $
0
. The maximum amount outstanding on the Wallach LOC is $
1,250
and the loan is a demand loan.
During
June 2018, we also entered into the First Amendment to the line of credit with the 2007 Daniel M. Wallach Legacy Trust, which is our
CEO's trust (the "Wallach Trust LOC") which modified the interest rate on the Wallach Trust LOC to generally equal
the prime rate plus
3
%. The interest rate for this borrowing was
6.25
% as of December 31, 2021 and 2020. There were no amounts borrowed
against the Wallach Trust LOC as of December 31, 2021 and 2020. The maximum amount outstanding on the Wallach Trust LOC is $
250
and the
loan is a demand loan.
Line
of Credit with William Myrick
During
June 2018, we entered into a line of credit agreement (the "Myrick LOC Agreement") with our Executive Vice President ("EVP"),
William Myrick. Pursuant to the Myrick LOC Agreement, Mr. Myrick provides us with a line of credit (the "Myrick LOC") with
the following terms:
●
Principal
    not to exceed $
1,000
;
●
Secured
    by a lien against all of our assets;
●
Cost
    of funds to us of prime rate plus
3
%; and
●
Due
    upon demand.
As
of December 31, 2021 and 2020, the amount outstanding pursuant to the Myrick LOC was $
859
and $
0
, respectively. For the years ended December
31, 2021 and 2020, interest expense was $
6
and $
19
, respectively.
Line
of Credit with Shuman
During
July 2017, we entered into a line of credit agreement (the "Shuman LOC Agreement") with Steven K. Shuman, which is now held
by Cindy K. Shuman. Pursuant to the Shuman LOC Agreement, Shuman provides us with a revolving line of credit (the "Shuman LOC")
with the following terms:
●
Principal
    not to exceed $
1,325
;
●
Secured
    with assignments of certain notes and mortgages;
●
Cost
    of funds to us of
10
%; and
●
Due
                                                                              in July 2022, but will automatically renew for additional 12-month periods, unless either party gives notice to not
                                                                              renew.
As
of December 31, 2021 and 2020, the amount outstanding pursuant to the Shuman LOC was $
125
and $
1,325
, respectively. Interest expense
was $
77
and $
135
for the years ended December 31, 2021 and 2020, respectively.
During
December 2021, the full Swanson LOC was assigned to Judith Swanson, a trustee of the 2021 Income Trust.
F-
17
Line
of Credit with Swanson
During
December 2018, we entered into a Master Loan Modification Agreement (the "Swanson Modification Agreement") with Paul Swanson
which modified the line of credit agreement between us and Mr. Swanson dated October 23, 2017. Pursuant to the Swanson Modification Agreement,
Mr. Swanson provides us with a revolving line of credit (the "Swanson LOC") with the following terms:
●
Principal
    not to exceed $
7,000
;
●
Secured
    with assignments of certain notes and mortgages;
●
Cost
    of funds to us of
6
%; and
●
Due
    in July 2022, but will
automatically renew for additional 12-month periods
, unless either party gives notice to not renew.
The
Swanson LOC was fully borrowed as of December 31, 2021 and 2020. Interest expense was $
619
and $
709
for the years ended December 31,
2021 and 2020, respectively.
During
December 2021, the full Swanson LOC was assigned to Judith Swanson, as trustee of a trust.
New
Lines of Credit
During
2020 and 2019, we entered into five line of credit agreements (the "New LOC Agreements"). Pursuant to the New LOC Agreements,
the lenders provide us with revolving lines of credit with the following terms:
●
Principal
    not to exceed $
6,063
;
●
Secured
    with assignments of certain notes and mortgages; and
●
Terms
    generally allow the lenders to give one month notice after which the principal balance of a New LOC Agreement will reduce to a zero
    over the next six months.
The
total balance of the New LOC Agreements was $
2,909
and $
4,159
as of December 31, 2021 and 2020, respectively. Interest expense was $
262
and $
341
for the year ended December 31, 2021 and 2020, respectively.
Mortgage
Payable
During
January 2018, we entered into a commercial mortgage on our office building with the following terms:
●
Principal
    not to exceed $
660
;
●
Interest
    rate at
5.07
% per annum based on a year of 360 days; and
●
Due
    in January 2033
.
The
principal amount of the Company's commercial mortgage was $
604
and $
619
as of December 31, 2021 and 2020, respectively. For the
years ended December 31, 2021 and 2020, interest expense was $
32
and $
33
, respectively.
Community
Loan
During
June 2020, we entered into a business loan agreement with Community Bank ("Community Loan") with the following terms:
●
Principal
    not to exceed $
362
;
●
First
    principal payment due July 2023;
●
Secured
    by certain of our foreclosed assets;
●
Interest
    rate at
3.8
% per annum based on a year of 360 days; and
●
Due
    in July 2025
.
The
principal amount for the Community Loan was $
217
and $
362
as of December 31, 2021 and 2020, respectively. Interest expense for the years
ended December 31, 2021 and 2020 was $
11
and $
8
, respectively.
F-
18
Secured
Deferred Financing Costs
The
Company had secured deferred financing costs of $
7
and $
8
as of December 31, 2021 and 2020, respectively.
Secured
Borrowings Secured by Loan Assets
Borrowings
secured by loan assets are summarized below:
December 31, 2021
December 31, 2020
Book Value of Loans which Served as Collateral
Due from Shepherd's Finance to Loan Purchaser or Lender
Book Value of
Loans which Served as Collateral
Due from Shepherd's Finance to Loan Purchaser or Lender
Loan Purchaser
Builder Finance
$
4,847
$
2,969
$
7,981
$
5,919
S.K. Funding
8,084
5,500
4,551
3,898
Lender
Shuman
566
125
1,916
1,325
Jeff Eppinger
3,328
1,500
2,206
1,500
Hardy Enterprises, Inc.
