8

                               FORM 10-KSB
     U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549

               ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                   THE SECURITIES EXCHANGE ACT OF 1934
               For the fiscal year ended December 31, 1997

(x) Annual report under section 13 or 15(d) of the Securities Exchange
Act of 1934
( ) Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934

Commission File Number 0-14888

                        PRIME CAPITAL CORPORATION
             (Name of small business issuer in its charter)
           Delaware                              36-3347311
    (State or other jurisdiction        (IRS Employer Identification No.)
  of incorporation or organization)

O'Hare International Center,
10275 W. Higgins Rd., Rosemont, IL                      60018-3890
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:     (847) 294-6000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$0.05 par value

Check  whether the issuer (1) has filed all reports required to be  filed
by  Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding  12 months (or for such shorter period that the registrant  was
required  to file such reports), and (2) has been subject to such  filing
requirements for the past 90 days.  Yes   (X)      No  (  ).

Check  if  disclosure of delinquent filers in response  to  Item  405  of
Regulation S-B is not contained in this form, and no disclosure  will  be
contained, to the best of registrant's knowledge, in definitive proxy  or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. (  )

Issuer's revenues for year ended December 31, 1997 were $17,086,470.

The  approximate  market  value  of  stock  held  by  non-affiliates  was
$11,124,000  based  upon 2,069,590 shares held  by  such  persons  and  a
closing price of the Common Stock on March 27, 1998 of $5.375. The number
of shares outstanding of the Registrant's $0.05 par value common stock at
December 31, 1997 was 4,302,065.

Exhibit Index is located on page 37.  The total number of pages is 41.
                    PRIME CAPITAL CORPORATION
                           FORM 10-KSB
                  YEAR ENDED DECEMBER 31, 1997
                              INDEX


Item
Number                                                       Page

                             PART I

1.     BUSINESS                                                 2
2.     PROPERTIES                                               7
3.     LEGAL PROCEEDINGS                                        7
4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS      7

                             PART II

5.     MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
         STOCKHOLDER MATTERS                                    8
6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS                    8
7.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA             13
8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURES                  13

                            PART III

9.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT     14
10.    EXECUTIVE COMPENSATION AND OTHER INFORMATION           15
11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT                                       15
12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS         15
13.    EXHIBITS AND REPORTS ON FORM 8-K                       16

                        OTHER INFORMATION

       INDEPENDENT AUDITORS' REPORT                           24
       CONSOLIDATED BALANCE SHEETS                            25
       CONSOLIDATED STATEMENTS OF OPERATIONS                  26
       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY        27
       CONSOLIDATED STATEMENTS OF CASH FLOWS                  28
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             29
       EXHIBIT INDEX                                          37
       SIGNATURES FOR ELECTRONIC SUBMISSION                   38
          EXHIBIT 21:  SUBSIDIARIES OF THE REGISTRANT
   39
       EXHIBIT 23:  CONSENT OF KPMG PEAT MARWICK LLP          40
       SIGNATURES                                             41

PART I

Item 1.   BUSINESS

General

Prime  Capital  Corporation  is a diversified  specialty  finance
company   that   originates,  aggregates  and   services   loans,
installment  purchase  agreements and  leases  primarily  in  the
medical,  communications,  specialty vehicle,  hospitality/gaming
and  software  industries.  Prime develops new business  directly
with  end users and through private label vendor finance programs
with  equipment  manufacturers, dealers and distributors.   Prime
seeks to become an effective business partner with its clients by
creating   comprehensive  programs  and  structures  to  develop,
promote and administer customer financing programs.  Prime  funds
its  loan and lease receivables primarily by issuing asset-backed
securities to institutional investors.

Prime's  target  markets  are those  which  are  underserved  and
underdeveloped,  with the objective of developing  niche  markets
that  combine  high growth potential with credit  and  collateral
characteristics  consistent with Prime's underwriting  standards.
Prime  utilizes its proven financial engineering capabilities  to
structure   transactions  which  mitigate  risk  while  achieving
attractive  spreads.  Prime employs a disciplined  approach  that
allows growth with reasonably protected margins designed to avoid
the  necessity of having to compete as either a risk absorber  or
pure low cost producer.


The ability of the Company to generate net income is dependent on
a  number of factors, including the following; (a) the volume  of
originations   of   Financial  Contracts   ("Financial   Contract
Volume"),  (b)  on  a short-term basis, the net  interest  spread
between  the  cost of the warehouse facilities available  to  the
Company  and  the  all-inclusive interest rate on  the  Financial
Contracts  (the "Short-Term Interest Spread"); and on a long-term
basis,  the  difference between the implied rate or yield  (after
factoring  in  various  components  such  as  expenses,  required
reserves,   subordination   levels   and   the   like)   on   the
securitizations sponsored by the Company and the weighted average
interest   rate  on  the  Financial  Contracts  sold  into   such
securitizations (the "Securitization Profit"), (c) the amount  of
credit  losses  arising from delinquencies and  defaults  on  the
Financial  Contracts originated or purchased by the Company,  and
(d)  the expenses incurred by the Company in the operation of its
business,  including  salaries, commissions  and  other  selling,
general   and   administrative  expenses   (collectively,   "SG&A
Expenses").

The  ability  of the Company to generate an acceptable  Financial
Contract  Volume is, itself, dependent upon a number of  factors,
including  (i) the size, experience and expertise  of  its  sales
staff, (ii) the availability of sufficient drawable amounts under
the   Company's  warehouse  credit  facilities  to  finance  such
Financial Contract volume, (iii) the reluctance of the Company to
accept  unattractive  credit  risk in  respect  of  a  particular
borrower  or  borrowers,  (iv) the necessity  of  such  Financial
Contracts   to   meet  the  requirements  and   criteria   of   a
securitization or other funding source and (v) the competition in
the  financial  market-place to provide  financing  to  customers
(including  competition from commercial banks, finance  companies
and other suppliers of capital).

The  ability  of the Company to maintain an acceptable  level  of
Short-Term Interest Spread and to generate an acceptable level of
Securitization  Profit is, itself, dependent upon  a  variety  of
factors  and  considerations, including (i)  competition  in  the
financial  market-place, (ii) the borrowing cost to  the  Company
under its warehouse credit facilities, and (iii) the all-in  cost
associated  with  the  securitization of the Financial  Contracts
originated and sold into such securitization.

The  ability of the Company to decrease or eliminate credit  risk
(and,  thus, write-offs and write-downs of the assets) is  highly
dependent  on  an  effective  system  (and  the  employment   and
retention  of  adequate personnel to implement and  monitor  such
system) to review, analyze and assess both the credit quality  of
the  borrowers and the continuing residual value of the equipment
or  other  items  which  form  the  security  for  the  Financial
Contract.  Securitization of a particular portfolio of  Financial
Contracts significantly reduces the Company's exposure to  credit
risk  by transferring a substantial portion of such risk  to  the
purchasers  of  the  securities.  Additionally,  any  substantial
decrease  in  the  credit  quality  of  a  previously-securitized
portfolio  will  impact  the ability of the  Company  to  realize
reserve fund amounts and would likely impact the ability  of  the
Company to sell all of the securities in future securitizations.

The  ability of the Company to manage its expenses, including its
SG&A  expenses,  is a major factor in determining  profitability.
Any  decrease in such expenses must be balanced against the  risk
associated   with  possible  defections  of  key  personnel   and
inadequate  staffing  levels, particularly with  respect  to  the
sales  personnel.  The Company believes that some portion of  its
SG&A  expenses  is  attributable to (i) the  re-focusing  of  its
products  lines, and (ii) the functional equivalent of  research-
and-development with respect to new products and services offered
by the Company.

Marketing and Sales Activities

Prime's  marketing group is organized into two  primary  business
units: Vendor Services Group ("VSG") and Structured Finance Group
("SFG").

      1)    Vendor  Services  Group builds and  maintains  formal
alliances  for  funding private label programs with manufacturers
or  distributors each of whom directly or indirectly control  the
distribution of the equipment.  This allows Prime to capture  the
financing opportunity at the point of sale.

      2)  Structured  Finance Group works  with  other  equipment
leasing companies, banks and captive finance companies to provide
project  financings  which are typically more  complex  than  the
standard  equipment lease-backed transaction.  These transactions
are generally mid-ticket and larger.

Prime  has  developed  considerable expertise  in  servicing  the
financing   needs  of  its  core  customers  as   well   as   the
corresponding  need  for  equipment  manufacturers   to   arrange
financing for their customers.  Prime has established a niche  in
markets underserved by the traditional capital providers and  has
achieved  beneficial  synergies with  vendors  and  providers  of
capital.  Accordingly, Prime has become well established  in  the
vendor financing, conduit financing, project financing, and asset
portfolio acquisition markets.  This provides Prime with a  broad
earnings   base   from   complementary  businesses,   diversifies
portfolio   risk   and   significantly  enhances   revenues   and
profitability.

Credit Underwriting

Prime  performs a credit review of prospective customers  through
an  examination of their financial statements and credit history,
and requests audited financials annually in order to keep current
on  each customer's financial status.  Since its inception, Prime
has    originated   or   purchased   financing   contracts   with
approximately 2,700 lessees/borrowers.

Prime's  credit underwriting and risk management strategies  have
historically proven to be extremely effective.  The management of
Prime   has  a  substantial  and  proven  history  of  evaluating
portfolio  and  vendor  risk  and  in  structuring  purchases  or
programs  in a manner that mitigates such risk.  Prime's  charge-
off  history is indicative of its conservative credit philosophy.
Prior  to  1997,  Prime's  credit losses  had  consistently  been
nominal, totaling approximately 0.05% of the portfolio's  average
outstanding contract balance.

In  its second quarter report Form 10QSB, Prime disclosed that it
had   identified   customers  who  had  experienced   significant
deterioration  in  their  financial condition  thereby  adversely
impacting their ability to repay financial obligations to  Prime.
As a result, Prime initiated a special review of its underwriting
process.    As   part  of  this  special  review   all   troubled
transactions were re-underwritten, certain underwriting  criteria
were  adjusted and applied to new business, and the size  of  the
collection staff was increased.  See Management's Discussion  and
Analysis of Financial Condition and Results of Operations, Credit
Losses.

