FORM 10-Q


                                        SECURITIES AND EXCHANGE COMMISSION

                                              Washington, D.C. 20549


          QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


(Mark One)
{ X }  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended  September 30, 1996

{   }  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

For the transition period from                              to


For Quarter Ended September 30, 1996      Commission file number  33-32125

                                Redwood Equipment Leasing Income Fund L.P.
                          (Exact Name of Registrant as Specified in its Charter)


             Delaware                                           52-1650971
(State or Other Jurisdiction of                              (I.R.S. Employer
Incorporation or Organization)                            Identification Number)



225 East Redwood Street, Baltimore, Maryland                        21202
(Address of Principal Executive Offices)                         (Zip Code)

Registrant's Telephone Number, Including Area Code:        (410) 727-4083


                                                   N/A
                          (Former Name, Former Address, and Former Fiscal Year,
                                      if Changed Since Last Report.)


  Indicate  by check  mark  whether  the  registrant  (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

<PAGE>
                                    REDWOOD EQUIPMENT LEASING INCOME FUND L.P.



                                                       INDEX


                                    Page No.

Part I.    Financial Information


     Item 1.    Financial Statements

                       Balance Sheets                                    1
                       Statements of Operations                          2
                       Statements of Partners' Capital                   3
                       Statements of Cash Flows                          4
                       Notes to Financial Statements                    5-6


     Item 2.    Management's Discussion and Analysis of
                   Financial Condition and Results of Operations         7



Part II.   Other Information


     Item 1. through Item 6.                                             8

     Signatures                                                          9


<PAGE>
          REDWOOD EQUIPMENT LEASING INCOME FUND L.P.           
                       Balance Sheets
                         (Unaudited)

<TABLE>
<CAPTION>
                                                            September 30,   December 31,
                                                               1996            1995

Assets

<S>                                                        <C>             <C>
 Cash and cash equivalents                                 $2,719,367      $2,500,697
 Lease payment and other receivables                           33,098          68,663
 Deposit                                                       10,000          10,000
 Investment in direct finance leases, net                   1,813,453       2,419,556

  Total assets                                             $4,575,918      $4,998,916


Liabilities and Partners' Capital

 Accounts payable and accrued expenses                     $   18,956      $   16,813
 Amounts due to affiliates                                     14,892          15,910
 Advance rentals                                               14,552          18,521

  Total liabilities                                            48,400          51,244


 Partners' Capital
  General Partner                                             (82,269)        (73,866)
  Assignor Limited Partner:
  Assignment of limited partnership interests - $25 stated
    value per unit, 401,180 units outstanding               4,609,002       5,020,712
  Limited partnership interests - $25 stated value per
   unit, 40 units outstanding                                     585             626
  Special Limited Partners                                        200             200

  Total partners' capital                                   4,527,518       4,947,672

  Total liabilities and partners' capital                  $4,575,918      $4,998,916
</TABLE>


        See accompanying notes to financial statements

                             -1-
<PAGE>
  REDWOOD EQUIPMENT LEASING INCOME FUND L.P.

         Statements of Operations
               (unaudited)

<TABLE>
<CAPTION>
                                         Three Months Ended              Nine Months Ended
                                         September 30,   September 30,    September 30,  September 30,
                                             1996            1995             1996           1995

Revenues
<S>                                     <C>            <C>               <C>            <C>
 Direct finance lease revenue           $      43,776  $        49,786   $     143,487  $     158,283
 Interest income                               35,474           38,670          96,898        115,280
 Gain from sale of leased equipment             6,575                 -         36,091        147,012

                                               85,825           88,456         276,476        420,575


Expenses
 Administrative expenses including
  amounts to related party                     13,008           14,806          49,442         51,175
 Management fees to advisor                     4,022            2,996          10,129         14,396
 Professional fees                              4,000              (88)         12,450         11,612
 Amortization of acquisition and
  organization costs                            3,417            3,258          10,497         11,447

                                               24,447           20,972          82,518         88,630


Net earnings                            $      61,378  $        67,484   $     193,958  $     331,945


Net earnings per unit of assignee
 limited partnership interest           $        0.15  $          0.16   $        0.47  $        0.81

</TABLE>


  See accompanying notes to financial statements

                   -2-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.

Statements of Partners' Capital
For the nine months ended September 30, 1996 and 1995
         (Unaudited)

<TABLE>
<CAPTION>
                               Assignee  Assignor     Special
                               Limited   Limited      Limited       General
                               Partners  Partner      Partners      Partner    Total


<S>                          <C>        <C>      <C>              <C>       <C>
Balance at December 31, 1995 $5,020,712 $    626 $            200 $ (73,866)$4,947,672

Net earnings                    190,060       19                 -    3,879    193,958

Distributions to partners      (601,770)     (60)                -  (12,282)  (614,112)

Balance at September 30, 1996$4,609,002 $    585 $            200 $ (82,269)$4,527,518



Balance at December 31, 1994 $5,426,614 $    667 $            200 $ (65,582)$5,361,899

Net earnings                    325,274       32                 -    6,639    331,945

Distributions to partners      (601,770)     (60)                -  (12,282)  (614,112)

