Manhattan Bridge Capital, Inc. Responds to Seeking Alpha Report
Manhattan Bridge Capital, Inc. (Nasdaq: LOAN)
On March 21, 2012, SeekingAlpha.com opined that the interest rate paid by Manhattan Bridge Capital to its CEO is too high. SeekingAlpha voices this opinion even though the total interest paid in 2011 was only $455.
Manhattan Bridge is in the business of short term financing to real estate investors in the New York Metropolitan area. The Company annually lends approximately $8 million of its own money, plus additional funds that it borrows from individual investors. It regularly seeks additional loans in order to maximize growth. Its CEO facilitates these efforts by offering his personal guarantee in most cases. To further increase leverage and support its growth, the Company is seeking a substantial line of credit from a commercial bank, a line of credit on which Mr. Ran will offer his personal guarantee.
From time to time, the Company needs immediate cash for very short periods of time in order to close deals. Mr. Ran holds a few hundred thousand dollars in his personal checking account, yielding almost nothing, in order to provide funds to the Company and allow it to close these deals. The total dollar amount of interest that was paid to Mr. Ran by the Company during 2011 and 2010 were only $455 and $400, respectively. In addition, the money advanced by Mr. Ran was unsecured and required no additional fees whatsoever (no legal fees, no recording fees, no payoff fees, etc.).
However, in order to avoid any appearance of conflict, Mr. Ran will reduce the interest he charges the Company to 6%, per annum, effective immediately.
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