Corporate Operations and Portfolio Servicing

Services  provided by the common back-room include documentation,
underwriting,  credit  review, portfolio administration/servicing
and  capital  funding  of transactions.  Prime  has  lowered  its
transactional costs of doing business through centralizing  those
functions   that  can  benefit  from  economies  of   scale   and
specialization  of  functions, but do not hinder  the  individual
group's marketing activities.

Lease Terms and Conditions

Substantially  all  leases and loans written by  Prime  are  non-
cancelable,  triple-net, full payout leases or loans under  which
the  aggregate rental due during the initial lease  term  exceeds
the  acquisition  cost  of the related equipment.   During  1997,
initial  contract  terms  ranged  from  12  to  84  months,  with
approximately  31.6%  of the Contracts, measured  by  Statistical
Calculation  Date  Aggregate Contract Value,  having  an  average
initial term of 43 months.

Prime  uses  a  master  lease or loan agreement,  the  terms  and
conditions  of  which  are sometimes modified  to  accommodate  a
particular  lease  or  loan transaction.   In  substantially  all
cases, the leases or loans are "triple net" leases or loans under
which  the lessees or borrowers are obligated to:  (i) remit  all
rents  due  regardless of the performance of the equipment;  (ii)
operate  the  equipment  in compliance  with  the  manufacturer's
instruction manuals and governmental rules and regulation;  (iii)
maintain  and  service the equipment; (iv) insure  the  equipment
against  casualty loss and provide public liability coverage  for
bodily  injury  and  property damage; and  (v)  pay  directly  or
reimburse  the  lessor  for any property, use  or  similar  taxes
associated with the equipment.

Under  each  master lease or loan agreement, in the  event  of  a
default  by a lessee or borrower, Prime may declare the lease  or
loan  in  default and pursue its contractual remedies,  including
repossession of the equipment.

The  master lease or loan agreement gives the lessee or  borrower
the right to enforce the warranties made by equipment vendors and
manufacturers.  Prime makes no representations or  warranties  to
the  lessee or borrower regarding marketability, fitness for  any
purpose,  condition,  quality, delivery or  installation  of  the
equipment.  The equipment is delivered from the supplier directly
to  the  lessee  or  borrower  and,  following  the  lessee's  or
borrower's  acceptance of the equipment, Prime pays the  purchase
price  to  the supplier.  In the case of leases, Prime  maintains
title  to the equipment throughout the lease term, while  in  the
case  of  loans,  Prime maintains a lien and  perfected  security
interest  in the equipment throughout the term of the  loan.    A
lease  may  also provide for the renewal of the lease and/or  the
purchase of the equipment at the end of the initial lease term.

Residual Terms

Prime has standardized its lease contracts in the following  four
categories:

Balloon Payment:  Under this provision the lessee is obligated to
purchase the leased equipment at the end of the lease term for  a
predetermined  price  which is greater than  the  monthly  rental
payment  paid  by the lessee during the term of the  lease.   The
amount  of the final balloon payment is an unconditional  promise
of the lessee.

Bargain Purchase Option:  This option gives the lessee the right,
but  not  the  obligation, to purchase  the  equipment  at  lease
maturity for a price below the expected fair market value.   This
provision, the most common provision in a finance lease, is often
referred to as a dollar buyout lease, for it commonly allows  the
lessee to purchase the equipment for a nominal amount. The  lease
payments are structured to fully amortize the equipment cost over
the  term of the lease.  The lessee pays a greater amount for use
of  the  equipment, but effectively obtains the ownership of  the
equipment at lease maturity.

Fixed Price Purchase Option:  This provision gives the lessee the
right,  but not the obligation, to purchase the equipment at  the
end  of the lease term for a predetermined price.  This provision
may characterize either a finance or an operating lease.

Fair  Market  Value  Purchase Option:  This provision  gives  the
lessee  the  right,  but  not  the obligation,  to  purchase  the
equipment  at the end of the lease term at its then  fair  market
value.   This  is  the most common termination  provision  in  an
operating  lease.   This provision allows  Prime  to  retain  the
upside potential of the equipment value.

Prime  also  structures certain financing transactions  as  loans
with   a   note   and  security  agreement  as   the   underlying
documentation.  Loan agreements require the full amortization  of
the  equipment cost (generally the loan principal balance) during
the term of the agreement.  Title to the equipment is held by the
borrower, with the lender having a perfected security interest in
and  lien  upon  the  equipment.   Upon  maturity,  the  security
interest is released and the equipment is owned by the borrower.

Types of Equipment Leased

The Company typically originates Financial Contracts that have an
original  contract balance ranging from approximately $50,000  to
$5,000,000 or greater.

The  assets that Prime finances for its clients varies within the
medical,  communications,  specialty vehicle,  hospitality/gaming
and   software  industries.   Prime's  Structured  Finance  Group
finances  medical devices used in the treatment of  patients  and
computer  systems  for the general operation of  hospitals.   The
Structured  Finance Group also provides financing for casino  and
route  operators in the gaming industry as well  as  heating  and
cooling  equipment  for  energy  management  applications.   Slot
machines  and  other  furniture & fixtures are  the  most  common
assets included in the gaming contracts.  The heating and cooling
equipment  is  composed of boilers, chillers and the  specialized
computers  needed  for climate control and  monitoring.   Prime's
Vendor  Services  Group  finances  the  assets  manufactured   or
distributed   by  its  clients,  including,  without  limitation,
software  for corporate applications, furniture and fixtures  for
hospitality, voice mail systems, telephone systems and  telephone
switches.   The table below shows the distribution  of  equipment
type stated as a percentage of the initial contract value for the
securitization (March 1997) and whole-loan sale (September  1997)
transactions completed during the year ended December 31, 1997.


           Equipment Type              March      September
                                       1997          1997
           ------------------------    ------      ---------
           Medical                        34%         13%
           Computer                         9          19
           Gaming                          15          11
           Energy Management                3           6
           Software                         4          12
           Furniture, Fixtures &
           Physician Practices              20          6
           Telecommunications              11          25
           Other                            4           8



Customers

Since  its  inception,  the Company has  entered  into  financing
transactions with over 2,700 customers.

Employees

As  of  December 31, 1997, the Company had 62 employees, none  of
whom were represented by a labor union.

Competition

The  equipment leasing and related businesses of the Company  are
highly competitive.  Many firms are engaged in the same types  of
businesses  as  the  Company, including  (i)  finance  divisions,
affiliates  and  subsidiaries  of equipment  manufacturers,  (ii)
banks,  their affiliates or subsidiaries, several of  which  lend
funds  to the Company, (iii) other leasing and finance companies,
(iv)  companies  and  state  agencies  which  sponsor  tax-exempt
financing  or  other  investor programs for the  acquisition  and
lease of equipment, and (v) independently formed partnerships  of
individuals or corporations operated for the specific purpose  of
leasing  equipment.   Many  of these organizations  have  greater
financial or other resources than the Company and, therefore, may
be  able  to  obtain  funds on terms more  favorable  than  those
available to the Company.

The  Company  believes  that its ability to  compete  effectively
depends  to  a  great  extent upon:   a)  its  knowledge  of  the
marketplace,  b)  the education, training and experience  of  its
personnel,  c) the relationship and reputation it has established
for  service  and  keeping  its commitments  with  customers  and
vendors,  and d) its flexibility and adaptability to the  special
needs   of   its   institutional   and   technologically-oriented
customers.

Item 2.     PROPERTIES

The    Company's    leased   corporate   headquarters    occupied
approximately  14,500 square feet of space in an office  building
located  in Rosemont, Illinois (a suburb of Chicago) near  O'Hare
International Airport. The lease, which expired on  December  31,
1996,  has  been extended pursuant to a seven-year  renewal.   In
1997, the Company exercised its option to lease 4,900 square feet
of  additional  space  contiguous with the existing  space.   The
Company  also leases sales offices in Duluth, Georgia and Albany,
New York.

Item 3.     LEGAL PROCEEDINGS


While  the Company is subject, from time to time in the  ordinary
course  of its business, to legal actions and claims, it  is  not
now  a  party  to any legal proceeding that could  have  material
adverse effect on the Company's financial position or results  of
operations.

Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

Item 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
          STOCKHOLDER MATTERS

(a)  Market Information

The  Common Stock was traded on the NASDAQ National Market System
until  July  23, 1992 at which time the Common Stock was  removed
from  the  National Market System and began being traded  in  the
over-the-counter  market primarily because it did  not  meet  the
minimum  bid  price requirement of one dollar to continue  to  be
traded on the NASDAQ Bulletin Board.  On June 5, 1996, the Common
Stock once again began trading on the Nasdaq SmallCap Market tier
of the Nasdaq Stock Market under the symbol: PMCP.  The following
table  summarizes the quarterly price range of the  Common  Stock
for 1997 and 1996.

                           1997                   1996
                    ------------------      ------------------
         Quarter     High         Low         High        Low
         -------    -------     -------     -------     -------
         First      $6 1/8      $4          $4          $1 5/8

         Second      7 1/2       4 3/4       6           3 1/2

         Third       6 1/4       4 7/8       6           4 3/4

         Fourth      6 5/8       5           6 1/4       4 3/4


(b)  Holders

As  of December 31, 1997, there were approximately 400 holders of
record of common stock.

c)   Dividends

The Company has never paid a dividend on its Common Stock, and no
dividends are contemplated in the foreseeable future.  Payment of
dividends  is  within the discretion of the  Company's  Board  of
Directors.

ITEM  6.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The operating results of Prime Capital are primarily affected  by
the  following  factors:  (1) the volume  of  Financial  Contract
activations,  (2)  the  amount and timing of  Financial  Contract
sales,  (3)  the  level  of  operating expenditures  required  to
originate   and   service  the  volume  of   Financial   Contract
activations and sales, and (4) credit losses.

Once  a  Financial Contract is activated, it is sold to  a  third
party  or,  in  most  cases, funded through a  warehouse  finance
facility  until  it is sold through securitization.   Sale  of  a
contract  to  a  third  party results in  immediate  fee  income.
Warehousing a contract for a period of time results in  increased
rentals  on  leased equipment or direct finance lease income  and
correspondingly increased interest expense and, if  the  contract
is  an  operating lease, depreciation on leased equipment.   When
contracts  are  accumulated  to a certain  level  and  sold  into
securitization, the Company recognizes fee income from  the  gain
on  securitization  and  ceases to  recognize  rental  or  direct
finance  lease  income  and  interest  and  depreciation  expense
associated  with  the sold contracts.  Future revenues  from  the
securitizations  include fee income derived  from  servicing  the
securitization  pool and interest income earned on  cash  reserve
balances until all the contracts in the pool have expired.

