FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003



[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________



Commission file number 814-00207

Venture Lending & Leasing III, Inc.

(Exact Name of Registrant as specified in its charter)



|Maryland                                      | 77-0534084         
|--------------------------------------------- | -------------------
|(State or other jurisdiction of incorporation | (I.R.S. Employer   
|or organization)                              | Identification No.)

2010 North First Street, Suite 310, San Jose, CA 95131

(Address of principal executive offices) 	 (Zip Code)

(408) 436-8577

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant has (i) filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days.

Yes ÖNo __

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class 	Outstanding as of November 2, 2003

Common Stock, $.001 par value			100,000









VENTURE LENDING & LEASING III, INC.

INDEX





PART I -- FINANCIAL INFORMATION

Item 1.		Financial Statements

Statements of Financial Position

As of September 30, 2003 and December 31, 2002

Statements of Operations (Unaudited)

For the Three and Nine Months Ended September 30, 2003 and 2002

Statements of Changes in Shareholder's Equity

For the Year ended December 31, 2002 and the Nine Months

Ended September 30, 2003

Statements of Cash Flows (Unaudited)

For the Nine Months Ended September 30, 2003 and 2002

Notes to Financial Statements

Item 2.	Management's Discussion and Analysis of Financial

Condition and Results of Operations

Item 3. Quantitative & Qualitative Disclosures About Market Risk

PART II -- OTHER INFORMATION

Item 1. 	Legal Proceedings

Item 2. 	Changes in Securities and Use of Proceeds

Item 3. 	Defaults upon Senior Securities

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

Item 5. 	Other Information

Item 6.	Exhibits

SIGNATURES



VENTURE LENDING & LEASING III, INC.

STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

|                                                           |  | September 30, 2003 |  | December 31, 2002
|---------------------------------------------------------- |  | ------------------ |  | -----------------
|                                                           |  | UNAUDITED          |  |                  
|ASSETS                                                     |  |                    |  |                  
|Loans at estimated fair value                              |  |                    |  |                  
|(Cost of $139,453,936 and $189,208,933)                    |  | $128,863,409       |  | $183,723,840     
|Cash and cash equivalents                                  |  | 13,991,461         |  | 9,863,882        
|Other assets                                               |  | 772,110            |  | 1,738,755        
|                                                           |  | ________________   |  | _______________  
|Total assets                                               |  | $143,626,980       |  | $195,326,477     
|                                                           |  | ==============     |  | =============    
|LIABILITIES AND SHAREHOLDER'S EQUITY                       |  |                    |  |                  
|Liabilities:                                               |  |                    |  |                  
|Borrowings under debt facilty                              |  | $43,986,520        |  | $51,884,504      
|Accrued management fees                                    |  | 1,008,370          |  | 1,312,698        
|Accounts payable and other accrued liabilities             |  | 1,473,922          |  | 2,359,957        
|                                                           |  | ________________   |  | _______________  
|Total liabilities                                          |  | 46,468,812         |  | 55,557,159       
|                                                           |  | ________________   |  | _______________  
|Shareholder's equity:                                      |  |                    |  |                  
|Common stock: $0.001 par value, 200,000 shares authorized; |  |                   
|Issued and outstanding - 100,000 shares                    |  | 100                |  | 100              
|Capital in excess of par value                             |  | 155,004,400        |  | 155,004,400      
|Accumulated distributions                                  |  | (59,917,366)       |  | (11,935,264)     
|Accumulated earnings (deficit)                             |  | 2,071,034          |  | (3,299,918)      
|                                                           |  | ________________   |  | _______________  
|Total shareholder's equity                                 |  | 97,158,168         |  | 139,769,318      
|                                                           |  | ________________   |  | _______________  
|Total liabilities and shareholder's equity                 |  | $143,626,980       |  | $195,326,477     
|                                                           |  | ==============     |  | =============    















See Notes to Financial Statements













VENTURE LENDING & LEASING III, INC.

