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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20594

                                    FORM 10-Q

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

                For the Quarterly Period Ended September 30, 2000

                         Commission File Number 1-11011


                              THE FINOVA GROUP INC.
             (Exact Name of Registrant as Specified in Its Charter)

            Delaware                                      86-0695381
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)

     4800 North Scottsdale Road
            Scottsdale, AZ                               85251-7623
(Address of Principal Executive Offices)                 (Zip Code)

        Registrant's Telephone Number, Including Area Code: 480-636-4800

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 [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

As of November  13,  2000,  61,303,000  shares of Common Stock ($0.01 par value)
were outstanding.

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<PAGE>
                              THE FINOVA GROUP INC.

                                TABLE OF CONTENTS



                                                                        Page No.
                                                                        --------

Part I Financial Information                                                1

     Item 1. Financial Statements.                                          1

          Condensed Consolidated Balance Sheets                             1

          Condensed Statements of Consolidated Operations                   2

          Condensed Statements of Consolidated Cash Flows                   3

          Notes to Interim Condensed Consolidated Financial Information     4

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations.                                          9

Item 3. Quantitative and Qualitative Disclosure About Market Risk          18


Part II Other Information                                                  19

Item 1. Legal Proceedings                                                  19

Item 6. Exhibits and Reports on Form 8-K.                                  20

Signatures                                                                 21
<PAGE>
                          PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                              THE FINOVA GROUP INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              September 30,        December 31,
                                                                                  2000                 1999
                                                                              ------------         ------------
<S>                                                                           <C>                  <C>
ASSETS:
Cash and cash equivalents                                                     $    708,151         $    100,344
Investment in financing transactions:
   Loans and other financing contracts                                           8,463,413            8,235,850
   Leveraged leases                                                                816,956              837,083
   Operating leases                                                                565,514              587,283
   Direct financing leases                                                         588,219              493,615
   Financing contracts held for sale                                                                    167,983
                                                                              ------------         ------------
                                                                                10,434,102           10,321,814
   Less reserve for credit losses                                                 (257,702)            (178,266)
                                                                              ------------         ------------
Net investment in financing transactions                                        10,176,400           10,143,548

Investments                                                                        440,017              442,662
Goodwill, net of accumulated amortization                                          242,838              264,014
Other assets                                                                       331,431              237,085
Investment in discontinued operations                                            1,457,897            2,702,236
                                                                              ------------         ------------
                                                                              $ 13,356,734         $ 13,889,889
                                                                              ============         ============

LIABILITIES:
Accounts payable and accrued expenses                                         $    116,361         $    153,276
Interest payable                                                                   126,595              114,397
Senior debt                                                                     11,271,980           11,407,767
Deferred income taxes                                                              299,617              439,518
                                                                              ------------         ------------
                                                                                11,814,553           12,114,958
                                                                              ------------         ------------
Commitments and contingencies
Company-obligated mandatory redeemable convertible
 preferred securities of subsidiary trust solely holding
 convertible debentures of FINOVA, net of expenses ("TOPrS")                       111,550              111,550

SHAREOWNERS' EQUITY:
Common stock, $0.01 par value, 400,000,000
 shares authorized, and 64,849,000 shares issued                                       648                  648
Additional capital                                                               1,107,205            1,109,521
Retained income                                                                    435,666              689,466
Accumulated other comprehensive income                                              53,750               33,812
Common stock in treasury, 3,546,000 and 3,597,000 shares, respectively            (166,638)            (170,066)
                                                                              ------------         ------------
                                                                                 1,430,631            1,663,381
                                                                              ------------         ------------
                                                                              $ 13,356,734         $ 13,889,889
                                                                              ============         ============
</TABLE>
See notes to interim consolidated condensed financial statements.

                                       1
<PAGE>
                              THE FINOVA GROUP INC.
                 CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
                  (Dollars in Thousands, except per share data)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                             Three Months Ended                 Nine Months Ended
                                                               September 30,                      September 30,
                                                        ----------------------------      ----------------------------
                                                            2000            1999              2000            1999
                                                        ------------    ------------      ------------    ------------
<S>                                                     <C>             <C>               <C>             <C>
Interest earned from financing transactions             $    266,850    $    233,037      $    794,663    $    641,016
Operating lease income                                        26,091          29,433            80,433          85,964
Interest expense                                            (161,565)       (117,738)         (454,421)       (330,680)
Operating lease depreciation                                 (15,974)        (19,396)          (49,046)        (53,267)
                                                        ------------    ------------      ------------    ------------
Interest margins earned                                      115,402         125,336           371,629         343,033
Volume-based fees                                                 --           3,723             1,336           8,751
                                                        ------------    ------------      ------------    ------------
Operating margin                                             115,402         129,059           372,965         351,784
Provision for credit losses                                 (111,237)        (13,531)         (141,347)        (12,183)
                                                        ------------    ------------      ------------    ------------
Net interest margins earned                                    4,165         115,528           231,618         339,601
(Losses) gains on investments and disposal of assets         (90,042)         14,880           (55,549)         45,877
                                                        ------------    ------------      ------------    ------------
                                                             (85,877)        130,408           176,069         385,478
Operating expenses                                           (29,466)        (40,172)         (122,228)       (121,223)
                                                        ------------    ------------      ------------    ------------
(Loss) income from continuing operations before income
 taxes and preferred dividends                              (115,343)         90,236            53,841         264,255
Income tax benefit (expense)                                  45,278         (34,398)          (18,757)       (101,853)
                                                        ------------    ------------      ------------    ------------
(Loss) income from continuing operations before
 preferred dividends                                         (70,065)         55,838            35,084         162,402
Preferred dividends, net of tax                                 (946)           (946)           (2,837)         (2,837)
                                                        ------------    ------------      ------------    ------------
(Loss) income from continuing operations                     (71,011)         54,892            32,247         159,565
Discontinued operations, net of tax                           11,803              14           (38,110)           (940)

Net loss on disposal of operations, net of tax              (214,853)                         (214,853)
                                                        ------------    ------------      ------------    ------------
NET (LOSS) INCOME                                       $   (274,061)   $     54,906      $   (220,716)   $    158,625
                                                        ============    ============      ============    ============
Basic (loss) earnings per share:
(Loss) income from continuing operations                $      (1.16)   $       0.90      $       0.53    $       2.68
Discontinued operations                                        (3.33)                            (4.15)          (0.02)
                                                        ------------    ------------      ------------    ------------
Net (loss) income                                              (4.49)           0.90             (3.62)           2.66
                                                        ============    ============      ============    ============
Adjusted weighted average shares outstanding              61,018,000      60,860,000        60,976,000      59,540,000
                                                        ============    ============      ============    ============
Diluted (loss) earnings per share:
(Loss) income from continuing operations                $      (1.16)   $       0.86      $       0.53    $       2.53
Discontinued operations                                        (3.33)                            (4.15)          (0.01)
                                                        ------------    ------------      ------------    ------------
Net (loss) income                                              (4.49)           0.86             (3.62)           2.52
                                                        ============    ============      ============    ============
Adjusted weighted average shares outstanding              61,018,000      65,024,000        60,976,000      64,103,000
                                                        ============    ============      ============    ============

Dividends declared per common share                     $       0.18    $       0.18      $       0.54    $       0.50
                                                        ============    ============      ============    ============
</TABLE>

See notes to interim consolidated condensed financial statements.

                                       2
<PAGE>
                              THE FINOVA GROUP INC.
                 CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                             (Dollars in Thousands)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                             Nine Months Ended September 30,
                                                                             -------------------------------
                                                                                 2000             1999
                                                                              -----------      -----------
<S>                                                                           <C>              <C>
OPERATING ACTIVITIES:
 Income from continuing operations                                            $    32,247      $   159,565
 Adjustments to reconcile income from continuing operations
  to net cash provided by continuing operations:
  Provision for credit losses                                                     141,347           12,183
  Depreciation and amortization                                                    66,602           69,593
  Deferred income taxes                                                          (152,793)          87,133
  Write downs on investments and  repossessed  assets                             109,004
 Change in assets and liabilities, net of effects from
  companies purchased:
  Decrease (increase) in other assets                                              22,203           (5,443)
  Decrease in accounts payable and accrued expenses                               (36,915)         (59,858)
  Increase in interest payable                                                     12,198            6,655
  Other                                                                             2,110           (1,608)
 Discontinued operations exclusive of income taxes                                (62,989)
 Net loss on disposal of operations exclusive of income taxes                    (355,423)          (1,555)
 Adjustments to reconcile discontinued operations and loss on
  disposal of operations to net cash provided by discontinued operations:
  Other charges related to discontinued operations                                394,722
  Income tax benefit                                                              165,449              615
                                                                              -----------      -----------
      NET CASH PROVIDED BY OPERATING ACTIVITIES                                   337,762          267,280
                                                                              -----------      -----------
INVESTING ACTIVITIES:
 Net proceeds from sales of investments and assets                                208,318          342,307
 Proceeds from securitizations                                                    764,607
 Net proceeds from sale of Commercial Services                                    205,564
 Principal collections on financing transactions and revolving
  credit facilities                                                             1,547,440        1,325,491
 Expenditures for investments and other income producing activities              (106,964)        (472,502)
 Expenditures for financing transactions and revolving credit facilities       (2,364,403)      (2,838,025)
 Net change in investment in discontinued operations                              181,897         (315,942)
 Cash received in acquisition                                                                       20,942
 Other                                                                                916            1,500
                                                                              -----------      -----------
      NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                            437,375       (1,936,229)
                                                                              -----------      -----------
FINANCING ACTIVITIES:
 Net change in commercial paper and short-term borrowings                         903,542          591,928
 Long-term borrowings                                                             225,000        1,788,592
 Repayment of long-term borrowings                                             (1,263,900)        (591,791)
 Proceeds from exercise of stock options                                            1,112           26,677
 Common stock purchases for treasury                                                               (89,272)
 Dividends                                                                        (33,084)         (29,845)
                                                                              -----------      -----------
      NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES                           (167,330)       1,696,289
                                                                              -----------      -----------

INCREASE IN CASH AND CASH EQUIVALENTS                                             607,807           27,340

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    100,344           49,518
                                                                              -----------      -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                      $   708,151      $    76,858
                                                                              ===========      ===========
</TABLE>
See notes to interim consolidated condensed financial statements.