-
-
1,590
1,000
Gary Zentner
-
-
424
250
R. Scott Summers
1,475
847
1,259
847
John C. Solomon
1,139
563
743
563
Swanson
9,803
6,841
9,381
6,685
Total
$
29,242
$
18,345
$
30,051
$
21,987
Unsecured
Borrowings
Unsecured
Notes through the Public Offering ("Notes Program")
The
effective interest rate on borrowings through our Notes Program at December 31, 2021 and 2020 was
9.28
% and
10.38
%, respectively, not
including the amortization of deferred financing costs. There are limited rights of early redemption. We generally offer four durations
at any given time, ranging from 12 to 48 months. The following table shows the roll forward of our Notes Program:
December 31, 2021
December 31, 2020
Gross notes outstanding, beginning of period
$
21,482
$
20,308
Notes issued
7,876
7,691
Note repayments / redemptions
(
8,722
)
(
6,517
)
Gross Notes outstanding, end of period
20,636
21,482
Less deferred financing costs, net
(
367
)
(
416
)
Notes outstanding, net
$
20,269
$
21,066
The
following is a roll forward of deferred financing costs:
December 31, 2021
December 31, 2020
Deferred financing costs, beginning balance
$
942
$
786
Additions
119
156
Deferred financing costs, ending balance
$
1,061
$
942
Less accumulated amortization
(
694
)
(
526
)
Deferred financing costs, net
$
367
$
416
F-
19
The
following is a roll forward of the accumulated amortization of deferred financing costs:
December 31, 2021
December 31, 2020
Accumulated amortization, beginning balance
$
526
$
370
Additions
168
165
Disposals
-
(
9
)
Accumulated amortization, ending balance
$
694
$
526
Other
Unsecured Debts
Our
other unsecured debts are detailed below:
Principal Amount Outstanding as of
Loan
Maturity
Date
Interest
Rate
(1)
December
31,
2021
December
31,
2020
Unsecured Note with Seven Kings Holdings, Inc.
Demand
(2)
9.5
%
$
500
$
500
Unsecured Line of Credit from Swanson
July 2022
6.0
%
159
315
Unsecured Line of Credit from Builder Finance, Inc.
January 2023
10.0
%
750
-
Subordinated Promissory Note
December 2021
10.5
%
-
146
Subordinated Promissory Note
April 2024
10.0
%
100
100
Subordinated Promissory Note
April 2021
10.0
%
-
174
Subordinated Promissory Note
August 2022
11.0
%
200
200
Subordinated Promissory Note
March 2023
11.0
%
-
169
Subordinated Promissory Note
February 2023
10.0
%
600
-
Subordinated Promissory Note
June 2023
10.0
%
400
-
Subordinated Promissory Note
February 2021
11.0
%
-
600
Subordinated Promissory Note
Demand
5.0
%
-
-
Subordinated Promissory Note
December 2022
5.0
%
3
3
Subordinated Promissory Note
December 2023
11.0
%
20
20
Subordinated Promissory Note
February 2024
11.0
%
20
20
Subordinated Promissory Note
January 2025
10.0
%
15
-
Subordinated Promissory Note
November 2021
9.5
%
-
200
Subordinated Promissory Note
November 2023
9.5
%
200
-
Subordinated Promissory Note
October 2024
10.0
%
700
700
Subordinated Promissory Note
December 2024
10
%
100
100
Subordinated Promissory Note
April 2025
10.0
%
202
-
Subordinated Promissory Note
July 2023
8.0
%
100
-
Subordinated Promissory Note
July 2024
5.0
%
1,500
-
Subordinated Promissory Note
September 2023
7.0
%
94
-
Subordinated Promissory Note
October 2023
7.0
%
100
-
Subordinated Promissory Note
December 2025
8.0
%
180
-
Senior Subordinated Promissory Note
March 2022
(3)
10.0
%
334
352
Senior Subordinated Promissory Note
March 2022
(4)
1.0
%
-
728
Junior Subordinated Promissory Note
March 2022
(4)
22.5
%
-
417
Senior Subordinated Promissory Note
October 2024
(5)
1.0
%
720
720
Junior Subordinated Promissory Note
October 2024
(5)
20.0
%
447
447
$
7,444
$
5,911
(1)
Interest rate per
annum, based upon actual days outstanding and a 365/366-day year.
(2)
Due six months
after lender gives notice.
(3)
Lender may require
us to repay $
20
of principal and all unpaid interest with 10 days' notice.
(4)
These notes were
issued to the same holder and, when calculated together, yield a blended rate of
11
% per annum.
(5)
These notes were
issued to the same holder and, when calculated together, yield a blended rate of
10
% per annum.
F-
20
During
February 2021, we borrowed approximately $
361
pursuant to the Paycheck Protection Program ("PPP"), created under the Coronavirus
Aid, Relief, and Economic Security Act, or CARES Act. The PPP is intended to provide loans to qualified businesses to cover payroll and
certain other identified costs. Funds from the loan may only be used for certain purposes, including payroll, benefits, rent, and utilities.
All or a portion of the loan may be forgivable, as provided by the terms of the PPP.
In
August 2021, the full principal amount of the PPP loan or $
361
and the accrued interest were forgiven by the U.S. Small Business Administration.
During
April 2020, the Company received a grant under the Economic Injury Disaster Loan Emergency Advance (the "EIDL Advance") of
$
10
which was used for payroll and other certain operating expenses.
In
February 2021, the full EIDL Advance of $
10
and accrued interest were forgiven by the U.S. Small Business Administration.
In
May 2020, we borrowed approximately $
361
pursuant to the PPP which was used for payroll and other certain operating expenses.
In
November 2020, the full principal amount of the PPP loan or $
361
and the accrued interest were forgiven by the U.S. Small Business Administration.
8.
Redeemable Preferred Equity
Series
C cumulative preferred units ("Series C Preferred Units") are redeemable by the Company at any time, upon a change of control
or liquidation, or by the investor any time after 6 years from the initial date of purchase. T
he Series C Preferred Units have a fixed
value which is their purchase price and preferred liquidation and distribution rights. Yearly distributions of 12% of the Series C Preferred
Units' value (provided profits are available) will be made on a quarterly basis. This rate may increase if any interest rate on
our public Notes offering rises above 12%. Dividends may be reinvested monthly into additional Series C Preferred Units.