Sales and Securitizations of Financial Contracts Completed During
the Years Ended December 31, 1997, 1996, And 1995

The  following  table summarizes the sale and  securitization  of
Financial Contracts completed during the years ended December 31,
1997, 1996, and 1995.

                                        Years Ended December 31,
                                         (Amounts in thousands)
Description                  Date         1997     1996    1995
---------------------   --------------- --------- ------- ------
Prime Finance
  Corporation 1995-1    March, 1995     $       0       0 56,726
Prime Finance
  Corporation 1995-A    January, 1996           0  85,273      0
Prime Finance
  Corporation 1996-A    December, 1996          0  66,322      0
Prime Finance
  Corporation 1997-A    March, 1997        77,476       0      0
Private whole-loan
  sale                  September, 1997    44,017       0      0
True sale facility      December, 1997     12,091       0      0
                                        --------- ------- ------
   Subtotal                               133,584 151,595 56,726

Other sale transactions Various            44,046  36,382 36,791
                                        --------- ------- ------
   Total                                $ 177,630 187,977 93,517
                                        ========= ======= ======




Year  Ended  December 31, 1997 Compared With Year Ended  December
31,1996

The Company activated Financial Contracts totaling $144.1 million
in 1997, a decrease of 20.7% from the $181.8 million activated in
1996.

Fee  income  increased $0.2 million, or 2.1% to $10.3 million  in
1997 from $10.1 million in 1996.  Fee income primarily relates to
gains  from  the  sale or securitization of Financial  Contracts.
The initial value of the contracts sold or securitized was $177.6
million and $188.0 million in 1997 and 1996, respectively.

Direct  financing lease income increased $1.0 million, or  29.0%,
to  $4.5  million in 1997 from $3.5 million in 1996.  The  longer
holding period of Financial Contracts and higher average contract
balances held in the warehouse accounted for this increase.

Rentals on leased equipment decreased $0.2 million, or 14.8%,  to
$1.0  million  in 1997 from $1.2 million in 1996.   There  was  a
corresponding  decrease in depreciation of  leased  equipment  of
$95,000, or 15.6%, to $513,000 in 1997 from $608,000 in 1996.

Interest income decreased $0.1 million, or 8.6%, to $1.0  million
in 1997 from $1.1 million in 1996.

Other  income decreased $153,000, or 33.8%, to $301,000  in  1997
from $454,000 in 1996.

Interest expense decreased $0.1 million, or 3.6%, to $3.5 million
in   1997  from  $3.7  million  in  1996.  Interest  related   to
subordinated debt totaled $633,681 in 1997.  (See "Liquidity  and
Capital Resources.")

The  Company  recorded  a provision for  credit  losses  of  $7.0
million  in 1997, compared with a $0.3 million provision recorded
in 1996.  (See "Credit Losses.")

Selling,  general  and  administrative  expenses  increased  $1.0
million,  or 13.0%, to $8.6 million in 1997 from $7.6 million  in
1996.    Employee  compensation  and  related  costs,   including
commissions,  accounted  for 63.4% and 63.1%  of  total  selling,
general   and   administrative  expenses  in   1997   and   1996,
respectively.   The Company had 62 and 52 employees  at  December
31,   1997   and  1996,  respectively.   Selling,   general   and
administrative  expenses  have increased  primarily  due  to  the
hiring  of additional employees and the increase in the  serviced
Financial Contract portfolio.

In  1997, earnings available for common shareholders was  reduced
by $229,000 for dividends declared payable to holder of preferred
stock.  Preferred stock dividends declared payable  were  $56,000
for 1996.  (See "Liquidity and Capital Resources.")

Year  Ended  December 31, 1996 Compared With Year Ended  December
31,1995

The Company activated Financial Contracts totaling $181.8 million
in  1996,  an increase of 21.1% from the $150.1 million activated
in 1995.

Fee  income increased $6.9 million to $10.1 million in 1996  from
$3.2 million in 1995.  Fee income includes gains from the sale of
Financial Contracts.  The initial value of the contracts sold was
$188.0 million and $93.5 million in 1996 and 1995, respectively.

Direct  financing lease income increased $2.1 million, or 146.2%,
to  $3.5  million in 1996 from $1.4 million in 1995.  The  longer
holding period of Financial Contracts and higher average contract
balances held in the warehouse accounted for this increase.

Rentals on leased equipment increased $0.5 million, or 60.2%,  to
$1.2  million  in 1996 from $0.7 million in 1995.   There  was  a
corresponding  increase in depreciation of  leased  equipment  of
$291,000, or 91.6%, to $608,000 in 1996 from $317,000 in 1995.

Interest expense increased $2.5 million to $3.7 million  in  1996
from  $1.2 million in 1995. Interest related to subordinated debt
totaled  $156,250  and $0 in 1996 and 1995,  respectively.   (See
"Liquidity and Capital Resources.")

Selling,  general  and  administrative  expenses  increased  $0.8
million,  or 13.1%, to $7.6 million in 1996 from $6.8 million  in
1995.    Employee  compensation  and  related  costs,   including
commissions,  accounted  for 63.1% and 56.6%  of  total  selling,
general   and   administrative  expenses  in   1996   and   1995,
respectively. The Company had 52 and 44 employees at December 31,
1996 and 1995, respectively.  Selling, general and administrative
expenses have increased primarily due to the hiring of additional
employees  and  the  increase in the serviced Financial  Contract
portfolio.

In  1996, earnings available for common shareholders was  reduced
by  $56,000  for  dividends declared payable  to  the  holder  of
preferred  stock.   There  were no preferred  dividends  declared
payable for 1995.  (See "Liquidity and Capital Resources.")

Credit Losses

An  allowance  for  credit losses is initially  established  when
Financial Contracts are sold or securitized in transactions where
the  Company  retains recourse for losses, partial or  otherwise.
This  initial estimate of future losses reduces the gain recorded
at  the time sale. If necessary, a provision for credit losses is
charged  against  earnings to maintain the allowance  for  credit
losses  at  an  amount  management believes necessary  to  absorb
potential losses in the finance contract portfolio.

Management  evaluates  the adequacy of the allowance  for  credit
losses  by  reviewing credit loss experience, delinquencies,  the
value   of  the  underlying  collateral,  including  third  party
guarantees or insurance recoveries, the level of finance contract
portfolio, as well as, general economic conditions.

During   1997,  Prime  identified  certain  customers   who   had
experienced   significant  deterioration   in   their   financial
condition,  which has adversely impacted their ability  to  repay
the  financial obligations to the Company.  The estimated  losses
from  these situations exceeded the balance of the allowance  for
credit  losses.  Consequently, the Company recorded an additional
$7.0  million provision for credit losses during the  year  ended
December 31, 1997.

For  three  of  the more significant customers, the  Company  has
alleged  fraud  and material misrepresentation of the  customer's
financial condition or the contract's underlying collateral.   In
each  case  the  Company  has and will continue  to  aggressively
pursue various loss mitigation strategies; including repossession
and sale of collateral, litigation, and other actions against the
lessee-obligors, guarantors of the Financial Contracts, or  other
individuals whose actions may have been detrimental to Prime.

Financial Condition

The  Company's financial condition will continue to be  dependent
upon  certain critical elements.  First, the Company must be able
to  obtain  recourse and non-recourse financing  to  fund  future
acquisitions  and  originations of Financial Contracts.   Second,
the  Company  must originate a sufficient volume of new  business
which is structured and priced in such a way so as to permit  the
Company  to  finance  or sell those Financial  Contracts  for  an
amount  which,  in  the aggregate, covers the Company's  cost  of
operations,  plus  provides  a return  on  stockholders'  equity.
Prime  intends  to  utilize a combination  of  interim  warehouse
borrowing and long-term funding methodologies to provide it  with
borrowing  and  funding  availability  at  competitive  rates  of
interest.   The long-term funding methodologies will include  (1)
the  continued issuance of asset-backed securities, (2) portfolio
sales,  (3)  program  financings,  and  (4)  the  discounting  of
individual Financial Contracts.

Prime conducts its business in a manner designed to conserve  its
working  capital and minimize its credit exposure.   The  Company
does  not purchase equipment or disburse funds until: (1) it  has
received  a  noncancelable  lease  or  loan  agreement  from  its
customer,  and  (2)  it has determined that  the  lease  or  loan
agreement  (a)  can  be  discounted  with  a  bank  or  financial
institution on a non-recourse basis, or (b) meets the origination
standards established for a securitized pool.

Liquidity and Capital Resources

In October, 1996, Prime raised additional capital by completing a
private sale of $5.0 million principal amount of five year, 12.5%
subordinated debentures and $2.5 million of 9% preferred stock to
Banc  One  Capital Corporation (BOCC), a subsidiary of  Bank  One
Corporation,  Columbus, Ohio.  As part of the  transaction,  BOCC
also  received  warrants  to purchase  499,606  shares  of  Prime
Capital's common stock at $1.00 per share.

In November 1997, the Company entered into a $75.0 million credit
facility.  The facility allows the Company, on an ongoing  basis,
to transfer and sell finance lease receivables to a wholly-owned,
bankruptcy  remote,  special purpose  entity,  Prime  Receivables
Finance Corporation I, which will sell such receivables to one or
more  trusts.   Each trust will issue two classes of certificates
of  beneficial  ownership, a senior certificate  and  a  residual
interest that will be owned by the Company.  Transfers and  sales
of  finance  lease  receivables  pursuant  to  the  facility  are
accounted  for  as  sales  under  generally  accepted  accounting
principles  and the related gains on the sale are  recognized  on
the date of such transfers.

In  January 1998 and February 1998, the Company entered into  two
new  warehouse  credit facilities totaling  $80.0  million.  Both
credit  facilities will be used to fund Financial Contracts  that
arise  during  the  normal course of business.  These  agreements
replaced  and  supplemented a $65.0 million credit facility  that
matured  on  December  31,  1997.   After  completing  these  two
agreements the Company had a total of $158.0 million of available
credit under four separate agreements.