STATEMENTS OF OPERATIONS (UNAUDITED)



|                                                                    |             | For The Three      |             | For The Three      |             | For The Nine       |             | For The Nine      
|------------------------------------------------------------------- | ----------- | ------------------ | ----------- | ------------------ | ----------- | ------------------ | ----------- | ------------------
|                                                                    |             | Months Ended       |             | Months Ended       |             | Months Ended       |             | Months Ended      
|                                                                    |             | September 30, 2003 |             | September 30, 2002 |             | September 30, 2003 |             | September 30, 2002
|                                                                    |             | _____________      |             | _____________      |             | _____________      |             | _____________     
|INVESTMENT INCOME:                                                  |             |                    |             |                    |             |                    |             |                   
|Interest on loans                                                   |             | $5,613,053         |             | $7,998,118         |             | $18,965,658        |             | $23,389,279       
|Interest on short-term investments                                  |             |                    |             |                    |             |                    |             |                   
|and other income                                                    |             | 62,639             |             | 120,312            |             | 223,869            |             | 734,337           
|                                                                    |             | _____________      |             | _____________      |             | _____________      |             | _____________     
|Total investment income                                             |             | 5,675,692          |             | 8,118,430          |             | 19,189,527         |             | 24,123,616        
|                                                                    |             | _____________      |             | _____________      |             | _____________      |             | _____________     
|EXPENSES:                                                           |             |                    |             |                    |             |                    |             |                   
|Management fees                                                     |             | 897,669            |             | 1,268,678          |             | 3,075,440          |             | 5,327,403         
|Interest expense                                                    |             | 528,748            |             | 766,575            |             | 1,728,596          |             | 2,594,793         
|Other operating expenses                                            |             | 537,113            |             | 730,672            |             | 2,126,905          |             | 2,102,566         
|                                                                    |             | _____________      |             | _____________      |             | _____________      |             | _____________     
|Total expenses                                                      |             | 1,963,530          |             | 2,765,925          |             | 6,930,941          |             | 10,024,762        
|                                                                    |             | _____________      |             | _____________      |             | _____________      |             | _____________     
|Net investment income                                               |             | 3,712,162          |             | 5,352,505          |             | 12,258,586         |             | 14,098,854        
|                                                                    |             | _____________      |             | _____________      |             | _____________      |             | _____________     
|Net change in unrealized loss from investments and hedging activity | (2,494,542) |                    | 645,446     |                    | (4,755,146) |                    | (7,501,879)
|Net realized gain (loss) from investment transactions               | 82,122      |                    | (1,980,266) |                    | (2,132,488) |                    | (3,164,867)
|                                                                    |             | _____________      |             | _____________      |             | _____________      |             | _____________     
|Net income                                                          |             | $1,299,742         |             | $4,017,685         |             | $5,370,952         |             | $3,432,108        
|                                                                    |             | ============       |             | ============       |             | ============       |             | ============      
|Net income per share                                                |             | $13.00             |             | $40.18             |             | $53.71             |             | $34.32            
|                                                                    |             | ============       |             | ============       |             | ============       |             | ============      
|Weighted average shares outstanding                                 |             | 100,000            |             | 100,000            |             | 100,000            |             | 100,000           





See Notes to Financial Statements



VENTURE LENDING & LEASING III, INC.

STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2002

AND THE NINE MONTHS ENDED SEPTEMBER 30, 2003

|                                        | Common Stock
____________________ | Capital in |              | Accumulated   |             
|--------------------------------------- | --------------------------------- | ---------- | ------------ | ------------- | ------------
|                                        | Excess of                         |            | Earnings     |              
|                                        | Shares                            | Par Value  | Par Value    | Distributions | (Deficit)   
|                                        | _________                         | _________  | _________    | _________     | _________   
|BALANCE, December 31, 2001              | 100,000                           | $100       | $155,004,400 | $(6,864,039)  | $(7,817,109)
|                                        |                                   |            |              |               |             
|Distributions                           |                                   |            |              | (5,071,225)   |             
|Net income                              |                                   |            |              |               | 4,517,191   
|                                        | _________                         | _________  | _________    | _________     | _________   
|BALANCE, December 31, 2002              | 100,000                           | $100       | $155,004,400 | $(11,935,264) | $(3,299,918)
|                                        | _________                         | _________  | _________    | _________     | _________   
|Distributions                           |                                   |            |              | (47,982,102)  |             
|Net income                              |                                   |            |              |               | 5,370,952   
|                                        | _________                         | _________  | _________    | _________     | _________   
|BALANCE, September 30, 2003 (UNAUDITED) | 100,000                           | $100       | $155,004,400 | $(59,917,366) | $2,071,034  
|                                        | _________                         | _________  | _________    | _________     | _________   