The Series C
Preferred Units have the same preferential rights as the Series B Preferred Units as more fully described in the following note.
Roll
forward of redeemable preferred equity:
December 31, 2021
December 31, 2020
Beginning balance
$
3,582
$
2,959
Additions from new investment
1,000
300
Distributions
(
101
)
(
49
)
Additions from reinvestment
533
372
Ending balance
$
5,014
$
3,582
The
following table shows the earliest redemption options for investors in Series C Preferred Units as of December 31, 2021:
Year Maturing
Total
Amount
Redeemable
2024
$
3,244
2025
402
2026
309
2027
1,059
Total
$
5,014
F-
21
9.
Members' Capital
There
are currently two classes of equity units outstanding that the Company classifies as Members' Capital: Class A common units ("Class
A Common Units") and Series B cumulative preferred units ("Series B Preferred Units").
As
of December 31, 2021, the Class A Common Units are held by eight members, all of whom have no personal liability. All Class A common
members have voting rights in proportion to their capital account. There were
2,629
Class A Common Units outstanding at both December
31, 2021 and 2020.
The
Series B Preferred Units were issued to the Hoskins Group through a reduction in a loan issued by the Hoskins Group to the Company. In
December 2015, the Hoskins Group agreed to purchase 0.1 Series B Preferred Units for $
10
at each closing of a lot to a third party in
the Hamlets and Tuscany subdivision
. As of December 31, 2021, and 2020, the Hoskins Group owns a total of
17.2
and
16.3
Series B Preferred
Units, respectively, which were issued for a total of $
1,720
and $
1,630
, respectively.
Both
the Series B Preferred Units and the Series C Preferred Units have the same basic preferential status as compared to the Class A Common
Units, and are pari passu with each other. Both Preferred Unit types include a liquidation preference and a dividend preference, as well
as a 12-month recovery period for a shortfall in earnings.
There
are two additional authorized unit classes: Class A preferred units and Class B profit units. Once Class B profit units are issued, the
existing Class A common units will become Class A preferred units. Class A Preferred units will receive preferred treatment in terms
of distributions and liquidation proceeds.
10.
Related Party Transactions
The
Company has two loan agreements with Daniel M. Wallach, our CEO, and his wife, pursuant to which they provide the Company with the Wallach
LOC and the Wallach Trust LOC. The agreements lay out the terms under which those members can lend money to us, providing that we desire
the funds and the members wish to lend. The interest rate on both the Wallach LOC and the Wallach Trust LOC generally equals prime plus
3
%, as more fully described in Note 7.
The
Company has a loan agreement with William Myrick, our EVP (the "Myrick LOC Agreement"), pursuant to which Mr. Myrick provides
us with the Myrick LOC. The Myrick LOC Agreement lays out the terms under which Mr. Myrick can lend money to us, providing that we desire
the funds and Mr. Myrick wish to lend. The rate on the Myrick LOC generally equals prime plus
3
%, as more fully described in Note 7.
Two
of our managers each own
1
% of our Class A common units. Barbara L. Harshman, our EVP of Operations, owns
2
% of our Class A common units.
Mr. Myrick owns
15.3
% of our Class A common units.
Mr.
Wallach and his wife's parents own 18.05 and 1.45 of our Series C Preferred Units, respectively. One of our managers, Gregory L.
Sheldon, owns 6.31 of our Series C Preferred Units
.
The
Company has a Senior Subordinated Promissory Note with the parents of Mr. Wallach for $
333
. The interest rate on the promissory note
is
10
% and the lender may require us to repay $
20
of principal and all unpaid interest with 10 days' notice, as more fully described
in Note 7.
A
son of one of our Managers is a minor participant in the Shuman LOC, which is more fully described in Note 7. In addition, Mr. Summers'
son is a lender to the Company pursuant to a New LOC Agreement, with principal not to exceed $
2,000
.
In
September 2018, the Company sold
three
loans to Mr. Wallach at their gross loans receivable balance of $
281
, and as such, no gain or
loss was recognized on the sale. Cash received was $
104
and the remaining purchase price was funded through a $
177
reduction in the principal
balance of the line of credit extended by Mr. Wallach to the Company. The Company continued to service these loans.
F-
22
In
June 2019, two of the loans owned by Mr. Wallach paid off for approximately $
375
. Additionally, during June 2019, Mr. Wallach purchased
two
additional loans for approximately $
286
. During December 2019, Mr. Wallach sold one of his loans to Mr. Myrick for approximately
$
254
.
In
July 2020, the Company purchased
two
loans at cost from Mr. Wallach for approximately $
198
. As of December 31, 2021, no loans serviced
by the Company were owned by Mr. Wallach.
In
September 2018, we sold
two
loans to Mr. Myrick at their gross loan's receivable balance of $
394
and as such, no gain or loss was
recognized on the sale. Cash received was $
94
and the remaining purchase price was funded through a $
300
reduction in the principal balance
of the line of credit extended by Mr. Myrick to the Company.
In
addition, during 2019 Mr. Myrick purchased
two
loans from the Company for approximately $
456
. In December 2019, Mr. Myrick purchased
one loan from Mr. Wallach for approximately $
254
. During 2020 and 2019, one and four of Mr. Myrick's loans paid off for approximately
$
245
and $
765
, respectively.
During
2021, Mr. Myrick purchased
two
loans for approximately $
141
and both loans were serviced by the company as of December 31, 2021.
During
2021, one of our managers purchased
one
loan from the Company for $
405
and the loan was serviced by the company as of December 31, 2021.
The
Hoskins Group has a preferred equity interest in the Company. In addition, the Company has issued Series B Preferred Units to the Hoskins
Group, as more fully described in Note 9
–
Members' Capital.