                                       3
<PAGE>
                              THE FINOVA GROUP INC.
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

NOTE A BASIS OF PREPARATION

     The  consolidated  financial  statements  present the  financial  position,
results  of  operations  and  cash  flows  of The  FINOVA  Group  Inc.  and  its
subsidiaries (collectively, "FINOVA" or the "Company"), including FINOVA Capital
Corporation and its subsidiaries (collectively, "FINOVA Capital").

     The interim condensed consolidated  financial information is unaudited.  In
the opinion of management all adjustments, consisting of normal recurring items,
necessary to present fairly the financial position as of September 30, 2000, the
results of operations  for the quarter and nine months ended  September 30, 2000
and 1999 and cash flows for the nine months ended  September  30, 2000 and 1999,
have been included. Interim results of operations are not necessarily indicative
of the  results  of  operations  for  the  full  year.  The  enclosed  financial
statements  should  be  read  in  connection  with  the  consolidated  financial
statements  and notes thereto  included in the  Company's  Annual Report on Form
10-K for the year ended December 31, 1999.

     Certain   reclassifications   have  been  made  to   reflect   discontinued
operations.  These reclassifications resulted from the Company's decision in the
third quarter to sell or liquidate  some of its more broad based  businesses and
focus on providing financing through its niche based businesses.  The businesses
discontinued include Corporate Finance,  Business Credit, Growth Finance (all of
which are  included  under the  caption  "Corporate  Finance"),  Distribution  &
Channel  Finance and  Commercial  Services.  See Note F for more  information on
discontinued operations.

NOTE B SIGNIFICANT ACCOUNTING POLICIES

     The Company  reports other  comprehensive  income (loss) in accordance with
Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive  Income." Total  comprehensive  (loss) income was $(223.7) million
and $56.6  million  for the three  months  ended  September  30,  2000 and 1999,
respectively  and $(200.8)  million and $165.0 million for the nine months ended
September   30,  2000  and  1999,   respectively.   The  primary   component  of
comprehensive  (loss) income other than net income was a net unrealized  gain on
securities.

NEW ACCOUNTING STANDARDS

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities,"  which  establishes  new  accounting  and
reporting  standards for derivative  instruments.  In June 1999, the FASB issued
SFAS No. 137,  "Accounting for Derivative  Instruments and Hedging Activities --
Deferral of the Effective Date of FASB Statement No. 133," and in June 2000, the
FASB issued SFAS No. 138,  "Accounting  for Certain  Derivative  Instruments and
Certain Hedging Activities -- An Amendment of FASB Statement No. 133." SFAS 133,
as amended,  establishes accounting and reporting standards requiring that every
derivative  instrument,  including certain  derivative  instruments  embedded in
other contracts, be recorded in the statement of financial position as either an
asset or liability measured at its fair value. SFAS 133 requires that changes in
the derivative's fair value be recognized  currently in earnings unless specific
hedge accounting criteria are met.

     These  rules  become  effective  for the  Company on  January 1, 2001.  The
Company is still assessing the impact of the adoption of SFAS133 on its warrants
held on private  companies  with  "cashless  exercise"  features,  pending final
guidance to be issued by the FASB.  The ongoing  effects of adoption will depend
on future market conditions.

NOTE C SEGMENT REPORTING

MANAGEMENT'S POLICY FOR IDENTIFYING REPORTABLE SEGMENTS

     FINOVA's  reportable  business  segments are strategic  business units that
offer  distinctive  products and services  that are marketed  through  different
channels.

                                       4
<PAGE>
RECONCILIATION OF SEGMENT INFORMATION TO CONSOLIDATED AMOUNTS

     Management  evaluates the business performance of each group based on total
net revenue,  income (loss) before  allocations  and managed  assets.  Total net
revenue is operating  margin plus (losses) gains on investments  and disposal of
assets.  Income  (loss)  before  allocations  is (loss)  income from  continuing
operations before income taxes and preferred dividends,  excluding allocation of
corporate overhead expenses and the unallocated  portion of provision for credit
losses.   Managed  assets   include  each  segment's   investment  in  financing
transactions plus securitizations.

         Information  for FINOVA's  reportable  segments  reconciles to FINOVA's
consolidated totals as follows:

                                                 Nine Months Ended September 30,
                                                 -------------------------------
(Dollars in Thousands)                               2000              1999
                                                 ------------      ------------

Total net revenue (loss):
  Commercial Finance                             $     43,978      $     38,167
  Specialty Finance                                   172,985           278,298
  Capital Markets                                     102,613            67,084
  Corporate and other                                  (2,160)           14,112
                                                 ------------      ------------
Consolidated total                               $    317,416      $    397,661
                                                 ============      ============
Income (loss) before allocations:
  Commercial Finance                             $     33,113      $     29,370
  Specialty Finance                                   107,278           223,602
  Capital Markets                                      20,200            19,827
  Corporate and other, overhead and
   unallocated provision for credit losses           (106,750)           (8,544)
                                                 ------------      ------------
Income from continuing operations
 before income taxes and preferred dividends     $     53,841      $    264,255
                                                 ============      ============

                                                           September 30,
                                                 -------------------------------
                                                     2000              1999
                                                 ------------      ------------
Managed assets:
  Commercial Finance                             $  1,197,851      $    985,039
  Specialty Finance                                 8,619,691         7,802,280
  Capital Markets                                     945,666         1,044,259
  Corporate and other                                  64,725            56,480
                                                 ------------      ------------
Consolidated total                                 10,827,933         9,888,058

Less securitizations                                 (393,831)         (123,681)
                                                 ------------      ------------
Investment in financing transactions             $ 10,434,102      $  9,764,377
                                                 ============      ============

                                       5
<PAGE>
NOTE D EARNINGS PER SHARE

     Basic  earnings or losses per share exclude the effects of dilution and are
computed by dividing  income  available  to common  shareowners  by the weighted
average amount of common stock  outstanding for the period.  Diluted earnings or
losses per share  reflect the  potential  dilution  that could occur if options,
convertible  preferred  stock or other contracts to issue stock at assumed rates
of conversion.  Basic and diluted earnings per share  calculations are presented
for the three and nine months ended September 30, 2000 and 1999 on the Condensed
Statements of Consolidated Operations and are detailed below:

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                              SEPTEMBER 30,                      SEPTEMBER 30,
                                                    ------------------------------      ------------------------------
(Dollars in thousands, except per share data)           2000              1999              2000              1999
                                                    ------------      ------------      ------------      ------------
<S>                                                 <C>               <C>               <C>               <C>
BASIC EARNINGS PER SHARE COMPUTATION:

(Loss) income from continuing operations            $    (71,011)     $     54,892      $     32,247      $    159,565
                                                    ============      ============      ============      ============

Weighted average shares outstanding                   61,304,000        61,173,000        61,262,000        59,810,000
Contingently issued shares (1)                          (286,000)         (313,000)         (286,000)         (270,000)
                                                    ------------      ------------      ------------      ------------
Adjusted weighted average shares                      61,018,000        60,860,000        60,976,000        59,540,000
                                                    ============      ============      ============      ============
BASIC (LOSS) INCOME FROM CONTINUING OPERATIONS
 PER SHARE                                          $      (1.16)     $       0.90      $       0.53      $       2.68
                                                    ============      ============      ============      ============
DILUTED EARNINGS PER SHARE COMPUTATION:

(Loss) income from continuing operations            $    (71,011)     $     54,892      $     32,247      $    159,565
Preferred dividends, net of tax                                                946                               2,837
                                                    ------------      ------------      ------------      ------------
(Loss) income from continuing operations before
 preferred dividends                                $    (71,011)     $     55,838      $     32,247      $    162,402
                                                    ============      ============      ============      ============

Weighted average shares outstanding                   61,304,000        61,173,000        61,262,000        59,810,000
Contingently issued shares (1)                          (286,000)         (313,000)         (286,000)         (270,000)
Incremental shares from assumed conversions:
  Stock options                                                          1,226,000                           1,625,000
  Convertible preferred securities                                       2,938,000                           2,938,000
                                                    ------------      ------------      ------------      ------------
Total potential dilutive common shares                                   4,164,000                           4,563,000
                                                    ------------      ------------      ------------      ------------
Adjusted weighted average shares                      61,018,000        65,024,000        60,976,000        64,103,000
                                                    ============      ============      ============      ============
DILUTED (LOSS) INCOME FROM CONTINUING OPERATIONS
 PER SHARE                                          $      (1.16)     $       0.86      $       0.53      $       2.53
                                                    ============      ============      ============      ============
</TABLE>

Note:
(1) Shares represent target levels of performance-based restricted stock.

NOTE E PORTFOLIO QUALITY

     The following  table presents a  distribution  (by line of business) of the
Company's  investment  in financing  transactions  before the reserve for credit
losses at the dates indicated.

