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                              EMPLOYMENT AGREEMENT


     AGREEMENT  made as of the  4th day of  March,  1997  by and  between  DELTA
FINANCIAL CORPORATION,  a Delaware corporation (the "Corporation"),  and Richard
Blass (the "Executive").

                              W I T N E S S E T H :
                              --------------------
                           

            In consideration of the  representations,  warranties and conditions
contained herein, the parties hereto agree as follows:
 
 
            1.    POSITION AND RESPONSIBILITIES.

            1.1.  The Executive  shall serve in an  executive  capacity as Chief
Financial  Officer and Senior Vice President of the  Corporation.  The Executive
shall  perform  such  functions  and  undertake  such  responsibilities  as  are
customarily  associated  with  such  capacity.  The  Executive  shall  hold such
directorships  and executive  officerships in the Corporation and any subsidiary
to which,  from time to time, he may be elected or appointed  during the term of
this Agreement.


            1.2.  The  Executive  shall devote his full time and best efforts to
the  business  and  affairs  of the  Corporation  and to  the  promotion  of its
interests.


            2.    TERM OF EMPLOYMENT.

            2.1.  The term of employment shall be three years,  commencing  with
the date hereof,  unless sooner  terminated as provided in this  Agreement.  The
initial term of employment  and any extension  thereof is herein  referred to as
the "Term."

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            2.2.  Notwithstanding  the  provisions  of Section 2.1  hereof,  the
Corporation  shall  have the  right,  on  written  notice to the  Executive,  to
terminate the Executive's employment for Cause, such termination to be effective
as of the date on which  notice  is given  or as of such  later  date  otherwise
specified in the notice.

            2.3.  For purposes of this Agreement,the term "Cause" shall mean any
of the following actions by the Executive: (a) failure to comply with any of the
material terms of this Agreement;  (b) engagement in gross misconduct  injurious
to the Corporation or an affiliate of the  Corporation;  (c) knowing and willful
neglect or refusal to attend to the material duties  reasonably  assigned to him
by the Board of Directors or the President of the  Corporation;  (d) intentional
misappropriation  of  property  of  the  Corporation  or  an  affiliate  of  the
Corporation to the  Executive's  own use; (e) the commission by the Executive of
an act of embezzlement;  (f) Executive's  conviction for a felony or if criminal
penalties  are  imposed  on  Executive  relating  to any  taxes due and owing by
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Executive;  or (g) Executive's engaging in any activity which would constitute a
material  conflict of  interest  with the  Corporation  or an  affiliate  of the
Corporation.

            2.4.  If the Executive's employment  with the  Corporation  shall be
terminated  by the  Corporation  other than pursuant to Sections 2.2, 4.1 or 4.2
hereof,  then the Corporation  shall pay: (a) if such termination  occurs within
the  first  year of the Term of this  Agreement,  one (1)  year's  salary,  less
withholding and payroll taxes; or (b) if such termination occurs after the first
year of the Term of this Agreement,  fifty (50%) percent of the remaining salary
due  under the  balance  of the Term of this  Agreement,  less  withholding  and
payroll  taxes.  Any  payments  made under this Section 2.4 shall (a) be paid in
equal installments over the six months following any

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such  termination, and (b)  be based upon the  Executive's  salary as it existed
immediately  prior to such termination.