The
Company has accepted investments under the Notes Program from employees, managers, members, and relatives of managers and members, with
$
3,989
outstanding at December 31, 2021. For the years ended December 31, 2021 and 2020 our investments from affiliates which exceed
$
120
through our Notes Program and other unsecured debt are detailed below:
Relationship to
Amount invested as of
Weighted
average
interest rate
as of
Interest
earned during
the year ended
Shepherd's
December 31,
December 31,
December 31,
Investor
Finance
2021
2020
2021
2021
2020
Eric A. Rauscher
Independent Manager
$
475
$
475
10.00
%
$
36
$
47
Capture HD Inc., Defined Benefit Plan & Trust
Sponsor is Brother of Employee
1,000
1,000
11.00
%
149
142
David Wallach Living Trust
Father of Member
571
577
10.23
%
58
60
Gregory L. Sheldon
Independent Manager
577
1,053
10.22
%
59
112
Joseph Rauscher
Parent of Independent Manager
195
195
11.00
%
21
14
Kenneth Summers
Independent Manager
100
189
4.00
%
1
20
Schultz Family Revocable Living Trust
Trustee is Mother-in-Law of Member
148
132
9.88
%
15
14
Kimberly Bedford
Employee
148
160
10.88
%
16
16
Lamar Sheldon
Parent of Independent Manager
253
217
9.03
%
23
21
F-
23
11.
Commitments and Contingencies
In
the normal course of business there may be outstanding commitments to extend credit that are not included in the consolidated financial
statements. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established
in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since
many of the commitments are expected to expire without being drawn upon and some of the funding may come from the earlier repayment of
the same loan (in the case of revolving lines), the total commitment amounts do not necessarily represent future cash requirements. The
financial instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the consolidated
financial statements. The Company evaluates each customer's creditworthiness on a case-by-case basis. Unfunded commitments to extend
credit, which have similar collateral, credit risk and market risk to our outstanding loans, were $
22,902
and $
19,495
at December 31,
2021 and 2020, respectively.
12.
Selected Quarterly Condensed Consolidated Financial Data (Unaudited)
Summarized
unaudited quarterly condensed consolidated financial data for the quarters of 2021 and 2020 are as follows:
Quarter
4
Quarter
3
Quarter
2
Quarter
1
Quarter
4
Quarter
3
Quarter
2
(1)
Quarter
1
2021
2021
2021
2021
2020
2020
2020
2020
Net interest income (loss)
$
958
$
830
$
625
$
411
$
932
$
389
$
(
228
)
$
990
Loan loss provision
246
83
45
214
140
70
1,560
35
Net interest income (loss) after loan loss provision
712
747
580
197
792
319
(
1,788
)
955
Gain on sale of foreclosed assets
1
64
13
88
22
135
3
–
Gain on foreclosure of assets
67
–
–
–
52
–
–
–
Impairment gains on foreclosed assets
–
–
–
–
(
4
)
95
–
–
Gain on extinguishment of debt
–
361
–
10
361
–
–
–
SG&A expense
415
483
438
537
648
367
462
708
Depreciation and amortization
12
12
13
16
22
21
21
21
Loss on sale of foreclosed assets
23
–
51
18
16
51
–
35
Loss on foreclosure of assets
47
–
–
–
52
2
–
–
Impairment loss on foreclosed assets
–
–
–
10
241
4
91
109
Net income (loss)
$
283
$
677
$
91
$
(
286
)
$
244
$
104
$
(
2,359
)
$
82
(1)
During
    the quarter ended June 30, 2020, net interest income after loan loss provision was reduced due to COVID-19 by $
1,492
. In addition,
    the Company wrote off $
469
of interest income directly related to COVID-19. During the quarter ended June 30, 2020, impairment loss
    on foreclosed assets of $
91
was due to the impact of COVID-19.
13.
Non-Interest Expense Detail
The
following table displays our selling, general and administrative expenses for the years ended December 31, 2021 and 2020:
2021
2020
Selling, general and administrative expenses
Legal and accounting
$
166
$
224
Salaries and related expenses
819
975
Board related expenses
99
99
Advertising
65
85
Rent and utilities
53
52
Loan and foreclosed asset expenses
348
498
Travel
154
140
Other
169
112
Total SG&A
$
1,873
$
2,185
14.
Subsequent Events
Management
of the Company has evaluated subsequent events through March 10, 2022, the date these consolidated financial statements were issued.
F-
24
$70,000,000
in Fixed Rate Subordinated Notes
PROSPECTUS
[__],
2022
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
following table sets forth all expenses to be paid by the Registrant, other than estimated underwriting discounts and commissions, in
connection with this offering. All amounts shown are estimates except for the SEC registration fee.
Amount to be Paid
SEC Registration Fee
$
4,172
Legal Fees and Expenses
521,000
Accounting Fees and Expenses
25,500
Printing and Engraving Expenses
6,700
Blue Sky Fees and Expenses
60,000
Trustee Fees
56,000
Total*
$
673,372
*
Assumes the maximum offering amount is raised.
Item
14. Indemnification of Directors and Officers.
None
of the Registrant's managers nor its officers shall be liable to the Registrant or any other manager or officer for any loss, damage
or claim incurred by reason of any action taken or omitted to be taken by such person in good faith and with the belief that such action
or omission is in, or not opposed to, the best interest of the Registrant, so long as such action or omission does not constitute fraud,
gross negligence or willful misconduct by such person.
