EXHIBIT 10.40

FIRST AMENDMENT TO CREDIT AGREEMENT

         THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered
into as of March 15, 2004, among PMC COMMERCIAL TRUST, a real estate investment
trust organized under the laws of the State of Texas (“Borrower”), certain
Lenders, and BANK ONE, NA, a national banking association with its main office
in Chicago, Illinois (“Administrative Agent”).

PRELIMINARY STATEMENT:

         Borrower, Administrative Agent and Lenders are party to that certain
Credit Agreement (as renewed, extended, amended and restated, the “Credit
Agreement”) dated as of February 29, 2004, pursuant to which the Lenders have
made and may hereafter make loans to Borrower. The parties hereto have agreed to
amend the Credit Agreement as described herein.

         Accordingly, for adequate and sufficient consideration, the receipt of
which is hereby acknowledged, Borrower, Administrative Agent and Lenders agree
as follows:

         1. Defined Terms; References. Unless otherwise stated in this Amendment
(a) terms defined in the Credit Agreement have the same meanings when used in
this Amendment and (b) references to “Sections,” “Schedules” and “Exhibits” are
to sections, schedules and exhibits to the Credit Agreement.

         2. Amendments.

  (a)   The defined term “Stated Termination Date” in Section 1.1 of the Credit
Agreement is amended in its entirety as follows:         “Stated Termination
Date” means December 31, 2004.     (b)   Section 4.5 of the Credit Agreement is
amended in its entirety as follows:         Facility Fee. On May 31, 2004,
Borrower shall pay to Administrative Agent a facility fee equal to the lesser of
(a) 0.125% multiplied by the Commitment in effect on such date, or (b) $50,000;
provided, however, that if the product of 0.125% multiplied by the Commitment in
effect on such date is less than $20,000, then Borrower shall instead pay to
Administrative Agent a facility fee of $20,000.

         3. Conditions Precedent. Notwithstanding any contrary provisions, the
foregoing paragraphs in this Amendment are not effective unless and until (a)
the representations and warranties in this Amendment are true and correct and
(b) Administrative Agent receives counterparts of this Amendment executed by
each party named below.

         4. Ratifications. This Amendment modifies and supersedes all
inconsistent terms and provisions of the Credit Documents, and except as
expressly modified and superseded by this Amendment, the Credit Documents are
ratified and confirmed and continue in full force and

 

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effect. Borrower, Administrative Agent and Lenders agree that the Credit
Documents, as amended by this Amendment, continue to be legal, valid, binding
and enforceable in accordance with their respective terms.

         5. Representations and Warranties. Borrower hereby represents and
warrants to Administrative Agent and Lenders that (a) this Amendment and any
Credit Documents to be delivered under this Amendment have been duly executed
and delivered by Borrower, (b) no action of, or filing with, any Governmental
Authority is required to authorize, or is otherwise required in connection with,
the execution, delivery, and performance by Borrower of this Amendment and any
Credit Document to be delivered under this Amendment, (c) this Amendment and any
Credit Documents to be delivered under this Amendment are valid and binding upon
Borrower and are enforceable against Borrower in accordance with their
respective terms, except as limited by any applicable Debtor Relief Laws,
(d) the execution, delivery and performance by Borrower of this Amendment and
any Credit Documents to be delivered under this Amendment do not require the
consent of any other Person and do not and will not constitute a violation of
any Governmental Requirements, agreements or understandings to which Borrower is
a party or by which Borrower is bound, (e) the representations and warranties
contained in the Credit Agreement, as amended by this Amendment, and any other
Credit Document are true and correct in all material respects as of the date of
this Amendment, and (f) as of the date of this Amendment, no Event of Default or
Potential Default exists or is imminent.

         6. References. All references in the Credit Documents to the “Credit
Agreement” refer to the Credit Agreement as amended by this Amendment. This
Amendment is a “Credit Document” referred to in the Credit Agreement and the
provisions relating to Credit Documents in the Credit Agreement are incorporated
by reference, the same as if set forth verbatim in this Amendment.

         7. Counterparts. This Amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document.

         8. Parties Bound. This Amendment binds and inures to the benefit of
Borrower, Administrative Agent and each Lender, and, subject to Section 14 of
the Credit Agreement, their respective successors and assigns.

         9. Entirety. THIS AMENDMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS
AMENDMENT, AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

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         EXECUTED as of the date first stated above.

              BANK ONE, NA,     as Administrative Agent, Bank One and a
Lender
 
       

  By:   /s/ Bradley C. Peters, Vice President

     

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      Bradley C. Peters, Vice President
 
            PMC COMMERCIAL TRUST,     as Borrower
 
       

  By:   /s/ Barry N. Berlin

     

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  Name:   Barry N. Berlin

     

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  Title:   CFO

     

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