            3.    COMPENSATION.

            3.1.  (a)  The   Corporation   shall  pay  or  cause  Delta  Funding
      Corporation to pay to the Executive for the services to be rendered by the
      Executive hereunder a salary at the rate of $160,000 per annum. The salary
      shall  be  payable  in  equal   installments   in   accordance   with  the
      Corporation's  normal payroll  practices.  Such salary will be reviewed at
      least  annually and shall be increased (but not decreased) by the Board of
      Directors  of the  Corporation  in such amount as  determined  in its sole
      discretion. In addition, the Executive will be paid a quarterly cash bonus
      based on the actual  performance  of the  Corporation.  The amount of such
      quarterly  cash  bonus will be as  follows:  for each 1%  increase  in net
      earnings per share for the  relevant  fiscal  quarter  greater than 10% as
      measured against the  corresponding  quarter in the prior fiscal year, the
      Executive  will  receive  a cash  bonus of 1.875%  of his  current  annual
      salary,  PROVIDED THAT for any fiscal year the sum of the  quarterly  cash
      bonuses  paid to the  Executive  may  not  exceed  50% of the  Executive's
      current  annual salary,  and PROVIDED  FURTHER THAT for any fiscal quarter
      the  quarterly  cash bonus paid to the Executive may not exceed 15% of the
      Executive's  current annual salary. Such quarterly bonuses will be payable
      60 days after the relevant  quarter.  By way of illustration  only, if the
      Company  reports net earnings per share for the quarter 13% higher than in
      the  corresponding  quarter of the prior  fiscal year and the  Executive's
      salary is $160,000  per annum,  60 days after the last day of the relevant
      quarter the Executive would be paid a cash bonus of $9,000.

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            3.2.  On  the  date  hereof,   the  Executive  shall  be  granted  a
non-qualified  option pursuant to the terms of Delta's 1996 Stock Option Plan to
purchase  25,000  shares of Delta  Common  Stock,  par value $.01 per share (the
"Common  Stock") at a price per share equal to the closing price of Delta Common
Stock on the date  hereof,  which option shall vest 20% per year and have a term
of five years.
 
            3.3.  The Executive shall be entitled to participate in, and receive
benefits from, any insurance, medical, disability, bonus, incentive compensation
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or other employee  benefit plan, if any are adopted,  of the  Corporation or any
subsidiary  which  may be in  effect  at  any  time  during  the  course  of his
employment  by the  Corporation  and which shall be  generally  available to the
Executive  on terms no less  favorable  than to other senior  executives  of the
Corporation  or its subsidiaries.
 
            3.4.  The  Corporation agrees to  reimburse  the  Executive  for all
reasonable  and  necessary  business  expenses  incurred by him on behalf of the
Corporation in the course of his duties  hereunder upon the  presentation by the
Executive of appropriate vouchers therefore.

            3.5.  The Executive will be entitled each year of  this Agreement to
a paid vacation of three weeks.

            3.6.  Upon  termination  of this  Agreement  for Cause or due to the
death or incapacity of the Executive (as defined in Section 4.1),  the Executive
shall be entitled to all  compensation  (including  pro rata bonus) and benefits
accrued and unpaid up to the date of termination.

            3.7.  The Executive shall not be required to mitigate damages or the
amount of any payment  provided  to him under this  Agreement  by seeking  other
employment or otherwise.

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            3.8.  Nothing contained herein shall prohibit the Board of Directors
of the  Corporation,  in its sole  discretion,  from increasing the compensation
payable to the Executive  pursuant to this Agreement  and/or making available to
the  Executive  other  benefits in addition to those to which the  Executive  is
entitled hereunder.


            4.    DEATH; INCAPACITY.

            4.1.  If,  during the  period of  employment  hereunder,  because of
illness  or other  incapacity,  the  Executive  shall  fail  for a period  of 90
consecutive  days, or for shorter periods  aggregating  more than 90 days during
any twelve month period, to render the services contemplated hereunder, then the
Corporation,  at its option, may terminate the term of employment hereunder upon
not less than 10 days  written  notice from the  Corporation  to the  Executive,
effective on the 10th day after giving of such notice;  provided,  HOWEVER, that
no such termination will be effective if prior to the 10th day after giving such
notice, the Executive's illness or incapacity shall have terminated and he shall
be physically and mentally able to perform the services  required  hereunder and
shall be performing such services.

            4.2.  In the event of the  death of the  Executive  during  the term
hereof,  the employment  hereunder  shall  terminate on the date of death of the
Executive.