Balance at September 30, 1995$5,150,118 $    639 $            200 $ (71,225)$5,079,732

</TABLE>

See accompanying notes to financial statements

             -3-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.      
Statements of Cash Flows
For the nine months ended September 30,
(unaudited)

<TABLE>
<CAPTION>

                                                                          1996               1995
Cash flow from operating activities
<S>                                                                 <C>                  <C>
 Net earnings                                                       $       193,958      $  331,945
 Adjustments to reconcile net earnings to net
  cash provided by operating activities
   Amortization of acquisition and organization costs                        10,497          11,447
   Gain from sale of leased equipment                                       (36,091)       (147,012)
   Changes in assets and liabilities
    Decrease in lease payment and other receivables                          35,565           7,624
    Increase (decrease) in accounts payable and accrued expenses              2,143          (6,987)
    (Decrease) increase in amounts due to affiliates                         (1,018)          4,361
    Decrease in advance rentals                                              (3,969)         (3,969)

Net cash provided by operating activities                                   201,085         197,409

Cash flows from investing activities
 Acquistion of direct finance leases                                               -       (543,914)
 Principal received on direct finance leases                                532,560         512,391
 Termination of direct finance leases                                        99,137         263,334

Net cash provided by investing activities                                   631,697         231,811

Cash flows from financing activities-
 distributions to partners                                                 (614,112)       (614,112)


Net increase (decrease) in cash and cash equivalents                        218,670        (184,892)

Cash and cash equivalents
 Beginning of period                                                      2,500,697       2,645,192

 End of period                                                      $     2,719,367      $2,460,300

</TABLE>

See accompanying notes to financial statements

-4-
<PAGE>
                                    REDWOOD EQUIPMENT LEASING INCOME FUND L.P.

                                           Notes to Financial Statements
                                                September 30, 1996
                                                    (Unaudited)


Note 1 - The Partnership and Basis of Preparation

         The  accompanying  financial  statements of Redwood  Equipment  Leasing
Income Fund L.P. (the  "Partnership")  do not include all of the information and
note  disclosures   normally  included  in  financial   statements  prepared  in
accordance with generally accepted accounting principles.  The unaudited interim
financial  statements  reflect  all  adjustments  which are,  in the  opinion of
management, necessary to a fair statement of the results for the interim periods
presented.  All such adjustments are of a normal recurring nature. The unaudited
interim financial  information  should be read in conjunction with the financial
statements contained in the 1995 Annual Report.


Note 2 - Cash and Cash Equivalents

         The  Partnership  considers all  short-term  investments  with original
maturities  of  three  months  or  less  as  cash  equivalents.  Cash  and  cash
equivalents  consist of cash,  money market accounts and other liquid short term
investments  and are  stated  at  cost,  which  approximates  market  value,  at
September 30, 1996 and December 31, 1995.


Note 3 - Related Party Transactions

         The  Partnership's  General  Partner earned an asset  management fee of
$6,141 each quarter (3% of  distributions  to investors) and received or was due
reimbursement  of $5,118 and $7,494  for  certain  costs  incurred  relating  to
administrative services for the Partnership for the three months ended September
30, 1996 and 1995, respectively.

         As the management  agent,  Signet is entitled to an equipment and lease
management fee equal to 1.5% of gross lease rental payments as well as a fee for
services  provided in acquiring  and disposing of leased  assets.  For the three
months  ended  September  30, 1996 and 1995,  Signet  earned  $4,022 and $2,996,
respectively in management and disposition fees.


Note 4 - Leases

         Investment in direct  finance leases with initial terms ranging from 34
to 82 months at September 30, 1996 and December 31, 1995 includes the following:
<TABLE>
<CAPTION>
                                                              September 30, 1996       December 31, 1995

<S>                                                                 <C>                     <C>
          Lease payments receivable                                 $ 1,475,908             $ 2,178,763
          Estimated residual value                                      542,237                 572,852
          Acquisition fees, net                                          21,881                  32,378
          Unearned income                                              (204,017)               (341,881)
          Reserve for residual value loss                               (22,556)                (22,556)
                                                                    $ 1,813,453             $ 2,419,556


</TABLE>

          During the third quarter of 1996, one lease expired and another lessee
purchased  a  portion  of its  equipment  prior  to the  end of its  lease.  The
Partnership   received  $69,621  and  recorded  a  gain  of  $6,575  from  these
transactions.



                                                      -5-


<PAGE>

                                    REDWOOD EQUIPMENT LEASING INCOME FUND L.P.

                                           Notes to Financial Statements
                                                September 30, 1996
                                                    (Unaudited)


Note 4 - Leases - continued

          The  partnership  has  been  unable  to  identify   acceptable   lease
opportunities  through  the  first  nine  months  of 1996.  The  Partnership  is
approaching  the end of the Investment  Period and prior to the end of 1996 will
enter the Liquidation Phase.

          All leases in the  Partnership's  portfolio  are  classified as direct
finance leases.


Note 5 - Net Earnings per Unit of Assigned Limited Partnership Interest

          Net  earnings  per unit of assignee  limited  partnership  interest is
disclosed  on the  Statements  of  Operations  and is based upon  401,180  units
outstanding.


