10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2018

or

[  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From               to             

Commission File Number 333-203707

SHEPHERD’S FINANCE, LLC

(Exact name of registrant as specified on its charter)

Delaware	36-4608739
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)

12627 San Jose Blvd., Suite 203, Jacksonville, FL 32223

(Address of principal executive offices)

302-752-2688

(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 Exchange Act.

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ]	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 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

FORM 10-Q

SHEPHERD’S FINANCE, LLC

TABLE OF CONTENTS

	Page
Cautionary Note Regarding Forward-Looking Statements		3
PART I. FINANCIAL INFORMATION		4
Item 1. Financial Statements		4
Interim Condensed Consolidated Balance Sheets as of March 31, 2018 (Unaudited) and December 31, 2017		4
Interim Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2018 and 2017		5
Interim Condensed Consolidated Statement of Changes in Members’ Capital (Unaudited) for the Three Months Ended March 31, 2018		6
Interim Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2018 and 2017		7
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3. Quantitative and Qualitative Disclosure About Market Risk		34
Item 4. Controls and Procedures		34
PART II. OTHER INFORMATION		35
Item 1. Legal Proceedings		35
Item 1A. Risk Factors		35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		35
Item 3. Defaults upon Senior Securities		35
Item 4. Mine Safety Disclosures		35
Item 5. Other Information		35
Item 6. Exhibits		35

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q of Shepherd’s Finance, LLC, other than historical facts, may be considered 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 report, including without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” 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. 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 our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission. If any of the events described in “Risk Factors” occur, they could have an adverse effect on our business, consolidated financial condition, results of operations, and cash flows.

When considering forward-looking statements, you should keep these risk factors, as well as the other cautionary statements in this report and in our 2017 Form 10-K in mind. You should not place undue reliance on any forward-looking statement. We are not obligated to update forward-looking statements.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Shepherd’s Finance, LLC

Interim Condensed Consolidated Balance Sheets

	As of
(in thousands of dollars)	March 31, 2018		December 31, 2017
	(Unaudited)
Assets
Cash and cash equivalents	$	380	$	3,478
Accrued interest receivable		966		720
Loans receivable, net		39,692		30,043
Foreclosed assets		1,079		1,036
Property, plant and equipment, net		1,033		1,020
Other assets		92		58
Total assets	$	43,242	$	36,355
Liabilities, Redeemable Preferred Equity and Members’ Capital
Liabilities
Customer interest escrow	$	786	$	935
Accounts payable and accrued expenses		478		705
Accrued interest payable		1,373		1,353
Notes payable secured, net of deferred financing costs		17,554		11,644
Notes payable unsecured, net of deferred financing costs		18,002		16,904
Due to preferred equity member		31		31
Total liabilities		38,224		31,572
Commitments and Contingencies (Notes 3 and 9)
Redeemable Preferred Equity
Series C preferred equity	$	1,130	$	1,097
Members’ Capital
Series B preferred equity		1,240		1,240
Class A common equity		2,648		2,446
Members’ capital		3,888		3,686
Total liabilities, redeemable preferred equity and members’ capital	$	43,242	$	36,355

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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Shepherd’s Finance, LLC

Interim Condensed Consolidated Statements of Operations - Unaudited

For the Three Months ended March 31, 2018 and 2017

	Three Months Ended
	March 31,
(in thousands of dollars)	2018		2017
Interest Income
Interest and fee income on loans	$	1,827	$	1,174
Interest expense:
Interest related to secured borrowings		411		179
Interest related to unsecured borrowings		450		367
Interest expense		861		546
Net interest income		966		628
Less: Loan loss provision		40		11
Net interest income after loan loss provision		926		617
Non-Interest Income
Gain from foreclosure of assets		-		77
Total non-interest income		-		77
Income		926		694
Non-Interest Expense
Selling, general and administrative		617		448
Depreciation and amortization		17		6
Impairment loss on foreclosed assets		5		49
Total non-interest expense		639		503
Net Income	$	287	$	191
Earned distribution to preferred equity holders		63		31
Net income attributable to common equity holders	$	224	$	160

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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Shepherd’s Finance, LLC

Interim Condensed Consolidated Statements of Changes In Members’ Capital - Unaudited

For the Three Months Ended March 31, 2018

(in thousands of dollars)	Three Months Ended March 31, 2018
Members’ capital, beginning balance	$	3,686
Net income		287
Earned distributions to preferred equity holders		(63	)
Distributions to common equity holders		(22	)
Members’ capital, ending balance	$	3,888

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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Shepherd’s Finance, LLC

Interim Condensed Consolidated Statements of Cash Flows - Unaudited

For the Three Months Ended March 31, 2018 and 2017

	Three Months Ended March 31,
(in thousands of dollars)	2018			2017
Cash flows from operations
Net income	$	287		$	191
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Amortization of deferred financing costs		48			64
Provision for loan losses		40			11
Net loan origination fees deferred		85			198
Change in deferred origination expense		(23	)		(64	)
Impairment of foreclosed assets		5			49
Depreciation and amortization		17			6
Gain from foreclosure of assets		-			(77	)
Net change in operating assets and liabilities:
Other assets		(39	)		9
Accrued interest receivable		(246	)		(40	)
Customer interest escrow		(149	)		209
Accounts payable and accrued expenses		(207	)		119
Net cash (used in) provided by operating activities		(182	)		675
Cash flows from investing activities
Loan originations and principal collections, net		(9,751	)		(4,221	)
Investment in foreclosed assets		(48	)		(145	)
Proceeds from sale of foreclosed assets		-			1,890
Property plant and equipment additions		(25	)		(556	)
Net cash used in investing activities		(9,824	)		(3,032	)
Cash flows from financing activities
Contributions from redeemable preferred equity		-			440
Contributions from preferred equity holders		-			10
Distributions to preferred equity holders		(30	)		(28	)
Distributions to common equity holders		(22	)		(12	)
Proceeds from secured note payable		7,581			2,001
Repayments of secured note payable		(1,665	)		(2,595	)
Proceeds from unsecured notes payable		4,479			4,144
Redemptions/repayments of unsecured notes payable		(3,400	)		(2,573	)
Deferred financing costs paid		(35	)		(10	)
Net cash provided by financing activities		6,908			1,377
Net decrease in cash and cash equivalents		(3,098)			(980	)
Cash and cash equivalents
Beginning of period		3,478			1,566
End of period	$	380		$	586
Supplemental disclosure of cash flow information
Cash paid for interest	$	813		$	488
Non-cash investing and financing activities
Earned but not paid distribution of preferred equity holders	$	33		$	31

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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Shepherd’s Finance, LLC

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

Information presented throughout these notes to the interim condensed consolidated financial statements (unaudited) is in thousands of dollars.

1. Description of Business and Basis of Presentation

Description of Business

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 a consolidating subsidiary, 84 REPA, LLC. The Company operated pursuant to an operating agreement by and among Daniel M. Wallach and the members of the Company from its inception through March 29, 2012, at which time it adopted an amended and restated operating agreement.

As of March 31, 2018, the Company extends commercial loans to residential homebuilders (in 17 states) to:

● construct single family homes,

● develop undeveloped land into residential building lots, and

● purchase and improve for sale older homes.

Basis of Presentation

The accompanying (a) condensed consolidated balance sheet as of March 31, 2018, which has been derived from audited consolidated financial statements, and (b) unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. While certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), management believes that the disclosures herein are adequate to make the unaudited interim condensed consolidated information presented not misleading. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the consolidated financial position, results of operations, and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. The consolidated results of operations for any interim period are not necessarily indicative of results expected for the fiscal year ending December 31, 2018. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2017 consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2017 (the “2017 Statements”). The accounting policies followed by the Company are set forth in Note 2 - Summary of Significant Accounting Policies in the 2017 Statements.

Accounting Standards Adopted in the Period

ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (An Amendment of FASB ASC 825).” Issued in January 2016, ASU 2016-01 was intended to enhance the reporting model for financial instruments to provide users of financial statements with improved decision-making information. The amendments of ASU 2016-01 include: (i) requiring equity investments, except those accounted for under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value, with changes in fair value recognized in net income; (ii) requiring a qualitative assessment to identify impairment of equity investments without readily determinable fair values; and (iii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

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ASU 2016-01 became effective for the Company on January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on the Company’s consolidated financial statements.

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” Issued in May 2014, ASU 2014-09 added FASB ASC Topic 606, Revenue from Contracts with Customers, and superseded revenue recognition requirements in FASB ASC Topic 605, Revenue Recognition and certain cost guidance in FASB ASC Topic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. ASU 2014-09 requires an entity to recognize revenue when (or as) an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled. Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services is transferred to the customer. ASU 2014-09 became effective for the Company on January 1, 2018. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements.

Revenue

On January 1, 2018, the Company implemented Accounting Standards Update 2014-09, Revenue from Contracts with Customers, codified at ASC Topic 606. The Company adopted ASC 606 using the modified retrospective transition method. As of December 31, 2017, the Company had no uncompleted customer contracts and, as a result, no cumulative transition adjustment was made during the first quarter of 2018. Results for reporting periods beginning January 1, 2018 are presented under ASC 606, while prior period amounts continue to be reported under legacy U.S. GAAP.

The majority of the Company’s revenue is generated through interest earned on financial instruments, including loans, which falls outside the scope of ASC 606. All of the Company’s revenue that is subject to ASC 606 would be included in non-interest income; however, not all non-interest income is subject to ASC 606. The Company had no contract liabilities or unsatisfied performance obligations with customers as of March 31, 2018.

Reclassifications

Certain prior year amounts have been reclassified for consistency with current period presentation.

2. Fair Value

There has been no change in our fair value policy during 2018.

The following tables present the balances of non-financial instruments measured at fair value on a non-recurring basis as of March 31, 2018 and December 31, 2017.

March 31, 2018

					Quoted
					Prices
					in Active
					Markets		Significant
					for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Foreclosed assets	$	1,079	$	1,079	$	–	$	–	$	1,079

December 31, 2017

					Quoted
					Prices
					in Active
					Markets		Significant
					for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Foreclosed assets	$	1,036	$	1,036	$	–	$	–	$	1,036

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The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized at the periods indicated:

March 31, 2018

					Quoted Prices
					in Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	380	$	380	$	380	$	–	$	–
Loans receivable, net		39,692		39,692		–		–		39,692
Accrued interest receivable		966		966		–		–		966
Financial Liabilities:
Customer interest escrow		786		786		–		–		786
Notes payable related party		1,000		1,000		–		–		1,000
Notes payable secured		16,554		16,554		–		–		16,554
Notes payable unsecured, net		18,002		18,002		–		–		18,002
Accrued interest payable		1,373		1,373		–		–		1,373

December 31, 2017

					Quoted Prices
					in Active
					Markets for		Significant Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	3,478	$	3,478	$	3,478	$	–	$	–
Loans receivable, net		30,043		30,043		–		–		30,043
Accrued interest receivable		720		720		–		–		720
Financial Liabilities:
Customer interest escrow		935		935		–		–		935
Notes payable secured		11,644		11,644		–		–		11,644
Notes payable unsecured, net		16,904		16,904		–		–		16,904
Accrued interest payable		1,353		1,353		–		–		1,353

3. Financing Receivables

Financing receivables are comprised of the following as of March 31, 2018 and December 31, 2017:

	March 31, 2018			December 31, 2017
Loans receivable, gross	$	42,201		$	32,375
Less: Deferred loan fees		(932	)		(847	)
Less: Deposits		(1,573	)		(1,497	)
Plus: Deferred origination expense		133			109
Less: Allowance for loan losses		(137	)		(97	)
Loans receivable, net	$	39,692		$	30,043

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Commercial Construction and Development Loans

Commercial Loans – Construction Loan Portfolio Summary

As of March 31, 2018, we have 64 borrowers, all of whom, including our three development loan customers (the “Hoskins Group,” consisting of Benjamin Marcus Homes, LLC, Investor’s Mark Acquisitions, LLC, and Mark Hoskins, being the largest of the three), borrow money for the purpose of building new homes.

The following is a summary of our loan portfolio to builders for home construction loans as of March 31, 2018 and December 31, 2017:

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
2018		17		64		199	$	84,753	$	54,773	$	36,959		65	%(3)		5	%
2017		16		52		168		75,931		47,087		29,563		62	%(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 Loan Portfolio Summary

The following is a summary of our loan portfolio to builders for land development as of March 31, 2018 and December 31, 2017:

Year	Number of States		Number of Borrowers		Number of Loans(4)		Gross Value of Collateral(1)		Commitment Amount(3)		Gross Amount Outstanding		Loan to Value Ratio(2)			Loan Fee
2018		3		3		6	$	8,019	$	6,362	$	5,242		65	%	$	1,000
2017		1		1		3		4,997		4,600		2,811		56	%		1,000

(1)	The value is determined by the appraised value adjusted for remaining costs to be paid. Part of this collateral is $1,240 as of March 31, 2018 and December 31, 2017 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 eliminate the loan balance. Part 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)	As of December 31, 2017, our development loans consisted of borrowings which originated in December 2011 and to which we refer throughout this report as the “Pennsylvania Loans”. During the first quarter of 2018, we added one additional development loan to the Pennsylvania Loans.

Credit Quality Information

The following table presents credit-related information at the “class” level in accordance with Financial Accounting Standards Board Accounting Standards Codification 310-10-50, Disclosures about the Credit Quality of Finance Receivables and the Allowance for Credit Losses. See our Form 10-K for the year ended December 31, 2017, as filed with the SEC, for more information.

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Gross finance receivables – By risk rating:

	March 31, 2018		December 31, 2017
Pass	$	31,194	$	25,656
Special mention		7,231		6,719
Classified – accruing		3,776		–
Classified – nonaccrual		–		–
Total	$	42,201	$	32,375

Gross finance receivables – Method of impairment calculation:

	March 31, 2018		December 31, 2017
Performing loans evaluated individually	$	11,217	$	14,992
Performing loans evaluated collectively		27,208		17,383
Non-performing loans without a specific reserve		3,776		–
Non-performing loans with a specific reserve		–		–
Total	$	42,201	$	32,375

At March 31, 2018 and December 31, 2017, there were no loans acquired with deteriorated credit quality.

Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of loans receivable. Our concentration risks for individual borrowers are summarized in the table below:

	March 31, 2018				December 31, 2017
		Percent of				Percent of
	Borrower	Loan			Borrower	Loan
	City	Commitments			City	Commitments
Highest concentration risk	Pittsburgh, PA		21	%	Pittsburgh, PA		22	%
Second highest concentration risk	Sarasota, FL		6	%	Sarasota, FL		7	%
Third highest concentration risk	Orlando, FL		5	%	Savannah, GA		5	%

4. Foreclosed Assets

Roll forward of foreclosed assets:

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Beginning balance	$	1,036		$	2,798		$	2,798
Additions for construction/development		48			317			296
Sale proceeds		-			(1,890	)		(1,890	)
Gain on sale		-			77			77
Impairment loss on foreclosed assets		(5	)		(266	)		(202	)
Ending balance	$	1,079		$	1,036		$	1,079

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5. Borrowings

The following table displays our borrowings and a ranking of priority:

	Priority Rank		March 31, 2018		December 31, 2017
Borrowing Source
Purchase and sale agreements and other secured borrowings		1	$	16,559	$	11,644
Secured line of credit from affiliates		2		1,000		–
Unsecured line of credit (senior)		3		500		–
Other unsecured debt (senior subordinated)		4		1,007		279
Unsecured Notes through our public offering, gross		5		13,785		14,121
Other unsecured debt (subordinated)		5		2,387		2,617
Other unsecured debt (junior subordinated)		6		590		173
Total			$	35,828	$	28,834

The following table shows the maturity of outstanding debt as of March 31, 2018.

Year Maturing	Total Amount Maturing		Public Offering		Other Unsecured		Purchase and Sale Agreements and other secured borrowings
2018	$	22,413	$	3,547	$	1,954	$	16,912
2019		4,876		4,029		833		14
2020		2,269		2,154		100		15
2021		3,904		3,889		-		15
2022 and thereafter		2,366		166		1,597		603
Total	$	35,828	$	13,785	$	4,484	$	17,559

Secured Borrowings

Purchase and Sale Agreements

In March 2018, we entered into the Seventh Amendment (the “Seventh Amendment”) to our Loan Purchase and Sale Agreement (the “S.K. Funding LPSA”) with S.K. Funding, LLC (“S.K. Funding”).

The purpose of the Seventh Amendment was to allow S.K. Funding to purchase a portion of the Pennsylvania Loans for a purchase price of $649 under parameters different from those specified in the S.K. Funding LPSA.

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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 $3,500.

● If the total principal amount is less than $4,500 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 has a term of 24 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 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.

Lines of Credit

During March  2018, we borrowed $1,000 against our line of credit with our Chief Executive Officer and his wife. Interest was $4 and $0 in the first quarter of 2018 and 2017, respectively. The interest rate for this borrowing was 4.4% as of March 31, 2018.

During July 2017, we entered into a line of credit agreement (the “Shuman LOC Agreement”) with a group of lenders (collectively, “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 2018 unless extended by Shuman for one or more additional 12-month periods.

The Shuman LOC was fully borrowed as of March 31, 2018

During October 2017, we entered into a line of credit agreement (the “Swanson LOC Agreement”) with Paul Swanson. Pursuant to the Swanson LOC Agreement, Mr. Swanson provides us with a revolving line of credit (the “Swanson LOC”) with the following terms:

● Principal not to exceed $4,000;

● Secured with assignments of certain notes and mortgages;

● Cost of funds to us of 10%; and

● Due in January 2019 unless extended by Mr. Swanson for one or more additional 15-month periods.

As of March 31, 2018, we have borrowed $3,851 under the Swanson LOC.

Mortgage Payable

During the first quarter of 2018, we entered into a commercial mortgage on our office building with the following terms:

● Principal not to exceed $660;

● Secured with assignments of certain notes and mortgages;

● Interest rate at 5.07% per annum based on a year of 360 days; and

● Due in January 2033.

Summary

The Purchase and Sale Agreements and Lines of Credit are summarized below:

	March 31, 2018				December 31, 2017
			Due From				Due From
	Book Value of		Shepherd’s		Book Value of		Shepherd’s
	Loans which		Finance to Loan		Loans which		Finance to Loan
	Served as Collateral		Purchaser or Lender		Served as Collateral		Purchaser or Lender
Loan Purchaser
Builder Finance, Inc.	$	7,506	$	4,262	$	7,483	$	4,089
S.K. Funding		13,046		6,463		9,128		4,134
Lender
Shuman		2,134		1,325		1,747		1,325
Paul Swanson		5,147		3,851		2,518		2,096
Total	$	27,833	$	15,901	$	20,876	$	11,644

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Unsecured Borrowings

Other Unsecured Debts

Our other unsecured debts are detailed below:

					Principal Amount Outstanding as of
	Maturity	Interest			March 31,		December 31,
Loan	Date	Rate (1)			2018		2017
Unsecured Note with Seven Kings Holdings, Inc.	August 2018		7.5	%		500		500
Unsecured Line of Credit from Builders Finance, Inc.	January 2019		10.0	%		500		-
Unsecured Line of Credit from Paul Swanson	June 2018(2)		10.0	%		149		1,904
Subordinated Promissory Note	Demand(3)		7.5	%		1,125		-
Subordinated Promissory Note	December 2019		10.5	%		113		113
Subordinated Promissory Note	April 2020		10.0	%		100		100
Senior Subordinated Promissory Note	March 2022(4)		10.0	%		400		-
Senior Subordinated Promissory Note	March 2022		1.0	%		728		-
Junior Subordinated Promissory Note	March 2022		22.5	%		417		-
Senior Subordinated Promissory Note	October 2022		1.0	%		279		279
Junior Subordinated Promissory Note	October 2022		20.0	%		173		173
					$	4,484	$	3,069

⁽¹⁾ Interest rate per annum, based upon actual days outstanding and a 365/366 day year.

⁽²⁾ Due in June 2018 unless extended by Mr. Swanson for one or more additional 15-month periods.

⁽³⁾ Principal due six months after lender gives notice. This note may be prepaid without fee, premium or penalty.

⁽⁴⁾ This note may be prepaid upon lender's request at least 10 days prior to an interest payment and up to $20 of principal.

Unsecured Notes through the Public Offering (“Notes Program”)

The effective interest rate on the Notes offered pursuant to the Notes Program at March 31, 2018 and December 31, 2017 was 9.16% and 9.21%, respectively, not including the amortization of deferred financing costs. There are limited rights of early redemption. The following table shows the roll forward of our Notes Program:

15

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Gross Notes outstanding, beginning of period	$	14,121		$	11,221		$	11,221
Notes issued		1,309			8,375			4,144
Note repayments / redemptions		(1,645	)		(5,475	)		(2,573	)
Gross Notes outstanding, end of period	$	13,785		$	14,121		$	12,792
Less deferred financing costs, net		267			286			357
Notes outstanding, net	$	13,518		$	13,835		$	12,435

The following is a roll forward of deferred financing costs:

	Three Months			Year			Three Months
	Ended			Ended			Ended
	March 31, 2018			December 31, 2017			March 31, 2017
Deferred financing costs, beginning balance	$	1,102		$	1,014		$	1,014
Additions		29			88			10
Deferred financing costs, ending balance	$	1,131		$	1,102		$	1,024
Less accumulated amortization		(864	)		(816	)		(667	)
Deferred financing costs, net	$	267		$	286		$	357

The following is a roll forward of the accumulated amortization of deferred financing costs:

	Three Months		Year		Three Months
	Ended		Ended		Ended
	March 31, 2018		December 31, 2017		March 31, 2017
Accumulated amortization, beginning balance	$	816	$	603	$	603
Additions		48		213		64
Accumulated amortization, ending balance	$	864	$	816	$	667

6. Redeemable Preferred Equity

The following is a roll forward our of Series C cumulative preferred equity (“Series C Preferred Units”):

	Three Months Ended March 31, 2018		Year Ended December 31, 2017		Three Months Ended March 31, 2017
Beginning balance	$	1,097	$	–	$	–
Additions from new investment		–		1,004		440
Additions from reinvestment		33		93		–
Ending balance	$	1,130	$	1,097	$	440

16

The following table shows the earliest redemption options for investors in our Series C Preferred Units as of March 31, 2018:

Year Maturing	Total Amount Redeemable
2023	$	1,130
Total	$	1,130

7. Members’ Capital

There are currently two classes of units outstanding: Class A common units (“Class A Common Units”) and Series B cumulative preferred units (“Series B Preferred Units”). The Class A Common Units are held by nine 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 March 31, 2018 and December 31, 2017.

In January 2018, our Chief Financial Officer and Executive Vice President of Operations purchased 2% and 1% of our outstanding Class A Common Units, respectively, from our CEO. In March 2018, our Executive Vice President of Sales purchased 14.3% of our outstanding Class A Common Units from our CEO.

8. Related Party Transactions

As of March 31, 2018, each of our two independent managers own 1% of our Class A Common Units. As of March 31, 2018, our CFO, Executive Vice President of Operations, and Executive Vice President of Sales each own 2%, 2%, and 15.3% of our Class A Common Units, respectively.

In March 2018, we borrowed $1,000 against our line of credit with our CEO and his wife. A more detailed description is included in Note 5 above. This borrowing is included in notes payable secured, net of deferred financing costs on the interim condensed consolidated balance sheet.

In February 2018, we issued a Subordinated Promissory Note in the principal amount of $1,125 to a trust affiliated with Seven Kings Holdings, Inc. One of our independent managers, Kenneth R. Summers, is the trustee of that trust. This borrowing is included in notes payable unsecured, net of deferred financing costs on the interim condensed consolidated balance sheet.

In March 2018, we issued a Senior Subordinated Promissory Note in the principal amount of $400 to family members of one of our CEO. This borrowing is included in the notes payable unsecured, net of deferred financing costs on the interim condensed consolidated balance sheet.

In March 2018, we issued a Senior Subordinated Promissory Note in the principal amount of $400 to family members of one of our CEO.

9. Commitments and Contingencies

Unfunded commitments to extend credit, which have similar collateral, credit risk, and market risk to our outstanding loans, were $18,935 and $19,312 at March 31, 2018 and December 31, 2017, respectively.

10. Selected Quarterly Condensed Consolidated Financial Data (Unaudited)

Summarized unaudited quarterly condensed consolidated financial data for the four quarters of each of 2018 and 2017 are as follows:

	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
	2018		2017		2017		2017		2017
Net Interest Income after Loan Loss Provision	$	926	$	802	$	917	$	725	$	617
Non-Interest Income		–		–		–		–		77
SG&A expense		617		643		537		456		448
Depreciation and Amortization		17		–		–		–		6
Impairment loss on foreclosed assets		5		64		47		106		49
Net Income	$	287	$	95	$	333	$	163	$	191

11. Non-Interest expense detail

The following table displays our selling, general and administrative (“SG&A”) expenses:

	For the Three Months Ended March 31,
	2018		2017
Selling, general and administrative expenses
Legal and accounting	$	143	$	96
Salaries and related expenses		356		254
Board related expenses		22		29
Advertising		17		17
Rent and utilities		10		5
Loan and foreclosed asset expenses		8		7
Travel		23		15
Other		38		25
Total SG&A	$	617	$	448

12. Subsequent Events

Management of the Company has evaluated subsequent events through May 10, 2018, the date these consolidated financial statements were issued.

As described more fully in Note 5, in October 2017, we entered into the Swanson LOC Agreement, pursuant to which Mr. Swanson provided us with the Swanson LOC. We and Mr. Swanson entered into a Master Loan Modification Agreement which modified the Swanson LOC Agreement (the “Modification Agreement”) and is effective and enforceable by us as of April 13, 2018. The Modification Agreement increased the maximum borrowing amount under the Swanson LOC from $4,000 to $7,000. If Mr. Swanson elects not to renew the Modification Agreement, Mr. Swanson must give us written notice at least 120 days before the expiration date of the then current term. If Mr. Swanson provides such written notice, we must repay $4,000 of the Swanson LOC by the expiration date and must repay the remaining balance on the Swanson LOC by 120 days after the expiration date. Our obligation to repay the Swanson LOC is evidenced by two Modified Promissory Notes from us, one dated April 12, 2018 and evidencing a promise to repay the secured portion of the Swanson LOC and the other dated April 13, 2018 and evidencing a promise to repay the unsecured portion of the Swanson LOC. The Modification Agreement did not affect the other terms of the Swanson LOC Agreement.

In April 2018, we fully repaid our line of credit to our CEO and his wife, which had a $1,000 outstanding principal balance as of March 31, 2018.

In February 2016, we entered into a construction loan agreement (the “Vista Loan Agreement”) with Lex Partners II, LLC (“Lex Partners II”), pursuant to which we extended a construction loan (the “Vista Loan”) to Lex Partners II to be used for the refinance of a parcel of land located at 1333 Vista Drive, Sarasota, Florida 34239 and the construction of a home thereon (the “Vista Property”). On June 30, 2016, Lex Partners II deeded the Vista Property to 1333 Vista Drive, LLC (the “Property Owner”), an unaffiliated third party, but Lex Partners II remained the borrower on the Vista Loan. As of April 24, 2018, the principal balance on the Vista Loan was approximately $3,776 and the unpaid interest on the Vista Loan was approximately $243.

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In February 2018, Lex Partners II defaulted under the Vista Loan by failing to make an interest payment that was due. Subsequently, on April 27, 2018, we and the Property Owner entered into an Agreement (the “Master Agreement”), which requires, among other things, that the Property Owner deed the Vista Property to us in lieu of foreclosure. When such deed in lieu of foreclosure is effective, the Master Agreement requires we pay the sum of $50 to the Property Owner. On April 27, 2018, we and the Property Owner executed a Deed in Lieu of Foreclosure Agreement (the “Deed Agreement”). As required by the Deed Agreement, on April 27, 2018, the Property Owner also executed a Warranty Deed in Lieu of Foreclosure in favor of the Company, pursuant to which the Property Owner deeded the Vista Property to us, and on May 3, 2018, we made the required payment of $50 to the Property Owner.

Pursuant to the Master Agreement, we may complete construction of the single family residence being built on the Vista Property, but we are not required to do so. When we sell the Vista Property, the Master Agreement requires that we pay the first $250 of profit (as defined in the Master Agreement) to the Property Owner, subject to certain limitations contained in the Master Agreement.

ITEM 2. 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 interim condensed consolidated financial statements and the notes thereto contained elsewhere in this report. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should also be read in conjunction with our audited annual consolidated financial statements and related notes and other consolidated financial data included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2017. See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I.

Overview

We had $39,692 and $30,043 in loan assets as of March 31, 2018 and December 31, 2017, respectively. As of March 31, 2018, we have 199 construction loans in 17 states with 64 borrowers and six development loans in three states. As of March 31, 2018 and December 31, 2017, we had four and three development loans, respectively, in Pittsburgh, Pennsylvania (the “Pennsylvania Loans”). In addition, we have various sources of capital, detailed below:

	March 31, 2018		December 31, 2017
Capital Source
Purchase and sale agreements and other secured borrowings	$	16,559	$	11,644
Secured line of credit from affiliates		1,000		–
Unsecured senior line of credit from a bank		500		–
Unsecured Notes through our Notes Program		13,785		14,121
Other unsecured debt		3,984		3,069
Preferred equity, Series B units		1,240		1,240
Preferred equity, Series C units		1,130		1,097
Common equity		2,648		2,446
Total	$	40,846	$	33,617

Our net income increased for the first quarter of 2018 as compared to the same period in 2017 due primarily to increased loan originations, which was partially offset by payroll cost increases due to an increase the number of employees, and an increase in our loan loss reserve.