            4.3.  The  Corporation  (or its  designee)  shall  have the right to
obtain for its benefit an appropriate  life insurance  policy on the life of the
Executive,  naming the  Corporation  (or its  designee) as the  beneficiary.  If
requested  by the  Corporation,  the  Executive  agrees  to  cooperate  with the
Corporation in obtaining such policy.

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            4.4.  In the event the  employment of Executive is terminated by the
Corporation  as the  result of the death or  incapacity  of the  Executive,  the
Corporation  agrees to  continue to pay the  Executive  (or his estate) his then
rate of salary for a period of one year after such termination.


            5.    OTHER ACTIVITIES DURING EMPLOYMENT;  NON-COMPETITION;
SOLICITATION.

            5.1.  The  Executive  shall not  during  the term of this  Agreement
undertake or engage in any other employment,  occupation or business enterprise.
Subject to compliance with the provisions of this  Agreement,  the Executive may
engage in  reasonable  activities  with respect to personal  investments  of the
Executive.

            5.2.  During the Term of Agreement,and for the remaining Term of the
Agreement,  in the event that the Executive leaves the  Corporation's  employ on
his own volition during the Term of the Agreement, neither the Executive nor any
entity in which he may be interested as a partner, trustee,  director,  officer,
employee,  shareholder, option holder, lender of money, guarantor or consultant,
shall be  engaged  directly  or  indirectly  in any  business  engaged in by the
Corporation in any area where the Corporation, or any subsidiary,  conducts such
business  at any  time  during  this  Agreement;  provided,  however,  that  the
foregoing  shall  not be deemed to  prevent  the  Executive  from  investing  in
securities  if such class of  securities  in which the  investment is so made is
listed on a national  securities  exchange or is issued by a company  registered
under  Section  12(g) of the  Securities  Exchange Act of 1934,  so long as such
investment  holdings do not, in the  aggregate,  constitute  more than 5% of the
voting stock of any company's  securities;  provided however,  that this Section
5.2  shall  not  apply  if  the  Executive's  employment  is  terminated  by the
Corporation.

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            5.3.  The Executive will not at any time during his employment  with
the  Corporation  and for a  period  of one  year  after  Executive  leaves  the
Corporation's  employ  for any  reason,  solicit  (or  assist or  encourage  the
solicitation  of) any employee of the Corporation or any of its  subsidiaries or
affiliates to work for Executive or for any business, firm, corporation or other
entity in which the Executive, directly or indirectly, in any capacity described
in Section 5.2 hereof,  participates  or engages (or expects to  participate  or
engage) or has (or expects to have) a financial interest or management position.

            5.4.  The Executive  shall not at any time during this  Agreement or
after the  termination  hereof  directly or indirectly  divulge,  furnish,  use,
publish or make accessible to any person or entity any Confidential  Information
(as hereinafter  defined).  Any records of Confidential  Information prepared by
the Executive or which come into  Executive's  possession  during this Agreement
are  and  remain  the  property  of the  Corporation  and  upon  termination  of
Executive's  employment all such records and copies thereof shall be either left
with or returned to the Corporation.

            5.5.  The term  "Confidential  Information"  shall mean  information
disclosed to the  Executive or known,  learned,  created or observed by him as a
consequence of or through his employment by the Corporation, not generally known
in the  relevant  trade  or  industry,  about  the  Corporation's  or any of its
subsidiaries'  or  affiliates'  business  activities,  services  and  processes,
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including  but  not  limited  to  information  concerning   advertising,   sales
promotion,  publicity,  sales data,  research,  finances,  accounting,  methods,
processes,  business  plans,  broker  or  correspondent  lists and  records  and
potential broker or correspondent lists and records.

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            6.    ASSIGNMENT.  The Corporation shall  require  any  successor or
assign  to  all or substantially all  the assets  of the Corporation (whether by
merger or by acquisition of stock, assets or otherwise) prior to consummation of
any transaction therewith, to expressly  assume and agree to  perform in writing
this Agreement in the same manner  and to the  same extent that the  Corporation
would be  required to  perform it if no such succession or assignment  had taken
place. This Agreement shall inure to the benefit of  and  be  binding  upon  the
Corporation,  its successors and assigns,  and upon the Executive and his heirs,
executors, administrators and legal representatives. This Agreement shall not be
assignable by the Executive.