See Notes to Financial Statements



VENTURE LENDING & LEASING III, INC.

STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

|                                                                                   | For the Nine Months Ended September 30, 2003 | For the Nine Months Ended September 30, 2002
|---------------------------------------------------------------------------------- | -------------------------------------------- | --------------------------------------------
|                                                                                   | ______________                               |                                             
|CASH FLOWS FROM OPERATING ACTIVITIES:                                              |                                              |                                             
|Net income                                                                         | $5,370,952                                   |                                             
|Adjustments to reconcile net income to net cash provided by operating activities:  |                                              |                                             
|Net realized loss from investment transactions                                     | 2,132,488                                    |                                             
|                                                                                   |                                              |                                             
|Net change in unrealized loss from investments and hedging activities              | 4,755,146                                    |                                             
|Amortization of deferred assets                                                    | 611,270                                      |                                             
|Decrease in other assets                                                           | 419,834                                      |                                             
|Net increase in accounts payable, accrued liabilities, and accrued management fees | (840,074)                                    |                                             
|                                                                                   | ______________                               |                                             
|Net cash provided by operating activities                                          | 12,449,616                                   |                                             
|                                                                                   | ______________                               |                                             
|CASH FLOWS FROM INVESTING ACTIVITIES:                                              |                                              |                                             
|Acquisition of loans                                                               | (52,199,683)                                 |                                             
|Principal payments on loans                                                        | 98,023,085                                   |                                             
|Acquisition of securities                                                          | (1,269,804)                                  |                                             
|                                                                                   | ______________                               |                                             
|Net cash provided by investing activities                                          | 44,553,598                                   |                                             
|                                                                                   | ______________                               |                                             
|CASH FLOWS FROM FINANCING ACTIVITIES:                                              |                                              |                                             
|Cash distribution to shareholder                                                   | (44,550,000)                                 |                                             
|Deemed distribution to shareholder                                                 | (363,191)                                    |                                             
|Payment of deferred bank and bank related fees                                     | (64,460)                                     |                                             
|Borrowings under debt facility                                                     | 35,839,518                                   |                                             
|Repayment of borrowings under debt facility                                        | (43,737,502)                                 |                                             
|                                                                                   | ______________                               |                                             
|Net cash used in financing activities                                              | (52,875,635)                                 |                                             
|                                                                                   | ______________                               |                                             
|Net increase (decrease) in cash and cash equivalents                               | 4,127,579                                    |                                             
|CASH AND CASH EQUIVALENTS:                                                         |                                              |                                             
|Beginning of period                                                                | 9,863,882                                    |                                             
|                                                                                   | ______________                               |                                             
|End of period                                                                      | $ 13,991,461                                 |                                             
|                                                                                   | ============                                 |                                             
|CASH PAID DURING THE PERIOD FOR:                                                   |                                              |                                             
|Interest                                                                           | $ 1,726,846                                  |                                             
|NON-CASH ACTIVITIES:                                                               |                                              |                                             
|Distributions of investment securities to shareholder                              | $ 3,068,911                                  |                                             





See Notes to Financial Statements

VENTURE LENDING & LEASING III, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2003



1. ORGANIZATION AND OPERATIONS OF THE FUND
2. SUMMARY OF INVESTMENTS
3. EARNINGS PER SHARE
4. RESTRUCTURE OF DEBT FACILITY AND CAPITAL REDUCTION
5. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
6. FINANCIAL HIGHLIGHTS

Accounting principles generally accepted in the United States of America require disclosure of financial highlights of the Fund for the periods presented, the three and nine months ended September 30, 2003 and 2002. The total rate of return is defined as the return based on the change in value during the period of a theoretical investment made at the beginning of the period. The total rate of return assumes a constant rate of return for the Fund during the period reported and weights each cash flow by the amount of time held in the Fund. This required methodology differs from an internal rate of return.