Note 6 - Subsequent Events

          In  November,  1996,  the  Partnership  will make a cash  distribution
totaling  $204,704 of which 98% will be allocated to assignee limited  partners.
This distribution will be derived from net cash provided by operating activities
and principal  payments  received on direct finance leases.  Holders of assignee
limited  partnership  interests will receive cash  distributions of $.50 per $25
unit.



                                                      -6-


<PAGE>

                                    REDWOOD EQUIPMENT LEASING INCOME FUND L.P.

                              Management's Discussion and Analysis of Financial
                                        Condition and Results of Operations

Liquidity and Capital Resources

         At September 30, 1996, the Partnership  had a working capital  position
that included cash and cash  equivalents of $2,719,367 and accounts  payable and
accrued  expenses of $18,956.  The  Partnership  invests its cash  balances in a
money  market  account  and other  high  quality  short  term  investments.  The
Partnership  initially  allocated  $100,295 (1% of offering proceeds) as working
capital  reserves,  but has the  discretion to increase or decrease  reserves as
deemed necessary.  The unexpended offering proceeds and working capital reserves
are sufficient to satisfy the Partnership's liquidity requirements.

         Cash and cash equivalents  increased  $105,826 during the third quarter
of 1996. This increase  represented  the combined effect of $64,296  provided by
operating activities,  $176,613 received in principal payments on direct finance
leases,  $30,000  received  from  the  sale of one of the EA  Engineering  lease
schedules, and $39,621 received as a partial payoff at its booked residual value
on the Coca-Cola lease, and $204,704 distributed to partners.

         The Partnership  made a distribution of $204,704 on August 9, 1996 from
funds  generated  from  operations,  and  principal  payments on direct  finance
leases.  This  distribution  represents  an  annualized  rate of 8% on  invested
capital and reflects the Partnership's current distribution target.


Results of Operations

         Direct finance lease revenue  decreased $6,010 during the third quarter
of 1996 as compared to the third quarter of 1995,  and $14,796  during the first
nine months of 1996 as compared to the first nine months of 1995.  This decrease
resulted  from  scheduled  lease  terminations  and an  expected  decline in the
portion of lease payments recognized as revenue (versus return of principal) for
existing leases.

         Interest  income  decreased  $3,196 during the third quarter of 1996 as
compared to the third quarter of 1995,  and $18,382 during the first nine months
of 1996 as  compared to the first nine months of 1995,  due  primarily  to lower
cash balances.

         The  Partnership  recognized  a $6,575  gain  from  the sale of  leased
equipment  during the third quarter of 1996 resulting from the sale of equipment
on one of the EA Engineering  lease  schedules.  The  Partnership  currently has
$22,556 in reserves which is deemed sufficient for any future potential losses.

         Total expenses  increased by $3,475 during the third quarter of 1996 as
compared  to the third  quarter  of 1995 due to the  timing of  expenses.  Total
expenses  decreased  $6,112  during the first nine months of 1996 as compared to
the first nine  months of 1995.  The  decreases  over the nine month  period are
attributable to reductions in administrative and management fees.


Equipment Lease Acquisitions

         During the third  quarter of 1996,  the  Partnership  made no equipment
lease  acquisitions.  The  Partnership  has not been able to identify  new lease
transactions  which it deems  acceptable from a risk and credit  standpoint.  As
noted in prior reports, the Partnership is approaching the end of the Investment
Period (period during which the  Partnership  makes new investments in equipment
leases) and prior to the end of 1996 will enter the  Liquidation  Phase.  If the
Partnership  does not  fully  invest  its  cash in  acceptable  equipment  lease
transactions prior to the end of the Investment Period, the remaining funds (net
of reserves) will be distributed to investors.



                                                      -7-
<PAGE>
                                    REDWOOD EQUIPMENT LEASING INCOME FUND L.P.




PART II.  OTHER INFORMATION


Item 1.     Legal Proceedings

                  Inapplicable

Item 2.     Changes in Securities

                  Inapplicable

Item 3.     Defaults upon Senior Securities

                  Inapplicable

Item 4.     Submission of Matters to a Vote of Security Holders

                  Inapplicable

Item 5.     Other Information

                  Inapplicable

Item 6.     Exhibits and Reports on Form 8-K

                  a)  Exhibits:  None

                  b)  Reports on Form 8-K:    None





                                                        -8-

<PAGE>


                              REDWOOD EQUIPMENT LEASING INCOME FUND L.P.




                                                    SIGNATURES


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


                                                  REDWOOD EQUIPMENT LEASING
                                                       INCOME FUND L.P.




DATE: 11/8/96                                      By:  /s/ John M. Prugh
                                                     John M. Prugh
                                                     President and Director
                                                     Redwood Leasing, Inc.
                                                     General Partner



DATE: 11/8/96                                      By: /s/ Timothy M. Gisriel
                                                     Timothy M. Gisriel
                                                     Treasurer
                                                     Redwood Leasing, Inc.
                                                     General Partner




                                                       -9-

<PAGE>