To
the fullest extent permitted by Delaware law, the Registrant shall indemnify, hold harmless, defend, pay and reimburse each of its managers
and its officers against any and all losses, claims, damages, judgments, fines or liabilities, including reasonable legal fees or other
expenses incurred in investigating or defending against such losses, claims, damages, judgments, fines or liabilities, and any amounts
expended in settlement of any claims to which such person may become subject by reason of:
(i)
Any act or omission or alleged act or omission performed or omitted to be performed on behalf of the Registrant, any of its members or
any direct or indirect subsidiary of the foregoing in connection with the business of the Registrant; or
(ii)
The fact that such person is or was acting in connection with the business of the Registrant as a partner, member, stockholder, controlling
affiliate, manager, director, officer, employee or agent of the Registrant, any of its members, or any of their respective controlling
affiliates, or that such person is or was serving at the request of the Registrant as a partner, member, manager, director, officer,
employee or agent of any person including the Registrant or any subsidiary of the Registrant;
provided,
that (x) such person acted in good faith and in a manner believed by such person to be in, or not opposed to, the best interests of the
Registrant and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful, and (y) such person's
conduct did not constitute fraud, gross negligence or willful misconduct, in either case as determined by a final, nonappealable order
of a court of competent jurisdiction. In connection with the foregoing, the termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of
nolo contendere
or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith or, with respect to any criminal proceeding, had reasonable cause to believe that such person's
conduct was unlawful, or that the person's conduct constituted fraud, gross negligence or willful misconduct.
II-
1
The
Registrant shall promptly reimburse (and/or advance to the extent reasonably required) each of its managers and its officers for reasonable
legal or other expenses (as incurred) of such person in connection with investigating, preparing to defend or defending any claim, lawsuit
or other proceeding relating to any losses for which such person may be indemnified; provided, that if it is finally judicially determined
that such person is not entitled to the indemnification, then such person shall promptly reimburse the Registrant for any reimbursed
or advanced expenses.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted
pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Securities and Exchange Commission
(the "SEC") such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
The
Registrant may maintain liability insurance, which insures against liabilities that its managers or its officers may incur in such capacities.
Item
15. Recent Sales of Unregistered Securities.
Issuances
of Series B Cumulative Redeemable Preferred Units
As
of December 31, 2021, the Hoskins Group (consisting of Benjamin Marcus Homes, L.L.C., Investor's Mark Acquisitions, LLC, and Mark
L. Hoskins) owns a total of 17.2 Series B cumulative preferred units ("Series B Preferred Units"), which the Registrant issued
for a total of $1,720,000. Of that total, 0.9, 1.6, and 1.5 Series B Preferred Units were issued to the Hoskins Group during 2021, 2020,
and 2019, respectively, pursuant to an agreement whereby the Hoskins Group agreed to purchase 0.1 Series B Preferred Units upon each
closing of a lot sale in the subdivisions in which the Registrant lends the Hoskins Group development funds.
The
proceeds received from the sale of the Series B Preferred Units in these transactions were used for the funding of construction loans.
The transactions in Series B Preferred Units described above were effected in private transactions exempt from the registration requirements
of the Securities Act under Section 4(a)(2) of the Securities Act. The transactions described above did not involve any public offering,
were made without general solicitation or advertising, and the buyer represented to the Registrant that the buyer is an "accredited
investor'' within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, with access to all relevant
information necessary to evaluate the investment in the Series B Preferred Units.
Issuances
of Series C Cumulative Redeemable Preferred Units
The
Registrant initially issued Series C cumulative preferred units ("Series C Preferred Units") in 2017 to various investors.
Investors in the Series C Preferred Units may elect to reinvest their distributions in additional Series C Preferred Units (the "Series
C Reinvestment Program"). Pursuant to the Series C Reinvestment Program, the Registrant issued a total of 1.727 additional Series
C Preferred Units from March 31, 2017 to June 30, 2018 for a total purchase price of $172,700. On July 31, 2018, the Registrant redeemed
all of the then-outstanding Series C Preferred Units.
On
June 7, 2019, the Registrant sold two of its Series C Preferred Units to two joint investors for the total price of $200,000.
On
October 13, 2019, the Registrant sold one of its Series C Preferred Units to Gregory L. Sheldon, one of the Registrant's independent
managers, and his wife, Madeline M. Sheldon, for the total price of $100,000.
On
December 7, 2020, the Registrant sold three of its Series C Preferred Units to an investor for the total price of $300,000.
On
February 10, 2021, the Registrant sold three of its Series C Preferred Units to two joint investors for the total price of $300,000.
II-
2
On
April 1, 2021, the Registrant sold five of its Series C Preferred Units to two joint investors for the total price of $500,000.
On
November 11, 2021, the Registrant sold two of its Series C Preferred Units to Gregory L. Sheldon, one of the Registrant's
independent managers, and his wife, Madeline M. Sheldon, for the total price of $200,000.
Investors in the Series C Preferred
Units have also received additional Series C Preferred Units as a result of their participation in the Series C Reinvestment Program
during the preceding three years. Pursuant to the Series C Reinvestment Program, the Registrant has issued approximately 10.05
Series C Preferred Units for distribution proceeds of approximately $1.0 million during such period.
The
proceeds received from the sale of the Series C Preferred Units in these transactions were used for the funding of construction loans.
The transactions in Series C Preferred Units described above were effected in private transactions exempt from the registration requirements
of the Securities Act under Section 4(a)(2) of the Securities Act. The transactions described above did not involve any public offering,
were made without general solicitation or advertising, and the buyer represented to the Registrant that the buyer is an "accredited
investor'' within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, with access to all relevant
information necessary to evaluate the investment in the Series C Preferred Units.
Subordinated
Promissory Note of September 2, 2019
On
September 2, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $562,500. This Subordinated Promissory
Note bears interest at the rate of 9.5% per annum, based upon actual days outstanding and a 365/366 day year and matured on October 25,
2020.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of October 7, 2019
On
October 7, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $98,736. This Subordinated Promissory
Note bears interest at the rate of 10.0% per annum, based upon actual days outstanding and a 365/366 day year and matured on April 7,
2021.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of October 7, 2019
On
October 7, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $75,504. This Subordinated Promissory
Note bears interest at the rate of 10.0% per annum, based upon actual days outstanding and a 365/366 day year and matured on April 7,
2021.