Management  believes  that in order to meet its  ongoing  funding
needs,  the Company will require additional capital resources  to
supplement  the  expected cash flows of its operating  activities
and anticipated borrowings under its warehouse credit facilities.
Prime  expects  to continue using securitization as  a  means  of
permanently  funding  a  significant  portion  of  its  Financial
Contracts.   The  Company  is  also exploring  other  sources  of
liquidity  to  satisfy  its ongoing need for  additional  capital
resources.

Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  following  financial statements of the  registrant  and  the
report thereon of KPMG Peat Marwick LLP are filed as part of this
annual report on Form 10-KSB:

Consolidated Balance Sheets - December 31, 1997 and 1996

Consolidated Statements of Operations - Years ended December  31,
1997, 1996 and 1995

Consolidated  Statements of Stockholders' Equity  -  Years  ended
December 31, 1997, 1996 and 1995

Consolidated Statements of Cash Flows - Years ended December  31,
1997, 1996 and 1995

Notes to Consolidated Financial Statements

Item 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES

Not applicable.

PART III

Item 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



                   Directors of the Registrant

                      Principal Occupation During Past          Director
Name                  Five Years and Other Information    Age    since

James A. Friedman     President and Chief Executive        52     1978
                      Officer of the Company or its
                      predecessor since November 1978.

William D. Smithburg  Former Chairman and CEO of The       59     1986
                      Quaker Oats Company from 1983 to
                      1997 and Chief Executive Officer
                      thereof from 1981 to 1997; Director
                      of Abbott Laboratories, The
                      Northern Trust Corporation and
                      Corning Incorporated.

Robert R. Youngquist  Practicing Orthodontist and owner    49     1978
D.D.S.                of Robert R. Youngquist D.D.S.,
                      Ltd. during the past six years.

Mark P. Bischoff      Senior Managing Partner of           51     1996
                      Bischoff, Maurides & Swabowski,
                      Ltd. since 1988; Secretary of the
                      Board of Directors and General
                      Counsel of the Company since 1986.

Leander W. Jennings was a member of the Board of Directors from
1986 until his death in December 1997.


                      Executive Officers of the Registrant

                      Principal Occupation During Past Five
Name of Officer            Years and Other Information            Age

James A. Friedman   President and Chief Executive Officer of      52
                    the Company or its predecessor since
                    November 1978.

John W. Altergott   Senior Vice President of the Company          38
                    since January 1996.  Vice President of
                    the Healthcare Finance Group of Prime
                    Capital Corporation since March 1988.

Vern E. Landeck     Vice President and Chief Financial            39
                    Officer of the Company since July 1997.
                    Vice President - Treasurer of the Company
                    from June 1996 through June 1997.
                    President of  Atlantic Capital Exchange,
                    Inc. 1988 to 1996.

Philip M. Dinielli  Vice President of Operations of the           39
                    Company since December 1997.  Began
                    employment with Prime Capital in 1988,
                    serving in various management capacities,
                    most recently as Vice President of Credit
                    and Underwriting Operations.

Thomas R. Ehmann    Vice President - Finance of the Company       45
                    since June of 1997.  Vice President and
                    Chief Financial Officer of First
                    Merchants Acceptance Corp. from 1992 to
                    1997.

Item 10  EXECUTIVE COMPENSATION AND OTHER INFORMATION

Information  regarding executive compensation  is  incorporated
herein  by  reference to the descriptions set forth  under  the
caption "Executive Compensation" in the 1998 Proxy Statement.

Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT


Information  regarding security ownership of  certain  beneficial
owners  and management of the Company is incorporated  herein  by
reference  to  the  information  set  forth  under  the   caption
"Security  Ownership of Certain Beneficial Owners and Management"
in the 1998 Proxy Statement.



Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information   regarding   certain   relationships   and   related
transactions with the Company is incorporated herein by reference
to   the   information  set  forth  under  the  caption  "Certain
Transactions" in the 1998 Proxy Statement.

Item 13.  EXHIBITS AND REPORTS ON FORM 8-K

1.     Financial Statements

The  following financial statements of Prime Capital  Corporation
and  subsidiaries are filed as part of this annual report on Form
10-KSB:

Sequential
                                                      Page No.
                                                     ----------
     a)  Independent Auditors' Report                      24

     b)  Consolidated Balance Sheets as of
                    December 31, 1997 and 1996
           25

     c)  Consolidated Statements of Operations
           for the years ended December 31, 1997,
           1996 and 1995                                   26

     d)  Consolidated Statements of Stockholders'
           Equity for the years ended
           December 31, 1997, 1996 and 1995                27

     e)  Consolidated Statements of Cash Flows
           for the years ended December 31, 1997,
           1996 and 1995                                   28

     f)  Notes to Consolidated Financial Statements        29

2.        Exhibits

     The exhibits filed in response to Item 601 of Regulation S-B
as  part of this Annual Report on Form 10-KSB are listed  in  the
Exhibit Index on pages 39 through 40.

3.        Reports on Form 8-K

      There  were  no  reports on Form 8-K filed by  the  Company
during  the  fourth  quarter of the Company's fiscal  year  ended
December 31, 1997



INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
Prime Capital Corporation:


We  have audited the accompanying consolidated balance sheets  of
Prime  Capital  Corporation and subsidiaries as of  December  31,
1997  and  1996,  and  the  related  consolidated  statements  of
operations, stockholders' equity, and cash flows for each of  the
years  in  the three-year period ended December 31, 1997.   These
consolidated financial statements are the responsibility  of  the
Company's  management.   Our  responsibility  is  to  express  an
opinion on these consolidated financial statements based  on  our
audits.

We  conducted  our  audits in accordance with generally  accepted
auditing  standards.  Those standards require that  we  plan  and
perform  the  audit to obtain reasonable assurance about  whether
the  financial statements are free of material misstatement.   An
audit  includes  examining, on a test basis, evidence  supporting
the  amounts  and  disclosures in the financial  statements.   An
audit also includes assessing the accounting principles used  and
significant  estimates made by management, as well as  evaluating
the  overall  financial statement presentation.  We believe  that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above  present  fairly, in all material respects,  the  financial
position  of  Prime  Capital  Corporation  and  subsidiaries   at
December  31, 1997 and 1996, and the results of their  operations
and  their  cash  flows for each of the years in  the  three-year
period  ended  December  31,  1997 in conformity  with  generally
accepted accounting principles.



KPMG PEAT MARWICK LLP


Chicago, Illinois

March 27, 1998



<TABLE>
           PRIME CAPITAL CORPORATION AND SUBSIDIARIES
                   Consolidated Balance Sheets
<CAPTION>
                                                December 31,
                                       --------------------------
ASSETS                                      1997         1996
                                       ------------- ------------
<S>                                    <C>           <C>
Cash and cash equivalents              $  3,572,553    7,063,398
Receivables:
  Operating lease rentals                   115,930      172,758
  Other                                   8,049,271    4,428,668
Net investment in direct financing
  leases and loans                       17,881,502   56,004,417
Investment in securitized receivables,
  including restricted cash               7,799,195   10,712,116
Leased equipment, net of accumulated
  depreciation                            4,188,097    1,370,289
Deposits on equipment                     1,370,326      134,487
Equipment and furniture, net of
  accumulated depreciation                  720,725      364,499
Other assets                              2,133,957      761,317
                                       ------------- ------------
   Total assets                        $ 45,831,556   81,011,949
                                       ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable                            16,357,347   46,418,920
Accounts payable for equipment            6,565,270    7,780,691
Accrued expenses and other liabilities    8,244,271    8,162,837
Deposits and advances                     2,415,476    4,592,210
                                       ------------- ------------
                                         33,582,364   66,954,658
Subordinated debt                         5,000,000    5,000,000
                                       ------------- ------------
   Total liabilities                     38,582,364   71,954,658
                                       ------------- ------------
Stockholders' equity
Preferred stock $100 par value:
 authorized 250,000 shares;
 issued 25,000  shares                    2,500,000    2,500,000
Common stock, $0.05 par value:
 authorized 10,000,000 shares;
 issued 4,396,265 and 4,384,365
 shares in 1997 and 1996, respectively      219,813      219,218
Additional paid-in capital                9,483,852    9,480,675
Accumulated deficit                      (5,659,673)  (2,842,802)
Unrealized gain on securities             1,005,000            0
Treasury stock, at cost; 94,200 shares
 at December 31, 1997 and 1996             (299,800)    (299,800)
                                       ------------- ------------
   Total stockholders' equity             7,249,192    9,057,291
   Total liabilities and stockholders'
     equity                            $ 45,831,556   81,011,949
                                       ============= ============
</TABLE>
See accompanying notes to consolidated financial statements



<TABLE>
           PRIME CAPITAL CORPORATION AND SUBSIDIARIES
              Consolidated statements of Operations
<CAPTION>
                                   Years Ended December 31,
                             ------------------------------------
                               1997          1996         1995
                             ------------ ----------- -----------
<S>                          <C>          <C>         <C>
Revenues:
Fee Income                   $10,296,305  10,087,077   3,249,544
Direct finance leases
  and loans                    4,534,897   3,514,885   1,427,943
Rentals on operating
  leases                         987,574   1,158,419     723,265
Interest income                  966,925   1,057,437     754,484
Other income                     300,769     454,211     286,110
                             ------------ ----------- -----------
  Total revenues              17,086,470  16,272,029   6,441,346
                             ------------ ----------- -----------

Expenses:
Depreciation of leased
 equipment                       513,193     607,795     317,181
Interest                       3,521,361   3,650,901   1,200,662
Selling, general and
 administrative                8,640,037   7,645,275   6,759,736
Provision for credit losses    7,000,000     342,000           0
                             ------------ ----------- -----------
  Total expenses              19,674,591  12,245,971   8,277,579

Income (loss) before income
 taxes and dividends          (2,588,121)  4,026,058  (1,836,233)
Income taxes                           0           0           0
                             ------------ ----------- -----------
Net income (loss)            $(2,588,121)  4,026,058  (1,836,233)
                             ============ =========== ===========
Basic earnings (loss) per
 share                       $     (0.66)       0.93       (0.43)
                             ============ =========== ===========
Diluted earnings (loss)
 per share                   $     (0.66)       0.85       (0.43)
                             ============ =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.