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Cash used in operations was $182 as of March 31, 2018 as compared to cash provided by operations of $675 for the same period of 2017. Our decrease in operating cash flow in 2018 is mainly due to an increase in accrued interest receivable of $246 offset by a decrease in interest and other payables of $207. In 2017, our increase in operating cash flow, as compared to net income, was due to an increase in accrued expenses of $119, an increase in interest escrow of $209, and an increase in interest and other payables of $119.

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. See our Form 10-K for the year ended December 31, 2017, as filed with the SEC, for more information on our critical accounting estimates. No material changes to our critical accounting estimates have occurred since December 31, 2017 unless listed below.

Loan Losses

Fair value of collateral has the potential to impact the calculation of the loan loss provision (the amount we have expensed over time in anticipation of loan losses we have not yet realized). 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.

	March 31, 2018
	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%**	$	(1,908	)

* 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.”

** Assumes the loans were nonperforming and a book amount of the loans outstanding of $39,692.

Foreclosed Assets

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).

	March 31, 2018
	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%	$	(378	)

* 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.

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Consolidated Results of Operations

Key financial and operating data for the three months ended March 31, 2018 and 2017 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.

	Three Months Ended
	March 31,
	2018		2017
Interest Income
Interest and fee income on loans	$	1,827	$	1,174
Interest expense:
Interest related to secured borrowings		411		179
Interest related to unsecured borrowings		450		367
Interest expense		861		546
Net interest income		966		628
Less: Loan loss provision		40		11
Net interest income after loan loss provision		926		617
Non-Interest Income
Gain from foreclosure of assets		-		77
Total non-interest income		-		77
Income		926		694
Non-Interest Expense
Selling, general and administrative		617		448
Depreciation and amortization		17		6
Impairment loss on foreclosed assets		5		49
Total non-interest expense		639		503
Net Income	$	287	$	191
Earned distribution to preferred equity holders		63		31
Net income attributable to common equity holders	$	224	$	160

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Interest Spread

The following table displays a comparison of our interest income, expense, fees, and spread:

	Three Months Ended
	March 31,
	2018				2017
Interest Income			*				*
Interest income on loans	$	1,291	13	%	$	780	13	%
Fee income on loans		536	6	%		394	7	%
Interest and fee income on loans		1,827	19	%		1,174	20	%
Interest expense unsecured		402	4	%		303	5	%
Interest expense secured		411	4	%		179	3	%
Amortization of offering costs		48	1	%		64	1	%
Interest expense		861	9	%		546	9	%
Net interest income (spread)	$	966	10	%	$	628	11	%
Weighted average outstanding loan asset balance	$	37,831			$	23,756

*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 5%. For most loans, the margin is fixed at 2%; however, for our development loans the margin is fixed at 7%. Future loans are anticipated to be originated at approximately the same 2% margin. This component is also impacted by the lending of money with no interest cost (our equity). For both 2018 and 2017, our difference between interest income and interest expense was 4%. We currently anticipate that the difference between our interest income and interest expense will continue to be 4% for the remainder of 2018.

● Fee income. Fee income is displayed in the table above. Our construction loans have a 5% fee on the amount we commit to lend, which is amortized over the expected life of each of those loans; however, we do not recognize a loan fee on our development loans. When loans terminate quicker than their expected life, the remaining unrecognized fee is recognized upon the termination of the loan. When loans exceed their expected life, no additional fee income is recognized. In 2018 our fee income decreased 1% due to an increase in loans that exceeded their expected life. We currently anticipate that fee income will continue at the same 6% rate for the remainder of 2018.

● Amount of nonperforming assets. Generally, we can have three types of nonperforming assets that negatively affect interest spread: loans not paying interest, foreclosed assets, and cash. We had no nonperforming loans in the first quarter of 2018 and 2017. Foreclosed assets do not provide a monthly interest return. The difference between our average foreclosed asset balance in 2018 as compared to 2017 did not have a major impact on our performance in the first quarter of 2018. The amount of nonperforming assets is expected to rise over the next twelve months, due to work expected on the two lots we currently own, anticipated foreclosure of assets, and due to idle cash increases related to anticipated large borrowing inflows.

Non-Interest Income

For the three months ended March 31, 2018, we did not recognize non-interest income compared to the same period in 2017. In the first quarter of 2017, we sold a foreclosed asset and recognized a gain of $77.

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SG&A Expenses

The following table displays our SG&A expenses:

	For the Three Months Ended March 31,
	2018		2017
Selling, general and administrative expenses:
Legal and accounting	$	143	$	96
Salaries and related expenses		356		254
Board related expenses		22		29
Advertising		17		17
Rent and utilities		10		5
Loan and foreclosed asset expenses		8		7
Travel		23		15
Other		38		25
Total SG&A	$	617	$	448

Legal and accounting expenses increased due to additional work performed related to the growth of the Company. Payroll increased due to our hiring of nine new employees, which was partially offset by a reduction in our CEO’s salary.

Impairment Loss on Foreclosed Assets

We owned four foreclosed assets as of March 31, 2018, compared to five foreclosed assets that we owned as of December 31, 2017. Two of the foreclosed assets are lots under construction and the remaining two have completed homes on the lots. We do not anticipate losses on the sale of foreclosed assets in the future; however this may be subject to change based on the final selling price of the foreclosed assets.

Loan Loss Provision

Our loan loss provision increased $29 to $40 during the first quarter of 2018 compared to the same period in 2017 due to an increase in loan balances and qualitative reserve percentage as a result of the change in housing values.

Consolidated Financial Position

The following is a roll forward of deferred financing costs:

	Three Months			Year			Three Months
	Ended			Ended			Ended
	March 31, 2018			December 31, 2017			March 31, 2017
Deferred financing costs, beginning balance	$	1,102		$	1,014		$	1,014
Additions		29			88			10
Deferred financing costs, ending balance	$	1,131		$	1,102		$	1,024
Less accumulated amortization		(864	)		(816	)		(667	)
Deferred financing costs, net	$	267		$	286		$	357

The following is a roll forward of the accumulated amortization of deferred financing costs:

	Three Months		Year		Three Months
	Ended		Ended		Ended
	March 31, 2018		December 31, 2017		March 31, 2017
Accumulated amortization, beginning balance	$	816	$	603	$	603
Additions		48		213		64
Accumulated amortization, ending balance	$	864	$	816	$	667

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Loans Receivable

Commercial Loans – Construction Loan Portfolio Summary

We anticipate that the aggregate balance of our construction loan portfolio will increase as loans near maturity, and due to new loan originations.

The following is a summary of our loan portfolio to builders for home construction loans as of March 31, 2018.

State	Number of Borrowers			Number of Loans		Value of Collateral(1)		Commitment Amount		Gross Amount Outstanding		Loan to Value Ratio(2)				Loan Fee
Colorado		3			6	$	3,225	$	2,196	$	1,244		68	%			5	%
Delaware		1			1		244		171		167		70	%			5	%
Florida		17			56		24,455		16,252		11,588		66	%			5	%
Georgia		7			13		9,253		6,038		4,695		65	%			5	%
Indiana		2			2		640		448		241		70	%			5	%
Michigan		5			24		6,354		4,080		2,634		64	%			5	%
New Jersey		3			13		4,298		2,934		1,730		68	%			5	%
New York		1			7		2,491		1,444		1,393		58	%			5	%
North Carolina		3			6		1,650		1,155		809		70	%			5	%
North Dakota		1			1		375		263		108		70	%			5	%
Ohio		1			3		2,331		1,498		658		64	%			5	%
Oregon		1			1		607		425		169		70	%			5	%
Pennsylvania		3			22		16,688		9,434		7,230		57	%			5	%
South Carolina		10			29		7,595		5,224		2,990		69	%			5	%
Tennessee		1			3		1,120		795		449		71	%			5	%
Utah		1			1		400		280		207		70	%			5	%
Virginia		4			11		3,027		2,136		647		71	%			5	%
Total		64	(4)		199	$	84,753	$	54,773	$	36,959		65	%	(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.
(4)	One builder borrows in multiple states.

The following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2017:

State	Number of Borrowers			Number of Loans		Value of Collateral (1)		Commitment Amount		Amount Outstanding		Loan to Value Ratio(2)				Loan Fee
Colorado		3			6	$	3,224	$	2,196	$	925		68	%			5	%
Delaware		1			1		244		171		147		70	%			5	%
Florida		15			54		25,368		16,555		10,673		65	%			5	%
Georgia		7			13		8,932		5,415		3,535		61	%			5	%
Indiana		2			2		895		566		356		63	%			5	%
Michigan		4			25		7,570		4,717		2,611		62	%			5	%
New Jersey		2			11		3,635		2,471		1,227		68	%			5	%
New York		1			5		1,756		929		863		53	%			5	%
North Carolina		3			6		1,650		1,155		567		70	%			5	%
Ohio		1			1		711		498		316		70	%			5	%
Oregon		1			1		607		425		76		70	%			5	%
Pennsylvania		2			20		15,023		7,649		5,834		51	%			5	%
South Carolina		7			18		4,501		3,058		1,445		68	%			5	%
Tennessee		1			2		690		494		494		72	%			5	%
Utah		1			2		790		553		344		70	%			5	%
Virginia		1			1		335		235		150		70	%			5	%
Total		52	(4)		168	$	75,931	$	47,087	$	29,563		62	%	(3)		5	%

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(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.
(4)	We have one builder in two states.

Commercial Loans – Real Estate Development Loan Portfolio Summary

The following is a summary of our loan portfolio to builders for land development as of March 31, 2018 and December 31, 2017. A significant portion of our development loans consist of the Pennsylvania Loans. Our additional development loans are in South Carolina and Florida.

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
2018		3		3		6	$	8,019	$	6,362	(3)	$	5,242		65	%	$	1,000
2017		1		1		3		4,997		4,600	(3)		2,811		56	%		1,000

(1)	The value is determined by the appraised value adjusted for remaining costs to be paid. Part of this collateral is $1,240 as of March 31, 2018 and December 31, 2017 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 eliminate the loan balance. Part of the collateral value is estimated based on the selling prices anticipated for the homes. Appraised values will replace these estimates in the second quarter of 2018.
(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.

Combined Loan Portfolio Summary

Financing receivables are comprised of the following as of March 31, 2018 and December 31, 2017:

	March 31, 2018			December 31, 2017
Loans receivable, gross	$	42,201		$	32,375
Deferred loan fees		(932	)		(847	)
Deposits		(1,573	)		(1,497	)
Deferred origination expense		133			109
Allowance for loan losses		(137	)		(97	)
Loans receivable, net	$	39,692		$	30,043

24

The following is a roll forward of commercial loans:

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Beginning balance	$	30,043		$	20,091		$	20,091
Additions		14,476			33,451			7,461
Payoffs/sales		(4,649	)		(22,645	)		(2,909	)
Moved to foreclosed assets		–			–			–
Change in deferred origination expense		23			55			64
Change in builder deposit		(76	)		(636	)		(331	)
Change in loan loss provision		(40	)		(44	)		(11	)
New loan fees		(619	)		(2,127	)		(593	)
Earned loan fees		534			1,898			395
Ending balance	$	39,692		$	30,043		$	24,167

Finance Receivables – By risk rating:

	March 31, 2018		December 31, 2017
Pass	$	31,194	$	25,656
Special mention		7,231		6,719
Classified – accruing		3,776		–
Classified – nonaccrual		–		–
Total	$	42,201	$	21,569

Below is an aging schedule of gross loans receivable as of March 31, 2018, on a recency basis:

	No. Accts.		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)		204	$	38,425		91	%
60-89 days		1		3,776		9	%
90-179 days		–		–		0	%
180-269 days		–		–		0	%
Subtotal		205	$	42,201		100	%
Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days)		–	$	–		0	%
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.)		–	$	–		0	%
Total		205	$	42,201		100	%

25

Below is an aging schedule of gross loans receivable as of March 31, 2018, on a contractual basis:

	No. Accts.		Unpaid Balances		%
Contractual Terms - All current Direct Loans and Sales Finance Contracts with installments past due less than 60 days from due date.		204	$	38,425		91	%
60-89 days		1		3,776		9	%
90-179 days		–		–		0	%
180-269 days		–		–		0	%
Subtotal		205	$	42,201		100	%
Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days)		–	$	–		0	%
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.)		–	$	–		0	%
Total		205	$	42,201		100	%

Below is an aging schedule of gross loans receivable as of December 31, 2017, on a recency basis:

	No. Accts.		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)		153	$	26,421		82	%
60-89 days		18		5,954		18	%
90-179 days		–		–		0	%
180-269 days		–		–		0	%
Subtotal		171	$	32,375		100	%
Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days)		–	$	–		0	%
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.)		–	$	–		0	%
Total		171	$	32,375		100	%

26

Below is an aging schedule of gross loans receivable as of December 31, 2017, on a contractual basis:

	No. Accts.		Unpaid Balances		%
Contractual Terms - All current Direct Loans and Sales Finance Contracts with installments past due less than 60 days from due date.		153	$	26,421		82	%
60-89 days		18		5,954		18	%
90-179 days		–		–		0	%
180-269 days		–		–		0	%
Subtotal		171	$	32,375		100	%
Interest only accounts (Accounts on which interest, deferment, extension and/or default charges were received in the last 60 days)		–	$	–		0	%
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.)		–	$	–		0	%
Total		171	$	32,375		100	%

Foreclosed Assets

Below is a roll forward of foreclosed assets:

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Beginning balance	$	1,036		$	2,798		$	2,798
Additions for construction/development		48			317			296
Sale proceeds		–			(1,890	)		(1,890	)
Gain on sale		–			77			77
Impairment loss on foreclosed assets		(5	)		(266	)		(202	)
Ending balance	$	1,079		$	1,036		$	1,079

27

Customer Interest Escrow

Below is a roll forward of interest escrow:

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Beginning balance	$	935		$	812		$	812
Preferred equity dividends		30			115			28
Additions from Pennsylvania Loans		-			480			51
Additions from other loans		102			1,163			629
Interest, fees, principal or repaid to borrower		(281	)		(1,635	)		(499	)
Ending balance	$	786		$	935		$	1,021

Related Party Borrowings

During March 2018, we borrowed $1,000 under our line of credit with our CEO and his wife. We incurred $4 and $0 of interest expense during the period ended March 31, 2018 and 2017, respectively. The interest rate for this borrowing was 4.4% as of March 31, 2018.