II-
3
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of November 4, 2019
On
November 4, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $500,000. This Subordinated Promissory
Note bears interest at the rate of 6.5% per annum, based upon actual days outstanding and a 365/366 day year and matured on April 1,
2020.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of November 15, 2019
On
November 15, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 5.0% per annum, based upon actual days outstanding and a 365/366 day year and matured on November
15, 2020.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of November 15, 2019
On
November 15, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $400,000. This Senior Subordinated
Promissory Note bears interest at the rate of 5.0% per annum, based upon actual days outstanding and a 365/366 day year and matured on
November 15, 2020.
The
proceeds received from the Senior Subordinated Promissory Note were used for the funding of construction loans. The transaction described
above was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising,
and the purchasers represented to the Registrant that they are an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of December 2, 2019
On
December 2, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $3,000. This Subordinated Promissory
Note bears interest at the rate of 5.0% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
II-
4
Subordinated
Promissory Note of December 10, 2019
On
December 10, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $20,000. This Subordinated Promissory
Note bears interest at the rate of 11.0% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Notes of December 23, 2019
On
December 23, 2019, the Registrant issued three Subordinated Promissory Notes in the total principal amount of $600,000. These Senior
Subordinated Promissory Notes bear interest at the rate of 11% per annum, based upon actual days outstanding and a 365/366 day year and
matured on February 23, 2021.
The
proceeds received from the Subordinated Promissory Notes were used for the funding of construction loans. The transactions described
above were effected in private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transactions described above did not involve any public offering, were made without general solicitation or advertising,
and the purchasers represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investments.
Subordinated
Promissory Note of December 25, 2019
On
December 25, 2019, the Registrant issued a Subordinated Promissory Note in the principal amount of $146,232. This Subordinated Promissory
Note bears interest at the rate of 10.5% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of February 5, 2020
On
February 5, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $20,000. This Subordinated Promissory
Note bears interest at the rate of 11% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
II-
5
Subordinated
Promissory Note of April 20, 2020
On
April 20, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Junior
Subordinated Promissory Note of October 5, 2020
On
October 5, 2020, the Registrant issued a Junior Subordinated Promissory Note in the principal amount of $447,346. This Junior Subordinated
Promissory Note bears interest at the rate of 20% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Junior Subordinated Promissory Note were used for the funding of construction loans. The transaction described
above was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Senior
Subordinated Promissory Note of October 5, 2020
On
October 5, 2020, the Registrant issued a Senior Subordinated Promissory Note in the principal amount of $719,607. This Senior Subordinated
Promissory Note bears interest at the rate of 1% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Senior Subordinated Promissory Note were used for the funding of construction loans. The transaction described
above was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of October 21, 2020
On
October 21, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $700,000. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
II-
6
Subordinated
Promissory Note of November 7, 2020
On
November 7, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $200,580. This Subordinated Promissory
Note bears interest at the rate of 9.5% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of December 7, 2020
On
December 7, 2020, the Registrant issued a Subordinated Promissory Note in the principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 10.0% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchasers represented to the Registrant that they are an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of January 13, 2021
On
January 13, 2021, the Registrant issued a Subordinated Promissory Note in the principal amount of $15,000. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Notes of February 24, 2021
On
February 24, 2021, the Registrant issued three Subordinated Promissory Notes in the total principal amount of $600,000. These Subordinated
Promissory Notes bear interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Notes were used for the funding of construction loans. The transactions described
above were effected in private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transactions described above did not involve any public offering, were made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investments.
II-
7
Subordinated
Promissory Note of April 8, 2021
On
April 8, 2021, the Registrant issued a Subordinated Promissory Note in the principal amount of $114,660. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of April 8, 2021
On
April 8, 2021, the Registrant issued a Subordinated Promissory Note in the principal amount of $87,681. This Subordinated Promissory
Note bears interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Notes of June 24, 2021
On
June 24, 2021, the Registrant issued two Subordinated Promissory Notes in the total principal amount of $400,000. These Subordinated
Promissory Notes bear interest at the rate of 10% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Notes were used for the funding of construction loans. The transactions described
above were effected in private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transactions described above did not involve any public offering, were made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investments.
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8
Subordinated
Promissory Note of July 1, 2021
On
July 1, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $1,500,000. This Subordinated Promissory
Note bears interest at the rate of 5% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of July 20, 2021
On
July 20, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 8% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of September 16, 2021
On
September 16, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $93,869. This Subordinated
Promissory Note bears interest at the rate of 7% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of October 26, 2021
On
October 26, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $100,000. This Subordinated Promissory
Note bears interest at the rate of 7% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
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Subordinated
Promissory Note of December 26, 2021
On
December 26, 2021, the Registrant issued a Subordinated Promissory Note in the total principal amount of $180,293. This Subordinated
Promissory Note bears interest at the rate of 8% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Note of January 12, 2022
On
January 12, 2022, the Registrant issued a Subordinated Promissory Note in the total principal amount of $10,000. This Subordinated Promissory
Note bears interest at the rate of 8% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Note were used for the funding of construction loans. The transaction described above
was effected in a private transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities
Act. The transaction described above did not involve any public offering, was made without general solicitation or advertising, and the
purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investment.
Subordinated
Promissory Notes of March 1, 2022
On
March 1, 2022, the Registrant issued five Subordinated Promissory Notes in the total principal amount of $500,000. These Subordinated
Promissory Notes bear interest at the rate of 9.75% per annum, based upon actual days outstanding and a 365/366 day year.
The
proceeds received from the Subordinated Promissory Notes were used for the funding of construction loans. The transactions described
above were effected in private transactions exempt from the registration requirements of the Securities Act under Section 4(a)(2) of
the Securities Act. The transactions described above did not involve any public offering, were made without general solicitation or advertising,
and the purchaser represented to the Registrant that it is an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, with access to all relevant information necessary to evaluate the investments.
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Item
16. Exhibits and Financial Statement Schedules.
(a)
Exhibits
:
Exhibit
    No.