                                       6
<PAGE>
                      INVESTMENT IN FINANCING TRANSACTIONS
                               BY LINE OF BUSINESS
                               SEPTEMBER 30, 2000
                             (Dollars in Thousands)


<TABLE>
<CAPTION>
                                          Revenue Accruing                      Nonaccruing
                                -------------------------------------  -------------------------------
                                                          Repossessed            Repossessed   Lease &   Total Carrying
                               Market Rate(1)  Impaired    Assets(2)   Impaired    Assets       Other        Amount        %
                               --------------  --------    ---------   --------    ------       -----        ------      -----
<S>                             <C>           <C>         <C>         <C>         <C>        <C>          <C>           <C>
Commercial Finance Group
  Rediscount Finance             $1,185,457    $  1,668    $    639    $  2,846    $ 7,241                 $ 1,197,851    11.5
                                 ----------    --------    --------    --------    -------    ----------   -----------   -----
                                  1,185,457       1,668         639       2,846      7,241                   1,197,851    11.5
                                 ----------    --------    --------    --------    -------    ----------   -----------   -----
Specialty Finance Group
  Transportation Finance          2,432,324                              45,529                              2,477,853    23.7
  Resort Finance                  1,406,885     148,207      14,877     140,923      6,976                   1,717,868    16.5
  Healthcare Finance                798,509      21,895       1,463      95,055                    3,181       920,103     8.8
  Franchise Finance                 870,940      37,812                   4,030      2,088           191       915,061     8.8
  Communications Finance            691,183       3,910                  34,085                                729,178     7.0
  Specialty Real Estate Finance     670,383      10,432      31,631       3,274      8,337                     724,057     6.9
  Commercial Equipment Finance      526,257                               5,916     11,165         4,084       547,422     5.2
  Public Finance                    189,370                               4,948                                194,318     1.9
                                 ----------    --------    --------    --------    -------    ----------   -----------   -----
                                  7,585,851     222,256      47,971     333,760     28,566         7,456     8,225,860    78.8
                                 ----------    --------    --------    --------    -------    ----------   -----------   -----
Capital Markets Group
  Realty Capital                    486,392                               4,806                                491,198     4.7
  Mezzanine Capital                 361,635      18,814                  36,332                                416,781     4.0
  Investment Alliance                33,536       4,151                                                         37,687     0.4
                                 ----------    --------    --------    --------    -------    ----------   -----------   -----
                                    881,563      22,965                  41,138                                945,666     9.1
                                 ----------    --------    --------    --------    -------    ----------   -----------   -----

Other                                64,725                                                                     64,725     0.6
                                 ----------    --------    --------    --------    -------    ----------   -----------   -----
Total Continuing Operations (3)  $9,717,596    $246,889    $ 48,610    $377,744    $35,807    $    7,456   $10,434,102   100.0
                                 ==========    ========    ========    ========    =======    ==========   ===========   =====
</TABLE>
NOTES:
(1)  Represents original or renegotiated  market rate terms,  excluding impaired
     transactions.
(2)  The Company earned income totaling $2.8 million on these repossessed assets
     year to date during 2000,  including  $1.8 million in Specialty Real Estate
     Finance, $0.7 million in Resort Finance, $0.1 million in Rediscount Finance
     and $0.1 million in Healthcare Finance.
(3)  Excludes $393.8 million of assets  securitized  which the Company  manages,
     including $277.9 million in Commercial Equipment Finance and $115.9 million
     in Franchise Finance.

                                       7
<PAGE>
RESERVE FOR CREDIT LOSSES

     The reserve for credit losses at September 30, 2000  represents 2.4% of the
Company's investment in financing  transactions and securitized assets.  Changes
in the reserve for credit losses were as follows:

                                               Nine Months Ended September 30,
                                               -------------------------------
                                                 2000                   1999
                                               ---------             ---------
                                                   (Dollars in Thousands)
Balance, beginning of period                   $ 178,266             $ 141,579
Provision for credit losses                      141,347                12,183
Write-offs                                       (62,930)              (16,331)
Recoveries                                           922                 1,501
Reserves related to acquisitions                                        23,763
Other                                                 97                 4,047
                                               ---------             ---------
Balance, end of period                         $ 257,702             $ 166,742
                                               =========             =========

     At  September  30, 2000 the total  carrying  amount of  impaired  loans was
$624.6  million,  of which $246.9 million were revenue  accruing.  A reserve for
credit  losses of $94.6  million  has been  established  for  $193.5  million of
nonaccruing  impaired  loans and $12.3  million has been  established  for $44.0
million of accruing  impaired  loans.  Additionally,  specific  reserves of $4.9
million have been established for other accounts. As a result, 43.4% of FINOVA's
reserve for credit  losses was  allocated to specific  accounts.  The  remaining
$145.9  million or 56.6% of the  reserve  for credit  losses is  designated  for
general purposes and represents management's best estimate of inherent losses in
the portfolio considering delinquencies,  loss experience and collateral. Actual
results could differ from those  estimates,  and there can be no assurance  that
the reserves  will be  sufficient to cover  portfolio  losses.  Additions to the
general and specific  reserves are reflected in current  operations.  Management
may transfer  reserves  between the general and specific  reserves as considered
necessary. No reserves for credit losses are carried for discontinued operations
because the assets of the  discontinued  operations  have been  written  down to
estimated net realizable value.

NOTE F DISCONTINUED OPERATIONS

     On August 28, 2000 FINOVA Capital  completed the sale of substantially  all
the assets of its Commercial  Services division to GMAC Commercial Credit LLC, a
wholly owned subsidiary of General Motors  Corporation,  for approximately  $235
million.   The  Commercial  Services  division  is  being  accounted  for  as  a
discontinued operation.  The sale resulted in an after-tax loss from disposition
of $5.4 million, which included a $16.7 million after-tax charge for unamortized
goodwill.   The  Company  has  recorded  $11.4  million  after-tax  losses  from
discontinued  operations.  In connection  with the sale, the Company  retained a
small portfolio, which was $30.5 million of net loans as of September 30, 2000.

     FINOVA has begun to implement a new strategic  direction that will focus on
core  specialty  niche  businesses.  In the  third  quarter,  FINOVA's  board of
directors  decided to discontinue  and offer for sale its Corporate  Finance and
Distribution  &  Channel  Finance  divisions.  As a  result  of  this  decision,
Corporate  Finance and  Distribution  & Channel  Finance  are being  reported as
discontinued  operations  and,  accordingly,  their  results of  operations  and
financial   positions  are  segregated  for  all  periods  in  the  accompanying
consolidated  financial  statements.  The Company has recorded  $26.7 million in
after-tax  losses from  discontinued  operations and $209.5 million in after-tax
losses from the disposal of  discontinued  operations  for the nine months ended
September 30, 2000. These losses represent the Company's estimate of operational
losses to be incurred and the expected losses from disposition of the divisions.
Actual  losses  could  differ  from those  estimates  and will be  reflected  as
adjustments in future financial statements.  No assurances can be given that the
recorded  losses will be sufficient to cover the actual  operational  losses and
losses incurred upon disposition or winding down of the discontinued operations.

                                       8
<PAGE>
     The losses are comprised of the following:

<TABLE>
<CAPTION>
                                                     Distribution &
                                        Corporate       Channel      Commercial
                                         Finance        Finance       Services        Total
                                         -------        -------       --------        -----
<S>                                     <C>            <C>           <C>            <C>
DISCONTINUED OPERATIONS, NET OF TAX     $  (9,184)     $(17,533)     $ (11,393)     $ (38,110)
                                        =========      ========      =========      =========
NET LOSS ON DISPOSAL OF OPERATIONS,
 NET OF TAX
 Net realizable value mark downs        $(130,427)     $(10,277)                    $(140,704)
 Goodwill written-off                     (33,083)      (15,076)       (16,725)       (64,884)
 Proceeds in excess of assets sold                                      17,634         17,634
 Accrued expenses                         (17,484)       (3,142)        (6,273)       (26,899)
                                        ---------      --------      ---------      ---------
                                        $(180,994)     $(28,495)     $  (5,364)     $(214,853)
                                        =========      ========      =========      =========
</TABLE>

NOTE G SUBSEQUENT EVENT

     On November 10, 2000, FINOVA and Leucadia National  Corporation  executed a
letter  agreement for an equity  investment by Leucadia.  Pursuant to the letter
agreement,  Leucadia  will  purchase  10  million  shares  of a  new  series  of
convertible  preferred  stock of FINOVA at an aggregate  purchase  price of $250
million,  or $25 per share. The convertible  preferred stock will initially have
an annual  dividend of 14%,  payable in  additional  shares of preferred  stock.
After five years,  the dividends may be paid in cash or shares at the same rate.
The preferred  stock will be  convertible  into common stock at a price of $2.50
per share, subject to anti-dilution  adjustments.  The preferred stock will have
the right to vote as a class with the common  stock,  and will have 20 votes per
share,  subject  to New York Stock  Exchange  requirements.  As a result,  it is
expected that Leucadia will have  approximately  a 45.2% equity  ownership and a
52.5% voting interest in FINOVA,  before dividends,  distributions,  if any, and
warrants and assuming the rights offering described below is fully subscribed by
other shareowners.

     Leucadia  will  receive a ten-year  warrant to  purchase,  for an aggregate
exercise  price of $125  million,  FINOVA  common stock  amounting to 20% of the
outstanding equity of the Company at that time, with certain exceptions.

     The  agreement  includes a provision  that provides for a  distribution  to
common  shareholders  or holders of PIK  Convertible  Preferred and the Leucadia
warrant in 2006, based upon the performance of FINOVA's loan and lease portfolio
through  2005.   The  board  of  directors  will  determine  the  form  of  that
distribution.

     As soon as practicable  after completion of Leucadia's  investment,  FINOVA
will conduct a rights offering in which existing  shareholders will be permitted
to purchase up to 6 million  shares of the new series of  convertible  preferred
stock at the same per share purchase price of $25.  Leucadia will act as standby
purchaser  for the offering with respect to $100 million of that  offering,  for
which it will be entitled to a fee of $5 million.

     Upon  completion of the Leucadia  investment,  FINOVA's  board of directors
will consist of 10 persons, of whom 6 will be designated by Leucadia.