Secured Borrowings

Purchase and Sale Agreements

In March 2018, we entered into the Seventh Amendment (the “Seventh Amendment”) to our Loan Purchase and Sale Agreement (the “S.K. Funding LPSA”) with S.K. Funding, LLC (“S.K. Funding”).

The purpose of the Seventh Amendment was to allow S.K. Funding to purchase a portion of the Pennsylvania Loans for a purchase price of $649 under parameters different from those specified in the S.K. Funding LPSA.

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 $3,500.

● If the total principal amount is less than $4,500 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 has a term of 24 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 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.

Lines of Credit

During July 2017, we entered into a line of credit agreement (the “Shuman LOC Agreement”) with a group of lenders (collectively, “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 2018 unless extended by Shuman for one or more additional 12-month periods.

The Shuman LOC was fully borrowed as of March 31, 2018

During October 2017, we entered into a line of credit agreement (the “Swanson LOC Agreement”) with Paul Swanson. Pursuant to the Swanson LOC Agreement, Mr. Swanson provides us with a revolving line of credit (the “Swanson LOC”) with the following terms:

● Principal not to exceed $4,000;

● Secured with assignments of certain notes and mortgages;

● Cost of funds to us of 10%; and

● Due in January 2019 unless extended by Mr. Swanson for one or more additional 15-month periods.

As of March 31, 2018, we have borrowed $3,851 under the Swanson LOC.

Summary

The secured borrowings are detailed below:

	March 31, 2018				December 31, 2017
			Due From				Due From
	Book Value of		Shepherd’s		Book Value of		Shepherd’s
	Loans which		Finance to Loan		Loans which		Finance to Loan
	Served as		Purchaser or		Served as		Purchaser or
	Collateral		Lender		Collateral		Lender
Loan Purchaser
Builder Finance, Inc.	$	7,506	$	4,262	$	7,483	$	4,089
S.K. Funding, LLC		13,046		6,463		9,128		4,134
Lender
Shuman		2,134		1,325		1,747		1,325
Paul Swanson		5,147		3,851		2,518		2,096
Total	$	27,833	$	15,901	$	20,876	$	11,644

			Typical Current Advance Rate			Does Buyer Portion
	Year Initiated		On New Loans			Have Priority?		Rate
Loan Purchaser
Builder Finance, Inc.		2014		70	%		Yes		The rate our customer pays us
S.K. Funding, LLC		2015		55	%		Varies		9–9.5%
Lender
Shuman		2017		67	%		Yes		10	%
Paul Swanson		2017		67	%		Yes		10	%

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Unsecured Borrowings

Other Unsecured Debts

Our other unsecured debts are detailed below:

					Principal Amount Outstanding as of
	Maturity	Interest			March 31,		December 31,
Loan	Date	Rate (1)			2018		2017
Unsecured Note with Seven Kings Holdings, Inc.	August 2018		7.5	%		500		500
Unsecured Line of Credit from Builders Finance, Inc.	January 2019		10.0	%		500		-
Unsecured Line of Credit from Paul Swanson	June 2018(2)		10.0	%		149		1,904
Subordinated Promissory Note	Demand(3)		7.5	%		1,125		-
Subordinated Promissory Note	December 2019		10.5	%		113		113
Subordinated Promissory Note	April 2020		10.0	%		100		100
Senior Subordinated Promissory Note	March 2022(4)		10.0	%		400		-
Senior Subordinated Promissory Note	March 2022		1.0	%		728		-
Junior Subordinated Promissory Note	March 2022		22.5	%		417		-
Senior Subordinated Promissory Note	October 2022		1.0	%		279		279
Junior Subordinated Promissory Note	October 2022		20.0	%		173		173
					$	4,484	$	3,069

⁽¹⁾ Interest rate per annum, based upon actual days outstanding and a 365/366 day year.

⁽²⁾ Due in June 2018 unless extended by Mr. Swanson for one or more additional 15-month periods.

⁽³⁾ Principal due six months after lender gives notice. This note may be prepaid without fee, premium or penalty.

⁽⁴⁾ This note may be prepaid upon lender's request at least 10 days prior to an interest payment and up to $20 of principal.

Unsecured Notes through the Public Offering (“Notes Program”)

The effective interest rate on the Notes offered pursuant to our Notes Program at March 31, 2018 and December 31, 2017 was 9.16% and 9.21%, respectively, not including the amortization of deferred financing costs. There are limited rights of early redemption. The following table shows the roll forward of our Notes program:

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Gross Notes outstanding, beginning of period	$	14,121		$	11,221		$	11,221
Notes issued		1,309			8,375			4,144
Note repayments / redemptions		(1,645	)		(5,475	)		(2,573	)
Gross Notes outstanding, end of period	$	13,785		$	14,121		$	12,792
Less deferred financing costs, net		267			286			357
Notes outstanding, net	$	13,518		$	13,835		$	12,435

29

The following is a roll forward of deferred financing costs:

	Three Months			Year			Three Months
	Ended			Ended			Ended
	March 31, 2018			December 31, 2017			March 31, 2017
Deferred financing costs, beginning balance	$	1,102		$	1,014		$	1,014
Additions		29			88			10
Deferred financing costs, ending balance	$	1,131		$	1,102		$	1,024
Less accumulated amortization		(864	)		(816	)		(667	)
Deferred financing costs, net	$	267		$	286		$	357

The following is a roll forward of the accumulated amortization of deferred financing costs:

	Three Months		Year		Three Months
	Ended		Ended		Ended
	March 31, 2018		December 31, 2017		March 31, 2017
Accumulated amortization, beginning balance	$	816	$	603	$	603
Additions		48		213		64
Accumulated amortization, ending balance	$	864	$	816	$	667

Redeemable Preferred Equity and Members’ Capital

We strive to maintain a reasonable (about 15%) balance between (1) redeemable preferred equity plus members’ capital and (2) total assets. The ratio of redeemable preferred equity plus members’ capital to assets was 13% as of March 31, 2018 and 16% as of December 31, 2017. We anticipate this ratio dropping until more preferred equity is added. We are currently exploring potential increases in preferred equity.

In January 2018, our Chief Financial Officer and Executive Vice President of Operations purchased 2% and 1% of our Class A common units; respectively, from our CEO. In March 2018, our Executive Vice President of Sales purchased 14.3% of our Class A common units from our CEO.

Priority of Borrowings

The following table displays our borrowings and a ranking of priority. The lower the number, the higher the priority.

	Priority Rank		March 31, 2018		December 31, 2017
Borrowing Source
Purchase and sale agreements and other secured borrowings		1	$	16,559	$	11,644
Secured line of credit from affiliates		2		1,000		–
Unsecured line of credit (senior)		3		500		–
Other unsecured debt (senior subordinated)		4		1,007		279
Unsecured Notes through our Notes Program, gross		5		13,785		14,121
Other unsecured debt (subordinated)		5		2,387		2,617
Other unsecured debt (junior subordinated)		6		590		173
Total			$	35,828	$	28,834

30

Liquidity and Capital Resources

The Company’s anticipated primary sources of liquidity going forward, and the amounts received from such sources as of March 31, 2018 and 2017, are:

Source of Liquidity	Three Months Ended March 31, 2018		Three Months Ended March 31, 2017		Comment and Future Outlook
Secured debt	$	7,581	$	2,001	We increased our related party debt and added a mortgage on our office building. We will continue to increase funds through bank participation during 2018 as needed.
Unsecured debt		4,479		4,144	Our unsecured debt outside of our Notes Program increased during 2018. We plan to increase our unsecured borrowings as needed
Principal payments		4,649		2,909	Our loan volume increased in 2018 resulting in an increase in principal payments. We anticipate continued growth in payoffs as our volume increases.
Interest income		1,291		780	We anticipate interest income increasing as our loan balances grow. Our concentrations in large borrowers adds risk to this source of liquidity.
Funds from the sale of foreclosed assets		–		–	We anticipate selling more foreclosed assets in the future.

The Company’s anticipated primary uses of liquidity going forward, and the amounts expended on such uses as of the three months ended March 31, 2018 and 2017, are:

Use of Liquidity	Three Months Ended March 31, 2018		Three Months Ended March 31, 2017		Comment and Future Outlook
Unfunded and new loans	$	18,935	$	15,257	We have loan commitments which are unfunded which will need to be funded as the collateral of these loans are built. As we create new loans, some portion of those will be funded at the initial creation of the loan and then the rest will be funded over time.
Payments on secured debt		1,665		2,595	These will continue to grow as loan payoffs continue to rise.
Payments on unsecured debt		3,400		2,573	Consists mostly of borrowings from our Notes program. We anticipate these payments to increase in 2018.
Interest expense		861		546	We anticipate interest expense increasing as we grow.
Distributions to owners		52		40	Distributions are based on income

31

To help manage our liquidity, we:

● do not offer demand deposits (for instance, a checking account). We manage the duration of our Notes through the interest rates we offer at any time;

● fund loan requests with varying sources of capital, not just our Notes offering; and

● match our interest rate to our borrower to our cost of funds.

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 average in many of the housing markets in the U.S. today, and our lending against these values is safer than loans made by financial institutions in 2006 to 2008.

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 0.5%, when CDs are paying 3%, we may have to have 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. Higher short-term rates may increase the rates builders are charged by banks faster than our rates to the builder will grow, which might be a benefit for us. 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.

32

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.

33

Source: U.S. Census Bureau

To date, changes in housing starts, CD rates, and inflation have not had a material impact on our business.

Off-Balance Sheet Arrangements

As of March 31, 2018, and December 31, 2017, we had no off-balance sheet transactions, nor do we currently have any such arrangements or obligations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, management including our CEO (our principal executive officer) and CFO (our principal financial officer) evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, our CEO (our principal executive officer) and CFO (our principal financial officer) concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our CEO (our principal executive officer) and CFO (our principal financial officer), as appropriate to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

During 2018, we hired a Vice President of Administrative Operations and Product Development to further implement segregation of duties. In addition, we placed into service an internally developed proprietary software system to assist in the management of our Notes Program, which replaced an electronic spreadsheet system. The development of the proprietary software system was designed in part to enhance the overall system of internal controls over financial reporting through further automation of various business processes. Except for the above-mentioned items there has been no change in our internal controls over financial reporting during the quarter ended March 31, 2018 that has materially affected or is reasonably likely to materially affect our internal controls over financial reporting.

34

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)	Reinvestments in Partial Series C Cumulative Preferred Units 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, on January 31, 2018, we issued approximately 0.0474022 of a Series C Preferred Unit to Margaret Rauscher IRA LLC in exchange for distribution proceeds of approximately $4,740.22, and approximately 0.0601630 of a Series C Preferred Unit to an IRA owned by William Myrick in exchange for distribution proceeds of approximately $6,016.30. On February 28, 2018, we issued approximately 0.0478762 of a Series C Preferred Unit to Margaret Rauscher IRA LLC in exchange for distribution proceeds of approximately $4,787.62, and approximately 0.0607647 of a Series C Preferred Unit to an IRA owned by William Myrick in exchange for distribution proceeds of approximately $6,076.47. On March 31, 2018, we issued approximately 0.0478762 of a Series C Preferred Unit to Margaret Rauscher IRA LLC in exchange for distribution proceeds of approximately $4,787.62, and approximately 0.0613723 of a Series C Preferred Unit to an IRA owned by William Myrick in exchange for distribution proceeds of approximately $6,137.23. The proceeds received from the sales of the partial Series C Preferred Units in those 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 us 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 in the Series C Preferred Units.
(b)	We registered up to $70,000,000 in Fixed Rate Subordinated Notes in our public offering (SEC File No. 333-203707, effective September 29, 2015). As of March 31, 2018, we had issued $15,981,000 in Notes pursuant to that public offering. From September 29, 2015 through March 31, 2018, we incurred expenses of $191,000 in connection with the issuance and distribution of the Notes, which were paid to third parties. These expenses were not for underwriters or discounts, but were for advertising, printing, and professional services. Net offering proceeds as of March 31, 2018 were $15,790,000, 100% of which was used to increase loan balances.
(c)	None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a)	During the quarter ended March 31, 2018, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K.
(b)	During the quarter ended March 31, 2018, there were no material changes to the procedures by which members may recommend nominees to our board of managers.

ITEM 6. EXHIBITS

The exhibits required to be filed with this report are set forth on the Exhibit Index hereto and incorporated by reference herein.

35

EXHIBIT INDEX

The following exhibits are included in this report on Form 10-Q for the period ended March 31, 2018 (and are numbered in accordance with Item 601 of Regulation S-K).

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 Operating Agreement, incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, filed on November 13, 2017, Commission File No. 333-203707
4.1	Indenture Agreement (including Form of Note) dated September 29, 2015, incorporated by reference to Exhibit 4.1 to the Registrant’s Post-Effective Amendment No. 1, filed on September 29, 2015, Commission File No. 333-203707
10.1	Twelfth Amendment to the Credit Agreement between Shepherd’s Finance, LLC, Benjamin Marcus Homes, L.L.C., and Investor’s Mark Acquisitions, LLC, dated as of January 5, 2018, incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, filed on January 8, 2018, Commission File No. 333-203707
31.1*	Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**	XBRL Instance Document
101.SCH**	XBRL Schema Document
101.CAL**	XBRL Calculation Linkbase Document
101.DEF**	XBRL Definition Linkbase Document
101.LAB**	XBRL Labels Linkbase Document
101.PRE**	XBRL Presentation Linkbase Document

* Filed herewith.

