Mail Stop 4561
								November 14, 2005

By U.S. Mail and Facsimile to (781) 994-4710

James R. Jackson, Jr.
Vice President and Chief Financial Officer
MicroFinancial Incorporated
10M Commerce Way
Woburn, MA  01801

Re:	MicroFinancial Incorporated
	Form 10-K for Fiscal Year Ended December 31, 2004
      Filed March 30, 2005
	File No. 001-14771

Dear Mr. Jackson:

      We have reviewed your response filed with the Commission on
October 12, 2005, and have the following additional comments.
Please
provide us with the requested information so we may better
understand
your disclosure.  Please be as detailed as necessary in your
explanation. After reviewing this information, we may raise
additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Critical Accounting Policies, Revenue Recognition page 15
1. We note your response to comment 1 of our letter dated
September
13, 2005.  In your response you indicated that the historical
experience relating to the expected cash flows to be received
after
the lease term is a consideration in the determination of the
residual value of the leased asset.  Please provide us with a
sample
calculation detailing how you determine the amounts to be recorded
under a direct finance lease, including how the cash flows
expected
to be received after the lease term impact the recorded residual
value.
2. We note your response to comment 2 from our letter dated
September
13, 2005.  In your response you indicate that when a lessee
continues
to rent their equipment after the lease term expires, you record
the
equipment under operating lease at the lower of its original cost,
fair value or present carrying amount.  Please tell us how you
determine the fair value of the equipment upon termination of the
original finance lease.  For example, do you take into
consideration
the rental payments that you expect to receive on a month-to-month
basis in your determination of the equipment`s fair value?
3. Please revise future filings to provide the disclosures
required
by paragraph 23(b) of SFAS 13 with respect to your operating
leases.

Results of Operations
Depreciation and Amortization, page 18
4. We note your response to comment 4 of our letter dated
September
13, 2005.  Please tell us how you determined the estimated life of
your service contracts to be 84 months considering the fact that
customers are not subject to a "firm term document" and may cancel
the contract without penalty after four years.  Cite the
authoritative literature you relied upon in making this
determination.

Financial Statements

Note C - Net Investment in Leases, page F-14
5. We note your response to comments 5 and 6 of our letter dated
September 13, 2005.  In SAB Topic 6L.6 the staff expressed our
belief
that a registrant`s loan loss allowance methodology is considered
valid when it accurately estimates the amount of loss contained in
the portfolio. Thus, the staff normally would expect the
registrant`s
methodology to include procedures that adjust loan loss estimation
methods to reduce differences between estimated losses and actual
subsequent charge-offs, as necessary.  Please tell us how you
applied
the guidance set forth in SAB Topic 6L when determining your
allowance for credit losses.  Specifically explain how your
methodology has accurately estimated the amount of loss contained
in
your portfolio when your subsequent charge-offs have consistently
exceeded your estimated losses.  For example:

* As of December 31, 2002 you had a recorded allowance of $69
million, however your net charge-offs in the subsequent year
totaled
$86 million.

* As of December 31, 2003 you had a recorded allowance of $43
million, however your net charge-offs in the subsequent year
totaled
$76 million.

* Of your December 31, 2004 allowance balance of $15 million, you
have already recorded net charge-offs of $12.4 million through the
first six months of 2005.

Note E - Notes Payable and Subordinated Debt, page F-16
6. We note your response to comment 7 of our letter dated
September
13, 2005.  Please tell us how you considered the guidance in
paragraphs 12 - 32 of EITF 00-19 in determining the appropriate
accounting treatment for these warrants.


      Please respond to these comments within 10 business days or
tell us when you will provide us with a response.  Please furnish
a
cover letter with your response indicating your intent to provide
the
requested disclosures in future filings.  Please provide us drafts
of
your proposed revisions, where applicable, and any requested
information.  Detailed cover letters greatly facilitate our
review.
Please understand that we may have additional comments after
reviewing your responses to our comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision.  Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.

	You may contact Margaret Fitzgerald at (202) 551-3556 or me
at
(202) 551-3426 if you have questions regarding comments on the
financial statements and related matters.


      Sincerely,



      Angela Connell
      Senior Accountant


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James R. Jackson, Jr.
MicroFinancial Incorporated
November 14, 2005
Page 1