<TABLE>
                            PRIME CAPITAL CORPORATION AND SUBSIDIARIES
                          Consolidated Statements of Stockholders' Equity
                            Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
                                     Additional  Accumu-  Unrealized
Total
                   Preferred Common    paid-in    lated    Gains on  Treasury
Shareholders
                     Stock    Stock    capital   deficit  Securities   Stock
Equity
                   --------- ------- --------- ---------- ---------- --------- -
----------
<S>                <C>       <C>     <C>        <C>        <C>       <C>
<C>
Balance at
 December 31, 1994         0 218,718 9,681,225 (4,977,002)         0 (299,800)
4,623,141
Net loss                   0       0         0 (1,836,233)         0        0
(1,836,233)

Balance at
 December 31, 1995         0 218,718 9,681,225 (6,813,235)         0 (299,800)
2,786,908
Net income                 0       0         0  4,026,058          0        0
4,026,058
Cash dividends-
 preferred                 0       0         0    (55,625)         0        0
(55,625)
Exercise of options        0     500     2,163          0          0        0
2,663
Issuance of
 preferred stock   2,500,000       0  (202,713)         0          0        0
2,297,287

Balance at
 December 31, 1996 2,500,000 219,218 9,480,675 (2,842,802)         0 (299,800)
9,057,291
Net loss                   0       0         0 (2,588,121)         0        0
(2,588,121)
Cash dividends-
 preferred                 0       0         0   (228,750)         0        0
(228,750)
Exercise of options        0     595     3,177                     0        0
3,772
Unrealized gain on
 securities                0       0         0          0  1,005,000        0
1,005,000

Balance at
December 31, 1997  2,500,000 219,813 9,483,852 (5,659,673) 1,005,000 (299,800)
7,249,192

</TABLE>

See accompanying notes to consolidated financial statements


<TABLE>
           PRIME CAPITAL CORPORATION AND SUBSIDIARIES
              Consolidated Statements of Cash Flows

                                  Years Ended December 31,
                              1997         1996         1995
                          ------------ ------------ -------------
<S>                       <C>          <C>          <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES
Net income (loss)         $ (2,588,121)   4,026,058   (1,836,233)
Adjustments to reconcile
 net income (loss) to net
 cash used in operating
 activities:
 Depreciation of leased
  equipment                    513,193      607,795      317,181
 Other depreciation and
  amortization                 218,630      146,555      120,528
 Amortization of debt
  financing fees               121,563       30,719            0
 Non cash gain on
  securitization            (2,850,064)  (4,859,389)  (1,834,317)
 Provision for credit loss   7,000,000      342,000            0
Changes in assets and
 liabilities:
 Rentals on leased
  equipment and other
  receivables               (2,609,405)  (4,366,474)      75,023
 Other assets                 (511,828)    (196,605)     621,177
 Accrued expenses and
  other liabilities             81,431    4,167,320    2,250,374
                          ------------ ------------ -------------
Net cash used in operating
 activities                   (624,601)    (102,021)    (286,267)

CASH FLOWS FROM INVESTING
 ACTIVITIES
Cost of equipment acquired
 for lease                (146,861,738)(178,734,731)(132,147,837)
Customer deposits and
 payments on direct
 finance leases and loans    9,793,153   10,806,507    4,795,648
Purchase of equipment and
 furniture                    (514,884)    (225,455)    (133,103)
Proceeds from sales of
 finance receivables       165,003,773  178,562,299   77,417,405
                          ------------ ------------ -------------
Net cash provided by
 (used in) investing
 activities                 27,420,304   10,408,620  (50,067,887)

CASH FLOWS FROM FINANCING
 ACTIVITIES:
Proceeds from issuance of
 subordinated debt                   0    5,000,000            0
Net proceeds from issuance
 of preferred stock and
 warrants                            0    2,297,287            0
Proceeds from exercise of
 options                         3,775        2,663            0
Payment of debt financing
 fees                                0     (608,143)           0
Preferred stock dividends     (228,750)     (55,625)           0
Proceeds from (reduction
 in) notes payable, net    (30,061,573) (11,881,332)  50,410,750
                          ------------ ------------ -------------
Net cash provided by (used
 in) financing activities  (30,286,548)  (5,245,150)  50,410,750

Increase (decrease) in
 cash and cash equivalents  (3,490,845)   5,061,449       56,596
Cash and cash equivalents:
 Beginning of year           7,063,398    2,001,949    1,945,353
                          ------------ ------------ -------------
 End of year              $  3,572,553    7,063,398    2,001,949
                          ============ ============ =============
Cash paid during the year
 for interest             $  3,827,759    3,030,240    1,225,401
                          ============ ============ =============
</TABLE>
See accompanying notes to consolidated financial statements




                    PRIME CAPITAL CORPORATION
              Notes to Consolidated Financial Statements
             Years Ended December 31, 1997, 1996 and 1995

(1)  Summary of Significant Accounting Policies

     Prime   Capital   Corporation,  through   its   wholly-owned
     subsidiaries, is engaged principally in providing  financial
     services  to  non-consumer customers throughout  the  United
     States.    The  Company's  primary  focus  is  on  providing
     specialty and high value-added financial products  that  are
     targeted  to  specific needs within selected  markets.   The
     Company  is primarily engaged in the business of originating
     or,  in  some  cases, purchasing leases,  secured  loans  or
     installment  purchase  agreements (collectively,  "Financial
     Contracts"),  warehousing  such  Financial  Contracts,   and
     ultimately   securitizing  (or,  in  some   cases,   selling
     outright)   such  Financial  Contracts.    The  accompanying
     consolidated  financial statements include the  accounts  of
     Prime Capital Corporation and its wholly-owned subsidiaries,
     and  certain of its special purpose subsidiaries  that  have
     been  incorporated to facilitate the sale or  securitization
     of  Financial  Contracts  ("Prime" or the  "Company").   All
     material intercompany transactions have been eliminated.

     (a)  Use of Estimates

     The  preparation of financial statements in conformity  with
     generally accepted accounting principles requires management
     to  make  estimates and assumptions that affect the reported
     amounts   of  assets  and  liabilities  and  disclosure   of
     contingent  assets  and  liabilities  at  the  date  of  the
     financial  statements and the reported amounts  of  revenues
     and  expenses  during the reporting period.  Actual  results
     could differ from those estimates.

     (b)  Direct Financing Leases and Loans

     Loans  and lease contracts which qualify as direct financing
     leases,  as  defined  by Statement of  Financial  Accounting
     Standards  (SFAS) No. 13, are accounted for by recording  on
     the  consolidated balance sheet the total  loan  or  minimum
     lease  payments receivable, plus the estimated  unguaranteed
     residual  value of the leased equipment, less  the  unearned
     income.  The unearned lease income represents the excess  of
     the  total  minimum  payments, plus the  estimated  residual
     expected  to be realized at the end of the lease term,  over
     the  cost  of  the  related equipment or  initial  principal
     balance.  Unearned income is recognized as revenue over  the
     term  of  the  contract  as a constant  percentage  interest
     return on the net investment.  The initial direct costs  are
     capitalized  as  part  of  the  net  investment  in   direct
     financing leases or loans and amortized over the lease  term
     as a reduction in yield.

     (c)  Operating Leases

     The  cost  of  equipment acquired for  the  Company's  lease
     transactions that qualify as operating leases, as defined by
     SFAS No. 13, is recorded as leased equipment and depreciated
     on  a straight-line basis to an estimated residual value  at
     lease  termination.   Lease  revenue  consists  of  periodic
     rentals.   Initial  direct  costs of  originating  operating
     leases  are  capitalized and amortized  on  a  straight-line
     basis over the lease term.

     (d)  Gain on Sale of Finance Receivables

     The   Company  generally  sells  or  assigns  the  Financial
     Contracts  it  acquires or originates through securitization
     and  other  structured finance transactions.  Gains  on  the
     sale  or  securitization of Financial Contracts are included
     in  fee  income in the consolidated statement of operations.
     In  a  securitization  transaction, the  Company  sells  and
     transfers  a  pool of Financial Contracts to a wholly-owned,
     bankruptcy   remote,  special  purpose   subsidiary.    This
     subsidiary  in  turn simultaneously sells and transfers  its
     interest in the Financial Contracts to a trust which  issues
     beneficial interests in the Financial Contracts in the  form
     of   senior   and  subordinated  securities.   The   Company
     generally  retains the residual interest  in  the  Financial
     Contracts.

     Gains   on   sale  of  Financial  Contracts   sold   through
     securitization  transactions are recorded as the  difference
     between  the proceeds received from the sale of  senior  and
     subordinated  securities  including  amounts  deposited   in
     restricted  cash reserve accounts, plus the estimated  value
     of  excess cash flows, less future losses expected to  arise
     from  recourse  obligations  related  to  the  sale  of  the
     Financial Contracts and related insurance expenses, and  the
     carrying value of the Financial Contracts.

     On  January  1,  1997,  the Company adopted  SFAS  No.  125,
     "Accounting for Transfers and Servicing of Financial  Assets
     and  Extinguishments of Liabilities" ("SFAS 125").  SFAS 125
     provides  consistent standards for distinguishing  transfers
     of  financial assets that are sales from transfers that  are
     secured  borrowings.  Under SFAS 125, after  a  transfer  of
     financial  assets,  an entity recognizes the  financial  and
     servicing  assets  it controls and the  liabilities  it  has
     incurred,  derecognizes financial assets  when  control  has
     been   surrendered,   and  derecognizes   liabilities   when
     extinguished.   SFAS  125 prohibits early  application  and,
     accordingly,   the   Company  adopted  this   standard   for
     transactions which occurred after December 31, 1996.   Under
     SFAS 125, a transfer of lease assets in which the transferor
     surrenders control of the lease assets is accounted for as a
     sale  and the transferred lease assets are removed from  the
     balance  sheet  with  the resulting gain  or  loss  on  sale
     reflected in the statement of operations.