** 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 purpose 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.

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SHEPHERD’S FINANCE, LLC (Registrant)
Dated: May 10, 2018	By:	/s/ Catherine Loftin
		Catherine Loftin
		Chief Financial Officer

37

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Daniel M. Wallach, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Shepherd’s Finance, LLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 10, 2018	By:	/s/ Daniel M. Wallach
		Daniel M. Wallach
		Chief Executive Officer and Manager
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Catherine Loftin, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Shepherd’s Finance, LLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 10, 2018	By:	/s/ Catherine Loftin
		Catherine Loftin
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Shepherd’s Finance, LLC (the “Company”), in connection with the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2018 (the “Report”) hereby certifies, to his knowledge, that:

(i)	the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 10, 2018	By:	/s/ Daniel M. Wallach
		Daniel M. Wallach
		Chief Executive Officer and Manager
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Shepherd’s Finance, LLC (the “Company”), in connection with the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2018 (the “Report”) hereby certifies, to her knowledge, that:

(i)	the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 10, 2018	By:	/s/ Catherine Loftin
		Catherine Loftin
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 10, 2018
Document And Entity Information
Entity Registrant Name	Shepherd's Finance, LLC
Entity Central Index Key	0001544190
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		0
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2018

XML

Interim Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Assets
Cash and cash equivalents	$ 380	$ 3,478
Accrued interest receivable	966	720
Loans receivable, net	39,692	30,043
Foreclosed assets	1,079	1,036
Property, plant and equipment, net	1,033	1,020
Other assets	92	58
Total assets	43,242	36,355
Liabilities
Customer interest escrow	786	935
Accounts payable and accrued expenses	478	705
Accrued interest payable	1,373	1,353
Notes payable secured, net of deferred financing costs	17,554	11,644
Notes payable unsecured, net of deferred financing costs	18,002	16,904
Due to preferred equity member	31	31
Total liabilities	38,224	31,572
Commitments and Contingencies (Notes 3 and 9)
Series C preferred equity	1,130	1,097
Members’ Capital
Series B preferred equity	1,240	1,240
Class A common equity	2,648	2,446
Members’ capital	3,888	3,686
Total liabilities, redeemable preferred equity and members’ capital	$ 43,242	$ 36,355

XML

Interim Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Interest Income
Interest and fee income on loans	$ 1,827	$ 1,174
Interest expense:
Interest related to secured borrowings	411	179
Interest related to unsecured borrowings	450	367
Interest expense	861	546
Net interest income	966	628
Less: Loan loss provision	40	11
Net interest income after loan loss provision	926	617
Non-Interest Income
Gain from foreclosure of assets		77
Total non-interest income		77
Income	926	694
Non-Interest Expense
Selling, general and administrative	617	448
Depreciation and amortization	17	6
Impairment loss on foreclosed assets	5	49
Total non-interest expense	639	503
Net Income	287	191
Earned distribution to preferred equity holders	63	31
Net income attributable to common equity holders	$ 224	$ 160

XML

Interim Condensed Consolidated Statements of Changes in Members' Capital (Unaudited) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
Statement of Stockholders' Equity [Abstract]
Members' capital, beginning balance	$ 3,686
Net income	287
Earned distributions to preferred equity holders	(63)
Distributions to common equity holders	(22)
Members' capital, ending balance	$ 3,888

XML

Interim Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operations
Net income	$ 287	$ 191
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Amortization of deferred financing costs	48	64
Provision for loan losses	40	11
Net loan origination fees deferred	85	198
Change in deferred origination expense	(23)	(64)
Impairment of foreclosed assets	5	49
Depreciation and amortization	17	6
Gain from foreclosure of assets		(77)
Net change in operating assets and liabilities:
Other assets	(39)	9
Accrued interest receivable	(246)	(40)
Customer interest escrow	(149)	209
Accounts payable and accrued expenses	(207)	119
Net cash (used in) provided by operating activities	(182)	675
Cash flows from investing activities
Loan originations and principal collections, net	(9,751)	(4,221)
Investment in foreclosed assets	(48)	(145)
Proceeds from sale of foreclosed assets		1,890
Property plant and equipment additions	(25)	(556)
Net cash used in investing activities	(9,824)	(3,032)
Cash flows from financing activities
Contributions from redeemable preferred equity		440
Contributions from preferred equity holders		10
Distributions to preferred equity holders	(30)	(28)
Distributions to common equity holders	(22)	(12)
Proceeds from secured note payable	7,581	2,001
Repayments of secured note payable	(1,665)	(2,595)
Proceeds from unsecured notes payable	4,479	4,144
Redemptions/repayments of unsecured notes payable	(3,400)	(2,573)
Deferred financing costs paid	(35)	(10)
Net cash provided by financing activities	6,908	1,377
Net decrease in cash and cash equivalents	(3,098)	(980)
Cash and cash equivalents
Beginning of period	3,478	1,566
End of period	380	586
Supplemental disclosure of cash flow information
Cash paid for interest	813	488
Non-cash investing and financing activities
Earned but not paid distribution of preferred equity holders	$ 33	$ 31

XML

Description of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

1. Description of Business and Basis of Presentation

Description of Business

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 a consolidating subsidiary, 84 REPA, LLC. The Company operated pursuant to an operating agreement by and among Daniel M. Wallach and the members of the Company from its inception through March 29, 2012, at which time it adopted an amended and restated operating agreement.

As of March 31, 2018, the Company extends commercial loans to residential homebuilders (in 17 states) to:

● construct single family homes,

● develop undeveloped land into residential building lots, and

● purchase and improve for sale older homes.

Basis of Presentation

The accompanying (a) condensed consolidated balance sheet as of March 31, 2018, which has been derived from audited consolidated financial statements, and (b) unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. While certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), management believes that the disclosures herein are adequate to make the unaudited interim condensed consolidated information presented not misleading. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the consolidated financial position, results of operations, and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. The consolidated results of operations for any interim period are not necessarily indicative of results expected for the fiscal year ending December 31, 2018. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2017 consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2017 (the “2017 Statements”). The accounting policies followed by the Company are set forth in Note 2 - Summary of Significant Accounting Policies in the 2017 Statements.

Accounting Standards Adopted in the Period

ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (An Amendment of FASB ASC 825).” Issued in January 2016, ASU 2016-01 was intended to enhance the reporting model for financial instruments to provide users of financial statements with improved decision-making information. The amendments of ASU 2016-01 include: (i) requiring equity investments, except those accounted for under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value, with changes in fair value recognized in net income; (ii) requiring a qualitative assessment to identify impairment of equity investments without readily determinable fair values; and (iii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

ASU 2016-01 became effective for the Company on January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on the Company’s consolidated financial statements.

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” Issued in May 2014, ASU 2014-09 added FASB ASC Topic 606, Revenue from Contracts with Customers, and superseded revenue recognition requirements in FASB ASC Topic 605, Revenue Recognition and certain cost guidance in FASB ASC Topic 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. ASU 2014-09 requires an entity to recognize revenue when (or as) an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled. Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services is transferred to the customer. ASU 2014-09 became effective for the Company on January 1, 2018. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements.

Revenue

On January 1, 2018, the Company implemented Accounting Standards Update 2014-09, Revenue from Contracts with Customers, codified at ASC Topic 606. The Company adopted ASC 606 using the modified retrospective transition method. As of December 31, 2017, the Company had no uncompleted customer contracts and, as a result, no cumulative transition adjustment was made during the first quarter of 2018. Results for reporting periods beginning January 1, 2018 are presented under ASC 606, while prior period amounts continue to be reported under legacy U.S. GAAP.

The majority of the Company’s revenue is generated through interest earned on financial instruments, including loans, which falls outside the scope of ASC 606. All of the Company’s revenue that is subject to ASC 606 would be included in non-interest income; however, not all non-interest income is subject to ASC 606. The Company had no contract liabilities or unsatisfied performance obligations with customers as of March 31, 2018.

Reclassifications

Certain prior year amounts have been reclassified for consistency with current period presentation.

XML

Fair Value

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value

2. Fair Value

There has been no change in our fair value policy during 2018.

The following tables present the balances of non-financial instruments measured at fair value on a non-recurring basis as of March 31, 2018 and December 31, 2017.

March 31, 2018

					Quoted
					Prices
					in Active
					Markets		Significant
					for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Foreclosed assets	$	1,079	$	1,079	$	–	$	–	$	1,079

December 31, 2017

					Quoted
					Prices
					in Active
					Markets		Significant
					for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Foreclosed assets	$	1,036	$	1,036	$	–	$	–	$	1,036

The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized at the periods indicated:

March 31, 2018

					Quoted Prices
					in Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	380	$	380	$	380	$	–	$	–
Loans receivable, net		39,692		39,692		–		–		39,692
Accrued interest receivable		966		966		–		–		966
Financial Liabilities:
Customer interest escrow		786		786		–		–		786
Notes payable related party		1,000		1,000		–		–		1,000
Notes payable secured		16,554		16,554		–		–		16,554
Notes payable unsecured, net		18,002		18,002		–		–		18,002
Accrued interest payable		1,373		1,373		–		–		1,373

December 31, 2017

					Quoted Prices
					in Active
					Markets for		Significant Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	3,478	$	3,478	$	3,478	$	–	$	–
Loans receivable, net		30,043		30,043		–		–		30,043
Accrued interest receivable		720		720		–		–		720
Financial Liabilities:
Customer interest escrow		935		935		–		–		935
Notes payable secured		11,644		11,644		–		–		11,644
Notes payable unsecured, net		16,904		16,904		–		–		16,904
Accrued interest payable		1,353		1,353		–		–		1,353

XML

Financing Receivables

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Financing Receivables

3. Financing Receivables

Financing receivables are comprised of the following as of March 31, 2018 and December 31, 2017:

	March 31, 2018			December 31, 2017
Loans receivable, gross	$	42,201		$	32,375
Less: Deferred loan fees		(932	)		(847	)
Less: Deposits		(1,573	)		(1,497	)
Plus: Deferred origination expense		133			109
Less: Allowance for loan losses		(137	)		(97	)
Loans receivable, net	$	39,692		$	30,043

Commercial Construction and Development Loans

Commercial Loans – Construction Loan Portfolio Summary

As of March 31, 2018, we have 64 borrowers, all of whom, including our three development loan customers (the “Hoskins Group,” consisting of Benjamin Marcus Homes, LLC, Investor’s Mark Acquisitions, LLC, and Mark Hoskins, being the largest of the three), borrow money for the purpose of building new homes.

The following is a summary of our loan portfolio to builders for home construction loans as of March 31, 2018 and December 31, 2017:

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
2018		17		64		199	$	84,753	$	54,773	$	36,959		65	%(3)		5	%
2017		16		52		168		75,931		47,087		29,563		62	%(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 Loan Portfolio Summary

The following is a summary of our loan portfolio to builders for land development as of March 31, 2018 and December 31, 2017:

Year	Number of States		Number of Borrowers		Number of Loans(4)		Gross Value of Collateral(1)		Commitment Amount(3)		Gross Amount Outstanding		Loan to Value Ratio(2)			Loan Fee
2018		3		3		6	$	8,019	$	6,362	$	5,242		65	%	$	1,000
2017		1		1		3		4,997		4,600		2,811		56	%		1,000

(1)	The value is determined by the appraised value adjusted for remaining costs to be paid. Part of this collateral is $1,240 as of March 31, 2018 and December 31, 2017 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 eliminate the loan balance. Part 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)	As of December 31, 2017, our development loans consisted of borrowings which originated in December 2011 and to which we refer throughout this report as the “Pennsylvania Loans”. During the first quarter of 2018, we added one additional development loan to the Pennsylvania Loans.

Credit Quality Information

The following table presents credit-related information at the “class” level in accordance with Financial Accounting Standards Board Accounting Standards Codification 310-10-50, Disclosures about the Credit Quality of Finance Receivables and the Allowance for Credit Losses. See our Form 10-K for the year ended December 31, 2017, as filed with the SEC, for more information.

Gross finance receivables – By risk rating:

	March 31, 2018		December 31, 2017
Pass	$	31,194	$	25,656
Special mention		7,231		6,719
Classified – accruing		3,776		–
Classified – nonaccrual		–		–
Total	$	42,201	$	32,375

Gross finance receivables – Method of impairment calculation:

	March 31, 2018		December 31, 2017
Performing loans evaluated individually	$	11,217	$	14,992
Performing loans evaluated collectively		27,208		17,383
Non-performing loans without a specific reserve		3,776		–
Non-performing loans with a specific reserve		–		–
Total	$	42,201	$	32,375

At March 31, 2018 and December 31, 2017, there were no loans acquired with deteriorated credit quality.

Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of loans receivable. Our concentration risks for individual borrowers are summarized in the table below:

	March 31, 2018				December 31, 2017
		Percent of				Percent of
	Borrower	Loan			Borrower	Loan
	City	Commitments			City	Commitments
Highest concentration risk	Pittsburgh, PA		21	%	Pittsburgh, PA		22	%
Second highest concentration risk	Sarasota, FL		6	%	Sarasota, FL		7	%
Third highest concentration risk	Orlando, FL		5	%	Savannah, GA		5	%

XML

Foreclosed Assets

3 Months Ended

Mar. 31, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Foreclosed Assets

4. Foreclosed Assets

Roll forward of foreclosed assets:

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Beginning balance	$	1,036		$	2,798		$	2,798
Additions for construction/development		48			317			296
Sale proceeds		-			(1,890	)		(1,890	)
Gain on sale		-			77			77
Impairment loss on foreclosed assets		(5	)		(266	)		(202	)
Ending balance	$	1,079		$	1,036		$	1,079

XML

Borrowings

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Borrowings

5. Borrowings

The following table displays our borrowings and a ranking of priority:

	Priority Rank		March 31, 2018		December 31, 2017
Borrowing Source
Purchase and sale agreements and other secured borrowings		1	$	16,559	$	11,644
Secured line of credit from affiliates		2		1,000		–
Unsecured line of credit (senior)		3		500		–
Other unsecured debt (senior subordinated)		4		1,007		279
Unsecured Notes through our public offering, gross		5		13,785		14,121
Other unsecured debt (subordinated)		5		2,387		2,617
Other unsecured debt (junior subordinated)		6		590		173
Total			$	35,828	$	28,834

The following table shows the maturity of outstanding debt as of March 31, 2018.

Year Maturing	Total Amount Maturing		Public Offering		Other Unsecured		Purchase and Sale Agreements and other secured borrowings
2018	$	22,413	$	3,547	$	1,954	$	16,912
2019		4,876		4,029		833		14
2020		2,269		2,154		100		15
2021		3,904		3,889		-		15
2022 and thereafter		2,366		166		1,597		603
Total	$	35,828	$	13,785	$	4,484	$	17,559

Secured Borrowings

Purchase and Sale Agreements

In March 2018, we entered into the Seventh Amendment (the “Seventh Amendment”) to our Loan Purchase and Sale Agreement (the “S.K. Funding LPSA”) with S.K. Funding, LLC (“S.K. Funding”).

The purpose of the Seventh Amendment was to allow S.K. Funding to purchase a portion of the Pennsylvania Loans for a purchase price of $649 under parameters different from those specified in the S.K. Funding LPSA.

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 $3,500.

● If the total principal amount is less than $4,500 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 has a term of 24 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 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.

Lines of Credit

During March  2018, we borrowed $1,000 against our line of credit with our Chief Executive Officer and his wife. Interest was $4 and $0 in the first quarter of 2018 and 2017, respectively. The interest rate for this borrowing was 4.4% as of March 31, 2018.

During July 2017, we entered into a line of credit agreement (the “Shuman LOC Agreement”) with a group of lenders (collectively, “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 2018 unless extended by Shuman for one or more additional 12-month periods.

The Shuman LOC was fully borrowed as of March 31, 2018

During October 2017, we entered into a line of credit agreement (the “Swanson LOC Agreement”) with Paul Swanson. Pursuant to the Swanson LOC Agreement, Mr. Swanson provides us with a revolving line of credit (the “Swanson LOC”) with the following terms:

● Principal not to exceed $4,000;

● Secured with assignments of certain notes and mortgages;

● Cost of funds to us of 10%; and

● Due in January 2019 unless extended by Mr. Swanson for one or more additional 15-month periods.