Name
    of Exhibit
3.1
Certificate of Conversion, incorporated by reference to Exhibit 3.1 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
3.2
Certificate of Formation, incorporated by reference to Exhibit 3.2 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
3.3
Second Amended and Restated Limited Liability Company Agreement of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on November 13, 2017, Commission File No. 333-203707
3.4
Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of the Registrant, incorporated by reference to Exhibit 3.4 to the Registrant's Quarterly Report on Form 10-Q, filed May 9, 2019, Commission File No. 333-203707
3.5
Amendment No. 2 to Second Amended and Restated Limited Liability Company Agreement of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed March 31, 2020, Commission File No. 333-224557
4.1**
Indenture
    Agreement dated [__], 2022 (including Form of Note)
5.1**
Opinion
    of Nelson Mullins Riley & Scarborough LLP ("Nelson Mullins") as to the legality of securities
10.1
Amended, Restated and Consolidated Credit Agreement dated January 27, 2022 by and between Shepherd's Finance, LLC, Benjamin Marcus Homes, L.L.C., Investor's Mark Acquisitions, LLC and Mark L. Hoskins, incorporated by reference to Exhibit 10.2 to the Registrant's Annual Report on Form 10-K for the Year Ended December 31, 2021, filed on March 10, 2022, Commission File No. 333-224557
10.2
Open-End Mortgage dated December 30, 2011 between Benjamin Marcus Homes, L.L.C. and Shepherd's Finance, LLC, related to the Hamlets of Springdale, incorporated by reference to Exhibit 10.4 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
10.3
Open-End Mortgage dated December 30, 2011 between Investor's Mark Acquisitions, LLC and Shepherd's Finance, LLC, related to the Tuscany Subdivision, incorporated by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
10.4
Commercial Guaranty dated December 30, 2011 by Mark L. Hoskins, Investor's Mark Acquisitions, LLC, and Benjamin Marcus Homes, L.L.C. in favor of Shepherd's Finance, LLC, incorporated by reference to Exhibit 10.6 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
10.5
Amended and Restated Commercial Pledge Agreement dated December 30, 2011 by Investor's Mark Acquisitions, LLC and Benjamin Marcus Homes, L.L.C. in favor of Shepherd's Finance, LLC, incorporated by reference to Exhibit 10.7 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
10.6
Assignment, Assumption, Amendment, and Restatement of Mortgage dated December 30, 2011 between 84 Financial L.P., Shepherd's Finance, LLC, and Investor's Mark Acquisitions, LLC, incorporated by reference to Exhibit 10.8 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
10.7
Promissory Note dated December 30, 2011 from Shepherd's Finance, LLC to 2007 Daniel M. Wallach Legacy Trust, incorporated by reference to Exhibit 10.10 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
10.8
Promissory Note dated December 30, 2011 from Shepherd's Finance, LLC to Daniel M. Wallach and Joyce S. Wallach, incorporated by reference to Exhibit 10.11 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
10.9
Commercial Pledge Agreement dated December 30, 2011 by Shepherd's Finance, LLC in favor of 2007 Daniel M. Wallach Legacy Trust and Daniel M. Wallach and Joyce S. Wallach, incorporated by reference to Exhibit 10.12 to the Registrant's Registration Statement on Form S-1, filed on May 11, 2012, Commission File No. 333-181360
10.10
Subordination of Mortgage dated September 27, 2013 between Benjamin Marcus Homes, L.L.C., Shepherd's Finance, LLC, and United Bank, Inc., incorporated by reference to Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 26, 2014, Commission File No. 333-181360
10.11
Series B Cumulative Redeemable Preferred Unit Purchase Agreement dated December 31, 2014 between Shepherd's Finance, LLC and Investor's Mark Acquisitions, LLC, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on January 6, 2015, Commission File No. 333-181360
10.12
Loan Purchase and Sale Agreement dated as of April 28, 2015 between Shepherd's Finance, LLC and Seven Kings Holdings, Inc., incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on May 5, 2015, Commission File No. 333-181360
10.13
First Amendment to the Loan Purchase and Sale Agreement by and between Shepherd's Finance, LLC and S.K. Funding, Inc., dated November 19, 2015, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on November 24, 2015, Commission File No. 333-203707
10.14
Series B Cumulative Preferred Unit Purchase Agreement by and between Shepherd's Finance, LLC and Investor's Mark Acquisitions, LLC, dated December 28, 2015, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on December 31, 2015, Commission File No. 333-203707
10.15
Second Amendment to the Loan Purchase and Sale Agreement by and between Shepherd's Finance, LLC and S.K. Funding, LLC, dated as of February 19, 2016, incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K, filed on February 25, 2016, Commission File No. 333-203707
10.16
Assignment of Mortgage from Shepherd's Finance, LLC to S.K. Funding, LLC, dated June 30, 2016, incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed on July 7, 2016, Commission File No. 333-203707
10.17
Loan Purchase and Sale Agreement between Shepherd's Finance, LLC and Builder Finance, Inc., dated as of February 6, 2017, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on February 10, 2017, Commission File No. 333-203707
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11
Exhibit
    No.
