Ameritrans Announces Sale of Debenture.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 18, 2002

Ameritrans Capital Corporation (NASDAQ:AMTC) today announced that its wholly-owned subsidiary, Elk Associates Funding Corporation, a licensed small business investment company, sold $2,050,000 principal amount of debentures to the United States Small Business Administration. The new 10-year debenture sold to the SBA bears interest at 0.5% above LIBOR until September 24, 2002, at which time, the 10-year debenture rate will be set by the SBA under its long-term debenture financing program. The sale of the debenture was made pursuant to the $12.0 million, 5-year commitment given by the SBA to Elk earlier this calendar year. Elk also plans to seek additional leverage to the extent available under the SBA's commitment.

The company further announced that it is Elk's intention to pay off and refinance its existing debentures guaranteed by the SBA for new 10-year terms at historically favorable interest rates. In that regard, prior to the sale of its new debenture, Elk prepaid its $1,020,000 principal amount debenture bearing interest at 6.54% per annum on or about June 1, 2002. This prepayment was made out of available cash.

After giving effect to the recent prepayment and the subsequent sale of Elk's new debenture, Elk has $9,910,000 principal amount of debentures outstanding at varying interest rates, $7,860,000 of which Elk plans to refinance at lower interest rates for new 10-year terms. These remaining debentures to be refinanced mature between September 2003 and March 2007.

Gary C. Granoff, president of the company, stated, "Elk's ability to refinance its debentures at more favorable rates benefits the company both by reducing our cost of funds and by strengthening our position with our banks." Elk's SBA debentures are subordinate to its bank loans. As a result of Elk's latest debenture sale and the recent debenture prepayment, the net increase in Elk's subordinated borrowings from the SBA increased by $1,030,000.

Ameritrans Capital Corporation is a specialty finance company engaged in making loans to and investments in small businesses. Ameritrans' wholly-owned subsidiary, Elk Associates Funding Corporation, has been licensed by the United States Small Business Administration (SBA) as a Small Business Investment Company since 1980. The company maintains its offices at 747 Third Avenue, 4th Floor, New York, New York 10017.

This announcement contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those presently anticipated or projected. Ameritrans Capital Corporation cautions investors not to place undue reliance on forward-looking statements, which speak only as to management's expectations on this date.