As of March 31, 2018, we have borrowed $3,851 under the Swanson LOC.

Mortgage Payable

During the first quarter of 2018, we entered into a commercial mortgage on our office building with the following terms:

● Principal not to exceed $660;

● Secured with assignments of certain notes and mortgages;

● Interest rate at 5.07% per annum based on a year of 360 days; and

● Due in January 2033.

Summary

The Purchase and Sale Agreements and Lines of Credit are summarized below:

	March 31, 2018				December 31, 2017
			Due From				Due From
	Book Value of		Shepherd’s		Book Value of		Shepherd’s
	Loans which		Finance to Loan		Loans which		Finance to Loan
	Served as Collateral		Purchaser or Lender		Served as Collateral		Purchaser or Lender
Loan Purchaser
Builder Finance, Inc.	$	7,506	$	4,262	$	7,483	$	4,089
S.K. Funding		13,046		6,463		9,128		4,134
Lender
Shuman		2,134		1,325		1,747		1,325
Paul Swanson		5,147		3,851		2,518		2,096
Total	$	27,833	$	15,901	$	20,876	$	11,644

Unsecured Borrowings

Other Unsecured Debts

Our other unsecured debts are detailed below:

					Principal Amount Outstanding as of
	Maturity	Interest			March 31,		December 31,
Loan	Date	Rate (1)			2018		2017
Unsecured Note with Seven Kings Holdings, Inc.	August 2018		7.5	%		500		500
Unsecured Line of Credit from Builders Finance, Inc.	January 2019		10.0	%		500		-
Unsecured Line of Credit from Paul Swanson	June 2018(2)		10.0	%		149		1,904
Subordinated Promissory Note	Demand(3)		7.5	%		1,125		-
Subordinated Promissory Note	December 2019		10.5	%		113		113
Subordinated Promissory Note	April 2020		10.0	%		100		100
Senior Subordinated Promissory Note	March 2022(4)		10.0	%		400		-
Senior Subordinated Promissory Note	March 2022		1.0	%		728		-
Junior Subordinated Promissory Note	March 2022		22.5	%		417		-
Senior Subordinated Promissory Note	October 2022		1.0	%		279		279
Junior Subordinated Promissory Note	October 2022		20.0	%		173		173
					$	4,484	$	3,069

⁽¹⁾ Interest rate per annum, based upon actual days outstanding and a 365/366 day year.

⁽²⁾ Due in June 2018 unless extended by Mr. Swanson for one or more additional 15-month periods.

⁽³⁾ Principal due six months after lender gives notice. This note may be prepaid without fee, premium or penalty.

⁽⁴⁾ This note may be prepaid upon lender's request at least 10 days prior to an interest payment and up to $20 of principal.

Unsecured Notes through the Public Offering (“Notes Program”)

The effective interest rate on the Notes offered pursuant to the Notes Program at March 31, 2018 and December 31, 2017 was 9.16% and 9.21%, respectively, not including the amortization of deferred financing costs. There are limited rights of early redemption. The following table shows the roll forward of our Notes Program:

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Gross Notes outstanding, beginning of period	$	14,121		$	11,221		$	11,221
Notes issued		1,309			8,375			4,144
Note repayments / redemptions		(1,645	)		(5,475	)		(2,573	)
Gross Notes outstanding, end of period	$	13,785		$	14,121		$	12,792
Less deferred financing costs, net		267			286			357
Notes outstanding, net	$	13,518		$	13,835		$	12,435

The following is a roll forward of deferred financing costs:

	Three Months			Year			Three Months
	Ended			Ended			Ended
	March 31, 2018			December 31, 2017			March 31, 2017
Deferred financing costs, beginning balance	$	1,102		$	1,014		$	1,014
Additions		29			88			10
Deferred financing costs, ending balance	$	1,131		$	1,102		$	1,024
Less accumulated amortization		(864	)		(816	)		(667	)
Deferred financing costs, net	$	267		$	286		$	357

The following is a roll forward of the accumulated amortization of deferred financing costs:

	Three Months		Year		Three Months
	Ended		Ended		Ended
	March 31, 2018		December 31, 2017		March 31, 2017
Accumulated amortization, beginning balance	$	816	$	603	$	603
Additions		48		213		64
Accumulated amortization, ending balance	$	864	$	816	$	667

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Redeemable Preferred Equity

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Redeemable Preferred Equity

6. Redeemable Preferred Equity

The following is a roll forward our of Series C cumulative preferred equity (“Series C Preferred Units”):

	Three Months Ended March 31, 2018		Year Ended December 31, 2017		Three Months Ended March 31, 2017
Beginning balance	$	1,097	$	–	$	–
Additions from new investment		–		1,004		440
Additions from reinvestment		33		93		–
Ending balance	$	1,130	$	1,097	$	440

The following table shows the earliest redemption options for investors in our Series C Preferred Units as of March 31, 2018:

Year Maturing	Total Amount Redeemable
2023	$	1,130
Total	$	1,130

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Members' Capital

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Members' Capital

7. Members’ Capital

There are currently two classes of units outstanding: Class A common units (“Class A Common Units”) and Series B cumulative preferred units (“Series B Preferred Units”). The Class A Common Units are held by nine 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 March 31, 2018 and December 31, 2017.

In January 2018, our Chief Financial Officer and Executive Vice President of Operations purchased 2% and 1% of our outstanding Class A Common Units, respectively, from our CEO. In March 2018, our Executive Vice President of Sales purchased 14.3% of our outstanding Class A Common Units from our CEO.

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Related Party Transactions

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

8. Related Party Transactions

As of March 31, 2018, each of our two independent managers own 1% of our Class A Common Units. As of March 31, 2018, our CFO, Executive Vice President of Operations, and Executive Vice President of Sales each own 2%, 2%, and 15.3% of our Class A Common Units, respectively.

In March 2018, we borrowed $1,000 against our line of credit with our CEO and his wife. A more detailed description is included in Note 5 above. This borrowing is included in notes payable secured, net of deferred financing costs on the interim condensed consolidated balance sheet.

In February 2018, we issued a Subordinated Promissory Note in the principal amount of $1,125 to a trust affiliated with Seven Kings Holdings, Inc. One of our independent managers, Kenneth R. Summers, is the trustee of that trust. This borrowing is included in notes payable unsecured, net of deferred financing costs on the interim condensed consolidated balance sheet.

In March 2018, we issued a Senior Subordinated Promissory Note in the principal amount of $400 to family members of one of our CEO. This borrowing is included in the notes payable unsecured, net of deferred financing costs on the interim condensed consolidated balance sheet.

In March 2018, we issued a Senior Subordinated Promissory Note in the principal amount of $400 to family members of one of our CEO.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

Unfunded commitments to extend credit, which have similar collateral, credit risk, and market risk to our outstanding loans, were $18,935 and $19,312 at March 31, 2018 and December 31, 2017, respectively.

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Selected Quarterly Condensed Consolidated Financial Data (Unaudited)

3 Months Ended

Mar. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Condensed Consolidated Financial Data (Unaudited)

10. Selected Quarterly Condensed Consolidated Financial Data (Unaudited)

Summarized unaudited quarterly condensed consolidated financial data for the four quarters of each of 2018 and 2017 are as follows:

	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
	2018		2017		2017		2017		2017
Net Interest Income after Loan Loss Provision	$	926	$	802	$	917	$	725	$	617
Non-Interest Income		–		–		–		–		77
SG&A expense		617		643		537		456		448
Depreciation and Amortization		17		–		–		–		6
Impairment loss on foreclosed assets		5		64		47		106		49
Net Income	$	287	$	95	$	333	$	163	$	191

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Non-Interest Expense Detail

3 Months Ended

Mar. 31, 2018

Non-interest Expense Detail

Non-Interest Expense Detail

11. Non-Interest expense detail

The following table displays our selling, general and administrative (“SG&A”) expenses:

	For the Three Months Ended March 31,
	2018		2017
Selling, general and administrative expenses
Legal and accounting	$	143	$	96
Salaries and related expenses		356		254
Board related expenses		22		29
Advertising		17		17
Rent and utilities		10		5
Loan and foreclosed asset expenses		8		7
Travel		23		15
Other		38		25
Total SG&A	$	617	$	448

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Subsequent Events

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

12. Subsequent Events

Management of the Company has evaluated subsequent events through May 10, 2018, the date these consolidated financial statements were issued.

As described more fully in Note 5, in October 2017, we entered into the Swanson LOC Agreement, pursuant to which Mr. Swanson provided us with the Swanson LOC. We and Mr. Swanson entered into a Master Loan Modification Agreement which modified the Swanson LOC Agreement (the “Modification Agreement”) and is effective and enforceable by us as of April 13, 2018. The Modification Agreement increased the maximum borrowing amount under the Swanson LOC from $4,000 to $7,000. If Mr. Swanson elects not to renew the Modification Agreement, Mr. Swanson must give us written notice at least 120 days before the expiration date of the then current term. If Mr. Swanson provides such written notice, we must repay $4,000 of the Swanson LOC by the expiration date and must repay the remaining balance on the Swanson LOC by 120 days after the expiration date. Our obligation to repay the Swanson LOC is evidenced by two Modified Promissory Notes from us, one dated April 12, 2018 and evidencing a promise to repay the secured portion of the Swanson LOC and the other dated April 13, 2018 and evidencing a promise to repay the unsecured portion of the Swanson LOC. The Modification Agreement did not affect the other terms of the Swanson LOC Agreement.

In April 2018, we fully repaid our line of credit to our CEO and his wife, which had a $1,000 outstanding principal balance as of March 31, 2018.

In February 2016, we entered into a construction loan agreement (the “Vista Loan Agreement”) with Lex Partners II, LLC (“Lex Partners II”), pursuant to which we extended a construction loan (the “Vista Loan”) to Lex Partners II to be used for the refinance of a parcel of land located at 1333 Vista Drive, Sarasota, Florida 34239 and the construction of a home thereon (the “Vista Property”). On June 30, 2016, Lex Partners II deeded the Vista Property to 1333 Vista Drive, LLC (the “Property Owner”), an unaffiliated third party, but Lex Partners II remained the borrower on the Vista Loan. As of April 24, 2018, the principal balance on the Vista Loan was approximately $3,776 and the unpaid interest on the Vista Loan was approximately $243.

In February 2018, Lex Partners II defaulted under the Vista Loan by failing to make an interest payment that was due. Subsequently, on April 27, 2018, we and the Property Owner entered into an Agreement (the “Master Agreement”), which requires, among other things, that the Property Owner deed the Vista Property to us in lieu of foreclosure. When such deed in lieu of foreclosure is effective, the Master Agreement requires we pay the sum of $50 to the Property Owner. On April 27, 2018, we and the Property Owner executed a Deed in Lieu of Foreclosure Agreement (the “Deed Agreement”). As required by the Deed Agreement, on April 27, 2018, the Property Owner also executed a Warranty Deed in Lieu of Foreclosure in favor of the Company, pursuant to which the Property Owner deeded the Vista Property to us, and on May 3, 2018, we made the required payment of $50 to the Property Owner.

Pursuant to the Master Agreement, we may complete construction of the single family residence being built on the Vista Property, but we are not required to do so. When we sell the Vista Property, the Master Agreement requires that we pay the first $250 of profit (as defined in the Master Agreement) to the Property Owner, subject to certain limitations contained in the Master Agreement.

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Schedule of Non-financial Instruments Measured at Fair Value on Non-recurring Basis

The following tables present the balances of non-financial instruments measured at fair value on a non-recurring basis as of March 31, 2018 and December 31, 2017.

March 31, 2018

					Quoted
					Prices
					in Active
					Markets		Significant
					for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Foreclosed assets	$	1,079	$	1,079	$	–	$	–	$	1,079

December 31, 2017

					Quoted
					Prices
					in Active
					Markets		Significant
					for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Foreclosed assets	$	1,036	$	1,036	$	–	$	–	$	1,036

Schedule of Fair Value Measurements, Recurring and Nonrecurring

The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized at the periods indicated:

March 31, 2018

					Quoted Prices
					in Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	380	$	380	$	380	$	–	$	–
Loans receivable, net		39,692		39,692		–		–		39,692
Accrued interest receivable		966		966		–		–		966
Financial Liabilities:
Customer interest escrow		786		786		–		–		786
Notes payable related party		1,000		1,000		–		–		1,000
Notes payable secured		16,554		16,554		–		–		16,554
Notes payable unsecured, net		18,002		18,002		–		–		18,002
Accrued interest payable		1,373		1,373		–		–		1,373

December 31, 2017

					Quoted Prices
					in Active
					Markets for		Significant Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	3,478	$	3,478	$	3,478	$	–	$	–
Loans receivable, net		30,043		30,043		–		–		30,043
Accrued interest receivable		720		720		–		–		720
Financial Liabilities:
Customer interest escrow		935		935		–		–		935
Notes payable secured		11,644		11,644		–		–		11,644
Notes payable unsecured, net		16,904		16,904		–		–		16,904
Accrued interest payable		1,353		1,353		–		–		1,353

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Financing Receivables (Tables)

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Schedule of Financing Receivables

Financing receivables are comprised of the following as of March 31, 2018 and December 31, 2017:

	March 31, 2018			December 31, 2017
Loans receivable, gross	$	42,201		$	32,375
Less: Deferred loan fees		(932	)		(847	)
Less: Deposits		(1,573	)		(1,497	)
Plus: Deferred origination expense		133			109
Less: Allowance for loan losses		(137	)		(97	)
Loans receivable, net	$	39,692		$	30,043

Commercial Loans - Construction Loan Portfolio Summary

The following is a summary of our loan portfolio to builders for home construction loans as of March 31, 2018 and December 31, 2017:

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
2018		17		64		199	$	84,753	$	54,773	$	36,959		65	%(3)		5	%
2017		16		52		168		75,931		47,087		29,563		62	%(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 Loan Portfolio Summary

The following is a summary of our loan portfolio to builders for land development as of March 31, 2018 and December 31, 2017:

Year	Number of States		Number of Borrowers		Number of Loans(4)		Gross Value of Collateral(1)		Commitment Amount(3)		Gross Amount Outstanding		Loan to Value Ratio(2)			Loan Fee
2018		3		3		6	$	8,019	$	6,362	$	5,242		65	%	$	1,000
2017		1		1		3		4,997		4,600		2,811		56	%		1,000

(1)	The value is determined by the appraised value adjusted for remaining costs to be paid. Part of this collateral is $1,240 as of March 31, 2018 and December 31, 2017 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 eliminate the loan balance. Part 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)	As of December 31, 2017, our development loans consisted of borrowings which originated in December 2011 and to which we refer throughout this report as the “Pennsylvania Loans”. During the first quarter of 2018, we added one additional development loan to the Pennsylvania Loans.