     Completion of the proposed transaction with Leucadia is contingent upon the
negotiation  and  execution  of  definitive   agreements  with  respect  to  the
investment  as well as  other  customary  conditions.  The  transaction  is also
subject to completion of a restructuring  with holders of FINOVA's existing $4.7
billion in outstanding  bank debt on terms  acceptable to Leucadia and FINOVA. A
copy of the letter agreement is included as Exhibit 10.A to this report.

NOTE H COMMITMENT & CONTINGENCIES

CREDIT AGREEMENTS

     FINOVA's credit agreements,  pursuant to which an aggregate of $4.7 billion
of  indebtedness  is  outstanding,   contain  normal  and  customary   financial
covenants.  Failure of FINOVA to comply with these  covenants  would result in a
default under the credit agreements,  unless waived by the lenders. If a default
were to occur under the credit  agreements and the lenders  required  repayment,
such  default  would in turn  result in a  default  under  substantially  all of
FINOVA's  other  outstanding  indebtedness.  Under one of these  covenants,  the
interest coverage test, FINOVA was in compliance at September 30, 2000. However,
declines in average net income or higher  interest  costs in future quarter ends
could help lead to a violation of that covenant.

     Inability of FINOVA to complete the transaction  with Leucadia and FINOVA's
banks or other transactions referred to above, adverse developments requiring an
increase of bad debt  reserves or the  write-off  of assets,  the  assertion  by
creditors  of a default  under  FINOVA's  credit  agreements,  or other  adverse
developments in FINOVA's business or results of operations could impair FINOVA's
ability to fund  operations  and debt payment  requirements  for  principal  and
interest.

                                       9
<PAGE>
LEGAL PROCEEDINGS

     Between  March 29 and May 23, 2000,  five  shareowner  lawsuits  were filed
against FINOVA and Samuel Eichenfield,  FINOVA's former chairman, president, and
chief  executive  officer;  two of the lawsuits  also named FINOVA  Capital as a
defendant,  and one named three other  executive  officers.  All of the lawsuits
purport  to be on  behalf of the  named  plaintiffs  (William  K.  Steiner,  Uri
Borenstein,  Jerry  Krim,  Mark  Kassis,  and  the  Louisiana  School  Employees
Retirement  System),  and others who  purchased  FINOVA  common stock during the
class period of July 15, 1999,  through  either March 26, 2000,  or May 7, 2000.
The suit  brought by the  Louisiana  School  Employees  Retirement  System  also
purports to be on behalf of all those who purchased  FINOVA  Capital 7.25% Notes
which are due  November 8, 2004,  pursuant  to the  registration  statement  and
prospectus supplement dated November 1, 1999.

     In an order by the U.S.  District  Court dated  August 30,  2000,  all five
lawsuits were  consolidated  and  captioned IN RE: FINOVA GROUP INC.  SECURITIES
LITIGATION.  The court also selected the Louisiana School  Employees  Retirement
System  ("LSERS") as the lead plaintiff in the consolidated  cases.  LSERS filed
its Amended Consolidated  Complaint on September 29, 2000, naming FINOVA, FINOVA
Capital, Samuel Eichenfield, Matthew Breyne, and Bruno Marszowski as defendants.
The Consolidated  Amended  complaint  generally alleges that the defendants made
materially misleading statements regarding FINOVA's loss reserves, and otherwise
violated  the federal  securities  laws in an effort to bolster  FINOVA's  stock
price, among other reasons.  The complaint seeks unspecified  damages for losses
incurred by shareholders,  plus interest,  and other relief, and rescission with
regard to the notes purchased.

     FINOVA  believes  the  claims  are  without  merit.  FINOVA  and the  other
defendants  intend to vigorously defend against the claims. On October 30, 2000,
FINOVA and the other defendants  filed a motion to dismiss the complaint,  which
is now pending.

     Since  consolidation  of  the  original  five  shareowner  lawsuits,  other
apparently  related lawsuits have been initiated against the Company and current
and former  officers and directors.  Two  shareowner  lawsuits were filed in the
United States District Court for the Middle District of Tennessee,  in which the
plaintiffs  (John  Cartwright,  Sirrom  Partners  and Sirrom G-1) assert  claims
relating to the Company's acquisition in 1999 of Sirrom Capital Corporation, and
the  exchange  of shares  of Sirrom  stock  for  shares  of  FINOVA  stock.  The
Cartwright  complaint  purports  to be a class  action  lawsuit on behalf of all
Sirrom  shareowners  that  exchanged  their  Sirrom  stock for FINOVA stock as a
result of the acquisition.  The defendants named are Sirrom Capital Corporation,
Samuel Eichenfield,  John W. Teets, Constance Curran, G. Robert Durham, James L.
Johnson, Kenneth Smith, Shoshana Tancer, Bruno Marszowski, and FINOVA Group. The
complaints appear related to the consolidated securities litigation because they
also allege that the defendants made materially  misleading statements regarding
FINOVA's loss reserves, and otherwise violated the federal securities laws in an
effort to reduce the total  consideration  provided to Sirrom shareowners at the
time of the  acquisition.  The complaint  seeks  unspecified  damages for losses
incurred by shareholders,  plus interest,  and other relief.  On October 23, the
Company and the other defendants  filed a motion to dismiss both complaints,  or
in the  alternative to transfer venue of the actions to the U.S.  District Court
for the District of Arizona,  where the  consolidated  securities  litigation is
pending.

     There have also been two  shareholders'  derivative  lawsuits filed against
current and former  officers and  directors,  one in the United States  District
Court  for the  District  of  Arizona,  and one in the  Court  of  Chancery  for
Newcastle  County,  Delaware.  Both complaints were filed on September 11, 2000,
and both purport to be brought by the named  plaintiffs  (William Kass and Cindy
Burkholter)  derivatively  on behalf of the  Company  against the  officers  and
directors,  alleging  generally  breaches  of  fiduciary  and  other  duties  as
directors.  As with the  consolidated  securities  litigation,  the  allegations
center  generally  on claims that there were  materially  misleading  statements
regarding FINOVA's loss reserves.

     Finally,  another  shareholder's  derivative lawsuit was filed on September
13,  2000,  in the  Circuit  Court for  Davidson  County,  Tennessee,  by Ronald
Benkler,  purportedly on behalf of Sirrom Capital  Corporation,  against several
former officers of Sirrom Capital  Corporation.  The complaint  alleges that the
Sirrom  officers  breached  various  duties  to Sirrom  in  connection  with the
acquisition  of Sirrom by the Company in 1999,  and the exchange of Sirrom stock
for FINOVA stock as a result of the acquisition.

     Inasmuch as the allegations are similar or related to those asserted in the
consolidated  securities  litigation,  the Company  believes that the claims are
without  merit,  and the Company and the other  defendants  intend to vigorously
defend against the claims.

                                       10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

             COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000
                   TO THE NINE MONTHS ENDED SEPTEMBER 30, 1999

     THE  FOLLOWING  DISCUSSION  RELATES  TO  THE  FINOVA  GROUP  INC.  AND  ITS
SUBSIDIARIES  (COLLECTIVELY  "FINOVA" OR THE "COMPANY") INCLUDING FINOVA CAPITAL
CORPORATION AND ITS SUBSIDIARIES (COLLECTIVELY, "FINOVA CAPITAL").

RESULTS OF OPERATIONS

     For the nine months ended  September  30, 2000,  FINOVA  reported a loss of
$220.7  million  ($3.62  per  diluted  share)  compared  to net income of $158.6
million  ($2.52 per diluted  share) for the nine months of 1999. The results for
the nine months of 2000  included  income from  continuing  operations  of $32.2
million ($0.53 per diluted share) and net losses from  discontinuing  operations
totaling  $253.0  million  ($4.15 per  diluted  share)  compared  to income from
continuing operations for the first nine months of 1999 of $159.6 million ($2.53
per  diluted  share) and a net loss from  discontinued  operations  for the same
period of $0.9 million ($0.01 per diluted share).

     DISCONTINUED  OPERATIONS.  The  discontinued  operations  resulted from the
Board of Director's  decision in the third quarter to sell or liquidate  some of
its more broad based  businesses and focus more on providing  financing  through
its niche based businesses.  The businesses included in discontinued  operations
consist  of  Commercial  Services  (sold  during  the  third  quarter  of 2000),
Corporate  Finance,  Business Credit,  Growth Finance (all of which are included
under the caption  "Corporate  Finance")  and  Distribution  & Channel  Finance.
Corporate Finance and Distribution & Channel Finance are actively being marketed
for sale. The sale could be for all or portions of the  businesses,  and if only
portions of the businesses are sold, the Company intends to liquidate the unsold
portions in an orderly manner.

     The losses from  discontinued  operations  in the first nine months of 2000
primarily consisted of charges to value the assets included in the businesses to
be sold or  liquidated  at  estimated  net  realizable  amounts,  including  the
write-off of unamortized  goodwill and accrued retention and severance  payments
applicable to those  businesses  and the operating  losses  experienced by those
businesses. Those losses were partially offset by the gain on sale of Commercial
Services (net of goodwill  write-off) and a gain of  approximately  $4.0 million
from  the  sale of a  portion  of the  collateral  supporting  the  $70  million
transaction  written off in the  Distribution & Channel Finance line of business
in March 2000. See Note F of Notes to Interim Condensed  Consolidated  Financial
Information for more information on discontinued operations.

     LOSS FROM  CONTINUING  OPERATIONS.  The decrease in income from  continuing
operations was primarily due to the following:

     *    Higher loss provisions to bolster the reserve for credit losses
     *    Losses on investments and assets held for sale
     *    Increases in the Company's cost of funds due to
          -    Several reductions in credit ratings
          -    Higher  costs  associated  with  borrowing  under  the  Company's
               domestic commercial paper back-up bank facilities
     *    Higher write-offs of financing contracts
     *    An increase in the level of nonaccruing assets
     *    The costs to exit the  origination  and sale of commercial real estate
          loans to the CMBS market in the second quarter of 2000.