The ratios of expenses and net investment income to average net assets, calculated below are annualized and are computed based upon the aggregate weighted average net assets of the Fund for the periods presented. Net investment income is inclusive of all investment income net of expenses, and excludes realized or unrealized gains and losses.

Beginning and ending net asset values per share are based on the beginning and ending number of shares outstanding. Other per share information is calculated based upon the aggregate weighted average net assets of the Fund for the periods presented.

The following per share data and ratios have been derived from the information provided in the financial statements:

|                                              | Three Months Ended |  | Nine Months Ended
|--------------------------------------------- | ------------------ |  | -----------------
|                                              |                    |  |                  
|                                              | 9/30/03            |  | 9/30/02          
|                                              | ____________       |  | ___________      
|Total Return *                                | 5.3%               |  | 11.6%            
|                                              | ============       |  | ===========      
|Per Share Amounts:                            |                    |  |                  
|Net Asset Value, Beginning of Period          | $999.05            |  | $1,387.67        
|                                              | ___________        |  | ___________      
|Net Investment Income                         | 37.12              |  | 53.53            
|Net Realized Loss & Change in Unrealized Loss | (24.12)            |  | (13.35)          
|                                              | ___________        |  | ___________      
|Total Income                                  | 13.00              |  | 40.18            
|Capital Contributions                         | 0.00               |  | 0.00             
|Capital Distributions                         | (40.47)            |  | (6.40)           
|                                              | ___________        |  | ___________      
|Net Asset Value, End of period                | $971.58            |  | $1,421.45        
|                                              | ============       |  | ===========      
|Net Assets, End of period                     | $97,158,168        |  | $142,145,068     
|                                              | ============       |  | ===========      
|Ratios to Average Net Assets:                 |                    |  |                  
|                                              |                    |  |                  
|Expenses *                                    | 8%                 |  | 8%               
|Net Investment Income *                       | 15%                |  | 15%              
|                                              |                    |  |                  
|*Annualized                                   |                    |  |                  



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



General

Venture Lending & Leasing III, Inc. (the "Fund") is a closed-end, non-diversified management investment company electing status as a business development company under the Investment Company Act of 1940 ("1940 Act"). The Fund is 100% owned by Venture Lending & Leasing III, LLC (the "Company"). The Fund's investment objective is to achieve a high total return. The Fund provides asset-based financing to carefully selected venture capital-backed companies, in the form of secured loans. The Fund generally receives warrants to acquire equity securities in connection with its portfolio investments. The Fund generally distributes these warrants to its shareholder upon receipt.

The Fund's shares of Common Stock, $.001 par value are sold to its shareholder under a stock purchase agreement. The Fund has issued 100,000 of the 200,000 shares that were authorized. The Fund's shareholder may make additional capital contributions to the Fund.

In addition to the historical information contained herein, this Quarterly Report on Form 10-Q contains certain forward-looking statements. The reader of this Quarterly Report should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Fund's actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, loan losses, expenses, rates charged on loans and earned on securities investments and competition effects as well as other factors. This entire Quarterly Report should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Fund's business.



Critical Accounting Policies

We identified the most critical accounting principles upon which our financial statements depend. We determined the critical accounting principles by considering accounting policies that involve the most complex or subjective decisions or assessments. We identified our only critical accounting policy to be that related to the valuation of loans.

Loans are held at estimated fair value as determined by management, in accordance with the valuation methods described in the valuation of loans section of footnote 2 of the Fund's Annual Report on Form 10-K for the year ended December 31, 2002 (Summary of Significant Accounting Policies). Critical factors in determining the fair value of a loan include payment history, collateral position, financial strength of the borrower, prospects for the borrower's raising future equity rounds, likelihood of sale or acquisition of the borrower, and length of expected holding period of the loan. The actual value of the loans may differ from management's estimates, which would affect net income as well as net assets.