            7.    NO THIRD PARTY BENEFICIARIES.  This Agreement does not create,
and shall not be construed as creating, any rights enforceable by any person not
a party to this Agreement, except as provided in Section 6 hereof.


            8.    HEADINGS.  The headings of  the sections  hereof are  inserted
for convenience only and  shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.


            9.    INTERPRETATION.  In case  any one or  more  of the  provisions
contained  in this  Agreement  shall,  for any  reason,  be held to be  invalid,
illegal  or  unenforceable  in  any  respect,  such  invalidity,  illegality  or
unenforceability  shall not affect any other  provisions of this Agreement,  and
this Agreement shall be construed as if such invalid,  illegal or  unenforceable
provision had never been contained herein. If, moreover,  any one or more of the
provisions  contained in this Agreement  shall for any reason be held by a court
of competent jurisdiction to be unenforceable because it is excessively broad as
to duration,  geographical scope,  activity or

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subject,  it shall be  construed  by  limiting  and reducing  it, so  as  to  be
enforceable  to the extent  compatible  with the applicable law as it shall then
appear.


          10.     NOTICES.  All notices under this Agreement shall be in writing
and shall be deemed to have been given at the time when mailed by registered  or
certified  mail,  addressed  to the address  below  stated of the party to which
notice is given,  or to such  changed  address  as such  party may have fixed by
notice:

            To the Corporation:
            Delta Financial Corporation
            1000 Woodbury Road
            Suite 200
            Woodbury, New York  11797
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            Attn:  President

             copy to -

            Stroock & Stroock & Lavan
            180 Maiden Lane
            New York, NY  10038
            Attn:  James R. Tanenbaum, Esq.

                  And

            To the Executive:

            Richard Blass
            2472 Kerry Lane
            Bellmore, NY 11710


provided,  however, that any notice of change of address shall be effective only
upon receipt.


          11.     WAIVERS.  If  either  party  should  waive  any  breach of any
provision of this Agreement, he or it shall not thereby be deemed to have waived
any  preceding or succeeding  breach of the same  or any other provision of this
Agreement.

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          12.     COMPLETE  AGREEMENT; AMENDMENTS.  The  foregoing is the entire
agreement of the parties with respect to  the  subject matter hereof and may not
be  amended, supplemented, canceled or discharged  except by  written instrument
executed by both parties hereto.


          13.     EQUITABLE REMEDIES.  The Executive  acknowledges  that  he has
been employed for his unique talents and  that  his leaving  the  employ  of the
Corporation  would seriously hamper the business of the Corporation and that the
Corporation will suffer irreparable damage if any provisions of Section 5 hereof
are not  performed  strictly in  accordance  with their  terms or are  otherwise
breached.  The Executive hereby  expressly agrees that the Corporation  shall be
entitled  as a matter  of right to  injunctive  or other  equitable  relief,  in
addition  to all  other  remedies  permitted  by law,  to  prevent  a breach  or
violation  by the  Executive  and to secure  enforcement  of the  provisions  of
Section 5. Resort to such  equitable  relief,  however,  shall not  constitute a
waiver or any other rights or remedies which the Corporation may have.


          14.     GOVERNING  LAW.  This  Agreement is  to  be  governed  by  and
construed in accordance  with the laws of the State of New York, without  giving
effect to principles of conflicts of law.

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            In witness whereof,  the parties hereto have executed this agreement
as of the date first above written.

                                      DELTA FINANCIAL CORPORATION


                                      By: /S/  MARC E. MILLER
                                      -----------------------

                                      Name:  Marc E. Miller
                                      Title:  VICE PRESIDENT



                                      /S/   RICHARD BLASS
                                      -------------------
                                      Richard Blass



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