     INTEREST MARGINS EARNED.  Interest margins earned represents the difference
between (a) interest and income earned from financing transactions and operating
lease  income and (b) interest  expense and  depreciation  on operating  leases.
Interest margins earned in dollars were up 8.3% in the first nine months of 2000
compared to the first nine months of 1999 ($371.6  million vs. $343.0  million).
The  increase  was due  primarily to portfolio  growth  (managed  assets)  which
increased by 3.7%, partially offset by a higher cost of funds in 2000. Portfolio
growth resulted  primarily from $4.2 billion of new business added during the 12
months ended September 30, 2000.  Annualized portfolio growth for the first nine
months of 2000 was 7.1%, excluding $168.0 million of commercial  mortgage-backed
securities  (CMBS) loans held for sale at December  31,  1999.  The lower growth
rate in the first nine months of 2000, when compared to 25.6% in the same period
for 1999, is primarily  attributable  to a higher  beginning  portfolio base and
lower new  business.  New business for the nine months of 2000 is running  16.7%
below new business for the first nine months of 1999 ($2.364  billion vs. $2.838
billion).  Lower new  business  volumes are  expected to continue as the Company
focuses on managing its liquidity position by being selective in originating any
new business over and above outstanding commitments.  New business for the third
quarter of 2000 was $619.0 million down 43.9% from $1.104 billion  originated in
the third  quarter of 1999.  The backlog of new business at  September  30, 2000
declined to $1.683 billion from $1.987 billion at June 30, 2000. Most of the new
business  in 2000 was  generated  by the more niche  focused  Specialty  Finance

                                       11
<PAGE>
Group,  which  generally  attracts  higher returns than FINOVA's other segments.
Interest  margins earned as a percent of average earning assets were 5.1% in the
first  nine  months  of 2000,  down from  5.4% in the same  period of 1999.  The
decrease  was  primarily  due  to a  higher  level  of  non-earning  assets  and
investments, lower nonrecurring income and higher cost of funds, as noted above.
Various  downgrades of its senior debt ratings  caused  FINOVA's  annual cost of
funds (in the form of the all in spread over LIBOR)  applicable  to $4.5 billion
in drawdowns  under its domestic  commercial  paper  back-up bank  facilities to
increase by 1.35%.  The impact of the weighted  average wider spreads over LIBOR
on FINOVA's  cost of funds for the first nine  months of 2000 was  approximately
0.50%

     VOLUME-BASED  FEES.   Volume-based  fees  historically  were  generated  by
FINOVA's Distribution & Channel Finance,  Commercial Services and Realty Capital
lines of business.  Since Distribution & Channel Finance and Commercial Services
are discontinued  operations,  the fees included in continuing  operations apply
only to Realty Capital.  These fees are predominately based on volume-originated
business rather than the balance of outstanding  financing  transactions  during
the period.  Volume-based fees for the nine months ended September 30, 2000 were
$1.3 million,  down from $8.8 million reported in the first nine months of 1999.
The decline in 2000 was due to Realty Capital  exiting from the  origination and
sale of commercial real estate loans to the CMBS market in April 2000.

     PROVISION FOR CREDIT LOSSES.  The provision for credit losses on continuing
operations  was higher in the first nine  months of 2000  compared  to the first
nine  months of 1999  ($141.3  million  vs.  $12.2  million)  due to the need to
bolster  the  reserve in light of  increasing  problem  accounts  and higher net
write-offs  in the first nine  months of 2000 ($62.0  million  compared to $14.8
million in the nine months of 1999).  The largest  portion of net  write-offs in
2000 was from multiple  customers in Mezzanine  Finance  totaling $40.7 million.
Net write-offs as a percent of average managed assets were 0.78%  annualized for
the first nine months of 2000, up from 0.22%  annualized  for the same period of
1999.  A  discussion  of the  increase in problem  accounts  is  included  under
Financial Condition, Liquidity and Capital Resources.

     FINOVA monitors  developments  affecting loans and leases in its portfolio,
taking into account each borrower's  financial  developments and prospects,  the
estimated  value  of  collateral,   legal   developments   and  other  available
information.  Based upon that information,  FINOVA adjusts its loan loss reserve
and when considered appropriate writes down the value of the loans. Depending on
developments,  there is the possibility that the loan loss reserves and/or write
downs will increase in the future.

     (LOSSES)/GAINS  ON INVESTMENTS  AND DISPOSAL OF ASSETS.  The losses for the
nine months of 2000 were  primarily due to the write-off of equity  positions in
the Resort, Communication and Mezzanine Finance businesses as well as charges to
write down  repossessed  assets in Resort  Finance  and  residual  positions  in
Transportation  Finance. The most significant charge was in Resort Finance which
wrote-off its $54.8 million  equity  investment  in a major  developer  that has
experienced a decline in earnings and a significant  reduction in its net worth.
The write down of residual  positions in  Transportation  Finance  totaled $17.9
million  and  principally  related to assets  held for sale or lease.  The total
charges of $109.0 million from the write-off of investments,  repossessed assets
and  assets  held for  sale or lease  were  partially  offset  by gains of $53.5
million.  Gains in the third quarter of 2000 included $4.8 million from the sale
of the Company's  remaining  Healtheon stock;  total gains from Healtheon in the
nine months of 2000 were $20.7 million.

     While in the aggregate  FINOVA has  historically  recognized gains on asset
disposals,  the timing and amount of these gains are  sporadic in nature.  There
can be no assurance  FINOVA will recognize  gains in the future,  depending,  in
part, on market conditions at the time of sale.

     OPERATING  EXPENSES.  Operating  expenses were $122.2  million in the first
nine months of 2000 compared to $121.2 million in the first nine months of 1999.
The increase was principally due to  nonrecurring  expenses  consisting of $11.8
million  incurred to exit the  origination  and sale of  commercial  real estate
loans to the CMBS market in the second quarter of 2000 and $7.6 million incurred
for deferred compensation and executive severance.  Excluding those nonrecurring
charges,  operating  expenses  declined by 17.2% in the nine months of 2000 from
the  comparable  1999 period  ($100.4  million vs.  $121.2  million).  Operating
efficiency,  which is the ratio of operating expenses to operating margins,  was
32.8% in the first nine months of 2000,  compared to 34.5% in the same period of
1999.

     INCOME  TAXES.  Income  taxes were lower for the first nine  months of 2000
compared to the  corresponding  period in 1999  primarily due to the decrease in
pre-tax income and beneficial IRS tax audit adjustments.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     The following primarily relates to continuing operations, except as noted.

     Managed assets were $10.83 billion at September 30, 2000 compared to $10.44
billion at December 31, 1999.  Included in managed  assets at September 30, 2000
were $10.43 billion in funds employed and $393.8 million of securitized  assets.
The increase in managed assets was due to funded new business of $2.36 billion

                                       12
<PAGE>
for the nine months ended  September 30, 2000,  partially  offset by prepayments
and asset sales accompanied by normal portfolio amortization.

     The reserve  for credit  losses as it  pertains  to  continuing  operations
increased  to $257.7  million  at  September  30,  2000 from  $178.3  million at
December 31, 1999. As previously discussed, the reserve was bolstered in 2000 as
a result of problem  accounts.  At September 30, 2000 and December 31, 1999, the
reserve  for  credit  losses  was  2.4%  and  1.7%  of  ending  managed  assets,
respectively.  The reserve for credit losses as a percent of nonaccruing  assets
declined to 61.2% at September 30, 2000,  from 101.9% at December 31, 1999,  due
to the increase in nonaccruing  assets.  Nonaccruing  assets increased to $421.0
million or 3.9% of ending  managed  assets at  September  30,  2000 from  $175.0
million or 1.7% at the end of 1999. The largest increases to nonaccruing  during
the nine months of 2000 occurred in Resort Finance ($125.9 million),  Healthcare
Finance ($56.1 million) and Communications Finance ($23.8 million).

     The increase in nonaccruing assets in Resort Finance principally relates to
the  addition  of $23.5  million  of  working  capital  loans  to eight  related
special-purpose  project  development  entities and $117.4  million for Sunterra
Corporation ("Sunterra") in the third quarter of 2000. The working capital loans
to the eight related project development entities were classified as nonaccruing
due to concerns  over each of the  borrower's  financial  condition and FINOVA's
collateral  coverage  if  a  forced  liquidation  became  necessary.  The  eight
development  entities are all  special-purpose  subsidiaries of the major resort
developer in which FINOVA had the $54.8 million investment previously described.
Sunterra  filed  bankruptcy  in the  second  quarter  of 2000 and has not made a
payment  in over 90 days;  therefore,  all  Sunterra  loans were  classified  as
nonaccruing.  The Sunterra  loans are secured by  marketable  assets,  primarily
completed  but unsold  timeshare  units,  at 13 of Sunterra's  approximately  90
resorts.  Although payments on the $20 million of consumer timeshare receivables
continue  to be  collected,  these  amounts  are being held in  segregated  bank
accounts pending a cash collateral agreement with Sunterra.

     Increases in  nonaccruing  assets in  Healthcare  Finance  during the third
quarter of 2000 were  primarily  related to the  addition of three  accounts,  a
special-purpose  developer of an assisted  living facility  ($12.4  million),  a
dental  practice  management  firm ($10.4  million),  and a skilled  nursing and
assisted living  developer  ($9.6  million).  The first is a senior secured real
estate loan collateralized by a first lien on a 92-unit assisted living facility
located in Connecticut.  FINOVA has entered into a letter  agreement to sell the
facility for its carrying value, with FINOVA financing the purchase.  The second
loan is  secured  by all the  assets of a dental  practice  management  company.
FINOVA and the  borrower  are  evaluating  an offer to purchase the practice for
less than FINOVA's  carrying value.  The third is a participation  facility in a
healthcare  entity that filed bankruptcy in June 2000. A plan of  reorganization
has not yet been presented to the lender group.