Results of Operations  For the Three and Nine Months ended September 30, 2003 and 2002

Total investment income for the three months ending September 30, 2003 and 2002 was $5.7 million and $8.1 million respectively, of which $5.6 million and $8.0 million respectively, consisted of interest on venture loans outstanding during the period. The remaining income consisted of payment of late fees from customers, income from expiration of commitments for which the Fund had received a commitment fee, and interest on the temporary investment of cash. The cash is held pending investment in venture loans. The majority of the decrease in investment income is due primarily to the decrease in average monthly outstanding performing loans from $192.4 million for the three months ended September 30, 2002 to $129.8 million for the three months ended September 30, 2003. This decrease was partially offset by the increase in average interest rate from 16.6% for the three months ended September 30, 2002 to 17.3% for the three months ended September 30, 2003. Total investment income for the nine months ending September 30, 2003 and 2002 was $19.2 million and $24.1 million respectively, of which $19.0 million and $23.4 million respectively, consisted of interest on venture loans outstanding during the period. The remaining income consisted of payment of late fees from customers, income from expiration of commitments for which the Fund had received a commitment fee, and interest on the temporary investment of cash. The cash is held pending investment in venture loans. The majority of the decrease in investment income is due primarily to the decrease in average monthly outstanding performing loans from $193.5 million for the nine months ended September 30, 2002 to $150.0 million for the nine months ended September 30, 2003. This decrease was partially offset by the increase in average interest rate from 16.1 % for the nine months ended September 30, 2002 to 16.9% for the nine months ended September 30, 2003.

Total expenses were $2.0 million and $2.8 million for the three months ending September 30, 2003 and 2002, respectively. Total expenses for the nine months ended September 30, 2003 and 2002 were $6.9 million and $10.0 million, respectively. Management fees were the largest expense. Management fees for the three months ended September 30, 2003 and 2002 were $0.9 million and $1.3 million respectively. Management fees were lower for the three months ended September 30, 2003 because the asset base declined from $203.0 million as of September 30, 2002 to $143.6 million as of September 30, 2003. Management fees for the nine months ended September 30, 2003 and 2002 were $3.1 million and $5.3 million, respectively. Management fees were lower for the nine months ended September 30, 2003 because the Fund has passed its second anniversary on May 19, 2002, the basis for calculation of management fees subsequent to this date has changed to a percentage of Fund assets as opposed to a percentage of committed capital. This change in the basis of calculation in management fees decreased the expense for management fees for the nine months ended September 30, 2003 because the dollar value of assets under management was lower than the dollar value of committed capital.

Interest expense was $0.5 million and $0.8 million for the three months ended September 30, 2003 and 2002 respectively. Included in these amounts are the settled portion of the Fund's interest hedge transactions of $0.3 million and $0.4 million for the three months ended September 30, 2003 and 2002 respectively. The decrease in interest expense for the three months ended September 30, 2003 is due to the lowering of general interest rates during these periods, as well as a decrease in average principal balance of loan outstanding from $62.9 million for the three months ended September 30, 2002 to $57.8 million for the three months ended September 30, 2003. Interest expense was $1.7 million and $2.6 million for the nine months ended September 30, 2003 and 2002 respectively. Included in these amounts are the settled portion of the Fund's interest hedge transactions of $0.9 million and $1.3 million for the nine months ended September 30, 2003 and 2002 respectively. The decrease in interest expense for the nine months ended September 30, 2003 is due to the decrease in average principal balance of loan outstanding from $70.2 million for the nine months ended September 30, 2002 to $61.0 million for the nine months ended September 30, 2003 as well as the lowering of general interest rates during these periods.