Summary of Finance Receivables by Classification

Gross finance receivables – By risk rating:

	March 31, 2018		December 31, 2017
Pass	$	31,194	$	25,656
Special mention		7,231		6,719
Classified – accruing		3,776		–
Classified – nonaccrual		–		–
Total	$	42,201	$	32,375

Schedule of Impairment Calculation Method

Gross finance receivables – Method of impairment calculation:

	March 31, 2018		December 31, 2017
Performing loans evaluated individually	$	11,217	$	14,992
Performing loans evaluated collectively		27,208		17,383
Non-performing loans without a specific reserve		3,776		–
Non-performing loans with a specific reserve		–		–
Total	$	42,201	$	32,375

Schedule of Concentration Risk for Individual Borrowers

Our concentration risks for individual borrowers are summarized in the table below:

	March 31, 2018				December 31, 2017
		Percent of				Percent of
	Borrower	Loan			Borrower	Loan
	City	Commitments			City	Commitments
Highest concentration risk	Pittsburgh, PA		21	%	Pittsburgh, PA		22	%
Second highest concentration risk	Sarasota, FL		6	%	Sarasota, FL		7	%
Third highest concentration risk	Orlando, FL		5	%	Savannah, GA		5	%

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Foreclosed Assets (Tables)

3 Months Ended

Mar. 31, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Roll Forward of Foreclosed Assets

Roll forward of foreclosed assets:

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Beginning balance	$	1,036		$	2,798		$	2,798
Additions for construction/development		48			317			296
Sale proceeds		-			(1,890	)		(1,890	)
Gain on sale		-			77			77
Impairment loss on foreclosed assets		(5	)		(266	)		(202	)
Ending balance	$	1,079		$	1,036		$	1,079

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Borrowings (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of Borrowings

The following table displays our borrowings and a ranking of priority:

	Priority Rank		March 31, 2018		December 31, 2017
Borrowing Source
Purchase and sale agreements and other secured borrowings		1	$	16,559	$	11,644
Secured line of credit from affiliates		2		1,000		–
Unsecured line of credit (senior)		3		500		–
Other unsecured debt (senior subordinated)		4		1,007		279
Unsecured Notes through our public offering, gross		5		13,785		14,121
Other unsecured debt (subordinated)		5		2,387		2,617
Other unsecured debt (junior subordinated)		6		590		173
Total			$	35,828	$	28,834

Schedule of Maturities of Long-term Debt

The following table shows the maturity of outstanding debt as of March 31, 2018.

Year Maturing	Total Amount Maturing		Public Offering		Other Unsecured		Purchase and Sale Agreements and other secured borrowings
2018	$	22,413	$	3,547	$	1,954	$	16,912
2019		4,876		4,029		833		14
2020		2,269		2,154		100		15
2021		3,904		3,889		-		15
2022 and thereafter		2,366		166		1,597		603
Total	$	35,828	$	13,785	$	4,484	$	17,559

Schedule of Secured Borrowings

The Purchase and Sale Agreements and Lines of Credit are summarized below:

	March 31, 2018				December 31, 2017
			Due From				Due From
	Book Value of		Shepherd’s		Book Value of		Shepherd’s
	Loans which		Finance to Loan		Loans which		Finance to Loan
	Served as Collateral		Purchaser or Lender		Served as Collateral		Purchaser or Lender
Loan Purchaser
Builder Finance, Inc.	$	7,506	$	4,262	$	7,483	$	4,089
S.K. Funding		13,046		6,463		9,128		4,134
Lender
Shuman		2,134		1,325		1,747		1,325
Paul Swanson		5,147		3,851		2,518		2,096
Total	$	27,833	$	15,901	$	20,876	$	11,644

Schedule of Other Unsecured Loans

Our other unsecured debts are detailed below:

					Principal Amount Outstanding  as of
	Maturity	Interest			March 31,		December 31,
Loan	Date	Rate (1)			2018		2017
Unsecured Note with Seven Kings Holdings, Inc.	August 2018		7.5	%		500		500
Unsecured Line of Credit from Builders Finance, Inc.	January 2019		10.0	%		500		-
Unsecured Line of Credit from Paul Swanson	June 2018(2)		10.0	%		149		1,904
Subordinated Promissory Note	Demand(3)		7.5	%		1,125		-
Subordinated Promissory Note	December 2019		10.5	%		113		113
Subordinated Promissory Note	April 2020		10.0	%		100		100
Senior Subordinated Promissory Note	March 2022(4)		10.0	%		400		-
Senior Subordinated Promissory Note	March 2022		1.0	%		728		-
Junior Subordinated Promissory Note	March 2022		22.5	%		417		-
Senior Subordinated Promissory Note	October 2022		1.0	%		279		279
Junior Subordinated Promissory Note	October 2022		20.0	%		173		173
					$	4,484	$	3,069

⁽¹⁾ Interest rate per annum, based upon actual days outstanding and a 365/366 day year.

⁽²⁾ Due in June 2018 unless extended by Mr. Swanson for one or more additional 15-month periods.

⁽³⁾ Principal due six months after lender gives notice. This note may be prepaid without fee, premium or penalty.

⁽⁴⁾ This note may be prepaid upon lender's request at least 10 days prior to an interest payment and up to $20 of principal.

Schedule of Roll Forward of Notes Outstanding

The following table shows the roll forward of our Notes Program:

	Three Months Ended March 31, 2018			Year Ended December 31, 2017			Three Months Ended March 31, 2017
Gross Notes outstanding, beginning of period	$	14,121		$	11,221		$	11,221
Notes issued		1,309			8,375			4,144
Note repayments / redemptions		(1,645	)		(5,475	)		(2,573	)
Gross Notes outstanding, end of period	$	13,785		$	14,121		$	12,792
Less deferred financing costs, net		267			286			357
Notes outstanding, net	$	13,518		$	13,835		$	12,435

Schedule of Roll Forward of Deferred Financing Costs

The following is a roll forward of deferred financing costs:

	Three Months			Year			Three Months
	Ended			Ended			Ended
	March 31, 2018			December 31, 2017			March 31, 2017
Deferred financing costs, beginning balance	$	1,102		$	1,014		$	1,014
Additions		29			88			10
Deferred financing costs, ending balance	$	1,131		$	1,102		$	1,024
Less accumulated amortization		(864	)		(816	)		(667	)
Deferred financing costs, net	$	267		$	286		$	357

Schedule of Roll Forward of Accumulated Amortization of Deferred Financing Costs

The following is a roll forward of the accumulated amortization of deferred financing costs:

	Three Months		Year		Three Months
	Ended		Ended		Ended
	March 31, 2018		December 31, 2017		March 31, 2017
Accumulated amortization, beginning balance	$	816	$	603	$	603
Additions		48		213		64
Accumulated amortization, ending balance	$	864	$	816	$	667

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Redeemable Preferred Equity (Tables)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Schedule of Roll Forward Our of Series C Cumulative Preferred Units

The following is a roll forward our of Series C cumulative preferred equity (“Series C Preferred Units”):

	Three Months Ended March 31, 2018		Year Ended December 31, 2017		Three Months Ended March 31, 2017
Beginning balance	$	1,097	$	–	$	–
Additions from new investment		–		1,004		440
Additions from reinvestment		33		93		–
Ending balance	$	1,130	$	1,097	$	440

Schedule of Redemption Option for Investors

The following table shows the earliest redemption options for investors in our Series C Preferred Units as of March 31, 2018:

Year Maturing	Total Amount Redeemable
2023	$	1,130
Total	$	1,130

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Selected Quarterly Condensed Consolidated Financial Data (Unaudited) (Tables)

3 Months Ended

Mar. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Summarized Unaudited Quarterly Condensed Consolidated Financial Data

Summarized unaudited quarterly condensed consolidated financial data for the four quarters of each of 2018 and 2017 are as follows:

	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
	2018		2017		2017		2017		2017
Net Interest Income after Loan Loss Provision	$	926	$	802	$	917	$	725	$	617
Non-Interest Income		–		–		–		–		77
SG&A expense		617		643		537		456		448
Depreciation and Amortization		17		–		–		–		6
Impairment loss on foreclosed assets		5		64		47		106		49
Net Income	$	287	$	95	$	333	$	163	$	191

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Non-Interest Expense Detail (Tables)

3 Months Ended

Mar. 31, 2018

Non-interest Expense Detail

Schedule of Selling General and Administrative Expenses

The following table displays our selling, general and administrative (“SG&A”) expenses:

	For the Three Months Ended March 31,
	2018		2017
Selling, general and administrative expenses
Legal and accounting	$	143	$	96
Salaries and related expenses		356		254
Board related expenses		22		29
Advertising		17		17
Rent and utilities		10		5
Loan and foreclosed asset expenses		8		7
Travel		23		15
Other		38		25
Total SG&A	$	617	$	448

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Fair Value - Schedule of Non-financial Instruments Measured at Fair Value on Non-recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Foreclosed assets	$ 1,079	$ 1,036	$ 1,079	$ 2,798
Carrying Amount [Member]
Foreclosed assets	1,079	1,036
Estimated Fair Value [Member]
Foreclosed assets	1,079	1,036
Fair Value, Inputs, Level 1 [Member]
Foreclosed assets
Fair Value, Inputs, Level 2 [Member]
Foreclosed assets
Fair Value, Inputs, Level 3 [Member]
Foreclosed assets	$ 1,079	$ 1,036

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Fair Value - Schedule of Fair Value Measurements, Recurring and Nonrecurring (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Financial Assets, Cash and cash equivalents	$ 380	$ 3,478	$ 586	$ 1,566
Financial Assets, Loans receivable, net	39,692	30,043
Financial Assets, Accrued interest receivable	966	720
Financial Liabilities, Customer interest escrow	786	935
Financial Liabilities, Notes payable related party	17,554	11,644
Financial Liabilities, Notes payable secured	16,554	11,644
Financial Liabilities, Notes payable unsecured, net	18,002	16,904
Carrying Amount [Member]
Financial Assets, Cash and cash equivalents	380	3,478
Financial Assets, Loans receivable, net	39,692	30,043
Financial Assets, Accrued interest receivable	966	720
Financial Liabilities, Customer interest escrow	786	935
Financial Liabilities, Notes payable related party	1,000
Financial Liabilities, Notes payable secured	16,554	11,644
Financial Liabilities, Notes payable unsecured, net	18,002	16,904
Financial Liabilities, Accrued interest payable	1,373	1,353
Estimated Fair Value [Member]
Financial Assets, Cash and cash equivalents	380	3,478
Financial Assets, Loans receivable, net	39,692	30,043
Financial Assets, Accrued interest receivable	966	720
Financial Liabilities, Customer interest escrow	786	935
Financial Liabilities, Notes payable related party	1,000
Financial Liabilities, Notes payable secured	16,554	11,644
Financial Liabilities, Notes payable unsecured, net	18,002	16,904
Financial Liabilities, Accrued interest payable	1,373	1,353
Fair Value, Inputs, Level 1 [Member]
Financial Assets, Cash and cash equivalents	380	3,478
Financial Assets, Loans receivable, net
Financial Assets, Accrued interest receivable
Financial Liabilities, Customer interest escrow
Financial Liabilities, Notes payable related party
Financial Liabilities, Notes payable secured
Financial Liabilities, Notes payable unsecured, net
Financial Liabilities, Accrued interest payable
Fair Value, Inputs, Level 2 [Member]
Financial Assets, Cash and cash equivalents
Financial Assets, Loans receivable, net
Financial Assets, Accrued interest receivable
Financial Liabilities, Customer interest escrow
Financial Liabilities, Notes payable related party
Financial Liabilities, Notes payable secured
Financial Liabilities, Notes payable unsecured, net
Financial Liabilities, Accrued interest payable
Fair Value, Inputs, Level 3 [Member]
Financial Assets, Cash and cash equivalents
Financial Assets, Loans receivable, net	39,692	30,043
Financial Assets, Accrued interest receivable	966	720
Financial Liabilities, Customer interest escrow	786	935
Financial Liabilities, Notes payable related party	1,000
Financial Liabilities, Notes payable secured	16,554	11,644
Financial Liabilities, Notes payable unsecured, net	18,002	16,904
Financial Liabilities, Accrued interest payable	$ 1,373	$ 1,353

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Financing Receivables - Schedule of Financing Receivables (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Receivables [Abstract]
Loans receivable, gross	$ 42,201	$ 32,375
Less: Deferred loan fees	(932)	(847)
Less: Deposits	(1,573)	(1,497)
Plus: Deferred origination expense	133	109
Less: Allowance for loan losses	(137)	(97)
Loans receivable, net	$ 39,692	$ 30,043

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Financing Receivables - Commercial Loans - Construction Loan Portfolio Summary (Details) $ in Thousands		3 Months Ended	12 Months Ended
		Mar. 31, 2018 USD ($) Loan Integer	Dec. 31, 2017 USD ($) Loan Integer
Summary Of Loan Portfolio To Builders For Home Construction [Line Items]
Gross Amount Outstanding		$ 42,201	$ 32,375
Home Construction Loans [Member]
Summary Of Loan Portfolio To Builders For Home Construction [Line Items]
Number of States | Integer		17	16
Number of Borrowers | Integer		64	52
Number of Loans | Loan		199	168
Value of Collateral	[1]	$ 84,753	$ 75,931
Commitment Amount		54,773	47,087
Gross Amount Outstanding		$ 36,959	$ 29,563
Loan to Value Ratio	[2],[3]	65.00%	62.00%
Loan Fee		5.00%	5.00%

[1] The value is determined by the appraised value.

[2] Represents the weighted average loan to value ratio of the loans.

[3] The loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.

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Financing Receivables - Commercial Loans - Real Estate Development Loan Portfolio Summary (Details) $ in Thousands		3 Months Ended	12 Months Ended
		Mar. 31, 2018 USD ($) Loan Integer	Dec. 31, 2017 USD ($) Loan Integer
Real Estate Development Loan Portfolio [Line Items]
Gross Amount Outstanding		$ 42,201	$ 32,375
Real Estate Development [Member]
Real Estate Development Loan Portfolio [Line Items]
Number of States | Integer		3	1
Number of Borrowers | Integer		3	1
Number of Loans | Loan	[1]	6	3
Gross Value of Collateral	[2]	$ 8,019	$ 4,997
Commitment Amount	[3]	6,362	4,600
Gross Amount Outstanding		$ 5,242	$ 2,811
Loan to Value Ratio	[4]	65.00%	56.00%
Loan Fee		$ 1,000	$ 1,000

[1] As of December 31, 2017, our development loans consisted of borrowings which originated in December 2011 and to which we refer throughout this report as the "Pennsylvania Loans". During the first quarter of 2018, we added one additional development loan to the Pennsylvania Loans.