     A $31.7 million loan to a Southeast  U.S.-based  wireless messaging company
represents the increase in nonaccruing  assets in Communications  Finance during
the third quarter of 2000.  The borrower is over 90 days  delinquent on interest
payments.  The  borrower  has  implemented  a  comprehensive  expense  reduction
strategy with the intent of bringing  interest current and is pursuing a sale or
merger of the Company.

     Earning  impaired assets  increased  during the nine months ended September
30,  2000 to $246.9  million  from  $108.8  million at December  31,  1999.  The
percentage  of  earning  impaired  assets to ending  managed  assets was 2.3% at
September 30, 2000 compared to 1.0% at December 31, 1999. The largest  additions
to earning  impaired assets were in Resort Finance ($148.2  million),  Franchise
Finance  ($37.8  million) and Specialty  Real Estate  Finance  ($10.4  million).
Additions  of $148.2  million in Resort  Finance  represent  the balances of the
obligations,  other than the working  capital loans,  owed by seven of the eight
related project developers mentioned above. These impaired,  but still accruing,
loans are secured by receivables  and real property,  which FINOVA  believes are
sufficient  to repay the loans,  including  interest.  The loans are  considered
impaired  because  the  parent  company  of  the  special-purpose  obligors  has
experienced a decline in earnings and a significant  reduction in its net worth,
which  could  possibly  cause  FINOVA to have to manage  the  underlying  resort
projects without support from the parent company. The Franchise Finance increase
relates to loans to a Florida-based restaurant franchisee ($19.8 million) and an
operator of a chain of casual-dining  restaurants ($18 million).  The franchisee
is  involved  in  ownership  and  operation  of Denny's  restaurants.  FINOVA is
pursuing the  restructuring  of the borrower's loan terms and extending  certain
loan  schedules  which  contractually  matured at the end of the third  quarter.
FINOVA has a participation  in the second  transaction,  which is in forbearance
with the lending group until March 2001.  The increase in Specialty  Real Estate
Finance was  attributable to a loan to a hotel operator ($10.4 million)  secured
principally  by a 160-room hotel in Kissimmee,  Florida.  The borrower filed for
bankruptcy  during  the  third  quarter.  FINOVA  is  currently  negotiating  an
agreement with the borrower  involving the pledge of additional  collateral.  If
the negotiations are successful, the combination of the hotel and excess pledged
collateral should be adequate to cover FINOVA's  exposure.  The most significant
decreases in earning impaired  resulted from the migration to nonaccruing of the
loans to Sunterra and Tower Air,  discussed  in the  Company's  prior  quarterly
report.

     There can be no  assurance  that any of the  potential  transactions  noted
above will be consummated on anticipated terms.

                                       13
<PAGE>
     The 31-90 day  delinquencies  at September  30, 2000  increased to 1.35% of
managed assets from 0.62% of managed assets at the end of 1999. The increases in
31-90 day delinquencies were in Healthcare Finance $41.8 million, Transportation
Finance $26.1 million and Communications Finance $17.8 million. $12.5 million of
the total $146.5  million of 31-90 day delinquent  outstandings  are included in
earning impaired assets.

     At  September  30,  2000,  FINOVA had $11.27  billion of debt  outstanding,
representing 7.3 times the Company's  equity base of $1.54 billion.  At year-end
1999,  FINOVA's  debt was 6.4 times the  equity  base of $1.77  billion.  FINOVA
Capital is restricted under its bank credit  agreements from maintaining debt to
equity above a 7.0 to 1.0 ratio.  FINOVA Capital is compliant with that covenant
and had leverage of 6.93 to 1.0 calculated in accordance with those  agreements,
which nets cash and cash equivalents  against  outstanding debt, as of September
30, 2000.

     FINOVA's internally generated funds, available credit lines and asset sales
have  financed  growth in funds  employed and  liquidity  during the nine months
ended  September  30,  2000.  During  May and June 2000,  FINOVA  drew down $4.5
billion against  domestic  commercial paper back-up bank facilities and used the
proceeds  primarily for repayment of commercial  paper maturing debt and to fund
general  operations.  Of this amount, $2.1 billion is due May 15, 2001, although
$500.0  million can be extended over a two year term-out if no default exists at
that time. The other $2.4 billion is to be repaid over a three-year  period from
2001 to 2003. FINOVA also has $150 million  (Canadian) due under a bank facility
that matures in July 2001.  Term debt  maturities over the next twelve months by
quarter include $182.9 million in the fourth quarter of 2000,  $242.0 million in
the first quarter of 2001,  $2.4 billion in the second quarter of 2001 (includes
$2.1 billion of bank facilities,  of which $500.0 million can be extended over a
two year term-out if no defaults  exist at that time) and $449.2  million in the
third quarter of 2001.  During the first nine months of 2000, FINOVA issued $225
million of new  long-term  borrowings  and  repaid  $1.3  billion  of  long-term
borrowings.  Subsequent  to September  30, 2000,  FINOVA's  credit  ratings were
further  reduced.  See Recent  Developments  and  Business  Outlook  for further
discussion of the rating agency downgrades.

SEGMENT REPORTING

     FINOVA's business is organized into three market groups, which are also its
reportable segments:  Commercial Finance, Specialty Finance and Capital Markets.
Management  has not yet  determined  whether its  reportable  segments  would be
reorganized  as a result  of the  recent  announcement  to  discontinue  several
operations.  Management  principally  relies  on total  revenue,  income  before
allocations  and managed assets in evaluating  the business  performance of each
reportable segment.

     Total  revenue  is the  sum of  operating  margin  and  (losses)  gains  on
investments and disposal of assets.  Income before  allocations is income before
income  taxes,   preferred  dividends,   corporate  overhead  expenses  and  the
unallocated  portion of the provision for credit losses.  Managed assets include
each segment's investment in financing transactions plus securitizations.

     COMMERCIAL   FINANCE.   Commercial  Finance  currently  only  includes  the
Rediscount  Finance  business unit which provides  financing  through  revolving
credit  facilities  to  finance  companies.  This  segment  previously  included
traditional  asset-based  businesses that provided  financing  through revolving
credit  facilities  and term loans  secured by assets  such as  receivables  and
inventories,  as well as providing  factoring and  management  services.  In the
third quarter of 2000,  FINOVA  announced  that the  Corporate  Finance/Business
Credit/Growth Finance and Distribution & Channel Finance business units would be
discontinued.  The Company also  completed the sale of its  Commercial  Services
business line to GMAC  Commercial  Credit LLC in the third quarter.  For further
discussion  on  activity  previously  reported  within  the  Commercial  Finance
segment, see Discontinued Operations.

     Total net revenue was $44.0  million in 2000  compared to $38.2 million for
the first nine months of 1999, an increase of 15.2%.  The increase was primarily
due to a 21.6% increase in managed assets over the last twelve months, partially
offset by the effects of a higher cost of funds.

     Income  before  allocations  increased  to $33.1  million in the first nine
months of 2000 from $29.4  million in 1999,  primarily  due to a higher level of
managed  assets,  partially  offset by a higher cost of funds and an increase in
net  write-offs.  Net  write-offs for the unit totaled $3.4 million in the first
nine  months of 2000  compared to $1.5  million in 1999.  Net  write-offs  as an
annualized  percent of average  managed  assets for the business  unit was 0.40%
compared  to 0.21% in the first nine  months of 1999.  Operating  expenses  as a
percent of operating margin improved to 23.4% in 2000 from 25.7% in 1999 for the
unit.

     Managed assets grew to $1.2 billion over the last twelve months from $985.0
million, an increase of 21.6%. The growth in managed assets was primarily due to
increased net utilization under existing revolving commitments. The Company as a
whole  expects to  significantly  slow managed  asset growth on an annual basis.
There can be no  assurance  that  FINOVA's  asset  base will  grow.  See  Recent
Developments and Business Outlook for further discussion.

                                       14
<PAGE>
     SPECIALTY  FINANCE.  Specialty  Finance  provides a wide variety of lending
products  such as  leases,  loans,  accounts  receivable  and  cash  flow  based
financing,  as well as servicing and  collection  services to a number of highly
focused industry specific niches.

     Total net  revenue  was $173.0  million  in the first  nine  months of 2000
compared to $278.3  million in 1999.  The decrease in net revenue was  primarily
due to the write-off of equity positions in Resort Finance and Communications as
well as charges to write down repossessed  assets in Resort Finance and residual
positions in Transportation  Finance.  The most significant charge was in Resort
Finance which  wrote-off a $54.8 million equity  investment in a major developer
that has  experienced a decline in earnings and a  significant  reduction in net
worth. The write down of residual  positions in  Transportation  Finance totaled
$17.9  million and  principally  related to assets held for sale or lease.  Also
contributing  to the  decline in net  revenue  was the effects of higher cost of
funds,  and a lower level of gains from the disposal of assets  partially offset
by a higher level of managed assets.  The segment  experienced a 10.5% growth in
managed assets over the last twelve months and 5.9% annualized growth during the
first nine months of 2000.  The lower gains were primarily  attributable  to the
timing of assets coming off lease and the Company's  ability to re-lease  assets
at end of term. While in the aggregate FINOVA has historically  recognized gains
on  disposals,  the  timing and amount of these  gains are  sporadic  in nature.
Additionally,  certain business units within this segment will sometimes receive
equity  interests  to  complement  their  financing  arrangements.  Depending on
various factors,  including management's discretion,  FINOVA may opt to exercise
and sell its position in these  equities  when  permitted to do so. In the third
quarter of 2000,  FINOVA  recorded a pre-tax  unrealized  gain of $63.7  million
through  other   comprehensive   income  on  the  balance  sheet  related  to  a
telecommunications stock.