     The  company also enters into transactions to sell Financial
     Contracts,  either in single contract or pool  transactions.
     Gains  on  such  contracts are calculated as the  difference
     between  the  proceeds  received,  net  of  related  selling
     expenses,  and the carrying amount of the related  Financial
     Contracts adjusted for ongoing recourse obligations  of  the
     Company, in any.

     (e)  Allowance for Credit Losses

     An allowance for credit losses is initially established when
     Financial  Contracts are sold or securitized in transactions
     where  the  Company retains recourse for losses, partial  or
     otherwise.   This initial estimate of future losses  reduces
     the  gain  recorded  at  the  time  sale.  If  necessary,  a
     provision  for credit losses is charged against earnings  to
     maintain  the  allowance  for credit  losses  at  an  amount
     management believes necessary to absorb potential losses  in
     the finance contract portfolio.

     Management  evaluates  the adequacy  of  the  allowance  for
     credit   losses   by   reviewing  credit  loss   experience,
     delinquencies,  the  value  of  the  underlying  collateral,
     including  third  party guarantees or insurance  recoveries,
     the level of finance contract portfolio, as well as, general
     economic conditions.

     An  account  is  reported as charged off  at  the  time  the
     account  is  to be repurchased under the Company's  recourse
     obligations   of   a  securitization  or  other   structured
     financing  transaction.  The Company's recourse  obligations
     generally require an account to be repurchased if the lessee
     or   borrower   declare  bankruptcy,   the   collateral   is
     repossessed, or the account becomes more than 120 days  past
     due.

     At  the  time an account is charged-off, the initial charge-
     off  is  recorded  net  of  an estimated  recovery  that  is
     expected  to  be realized in the future.  Examples  of  such
     recoveries  include continuing payments from the  lessee  or
     borrower, payments from guarantors, proceeds from  the  sale
     of   equipment  or  other  collateral,  and  proceeds   from
     insurance contracts.

     (f)  Portfolio Servicing Fees

     The  Company  generally  agrees to  continue  servicing  the
     receivable portfolio it has sold or securitized.   Servicing
     fees  are  received monthly and recorded as  fee  income  as
     earned.

     (g)  Cash and Cash Equivalents

     Cash  and  cash  equivalents are comprised of highly  liquid
     instruments with original maturities of 90 days or less.

     (h)  Restricted Cash

     In  connection  with each securitization  completed  by  the
     Company,  certain  cash reserves are set  aside  for  credit
     enhancement  of  the  securitization pools.   These  reserve
     balances are reported as restricted cash and included in the
     Company's  net investment in securitized receivables.   Cash
     reserve  accounts  are initially funded  from  the  proceeds
     received  from the securitization and are increased  by  the
     excess  spread  realized from the receipt of  payments  from
     borrowers   or  lessees  over  the  payments  due   to   the
     securitization  bondholders.  In the  event  of  default  or
     delinquency  by  a  borrower  or  lessee,  payments  to  the
     bondholder  are  disbursed  from  the  cash  reserve   fund.
     Typically,  the  cash  reserve  funds  become  available  as
     unrestricted cash to the Company once all contracts  in  the
     securitization  pool are paid in full,  however,  payout  is
     sometimes  sooner depending upon the specific pool indenture
     agreement.

     (i)  Investments

     The  Company has classified its entire investment  portfolio
     as  available-for-sale.  Available-for-sale  securities  are
     stated  at  fair  value  with unrealized  gains  and  losses
     included  in  stockholders'  equity.   Fair  value  of   the
     securities is determined based on market prices.  Securities
     for  which  a  readily  determinable  market  price  is  not
     available are recorded at cost.

     (j)  Income Taxes

     The  Company uses the asset and liability method to  account
     for  income taxes.  Deferred tax assets and liabilities  are
     recognized  for the future tax consequences attributable  to
     differences between the financial statement carrying amounts
     of  existing assets and liabilities and their respective tax
     basis.   The measurement of deferred tax assets is  reduced,
     if  necessary, by a valuation allowance for any tax benefits
     of which future realization is uncertain.

     (k)  Net Income (Loss) per Common Share

     In  1997,  the  Financial Accounting Standards Board  issued
     Statement No. 128, "Earnings Per Share" ("SFAS 128").   SFAS
     128  replaced  the calculation of primary and fully  diluted
     earnings  per  share  with basic and  diluted  earnings  per
     share.   Unlike  primary earnings per share, basic  earnings
     per  share  exclude  any  dilutive  effect  of  options  and
     warrants.   Diluted earnings per share are very  similar  to
     the  previously reported fully diluted earnings  per  share.
     Earnings  per  share  amounts  for  all  periods  have  been
     restated to conform to the SFAS 128 requirements.

     (l)  Financial Instruments

     The  carrying  value of the Company's financial  instruments
     approximates their fair value.

     (m)  Stock Based Compensation

     The  Company  uses  the  intrinsic  value  based  method  of
     accounting for its stock-based compensation arrangements  as
     promulgated  by  the  Accounting  Principles  Board  ("APB")
     Opinion No. 25 and related Interpretations.

     (n)  Reclassifications

     Certain  1996  and  1995 amounts have been  reclassified  to
     conform to the 1997 presentation.

(2)  Net Investment in Direct Financing Leases and Loans

     The components of the net investment in direct financing
     leases and loans as of December 31 were as follows:
     <TABLE>
     <CAPTION>
                                           1997         1996
                                      ------------- ------------
     <S>                              <C>           <C>
     Minimum lease and loan payments  $ 21,849,420   73,784,482
     Estimated unguaranteed residual
       value of leased equipment           512,708      231,961
     Initial direct costs                    6,576       22,875
     Unearned income                    (4,477,202) (18,024,901)
     Allowance for uncollectible
        accounts                           (10,000)     (10,000)
                                      -------------  -----------
     Net investment in direct
       financing leases and loans     $ 17,881,502   56,004,417
                                      ============= ===========
     </TABLE>
     The  Financial Contracts in the Company's portfolio consists
     primarily  of medical, telecommunication and other equipment
     with average initial contract terms of 46 months.

     The  following table summarizes the minimum lease  and  loan
     payments  to  be  received  and the  estimated  unguaranteed
     residual  values  of  maturing direct financing  leases  and
     loans in each of the next five years and thereafter:
     <TABLE>
     <CAPTION>
                                     Estimated
                    Minimum          Unguaranteed
     Years Ending   Lease and        Residual
     December 31,   Loan Payments    Values
     ------------   --------------   ------------
     <S>            <C>              <C>
     1998           $  6,076,050           22,175
     1999              5,078,984           29,699
     2000              3,991,445          128,061
     2001              2,759,991            6,632
     2002              2,132,370          273,278
     Thereafter        1,810,580           52,863
     ------------   --------------   ------------
     Total          $ 21,849,420          512,708
     ============   ==============   ============
     </TABLE>

(3)  Leased Equipment, Net of Accumulated Depreciation
     <TABLE>
     <CAPTION>

                                           1997      1996
                                      -----------  ----------
     <S>                              <C>          <C>
     Equipment under operating leases $ 4,214,274  1,449,174
     Accumulated depreciation             (26,177)   (78,885)
                                      -----------  ----------
     Net                              $ 4,188,097  1,370,289
                                      ===========  ==========
     </TABLE>

     At December 31, 1997, the minimum lease payments to be
     received under operating leases for each of the next five
     years and thereafter were as follows:
     <TABLE>
     <CAPTION>
     Years Ending      Minimum Lease
     December 31,      Payments
     ------------      --------------
     <S>               <C>
     1998              $    1,205,363
     1999                   1,067,783
     2000                     753,834
     2001                     459,573
     2002                     182,653
     Thereafter                     0
                       --------------
     Total             $    3,669,206
                       ==============
     </TABLE>

(4)  Net Investment in Securitized Receivables, Including
     Restricted Cash.

The components of net investment in securitized receivables as of
December 31 were as follows:

     <TABLE>
     <CAPTION>
                                     1997         1996
                                 -----------  -----------
     <S>                         <C>          <C>
     Restricted cash             $ 6,745,049   7,873,004
     Reserve advances              1,057,439     973,369
     Notes receivable              1,215,145           0
     Servicer advances               239,707     356,309
     Estimated excess spread       1,041,359   2,898,428
     Allowance for credit losses  (2,499,504) (1,388,994)
                                 -----------  -----------
     Total                       $ 7,799,195  10,712,116
                                 ===========  ===========
     </TABLE>

(5)  Allowance for Credit Losses

     <TABLE>
     <CAPTION>
                                 1997       1996      1995
                             ----------  ---------  ---------
     <S>                    <C>          <C>        <C>
     Balance at beginning
       of year              $ 1,998,994  1,120,767  1,005,712
     Initial reserves
       charged against gains
       on sales of finance
       receivables            1,688,890    776,367    115,055
     Additional provisions
       for credit losses      7,000,000    342,000          0
     Charge-offs, net of
       estimated recoveries  (8,178,380)  (240,140)         0
                             ----------  ---------  ---------
     Balance at end of year $ 2,509,504  1,998,994  1,120,767
                             ==========  =========  =========
     </TABLE>

     At  December 31, 1997 and 1996, loss reserves were  included
     as   components   of  the  net  investment  in   securitized
     receivables  and  net investment in direct financing  leases
     and  loans.    Also at December 31, 1996, $600,000  of  loss
     reserves  were  included  in  accrued  expenses  and   other
     liabilities.   Estimated recoveries are  included  in  other
     receivables and totaled $5,087,590 and $195,659 at  December
     31, 1997 and 1996, respectively.

(6)  Investments Available-for-Sale

     At  December  31,  1997, the Company held available-for-sale
     securities   with  estimated  fair  values   of   $1,005,000
     consisting  entirely of gross unrealized gains  attributable
     to  warrants to acquire shares of common stock of a customer
     of the Company. The warrants were received by the Company in
     connection  with  the origination of a leasing  transaction.
     At  the date the warrants were received by the Company  they
     were  determined to have no material value.  There  were  no
     securities   available-for-sale  at   December   31,   1996.
     Available-for-sale securities are reported in other assets.