Name
    of Exhibit
10.18
Confirmation Agreement between Shepherd's Finance, LLC, 1st Financial Bank USA, and Builder Finance, Inc., dated as of February 6, 2017, incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on February 10, 2017, Commission File No. 333-203707
10.19
Sixth Amendment to the Loan Purchase and Sale Agreement between Shepherd's Finance, LLC and S.K. Funding, LLC, dated as of July 24, 2017, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on July 27, 2017, Commission File No. 333-203707
10.20
Line of Credit Agreement between Shepherd's Finance, LLC and Paul Swanson, dated as of October 23, 2017, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on October 27, 2017, Commission File No. 333-203707
10.21
Collateral Assignment of Notes and Documents from Shepherd's Finance, LLC to Paul Swanson, dated as of October 23, 2017, incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K, filed on October 27, 2017, Commission File No. 333-203707
10.22
Master Loan Modification Agreement between Shepherd's Finance, LLC and Paul Swanson, dated as of April 11, 2018, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on April 18, 2018, Commission File No. 333-203707
10.23
Secured Promissory Note from Shepherd's Finance, LLC to Paul Swanson, dated as of October 23, 2017 and April 12, 2018, incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed on April 18, 2018, Commission File No. 333-203707
10.24
First Amendment to Promissory Note by and among Shepherd's Finance, LLC and Daniel M. Wallach and Joyce S. Wallach, dated June 14, 2018, incorporated by reference to Exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2018, filed on August 9, 2018, Commission File No. 333-203707
10.25
First Amendment to Promissory Note by and among Shepherd's Finance, LLC and 2007 Daniel M. Wallach Legacy Trust, dated June 14, 2018, incorporated by reference to Exhibit 10.8 to the Registrant's Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2018, filed on August 9, 2018, Commission File No. 333-203707
10.26
Loan Modification Agreement by and between Shepherd's Finance, LLC and Paul Swanson, dated as of December 27, 2018, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on January 2, 2019, Commission File No. 333-203707
10.27
Loan Agreement by and between Shepherd's Finance, LLC and LCA Bank Corporation, dated May 5, 2020, incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2020, filed on May 11, 2020, Commission File No. 333-224557
10.28
Note from Shepherd's Finance, LLC in favor of LCA Bank Corporation, dated May 5, 2020, incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2020, filed on May 11, 2020, Commission File No. 333-224557
10.29
Loan Agreement dated February 5, 2021 by and between the Registrant and LCA Bank Corporation, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on February 11, 2021, Commission File No. 333-224557
10.30
Promissory Note dated February 5, 2021 from the Company in favor of LCA Bank Corporation, incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on February 11, 2021, Commission File No. 333-224557
21.1
Subsidiaries of Shepherd's Finance, LLC, incorporated by reference to Exhibit 21.1 to the Registrant's Annual Report on Form 10-K for the Year Ended December 31, 2021, filed on March 10, 2022, Commission File No. 333-224557
23.1*
Consent of Warren Averett, LLC
23.3**
Consent
    of Nelson Mullins (included in Exhibit 5.1)
24.1*
Power
    of Attorney from Kenneth R. Summers, Eric A. Rauscher, and Greg Sheldon to Daniel M. Wallach, dated March 21, 2022
25.1**
Statement
    of Eligibility of Trustee
107*
Filing Fees Exhibit
101.INS***
XBRL
    Instance Document
101.SCH***
XBRL
    Taxonomy Extension Schema Document
101.CAL***
XBRL
    Taxonomy Extension Calculation Linkbase Document
101.DEF***
XBRL
    Taxonomy Extension Definition Linkbase Document
101.LAB***
XBRL
    Taxonomy Extension Label Linkbase Document
101.PRE***
XBRL
    Taxonomy Extension Presentation Linkbase Document
*
Filed herewith.
**
To be filed by amendment.
***
Pursuant to Regulation 406T of Regulation S-T, these Interactive data files are deemed not filed or part of a registration statement
or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act
of 1934, as amended, and are otherwise not subject to liability.
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12
(b)
Financial Statements:
The following financial statements are filed as part of this registration statement and included in the
prospectus:
Consolidated
Financial Statements:
Audited
Financial Statements
(1)
Report of Independent Registered Public Accounting Firm on Financial Statements
(2)
Consolidated Balance Sheets as of December 31, 2021 and 2020
(3)
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020
(4)
Consolidated Statements of Changes in Members' Capital for the Years Ended December 31, 2021 and 2020
(5)
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020
(6)
Notes to Consolidated Financial Statements
Item
17. Undertakings.
The
undersigned Registrant hereby undertakes:
(1)
To
    file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To
    include any prospectus required by section 10(a)(3) of the Securities Act;
(ii)
To
    reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
    post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
    forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
    the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
    of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if,
    in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth
    in the "Calculation of Registration Fee" table in the effective registration statement;
(iii)
To
    include any material information with respect to the plan of distribution not previously disclosed in the registration statement
    or any material change to such information in the registration statement.
(2)
That,
    for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a
    new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be
    deemed to be the initial bona fide offering thereof.
(3)
To
    remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
    termination of the offering.
(4)
That,
    for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b)
    as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
    prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date
    it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is
    part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
    or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first
    use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration
    statement or made in any such document immediately prior to such date of first use.
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13
(5)
For
    the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the
    securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant
    to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
    are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller
    to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any
    preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule
    424;
(ii)
Any
    free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by
    the undersigned Registrant;
(iii)
The
    portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant
    or its securities provided by or on behalf of the undersigned Registrant; and
(iv)
Any
    other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to managers, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a manager, officer
or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such manager, officer
or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The
undersigned Registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act of 1939, as amended, in accordance with the rules and regulations prescribed
by the SEC under Section 305(b)(2) thereof.
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14
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Jacksonville, State of Florida, on March 22, 2022.
SHEPHERD'S FINANCE, LLC
By:
/s/
    Daniel M. Wallach
Daniel
    M. Wallach
Chief
    Executive Officer and Manager
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated.
Signature
Title
Date
/s/
    Daniel M. Wallach
Chief
    Executive Officer and Manager
March
    22, 2022
Daniel
    M. Wallach
(Principal
    Executive Officer)
/s/
    Catherine Loftin
Chief
    Financial Officer
March
    22, 2022
Catherine
    Loftin
(Principal
    Financial Officer and Principal Accounting Officer)
/s/
    Kenneth R. Summers*
Manager
March
    22, 2022
Kenneth
    R. Summers
/s/
    Eric A. Rauscher*
Manager
March
    22, 2022
Eric
    A. Rauscher
/s/
    Gregory L. Sheldon*
Manager
March
    22, 2022
Gregory
    L. Sheldon
*By:
/s/
    Daniel M. Wallach
Daniel
    M. Wallach
Attorney-in-Fact,
    pursuant to Power of Attorney dated March 21, 2022.
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15