     Income  before  allocations  was $107.3  million for the nine months  ended
September 30, 2000  compared to income of $223.6  million for the same period in
1999.  The decrease was  primarily due to the  charge-offs  mentioned  above,  a
higher cost of funds, lower gains and an increase in net write-offs of financing
contracts,  which  rose to $17.7  million  in 2000  from $8.4  million  in 1999.
Annualized  net  write-offs  as a percentage of average  managed  assets for the
group increased to 0.27% from 0.15% in 1999.

     Managed  assets grew to $8.6  billion in 2000 from $7.8 billion in the same
period of 1999, an increase of 10.5%. The growth in managed assets was driven by
new  business of $2.0  billion in 2000  compared to $2.4  billion in 1999.  This
growth was spread across most business units over the last twelve  months,  with
Specialty  Real Estate  Finance being the only business  experiencing a decline.
The group as a whole  experienced  a decrease  in  backlog  to $1.39  billion at
September 30, 2000 from $1.68 billion at September 30, 1999.

     CAPITAL  MARKETS.   Capital  Markets,  in  conjunction  with  institutional
investors,   provide  debt  and  equity  capital   funding,   third-party   loan
administration  services and provided commercial mortgage banking services until
those operations were terminated.

     Total net revenue was $102.6  million in 2000  compared to $67.1 million in
1999.  The  increase in net revenue was  primarily  attributable  to the group's
Mezzanine  Capital  unit,  which  experienced  a $37.5  million  increase in net
revenue from $27.0 million in 1999 to $64.5 million for the nine months of 2000.
The growth in Mezzanine  Capital's net revenue was primarily due to an increased
level of gains from the sale of equity  and  warrant  positions.  Gains from the
sale of equity and warrant  positions  totaled $35.8 million in 2000 as compared
to $9.0  million for the first nine months of 1999.  The gains in 2000  included
$20.7 million from the sale of the Company's position in Healtheon stock. FINOVA
periodically  assesses its position in this unit's investment  portfolio and may
opt to  exercise  and sell its  position  based on  various  factors,  including
management's discretion, when permitted to do so.

     Also  contributing to the increase in net revenue was the continued  growth
of Realty Capital's bridge and mezzanine financing  activities  partially offset
by a lower level of  volume-based  fees,  advisory and  consulting  income and a
higher  cost of funds.  The lower level of  volume-based  fees was due to Realty
Capital's exit from the  origination and sale of commercial real estate loans to
the CMBS market in April 2000. The lower level of advisory and consulting income
was primarily due to the sale of the Harris  Williams & Co. business unit to its
management in the second quarter of 2000.  Realty Capital's bridge and mezzanine
financing  portfolio  grew to $491.2  million by September  30, 2000 compared to
$237.5 million at September 30, 1999.

     Income before  allocations  was $20.2 million in 2000 compared to income of
$19.8 million in 1999. This increase was primarily attributable to the increased
net revenue,  offset by $40.7 million of net write-offs in the Mezzanine Capital
portfolio  as  compared  to $5.0  million  in 1999,  and $11.8  million of costs
incurred in connection with Realty  Capital's exit from the origination and sale
of loans to the CMBS market.

     Managed  assets  declined to $945.7  million from $1.0  billion.  Excluding
Realty Capital's  on-balance  sheet CMBS loans,  which totaled $313.8 million at
September  30,1999,  the  group's  asset grew by $215.2  million or 29.5%.  This
growth was  primarily  due to increased  assets in Realty  Capital's  bridge and
mezzanine  financing  products,  partially  offset  by a  decline  in  Mezzanine
Capital's portfolio of $51.6 million.

                                       15
<PAGE>
RECENT DEVELOPMENTS AND BUSINESS OUTLOOK

     On March  27,  2000,  FINOVA  announced  the  retirement  of its  Chairman,
President and Chief Executive Officer,  Samuel L. Eichenfield,  for personal and
health  reasons.  Following  Mr.  Eichenfield's  retirement  as a  director  and
officer,  the FINOVA board of directors elected Matthew M. Breyne as a director,
President  and Chief  Executive  Officer of FINOVA.  FINOVA  Capital's  board of
directors elected Mr. Breyne as Chairman,  President and Chief Executive Officer
of FINOVA Capital. He previously served as President and Chief Operating Officer
of FINOVA Capital and continues to serve as a director of that company.

     FINOVA also  announced  that it would take a special  $80  million  pre-tax
charge to earnings in the first  quarter of 2000 to bolster  loss  reserves  and
provide  for payment of  deferred  compensation  and  executive  severance.  The
additional  loss reserves  related to a $70 million loss on a major  customer in
the  Distribution  and Channel Finance line of business which is now included as
part of the loss from discontinued  operations.  The remainder of the charge was
used to provide for payment of deferred compensation and executive severance for
Mr. Eichenfield.

     On May 5, 2000,  FINOVA renewed a $500 million,  364-day  revolving  credit
agreement for another year to 2001.  Two  additional  364-day  commercial  paper
back-up  facilities  aggregating $1.6 billion were scheduled to renew on May 16,
2000. FINOVA received  commitments to renew  approximately $1.1 billion of these
facilities. The $1.1 billion, along with the $500 million renewal on May 5th and
$2.4 billion previously in place, was not adequate to provide  dollar-for-dollar
coverage on $4.3 billion of commercial paper  outstanding.  As a result,  FINOVA
exercised its term-out  option under the $1.6 billion of  facilities,  which are
payable on May 15, 2001 and also drew down its other  commercial  paper  back-up
bank  facilities  as  discussed in Financial  Condition,  Liquidity  and Capital
Resources.

     On May 8, 2000,  FINOVA  announced  that it had engaged Credit Suisse First
Boston to assist in the  exploration of strategic  alternatives  with financial,
strategic  and  other  potential  partners.  Since  that  time  FINOVA  has  had
discussions with a substantial  number of persons  concerning the possibility of
an  acquisition  of the  entire  ownership  of  FINOVA or a  substantial  equity
ownership  position.  As  described  in Note G of  Notes  to  Interim  Condensed
Consolidated Financial Information,  on November 10, 2000, FINOVA entered into a
letter  agreement  with  respect to an equity  infusion of up to $350 million by
Leucadia National Corporation.

     During July 2000, FINOVA structured a securitization  with Chase Securities
acting as structuring  agent, which includes a commitment to purchase up to $500
million of loans on a revolving basis until February 2001, which may be extended
by mutual agreement,  and is funded through a commercial paper conduit.  As with
FINOVA's other  securitizations,  other events,  such as the  performance of the
portfolio or of FINOVA, could result in termination of the  securitizations.  If
the  securitization  is  terminated  or  not  extended,  loan  collections  will
thereafter be applied to reduce the  securitization  balance rather than to fund
the obligations to the underlying  borrowers,  which would become the obligation
of  FINOVA.  Proceeds  to FINOVA  through  the first two  fundings  of the Chase
securitization   aggregated  approximately  $475  million.  This  securitization
requires,  among other things,  that a back-up servicer be appointed by November
29, 2000. Due to the potential sale of the Corporate Finance assets, the Company
has not yet  engaged a back-up  servicer  although  it is  presently  engaged in
negotiations  with a prospective  backup  servicer.  If a backup servicer is not
engaged by November 29, 2000, Chase would have the ability to retain collections
on  the  securitized  loans,   thereby   constraining   liquidity  further.  The
securitization   assets  were  originated  through  FINOVA's  Corporate  Finance
division.

     An additional  $300 million  securitization,  structured by Morgan  Stanley
Dean Witter earlier this year, was not funded and currently is not available for
future funding,  pending  satisification of certain conditions.  The Company has
been in negotiations with Morgan Stanley Dean Witter to seek a revision of these
conditions, although the outcome is uncertain.

     On August 28, 2000,  FINOVA  completed  the sale of  substantially  all the
assets of its  Commercial  Services  division to GMAC  Commercial  Credit LLC, a
wholly owned subsidiary of General Motors  Corporation,  for approximately  $235
million.

     In light of the  events  since  March  2000,  the  credit  rating  agencies
downgraded  the senior  debt and  commercial  paper  credit  ratings  for FINOVA
Capital Corporation.  Including the October 31st downgrades,  the credit ratings
for FINOVA Capital are as follows:

                                          Senior Debt           Commercial Paper
                                          -----------           ----------------
Moody's Investors Service Inc.                B1                       NP
Standard & Poor's Ratings Group               BB                       B
Fitch IPCA                                    B                        B

     The Company  decided in the third quarter to sell or liquidate  some of its
more broad based businesses and focus on providing  financing  through its niche
based businesses. The Company has decided to discontinue and actively market for
sale its Corporate Finance and Distribution & Channel Finance businesses. A sale
could be for all or parts of the  businesses, and if only parts of the  business
are sold, the Company intends to orderly liquidate the unsold portions.

                                       16
<PAGE>
     FINOVA has engaged Jay Alix & Associates, a nationally recognized financial
consulting  firm, to assist in connection  with the development of strategic and
financial planning, including re-negotiation of its bank debt.

     FINOVA's credit agreements,  pursuant to which an aggregate of $4.7 billion
of  indebtedness  is  outstanding,   contain  normal  and  customary   financial
covenants.  Failure of FINOVA to comply with these  covenants  would result in a
default under the credit agreements,  unless waived by the lenders. If a default
were to occur under the credit  agreements and the lenders  required  repayment,
such  default  would in turn  result in a  default  under  substantially  all of
FINOVA's  other  outstanding  indebtedness.  Under one of these  covenants,  the
interest coverage test, FINOVA was in compliance at September 30, 2000. However,
declines in average net income or higher  interest  costs in future quarter ends
could help lead to a violation of that covenant.