[2] The value is determined by the appraised value adjusted for remaining costs to be paid. Part of this collateral is $1,240 as of March 31, 2018 and December 31, 2017 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 eliminate the loan balance. Part of the collateral value is estimated based on the selling prices anticipated for the homes.

[3] The commitment amount does not include letters of credit and cash bonds.

[4] The loan to value ratio is calculated by taking the outstanding amount and dividing by the appraised value calculated as described above.

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Financing Receivables - Commercial Loans - Real Estate Development Loan Portfolio Summary (Details) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Receivables [Abstract]
Collateral of preferred equity	$ 1,240	$ 1,240

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Financing Receivables - Summary of Finance Receivables by Classification (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Loans receivable, gross	$ 42,201	$ 32,375
Pass [Member]
Loans receivable, gross	31,194	25,656
Special Mention [Member]
Loans receivable, gross	7,231	6,719
Classified - Accruing [Member]
Loans receivable, gross	3,776
Classified - Nonaccrual [Member]
Loans receivable, gross

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Financing Receivables - Schedule of Impairment Calculation Method (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 42,201	$ 32,375
Performing Loans Evaluated Individually [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	11,217	14,992
Performing Loans Evaluated Collectively [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	27,208	17,383
Non-performing Loans without a Specific Reserve [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	3,776
Non-performing Loans with a Specific Reserve [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross

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Financing Receivables - Schedule of Concentration Risk for Individual Borrowers (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Highest Concentration Risk [Member]
Borrower City	Pittsburgh, PA	Pittsburgh, PA
Percent of Loan Commitments	21.00%	22.00%
Second Highest Concentration Risk [Member]
Borrower City	Sarasota, FL	Sarasota, FL
Percent of Loan Commitments	6.00%	7.00%
Third Highest Concentration Risk [Member]
Borrower City	Orlando, FL	Savannah, GA
Percent of Loan Commitments	5.00%	5.00%

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Foreclosed Assets - Schedule of Roll Forward of Foreclosed Assets (Details) - USD ($) $ in Thousands	3 Months Ended					12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Beginning balance	$ 1,036			$ 1,079	$ 2,798	$ 2,798
Additions for construction/development	48				296	317
Sale proceeds					(1,890)	(1,890)
Gain on sale					77	77
Impairment loss on foreclosed assets	(5)	$ (64)	$ (47)	$ (106)	(49)	(266)
Ending balance	$ 1,079	$ 1,036			$ 1,079	$ 1,036

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Borrowings (Details Narrative) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended
	Mar. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Interest				$ 4	$ 0
Debt instrument interest rate stated percentage	4.40%			4.40%
Notes Program [Member]
Debt instrument interest rate stated percentage	9.16%			9.16%		9.21%
Loan Purchase and Sale Agreement [Member] | Seventh Amendment [Member] | S.K. Funding, LLC [Member]
Purchase price of loan	$ 649
Description of loan funding obligation	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 $3,500. If the total principal amount is less than $4,500 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.
Debt term	24 months
Shuman Line of Credit Agreement [Member] | Shuman [Member]
Line of credit maximum borrowing capacity			$ 1,325
Cost of funds percentage			10.00%
Line of credit maturity date			Jul. 31, 2018
Line of credit termination description			Due in July 2018 unless extended by Shuman for one or more additional 12-month periods.
Swanson Line of Credit Agreement [Member] | Paul Swanson [Member]
Line of credit maximum borrowing capacity	$ 660	$ 4,000		$ 660
Cost of funds percentage		10.00%		5.07%
Line of credit maturity date		Jan. 31, 2019		Jan. 31, 2033
Line of credit termination description		Due in January 2019 unless extended by Mr. Swanson for one or more additional 15-month periods.		Due in January 2033.
Borrowings under line of credit				$ 3,851
Chief Executive Officer [Member]
Line of credit	$ 1,000			$ 1,000

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Borrowings - Schedule of Borrowings (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
Purchase and sale agreements and other secured borrowings	$ 16,559	$ 11,644
Secured line of credit from affiliates	1,000
Unsecured line of credit (senior)	500
Other unsecured debt (senior subordinated)	1,007	279
Unsecured Notes through our public offering, gross	13,785	14,121
Other unsecured debt (subordinated)	2,387	2,617
Other unsecured debt (junior subordinated)	590	173
Total	$ 35,828	$ 28,834

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Borrowings - Schedule of Maturities of Long-term Debt (Details) $ in Thousands	Mar. 31, 2018 USD ($)
Total Amount Maturing [Member]
2018	$ 22,413
2019	4,876
2020	2,269
2021	3,904
2022 and thereafter	2,366
Total	35,828
Public Offering [Member]
2018	3,547
2019	4,029
2020	2,154
2021	3,889
2022 and thereafter	166
Total	13,785
Other Unsecured [Member]
2018	1,954
2019	833
2020	100
2021
2022 and thereafter	1,597
Total	4,484
Purchase and Sale Agreements and Other Secured Borrowings [Member]
2018	16,912
2019	14
2020	15
2021	15
2022 and thereafter	603
Total	$ 17,559

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Borrowings - Schedule of Secured Borrowings (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Book Value of Loans which Served as Collateral	$ 27,833	$ 20,876
Due From Shepherd's Finance to Loan Purchaser or Lender	16,554	11,644
Builder Finance, Inc. [Member]
Book Value of Loans which Served as Collateral	7,506	7,483
Due From Shepherd's Finance to Loan Purchaser or Lender	4,262	4,089
S.K. Funding [Member]
Book Value of Loans which Served as Collateral	13,046	9,128
Due From Shepherd's Finance to Loan Purchaser or Lender	6,463	4,134
Shuman [Member]
Book Value of Loans which Served as Collateral	2,134	1,747
Due From Shepherd's Finance to Loan Purchaser or Lender	1,325	1,325
Paul Swanson [Member]
Book Value of Loans which Served as Collateral	5,147	2,518
Due From Shepherd's Finance to Loan Purchaser or Lender	$ 3,851	$ 2,096

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Borrowings - Schedule of Other Unsecured Loans (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Dec. 31, 2017
Unsecured Note with Seven Kings Holdings,Inc [Member]
Maturity Date		August 2018
Interest Rate	[1]	7.50%
Other Unsecured Loans		$ 500	$ 500
Unsecured Line of Credit from Builders Finance Inc [Member]
Maturity Date		January 2019
Interest Rate	[1]	10.00%
Other Unsecured Loans		$ 500
Unsecured Line of Credit from Paul Swanson [Member]
Maturity Date	[2]	June 2018
Interest Rate	[1]	10.00%
Other Unsecured Loans		$ 1,904	149
Subordinated Promissory Note [Member]
Maturity Date	[3]	Demand
Interest Rate	[1]	7.50%
Other Unsecured Loans		$ 1,125
Subordinated Promissory Note [Member]
Maturity Date		December 2019
Interest Rate	[1]	10.50%
Other Unsecured Loans		$ 113	113
Subordinated Promissory Note [Member]
Maturity Date		April 2020
Interest Rate	[1]	10.00%
Other Unsecured Loans		$ 100	100
Senior Subordinated Promissory Note [Member]
Maturity Date	[4]	March 2022
Interest Rate	[1]	10.00%
Other Unsecured Loans		$ 400
Senior Subordinated Promissory Note One [Member]
Maturity Date		March 2022
Interest Rate	[1]	1.00%
Other Unsecured Loans		$ 728
Junior Subordinated Promissory Note [Member]
Maturity Date		March 2022
Interest Rate	[1]	22.50%
Other Unsecured Loans		$ 417
Senior Subordinated Promissory Note Two [Member]
Maturity Date		October 2022
Interest Rate	[1]	1.00%
Other Unsecured Loans		$ 279	279
Junior Subordinated Promissory Note One [Member]
Maturity Date		October 2022
Interest Rate	[1]	20.00%
Other Unsecured Loans		$ 173	173
Other Unsecured Debt [Member]
Other Unsecured Loans		$ 4,484	$ 3,069

[1] Interest rate per annum, based upon actual days outstanding and a 365/366 day year.

[2] Due in June 2018 unless extended by Mr. Swanson for one or more additional 15-month periods

[3] Principal due six months after lender gives notice. This note may be prepaid without fee, premium or penalty.

[4] This note may be prepaid upon lender's request at least 10 days prior to an interest payment and up to $20 of principal.

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Borrowings - Schedule of Other Unsecured Loans (Details) (Parenthetical) $ in Thousands	Mar. 31, 2018 USD ($)
Senior Subordinated Promissory Note [Member] | Maximum [Member]
Debt, principal amount	$ 20

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Borrowings - Schedule of Roll Forward of Notes Outstanding (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Debt Disclosure [Abstract]
Gross Notes outstanding, beginning of period	$ 14,121	$ 11,221	$ 11,221
Notes issued	1,309	4,144	8,375
Note repayments / redemptions	(1,645)	(2,573)	(5,475)
Gross Notes outstanding, end of period	13,785	12,792	14,121
Less deferred financing costs, net	267	357	286
Notes outstanding, net	$ 13,518	$ 12,435	$ 13,835

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Borrowings - Schedule of Roll Forward of Deferred Financing Costs (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Deferred financing costs, beginning balance	$ 1,102	$ 1,014	$ 1,014
Additions	29	10	88
Deferred financing costs, ending balance	1,131	1,024	1,102
Less accumulated amortization	(864)	(667)	(816)	$ (603)
Deferred financing costs, net	$ 267	$ 357	$ 286

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Borrowings - Schedule of Roll Forward of Accumulated Amortization of Deferred Financing Costs (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Debt Disclosure [Abstract]
Accumulated amortization, beginning balance	$ 816	$ 603	$ 603
Additions	48	64	213
Accumulated amortization, ending balance	$ 864	$ 667	$ 816

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Redeemable Preferred Equity - Schedule of Roll Forward of Redeemable Preferred Equity (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Equity [Abstract]
Series C Preferred Equity, beginning balance	$ 1,097
Additions from new investment		440	1,004
Additions from reinvestment	33		93
Series C Preferred Equity, ending balance	$ 1,130	$ 440	$ 1,097

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Redeemable Preferred Equity - Schedule of Redemption Option for Investors (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Equity [Abstract]
Year Maturing	2023
Total Amount Redeemable	$ 1,130	$ 1,097	$ 440

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Members' Capital (Details Narrative) - shares	Mar. 31, 2018	Jan. 31, 2018	Dec. 31, 2017
Chief Financial Officer [Member]
Equity ownership, percentage		2.00%
Executive Vice President of Operations [Member]
Equity ownership, percentage		1.00%
Executive Vice President of Sales [Member]
Equity ownership, percentage	14.30%
Class A Common Units [Member]
Common stock, units outstanding	2,629		2,629
Class A Common Units [Member] | Chief Financial Officer [Member]
Equity ownership, percentage	2.00%
Class A Common Units [Member] | Executive Vice President of Operations [Member]
Equity ownership, percentage	2.00%
Class A Common Units [Member] | Executive Vice President of Sales [Member]
Equity ownership, percentage	15.30%

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Related Party Transactions (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2018	Feb. 28, 2018	Jan. 31, 2018
Chief Executive Officer and Wife [Member]
Line of credit	$ 1,000
Trust Affiliated with Seven Kings Holdings,Inc [Member] | Subordinated Promissory Note [Member]
Debt instrument, face amount		$ 1,125
Chief Executive Officer [Member]
Line of credit	1,000
Chief Executive Officer [Member] | Senior Subordinated Promissory Note One [Member]
Debt instrument, face amount	400
Chief Executive Officer [Member] | Senior Subordinated Promissory Note Two [Member]
Debt instrument, face amount	$ 400
Chief Financial Officer [Member]
Percentage of ownership interest			2.00%
Executive Vice President of Operations [Member]
Percentage of ownership interest			1.00%
Executive Vice President of Sales [Member]
Percentage of ownership interest	14.30%
Class A Common Units [Member] | Independent Manager 1 [Member]
Percentage of ownership interest	1.00%
Class A Common Units [Member] | Independent Manager 2 [Member]
Percentage of ownership interest	1.00%
Class A Common Units [Member] | Chief Financial Officer [Member]
Percentage of ownership interest	2.00%
Class A Common Units [Member] | Executive Vice President of Operations [Member]
Percentage of ownership interest	2.00%
Class A Common Units [Member] | Executive Vice President of Sales [Member]
Percentage of ownership interest	15.30%

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Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Letter of credit, amount outstanding	$ 18,935	$ 19,312

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Selected Quarterly Condensed Consolidated Financial Data (Unaudited) - Summarized Unaudited Quarterly Condensed Consolidated Financial Data (Details) - USD ($) $ in Thousands	3 Months Ended					12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2017
Quarterly Financial Information Disclosure [Abstract]
Net Interest Income after Loan Loss Provision	$ 926	$ 802	$ 917	$ 725	$ 617
Non-Interest Income					77
SG&A expense	617	643	537	456	448
Depreciation and Amortization	17				6
Impairment loss on foreclosed assets	5	64	47	106	49	$ 266
Net Income	$ 287	$ 95	$ 333	$ 163	$ 191

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Non-Interest Expense Detail - Schedule of Selling General and Administrative Expenses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017
Non-interest Expense Detail
Legal and accounting	$ 143				$ 96
Salaries and related expenses	356				254
Board related expenses	22				29
Advertising	17				17
Rent and utilities	10				5
Loan and foreclosed asset expenses	8				7
Travel	23				15
Other	38				25
Total SG&A	$ 617	$ 643	$ 537	$ 456	$ 448

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Subsequent Events (Details Narrative) - USD ($) $ in Thousands				3 Months Ended
	May 03, 2018	Apr. 27, 2018	Oct. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Apr. 30, 2018	Apr. 24, 2018
Payment to acquire property				$ 25	$ 556
Chief Executive Officer and Wife [Member]
Line of credit, principal balance				$ 1,000
Subsequent Event [Member] | Swanson Line of Credit Agreement [Member]
Line of credit maximum borrowing capacity			$ 4,000
Repayment of line of credit			4,000
Subsequent Event [Member] | Swanson Line of Credit Agreement [Member] | Chief Executive Officer and Wife [Member]
Line of credit, principal balance						$ 1,000
Subsequent Event [Member] | Swanson Line of Credit Agreement [Member] | Maximum [Member]
Line of credit maximum borrowing capacity			$ 7,000
Subsequent Event [Member] | Vista Loan Agreement [Member]
Principal balance on loan							$ 3,776
Unpaid interest							$ 243
Subsequent Event [Member] | Master Agreement [Member]
Payment of loans		$ 50
Payment to acquire property		$ 250
Subsequent Event [Member] | Deed Agreement [Member] | Property Owner [Member]
Payment of loans	$ 50