Total other operating expenses for the three months ending September 30, 2003 and 2002 were $0.5 million and $0.7 million respectively. Legal and banking related fees comprised a majority of the other operating expenses for the three months ended September 30, 2003 and 2002. The majority of the decrease in total other operating expenses was the result of the decrease in credit insurance fees due to the banking restructure which was completed in March, 2003. Total other operating expenses for the nine months ending September 30, 2003 and 2002 were $2.1 million and $2.1 million respectively. Legal and banking related fees comprised a majority of the other operating expenses for the nine months ended September 30, 2003 and 2002. An increase in legal and banking fees, including an increase of $0.3 million in deferred banking fees which were written off during the nine months ended September 30, 2003 due to the restructuring of the bank facility in March 2003 was offset by a decrease in other banking related fees which resulted from the restructure.



Net investment income for the three months ending September 30, 2003 and 2002 was $3.7 million and $5.4 million, respectively. Net investment income for the nine months ending September 30, 2003 and 2002 was $12.3 million and $14.1 million, respectively

The Fund incurred an unrealized gain (loss) from investments and hedging activity of $(2.5) million and $0.6 million for the three months ended September 30, 2003 and 2002, respectively. The change in unrealized gain (loss) from investments and hedging activity was due primarily to an adjustment to fair value of loans from borrowers of $(2.8) million and $0.8 million for the three months ended September 30, 2003 and 2002 respectively. Included in the unrealized gain (loss) for the three months ended September, 2003 and 2002 is a $0.3 million unrealized gain (loss) and a $(0.2) million unrealized gain (loss) resulting from interest rate hedging transactions. The Fund incurred an unrealized loss from investments of $4.8 million and $7.5 million for the nine months ended September 30, 2003 and 2002, respectively. The change in unrealized loss from investments was due primarily to an adjustment to fair value of loans from borrowers of $5.1 million and $7.4 million for the nine months ended September 30, 2003 and 2002 respectively. Included in the unrealized loss for the nine months ended September 30, 2003 and 2002 is a $0.3 million unrealized gain and a $(0.1) million unrealized loss, respectively resulting from interest rate hedging transactions.



The Fund incurred a realized loss from investment transactions of $0.1 million and $2.0 million for the three months ended September 30, 2003 and 2002 respectively. These realized losses were from the writing off of certain loans deemed to be uncollectible less small recoveries of previously written off loans. The Fund incurred a realized loss from investment transactions of $2.1 million and $3.2 million for the nine months ended September 30, 2003 and 2002 respectively. These realized losses were from the writing off of certain loans deemed to be uncollectible less small recoveries of previously written off loans.



Net income for the three months ended September 30, 2003 and 2002 was $1.3 million and $4.0 million, respectively. On a per share basis, the net income was $13.00 and $40.18 for the three months ended September 30, 2003 and 2002 respectively. Net income for the nine months ended September 30, 2003 and 2002 was $5.4 million and $3.4 million, respectively. On a per share basis, the net income was $53.71 and $34.32 for the nine months ended September 30, 2003 and 2002 respectively.





Liquidity and Capital Resources -- September 30, 2003 and December 31, 2002

Total capital contributed to the Fund was approximately $155.0 million at September 30, 2003 and December 31, 2002. Committed capital to the Company at September 30, 2003 and December 31, 2002 was $217.1 million and $361.9 million, respectively of which $162.8 million has been called and received.



As of September 30, 2003, the Fund has in place a $160.0 million debt facility to finance the acquisition of asset-based loans. In March, 2003, the Fund had reduced the debt facility from $250.0 million which was available as of December 31, 2002. As of September 30, 2003 and December 31, 2002, $44.0 million and $51.9 million were outstanding under this facility.

At September 30, 2003 and December 31, 2002, the Fund had interest rate swap transactions outstanding with a total notional principal amount of $51.7 million and $51.0 million respectively. The effect of these swap transactions is to convert the floating rate bank debt into a fixed rate on the contract notional value. The amortization schedule for each borrowing under the facility is expected to correspond to the amortization of the loans supporting each borrowing.