(7)  Notes Payable

     Notes payable consisted of the following as of December 31:

     <TABLE>
     <CAPTION>
                                          1997       1996
                                     ------------ ----------
     <S>                             <C>          <C>
     Warehouse Credit Facilities     $ 14,387,021 46,282,960
     Other                              1,970,326    135,960
                                     ------------ ----------
     Total                           $ 16,357,347 46,418,920
                                     ============ ==========
     </TABLE>

     The  underlying equipment and lease or loan contracts secure
     borrowings  under  the  warehouse  credit  facilities.   The
     weighted average interest at December 31, 1997 was 8.07% per
     annum.   The  warehouse  credit facilities  contain  certain
     covenants  and  restrictions with  which  the  Company  must
     comply, see Note 8 to the consolidated financial statements.

     In  November 1997, the Company entered into a $75.0  million
     credit  facility.  The facility allows the  Company,  on  an
     ongoing   basis,   to  transfer  and  sell   finance   lease
     receivables  to  a wholly-owned, bankruptcy remote,  special
     purpose  entity,  Prime Receivables Finance  Corporation  I,
     which  will  sell  such receivables to one or  more  trusts.
     Each  trust  will  issue  two  classes  of  certificates  of
     beneficial  ownership, a senior certificate and  a  residual
     interest  that will be owned by the Company.  Transfers  and
     sales  of finance lease receivables pursuant to the facility
     are   accounted  for  as  sales  under  generally   accepted
     accounting principles and the related gains on the sale  are
     recognized on the date of such transfers.

     In  January 1998 and February 1998, the Company entered into
     two  new warehouse credit facilities totaling $80.0 million.
     Both  credit  facilities  will be  used  to  fund  Financial
     Contracts  that arise during the normal course of  business.
     These  agreements replaced and supplemented a $65.0  million
     credit  facility that matured on December 31,  1997.   After
     completing these two agreements the Company had a  total  of
     $158.0  million  of  available credit  under  four  separate
     agreements.

(8)  Subordinated Debt and Preferred Stock with Warrants

     On  October  4,  1996,  Prime received $7,500,000  cash  and
     incurred approximately $800,000 in expenses, in exchange for
     a   $5.0  million  principal  amount  of  five  year,  12.5%
     subordinated debentures and 25,000 shares of $100 par  value
     9.0%  Dividend non-voting Preferred Stock with  warrants  to
     purchase  499,606 shares of the Company's  common  stock  at
     $1.00  per share.  Expenses related to the transaction  were
     allocated between the subordinated debt, preferred stock and
     warrants based upon their fair value.  Expenses allocated to
     the   subordinated  debt  were  capitalized  and  are  being
     amortized over five years.  The unamortized balance of these
     expenses  were  included in other assets  on  the  Company's
     consolidated  balance sheets at December 31, 1997  and  1996
     and  amortization  of $121,563 and $30,719  respectively  is
     included  in  interest expense on the Company's consolidated
     statements  of operations.  The warrants are exercisable  in
     March 1998.

     The  Company's various debt agreements contain  restrictions
     on,  among  other things, the payment of dividends  and  the
     amount  of  recourse  indebtedness  that  can  be  incurred.
     Furthermore, the Company is required to maintain  a  minimum
     adjusted  tangible net worth (as defined), and  the  Company
     may   not   exceed  a  specified  ratio  of  total  recourse
     liabilities (as defined) to adjusted tangible net worth  and
     is required to maintain minimum debt service coverage ratios
     (as  defined).  The Company was not in default of any of its
     debt agreements at December 31, 1997.


(9)  Sales and Securitization of Financial Receivables

     During  the  year  ended  December  31,  1997,  the  Company
     securitized Financial Contracts in two transactions totaling
     $89.6 million.  Also, during 1997 the Company sold a pool of
     Financial Contracts for $44.0 million

     During  1996  and  1995,  the Company  permanently  financed
     certain  assets  and liabilities carried  on  the  Company's
     consolidated balance sheet through the issuance and sale  of
     equipment  lease and loan backed securities  with  aggregate
     contract   values  of  $151.6  million  and  $56.7  million,
     respectively.  For financial reporting purposes, the  assets
     and  liabilities were removed from the consolidated  balance
     sheets.

     The  Company  also  sold equipment or assigned  the  related
     Financial  Contracts  to  third parties  with  an  aggregate
     contract  value  of $44.0 million, $36.4 million  and  $36.8
     million during the years ended December 31, 1997, 1996,  and
     1995, respectively.

     The  net  gains  from all sales and securitizations  totaled
     $7.2  million,  $7.1  million, and $1.5 million  during  the
     years ended December 31, 1997, 1996, and 1995, respectively.

(10) Income Taxes

     The  Company's  net income tax provision after consideration
     of  the  tax  effect  from utilizing of net  operating  loss
     carryforwards  was  zero for the years  ended  December  31,
     1997, 1996 and 1995.

     The  reported income tax expense differs from the "expected"
     tax  expense  (benefit) (computed by  applying  the  Federal
     corporate tax rate to the income (loss) before income taxes)
     as follows:

     <TABLE>
     <CAPTION>
                                   1997        1996      1995
                               -----------  ---------  ---------
     <S>                       <C>          <C>       <C>
     Computed "expected" tax
       expense (benefit)       $ (880,000)  1,369,000  (624,000)
     State income tax expense
       (benefit) net of Federal
       income tax expense        (126,000)    201,000   (89,000)
     Other, net                    17,000      15,000    12,000
     Net operating loss
      and passive activity loss
      (utilized) benefit not
      recognized                  989,000  (1,585,000)  701,000
                               -----------  ---------  ---------
     Total expense             $        0           0         0
                               ===========  =========  =========
     </TABLE>

  Deferred tax assets and liabilities at December 31, 1997 and
  1996 include:
  <TABLE>
  <CAPTION>
                                         1997        1996
                                     -----------  -----------
  <S>                                <C>          <C>
  Deferred Tax Assets:
    Net operating and passive
    activity loss carryforwards      $ 9,567,000    9,344,056
  Investment tax credit carryforward     554,000      614,361
  AMT credit carryforward                135,000            0
  Financial statement reserves not
    currently deductible for tax
    purposes                             253,000      324,331
                                     -----------  -----------
  Gross deferred tax assets           10,509,000   10,282,748

  Less:  Valuation allowance          (7,574,000)  (5,296,678)
                                     -----------  -----------
  Total deferred tax assets            2,935,000    4,986,070
                                     -----------  -----------

  Deferred Tax Liabilities:
  Difference in securitization
    accounting for tax purposes
    and financial statement purposes   2,527,000    4,694,228
  Other, net                             408,000      291,842
                                     -----------  -----------

  Total deferred tax liabilities       2,935,000    4,986,070
                                     -----------  -----------
  Net deferred taxes                 $         0            0
                                     ===========  ===========
  </TABLE>

  Included  at  January  1,  1997 were  valuation  allowances  of
  $5,296,678.   During  fiscal  1997,  the  valuation   allowance
  increased by $2,277,322 due primarily to the additional passive
  activity  losses  generated  by  certain  subsidiaries  of  the
  Company.

  The  Company  has  $554,000  of unused  investment  tax  credit
  carryforwards  that are available for consolidated  tax  return
  purposes  that expire at various times between 1998  and  2001.
  There  is  also  an  alternative  minimum  tax  ("AMT")  credit
  carryforward of $135,000 that does not expire and can  only  be
  used against regular income tax, not the AMT.  At December  31,
  1997,  the Company had a passive activity loss carryforward  of
  approximately   $20.2   million   and   net   operating    loss
  carryforwards of approximately $4.3 million available  for  tax
  return  purposes.  The passive activity loss carryforward  does
  not expire, and must be used before the Company's net operating
  loss  carryforwards  to  offset  income  from  future  business
  activities of the Company.  However, the passive activity  loss
  cannot  be  used against portfolio income, therefore,  the  net
  operating  loss  carryforwards are  applied  against  portfolio
  income, which totals $773,000 for 1997.  The net operating loss
  carryforwards expire as follows: $1,105,000 in 2001, $1,238,000
  in  2002, $1,215,000 in 2003, $102,000 in 2004, $5,000 in 2005,
  $575,000 in 2006, and $50,000 thereafter through 2012.

  (11) Commitments and Contingencies

  The  Company  rents office space under various operating  lease
  agreements  expiring during the next six years.  The  following
  is  a schedule of future minimum rental payments required under
  these  leases  and does not include the Company's proportionate
  share  of  future  real  estate taxes  and  building  operating
  expenses.

     <TABLE>
     <CAPTION>
     Year ending
     December 31,    Amount
     ------------ ---------
     <S>          <C>
     1998         $ 204,089
     1999           213,807
     2000           223,526
     2001           233,244
     2002           242,963
     Thereafter   $ 252,681
     </TABLE>

  Rent  expense,  including the Company's share  of  real  estate
  taxes  and  building operating expenses, for  the  years  ended
  December  31, 1997, 1996, and 1995 was $403,736, $294,656,  and
  $282,513, respectively.

  As of December 31, 1997, the Company had commitments to finance
 approximately  $204.9  million  of  Financial  Contracts.    The
 management  of  the  Company believes  that  funding  for  these
 Financial  Contracts will be obtained through the normal  course
 of business.

(12) Stock Option Plans

  In  1997,  the  Company  adopted the  1997  Stock  Option  Plan
 ("Plan")  under  which certain employees and  Directors  of  the
 Company  may be granted the right to purchase shares  of  common
 stock at its fair market value on the date of grant.  This  plan
 superseded  and replaced the Company's 1987 Stock  Option  Plan.
 The  Company  has authorized an aggregate of 750,000  shares  of
 common stock for issuance under the Plan.

