Mail Stop 4561
								April 10, 2006

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
March 15, 2006, and have the following additional comment.  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 comment or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.


Note C-Net Investment in Leases, page F-14

1. We have reviewed your response to comments 4-7 of our letter
dated
January 10, 2006.  We understand that you deem a contract to be
impaired when it becomes over 90 days past due.  We also
understand
that you charge-off receivables when they become over 360 days
past
due and no contact has been made with the lessee for 12 months,
and
that there is a significant time lag between the dates an account
is
charged off and any subsequent recoveries. You have asserted that
based on static pool performance analysis and long term loss
experience that you have adopted a policy of reserving 50% of your
over 90 days delinquent receivable balance to estimate inherent
losses in your portfolio.
In response to our comments, you have provided a static pool
analysis
that demonstrates that over a several year period you collected
approximately 77% of billed receivables which were greater than 90
days past due at a point in time.  However, the analysis you
provided
is based on a pool of receivables from a 1999 vintage.  We believe
that such an analysis should be continually updated in order to
validate that the collection patterns continue to hold true given
credit quality trends and changes in general economic and business
conditions affecting your primary market area.  Based on our
conversations, it does not appear that you have performed
sufficient
analyses in recent years to verify that current collection
patterns
are consistent with the collection history realized on your 1999
vintage pool of receivables.  Further, your static pool analysis
does
not address the likelihood that a receivable that is current or
past
due for less than 90 days will be collected.  Therefore it fails
to
provide a basis for you to compute your allowance on these
receivable
balances.  We do not believe that, by itself, a static pool
analysis
based on a vintage pool of receivables is a reliable predictor of
estimated losses on current receivables.
Your consistent policy of reserving 50% of your over 90 days
delinquent receivable balance does not appear to properly reflect
the
trends experienced in your actual history, and your current static
pool methodology fails to provide sufficient information to
support
and/or adjust your policy.  Therefore, we believe you should
improve
your methodology to better comply with SAB Topic 6L. In
particular,
we believe your methodology must include procedures that adjust
loan
loss estimation methods to reduce differences between estimated
losses and actual subsequent charge-offs, as necessary. Refer to
SAB
Topic 6:L.6.
You have represented, and your auditors concur, that you have
complied with SAB Topic 6L in the determination of your allowance
for
credit losses and that you believe your allowance balance as of
the
end of each period presented in your filings made with the
Commission
is sufficient to cover net losses inherent in your portfolio. We
do
not have enough information to agree or disagree with your
conclusion
that your allowance for credit losses complies with SAB Topic 6L
and
that you have adequately reserved for such losses as of each
period
end.


Since the company`s management is in possession of all facts with
respect to the matters discussed above and addressed in your
correspondence, they are responsible for the accuracy and adequacy
of
the financial statements and disclosures made notwithstanding the
staff`s comments in this letter, and your independent registered
accountant is responsible for its report on the financial
statements.
All persons who are responsible for the accuracy and adequacy of
the
disclosure in the company`s filings made with the Commission are
urged to be certain that all information required for investors to
make an informed decision is provided.
Please confirm to us in your response that you will take the
necessary action to improve your methodology to better comply with
SAB Topic 6L and to enable you to more accurately determine the
appropriate amount of allowance in future periods.  Confirm that
your
revised methodology will include procedures that adjust loan loss
estimation methods to reduce differences between estimated losses
and
actual subsequent charge-offs, as necessary.

*	*	*

      Please respond to this comment 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 make the
necessary changes in your allowance methodology.  Please
understand
that we may have additional comments after reviewing your response
to
our comment.

	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


James R. Jackson, Jr.
MicroFinancial Incorporated
April 10, 2006
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