As of September 30, 2003 and December 31, 2002, 10% and 5% of the Fund's assets consisted of cash and cash equivalents. The Fund continued to invest its assets in venture loans during the period. Amounts disbursed under the Fund's loan commitments increased by approximately $52.2 million during the nine months ending September 30, 2003. Net loan amounts outstanding after amortization decreased by approximately $54.8 million for the same period. Unexpired, unfunded commitments decreased by approximately $16.0 million for the nine months ended September 30, 2003.



|                   | Amount Disbursed | Principal Reductions | Balance Outstanding | Unexpired Unfunded Commitments
|------------------ | ---------------- | -------------------- | ------------------- | ------------------------------
|September 30, 2003 | $469.2 million   | $340.3 million       | $128.9 million      | $41.0 million                 
|December 31, 2002  | $417.0 million   | $233.3 million       | $183.7 million      | $57.0 million                 



Because venture loans are privately negotiated transactions, investments in these assets are relatively illiquid.



Item 3. Quantitative and Qualitative Disclosures About Market Risk



The Fund's business activities contain elements of risk. The Fund considers the principal types of market risk to be interest rate risk and credit risk. The Fund considers the management of risk essential to conducting its businesses and to maintaining profitability. Accordingly, the Fund's risk management procedures are designed to identify and analyze the Fund's risks, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs.

The Fund manages its credit risk by maintaining a portfolio that is diverse by industry, size of investment, stage of development, and borrower. The Fund has limited exposure to public market price fluctuations as the Fund primarily invests in private business enterprises and the Fund distributes all equity securities upon receipt.

The Fund's sensitivity to changes in interest rates is regularly monitored and analyzed by measuring the characteristics of assets and liabilities. The Fund utilizes various methods to assess interest rate risk in terms of the potential effect on interest income net of interest expense, the value of net assets and the value at risk in an effort to ensure that the Fund is insulated from any significant adverse effects from changes in interest rates.

Based on the model used for the sensitivity of interest income net of interest expense, if the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity, a hypothetical immediate 100 basis point change in interest rates would have affected net income by less than $0.1 million. This translates to approximately 1.5% for the three months ended September 30, 2003. Although management believes that this measure is indicative of the Fund's sensitivity to interest rate changes, it makes estimates to adjust for potential changes in credit quality, size and composition of the balance sheet and other business developments that could affect net income. Accordingly, no assurances can be given that actual results would not differ materially from the potential outcome simulated by these estimates.

ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Within 90 days prior to the filing of this report, under the supervision and with the participation of the Fund's management, including the Fund's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), an evaluation of the effectiveness of the Fund's disclosure controls and procedures was performed. Based on this evaluation, the CEO and CFO have concluded that the Fund's disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by management of the Fund on a timely basis in order to comply with the Fund's disclosure obligations under the Securities Exchange Act of 1934 and the SEC rules thereunder.

Changes in internal controls

There were no significant changes in the Fund's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation.



PART II -- OTHER INFORMATION

Item 1. Legal Proceedings

The Fund may become party to certain lawsuits from time to time in the normal course of business. While the outcome of these legal proceedings cannot at this time be predicted with certainty, the Fund does not expect these proceedings will have a material effect upon the Fund's financial condition or results of operation.

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

Not applicable

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

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

None

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.

VENTURE LENDING & LEASING III, INC.

(Registrant)

|By:	/S/ Ronald W. Swenson            | By:	/S/ Brian R. Best  
|------------------------------------ | -----------------------
|Ronald W. Swenson                    | Brian R. Best          
|Chairman and Chief Executive Officer | Chief Financial Officer
|Date:	November 13, 2003              | Date:	November 13, 2003



CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian Best, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Venture Lending & Leasing III, Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such

statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of

the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the

equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the

registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 13, 2003

/S/ Brian R. Best

Brian Best

Chief Financial Officer

CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald W. Swenson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Venture Lending & Leasing III, Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such

statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of

the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the

equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the

registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 13, 2003

/S/ Ronald W. Swenson

Ronald W. Swenson

Chief Executive Officer

CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Venture Lending & Leasing III, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ronald W. Swenson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



/S/ Ronald W. Swenson

Ronald W. Swenson
Chief Executive Officer
November 13, 2003









CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Venture Lending & Leasing III, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Brian Best, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



/S/ Brian R. Best

Brian R. Best
Chief Financial Officer
November 13, 2003