  The  Company continues to apply the accounting specified by APB
 Opinion  No.  25  and related Interpretations in accounting  for
 the  Plan. Accordingly, no compensation cost has been recognized
 for  options granted under the Plan.  Had compensation cost  for
 the  Plan  been  determined consistent with FASB  Statement  No.
 123,  the Company's net income (loss) and basic and diluted  net
 income  (loss) per common share would have been reduced  to  the
 pro forma amounts indicated below:
     <TABLE>
     <CAPTION>
                                  1997       1996       1995
                              -----------  ---------  ----------
     <S>                      <C>          <C>        <C>
     Net income (loss)
      available to common
      shareholders
     As Reported             $ (2,816,871) 3,970,433 (1,836,233)
     Pro Forma               $ (3,145,813) 3,712,230 (1,859,826)

     Basic net income (loss)
     per common share
     As Reported             $      (0.66)      0.93      (0.43)
     Pro Forma               $      (0.73)      0.87      (0.43)

     Diluted net income
     (loss) per common share
     As Reported             $      (0.66)      0.85      (0.43)
     Pro Forma               $      (0.73)      0.80      (0.43)
     </TABLE>

  The fair value of each option grant is estimated on the date of
 grant  using  the Black-Scholes option-pricing  model  with  the
 following weighted-average assumptions used for grants in  1997,
 1996  and  1995,  respectively: dividend yield  of  0%  for  all
 years;  expected  volatility of 71%,  78%  and  109%;  risk-free
 interest rates of 5.97%, 6.12% and 6.56%; and expected lives  of
 5  years  for 1997, 1996 and 1995.  Additional adjustments  were
 made  regarding a 5.5% estimated forfeit rate on the grants  for
 the  years  following  the initial date of grant,  beginning  in
 1996.

  A  summary of the status of the Company's Stock Option Plan  as
 of  December  31,  1997, 1996 and 1995 and  changes  during  the
 years ended on those dates is presented below:

<TABLE>
<CAPTION>
                       1997            1996            1995
                 ---------------- --------------- ---------------
                        Weighted-       Weighted-       Weighted-
                         Average         Average         Average
                        Exercise        Exercise        Exercise
                 Shares   Price  Shares   Price  Shares   Price
                -------- ------- ------ -------- ------ --------
<S>             <C>      <C>     <C>    <C>      <C>    <C>
Shares under
 option at
 beginning of
 year            573,500 $ 2.47  336,094 $ 1.28  356,162  $ 1.39
Options granted  146,000   5.89  289,500   4.37   85,000    1.17
Options expired        0      0  (24,094) 10.59  (18,568)   1.03
Options
 terminated     (117,017)  2.52  (18,000)  1.25  (86,500)   1.67
Options
  exercised     ( 11,900)  0.32  (10,000)  0.27        0       0
Shares under
 option at end
 of year         590,583 $ 3.20  573,500 $ 2.47  336,094  $ 1.28
Options
 exercisable
 at end of year  279,912 $ 1.43  236,150 $ 0.39  237,428  $ 1.33
Weighted average
 fair value of
 options granted
 during the year          $3.73          $ 2.59            $0.96
</TABLE>

  The  following table summarizes information about stock options
  outstanding as of December 31, 1997:
<TABLE>
<CAPTION>
                        Options Outstanding   Options Exercisable
                       ---------------------  -------------------
                       Weighted-
                       average     Weighted-            Weighted-
Range of     Number    remaining   average              average
exercise     of        contractual exercise  Number     exercise
prices       shares    life        price     of shares  price
-----------------------------------------------------------------
<S>          <C>       <C>          <C>        <C>        <C>
$ .01-$1.50  202,583   3.83 years   $ 0.33     195,917    $ 0.30
$1.51-$3.00   52,000   8.01 years     1.88      17,332      1.88
$3.01-$4.50  100,000   8.94 years     4.00      33,332      4.00
$4.51-$6.00  236,000   9.22 years     5.61      33,331      5.25
-----------------------------------------------------------------
Total        590,583   7.22 years   $ 3.20     279,912    $ 1.43
=================================================================
</TABLE>

(13) Employee Benefit Plan

  During  1985,  the  Company established a defined  contribution
  benefit  plan under Internal Revenue Code (the "Code")  section
  401(a)  with a cash deferred benefit arrangement under  section
  401(k)   of   the   Code.   The  plan  covers  all   employees.
  Contributions to the plan are based on percentages of  employee
  contributions   plus  discretionary  contributions   determined
  annually   by   the  Board  of  Directors.   Contributions   of
  approximately $98,386 were made in 1997 for participants in the
  plan.  There were no contributions made in 1996 or 1995.

(14) Earnings Per Share

  The  following table sets forth the computation  of  basic  and
  diluted earnings per share:

<TABLE>
<CAPTION>
                                1997         1996        1995
                            ------------  ---------  -----------
<S>                        <C>            <C>        <C>
Numerator:
  Net income (loss)        $ (2,588,121)  4,026,058  (1,836,233)
  Preferred dividends          (228,750)    (55,625)          0
                            ------------  ---------  -----------
Numerator for basic
  and diluted earnings
  per share-income
  (loss) available to
  common shareholders      $ (2,816,871)  3,970,433  (1,836,233)
                            ===========   =========  ===========


Denominator:
  Denominator for basic
   earnings per share-
   weighted average shares    4,293,799   4,282,610   4,280,165

Effect of dilutive securities:
  Options and warrants          710,109     386,352     245,097
                            -----------   ---------  -----------
Dilutive potential
   common shares                710,109     386,352     245,097
                            -----------   ---------  -----------
Denominator for diluted
earnings per share-
adjusted weighted
average shares and
assumed conversions           5,003,908   4,668,962    4,252,262
                            ===========   =========  ===========

Basic earnings (loss)
  per share                $      (0.66)       0.93       (0.43)
                            ===========   =========  ===========
Diluted earnings (loss)
per share                  $      (0.66)       0.85       (0.43)
                            ===========   =========  ===========
</TABLE>

(1)  In  1997  and  1995, the weighted average shares  under  the
diluted  computation  have  an  anti-dilutive  effect,  therefore
diluted  earnings per share will be shown equal to basic earnings
per share.

Options  to purchase an average of 62,802 shares of common  stock
at  prices  between  $5.25  and $6.00  per  share  in  1997  were
outstanding but were not included in the computation  of  diluted
earnings  per  share  because  the options'  exercise  price  was
greater  than the average market price of the common shares  and,
therefore,  the  effect  would be antidilutive.   For  additional
disclosures  regarding the employee stock options  and  warrants,
see Notes 8 and 13 to the consolidated financial statements.




                          EXHIBIT INDEX

                    PRIME CAPITAL CORPORATION

Copies of the following documents are filed herewith as exhibits:

 Exhibit                                                   Sequential
   No.    Description                                        Page No.
--------  ----------------------------------------------   ----------
3.1       Certificate of Incorporation                          (a)
3.2       By-Laws                                               (b)
10.1      Sublease dated October 8, 1985 between
          the Dow Chemical Company and Registrant               (a)
10.2      1984 Incentive Stock Option Plan of Registrant        (a)
10.3      1986 Non-Qualified Stock Option Plan of Registrant    (a)
10.3      1987 Stock Option Plan                                (a)
10.3      1997 Stock Option Plan                                (f)
10.13     Master Lease Agreements of Registrant                 (a)
10.13(a)  Revised Master Lease Agreements of Registrant         (d)
10.15     Stock Restriction Agreement dated July 2, 1985
          between Registrant and Marvin T. Keeling              (a)
10.23     Form of Equipment Bill of Sale and Assignment
          contracts used in equipment sale-lease assignment
          transactions between Registrant and each of
          James A. Friedman, Marvin T. Keeling,
          Robert Youngquist, Thomas W. Heimsoth
          and Allen M. Olinger, III                             (a)
10.48     Bill of Sale of Lease to James Friedman               (e)
21        Subsidiaries of Registrant                            39
23.1      Consent of KPMG Peat Marwick LLP                      40
27        Financial Data Schedule                               (c)


(a)  Incorporated  by  reference to  the  Company's  Registration
Statement  on  Form S-1, effective May 29, 1986,  in  which  each
Exhibit had the same number as herein.

(b)  Exhibit  3.2 is incorporated by reference to  the  Company's
Proxy Statement, effective April 29, 1987.

(c)  Incorporated by reference to the Company's electronic filing
of the December 31, 1997 10 KSB as filed on March 31, 1998.

(d)  Incorporated by reference to the Company's Annual Report  on
Form 10-K as filed on May 10, 1991.

(e)  Incorporated by reference to the Company's Annual Report  on
Form  10-K.   For the years ended December 31, 1991 as  filed  on
August 28, 1992 and amended on Form 8 filed on October 20, 1992.

(f)  Incorporated by reference to the Company's electronic filing
of the 1996 Proxy Statement Def-14A filed on June 3, 1997.

Exhibits 21 and 23.1 have been included herein.




                           SIGNATURES

Pursuant  to  the  requirements of Section 13  or  15(d)  of  the
Securities  Exchange Act of 1934, the registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.

                                      PRIME CAPITAL CORPORATION
                                             (Registrant)



Date:  March 31, 1998                     /S/ James A. Friedman
                                          James A. Friedman
                                          President, Chairman and
Chief
                                          Executive Officer


Pursuant  to the requirements of the Securities Exchange  Act  of
1934,  this report has been signed below by the following persons
on  behalf  of the registrant and in the capacities indicated  on
this 31st day of March, 1998.

     Signature                                  Title


/s/ James A. Friedman              President, Chairman, and Chief
                                   Executive Officer
James A. Friedman                  (Principal Executive Officer)


/s/ Vern E. Landeck                Vice President and
                                   Chief Financial Officer
Vern E. Landeck                    (Principal Financial Officer)


Directors


/s/ James A. Friedman                    /s/ William D. Smithburg
James A. Friedman                        William D. Smithburg


/s/ Mark P. Bischoff                     /s/ Robert R. Youngquist
Mark Bischoff                            Robert R. Youngquist



                           SIGNATURES

Pursuant  to  the  requirements of Section 13  or  15(d)  of  the
Securities  Exchange Act of 1934, the registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.



                                 PRIME CAPITAL CORPORATION
                                       (Registrant)


Date:  March 31, 1998
                                          James A. Friedman
                                          President, Chairman and
                                          Chief Executive Officer

Pursuant  to the requirements of the Securities Exchange  Act  of
1934,  this report has been signed below by the following persons
on  behalf  of the registrant and in the capacities indicated  on
this 31st day of March, 1998.

          Signature                                    Title


                                       Chairman, President,
                                         Director and
                                       Chief Executive Officer

       James A. Friedman
(Principal Executive Officer)


                                      Vice President
                                      and Chief Financial Officer

        Vern E. Landeck
  (Principal Financial Officer)



Directors



        James A. Friedman                    William D. Smithburg



         Mark P. Bischoff                    Robert R. Youngquist