     On  November  10,  2000,  FINOVA  announced  that it entered  into a letter
agreement  with  Leucadia  National   Corporation  with  respect  to  an  equity
investment  in the Company  that,  if  consummated,  would improve the Company's
liquidty.  See Note G to  Notes  to  Interim  Condensed  Consolidated  Financial
Information.

     Pending  consummation of the transaction  with Leucadia,  FINOVA expects to
use cash flow from  operations  and if consented to by Leucadia,  proceeds  from
securitizations  and  proceeds  from  other  asset  sales  to  satisfy  its debt
obligations and operational  needs, and to fund reduced amounts of new business.
In May  2001,  FINOVA  is  obligated  to repay  approximately  $2.1  billion  of
borrowings ($500 million of which may be extended over a two year term-out if no
default  exists at that time)  under  FINOVA's  credit  facilities,  which is in
addition to other debt  maturities.  These  repayments  will require  additional
asset sales, new financing  arrangements,  infusion of debt or equity or similar
arrangements.  The transaction with Leucadia will involve  negotiations with the
banks concerning the timing and amount of those repayments among other items.

     Inability of FINOVA to complete the transaction  with Leucadia and FINOVA's
banks or other transactions referred to above, adverse developments requiring an
increase of bad debt  reserves or the  write-off  of assets,  the  assertion  by
creditors  of a default  under  FINOVA's  credit  agreements,  or other  adverse
developments in FINOVA's business or results of operations could impair FINOVA's
ability to fund  operations  and debt payment  requirements  for  principal  and
interest.

     FINOVA's  ability to seek new business has been  adversely  affected by the
events noted above.  It continues to do so by emphasizing  customer  service and
focusing  on  selected  market  niches.  The  Company  as  a  whole  expects  to
significantly  slow  managed  asset growth on an annual  basis.  There can be no
assurance that FINOVA's asset base will grow.

                                       17
<PAGE>
NEW ACCOUNTING STANDARDS

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities,"  which  establishes  new  accounting  and
reporting  standards for derivative  instruments.  In June 1999, the FASB issued
SFAS No. 137,  "Accounting for Derivative  Instruments and Hedging Activities --
Deferral of the Effective Date of FASB Statement No. 133," and in June 2000, the
FASB issued SFAS No. 138,  "Accounting  for Certain  Derivative  Instruments and
Certain Hedging Activities -- An Amendment of FASB Statement No. 133." SFAS 133,
as amended,  establishes accounting and reporting standards requiring that every
derivative  instrument,  including certain  derivative  instruments  embedded in
other contracts, be recorded in the statement of financial position as either an
asset or liability measured at its fair value. SFAS 133 requires that changes in
the derivative's fair value be recognized  currently in earnings unless specific
hedge accounting criteria are met.

     These  rules  become  effective  for the  Company on  January 1, 2001.  The
Company  is  still  assessing  the  impact  of the  adoption  of SFAS 133 on its
warrants held on private companies with "cashless  exercise"  features,  pending
final  guidance to be issued by the FASB.  The ongoing  effects of adoption will
depend on future market conditions.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This report contains forward-looking  statements, such as estimates of gain
or loss and other  predictions  or  forecasts.  FINOVA  assumes no obligation to
update those  statements to reflect  actual  results,  changes in assumptions or
other factors.

     The  forward-looking  statements  are subject to known and  unknown  risks,
uncertainties  and other  factors  that  could  cause  actual  results to differ
materially from those predicted. Those factors include:

     *    FINOVA's ability to address its financing requirements in light of its
          existing debt obligations and market conditions.
     *    Pending and potential litigation relating to charges to earnings.
     *    The  results of  efforts  to  implement  FINOVA's  business  strategy,
          including  the ability to  successfully  conclude  its  evaluation  of
          strategic alternatives and to conclude proposed transactions.
     *    The ability to attract and retain key personnel and customers.
     *    Conditions that adversely impact FINOVA's  borrowers and their ability
          to meet their obligations to FINOVA.
     *    The adequacy of FINOVA's loan loss reserves.
     *    Actual  results  in  connection   with   continuing  or   discontinued
          operations and the disposition of assets.
     *    Other risks detailed in FINOVA's SEC reports,  including on page 15 of
          FINOVA's 10-K for 1999.

     In addition, FINOVA's financial condition,  liquidity and future results of
operations will be materially affected by the results of negotiations  seeking a
restructuring of its credit facilities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     One of the major elements in determining  FINOVA's  success as a commercial
finance  company is its ability to access  capital and the cost of that capital.
The events that have transpired in 2000 have adversely affected FINOVA's ability
to access  the  capital  markets  and has  significantly  increased  its cost of
capital.  The total  impact on its annual cost of capital  cannot be  accurately
determined at this time because the sources of capital and respective  costs are
uncertain.  One borrowing  cost that can be  quantified  is the  Company's  $4.5
billion bank facility where the all in spread over LIBOR has increased  rates by
1.35% during 2000 which  effectively  increases the annual  interest  expense on
those borrowings by $60.8 million.

                                       18
<PAGE>
                            PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Between  March 29 and May 23, 2000,  five  shareowner  lawsuits  were filed
against FINOVA and Samuel Eichenfield,  FINOVA's former chairman, president, and
chief  executive  officer;  two of the lawsuits  also named FINOVA  Capital as a
defendant,  and one named three other  executive  officers.  All of the lawsuits
purport  to be on  behalf of the  named  plaintiffs  (William  K.  Steiner,  Uri
Borenstein,  Jerry  Krim,  Mark  Kassis,  and  the  Louisiana  School  Employees
Retirement  System),  and others who  purchased  FINOVA  common stock during the
class period of July 15, 1999,  through  either March 26, 2000,  or May 7, 2000.
The suit  brought by the  Louisiana  School  Employees  Retirement  System  also
purports to be on behalf of all those who purchased  FINOVA  Capital 7.25% Notes
which are due  November 8, 2004,  pursuant  to the  registration  statement  and
prospectus supplement dated November 1, 1999.

     In an order by the U.S.  District  Court dated  August 30,  2000,  all five
lawsuits were  consolidated  and  captioned IN RE: FINOVA GROUP INC.  SECURITIES
LITIGATION.  The court also selected the Louisiana School  Employees  Retirement
System  ("LSERS") as the lead plaintiff in the consolidated  cases.  LSERS filed
its Amended Consolidated  Complaint on September 29, 2000, naming FINOVA, FINOVA
Capital, Samuel Eichenfield, Matthew Breyne, and Bruno Marszowski as defendants.
The Consolidated  Amended  complaint  generally alleges that the defendants made
materially misleading statements regarding FINOVA's loss reserves, and otherwise
violated  the federal  securities  laws in an effort to bolster  FINOVA's  stock
price, among other reasons.  The complaint seeks unspecified  damages for losses
incurred by shareholders,  plus interest,  and other relief, and rescission with
regard to the notes purchased.

     FINOVA  believes  the  claims  are  without  merit.  FINOVA  and the  other
defendants  intend to vigorously defend against the claims. On October 30, 2000,
FINOVA and the other defendants  filed a motion to dismiss the complaint,  which
is now pending.

     Since  consolidation  of  the  original  five  shareowner  lawsuits,  other
apparently  related lawsuits have been initiated against the Company and current
and former  officers and directors.  Two  shareowner  lawsuits were filed in the
United States District Court for the Middle District of Tennessee,  in which the
plaintiffs  (John  Cartwright,  Sirrom  Partners  and Sirrom G-1) assert  claims
relating to the Company's acquisition in 1999 of Sirrom Capital Corporation, and
the  exchange  of shares  of Sirrom  stock  for  shares  of  FINOVA  stock.  The
Cartwright  complaint  purports  to be a class  action  lawsuit on behalf of all
Sirrom  shareowners  that  exchanged  their  Sirrom  stock for FINOVA stock as a
result of the acquisition.  The defendants named are Sirrom Capital Corporation,
Samuel Eichenfield,  John W. Teets, Constance Curran, G. Robert Durham, James L.
Johnson, Kenneth Smith, Shoshana Tancer, Bruno Marszowski, and FINOVA Group. The
complaints appear related to the consolidated securities litigation because they
also allege that the defendants made materially  misleading statements regarding
FINOVA's loss reserves, and otherwise violated the federal securities laws in an
effort to reduce the total  consideration  provided to Sirrom shareowners at the
time of the  acquisition.  The complaint  seeks  unspecified  damages for losses
incurred by shareholders,  plus interest,  and other relief.  On October 23, the
Company and the other defendants  filed a motion to dismiss both complaints,  or
in the  alternative to transfer venue of the actions to the U.S.  District Court
for the District of Arizona,  where the  consolidated  securities  litigation is
pending.

     There have also been two  shareholders'  derivative  lawsuits filed against
current and former  officers and  directors,  one in the United States  District
Court  for the  District  of  Arizona,  and one in the  Court  of  Chancery  for
Newcastle  County,  Delaware.  Both complaints were filed on September 11, 2000,
and both purport to be brought by the named  plaintiffs  (William Kass and Cindy
Burkholter)  derivatively  on behalf of the  Company  against the  officers  and
directors,  alleging  generally  breaches  of  fiduciary  and  other  duties  as
directors.  As with the  consolidated  securities  litigation,  the  allegations
center  generally  on claims that there were  materially  misleading  statements
regarding FINOVA's loss reserves.

     Finally,  another  shareholder's  derivative lawsuit was filed on September
13,  2000,  in the  Circuit  Court for  Davidson  County,  Tennessee,  by Ronald
Benkler,  purportedly on behalf of Sirrom Capital  Corporation,  against several
former officers of Sirrom Capital  Corporation.  The complaint  alleges that the
Sirrom  officers  breached  various  duties  to Sirrom  in  connection  with the
acquisition  of Sirrom by the Company in 1999,  and the exchange of Sirrom stock
for FINOVA stock as a result of the acquisition.

     Inasmuch as the allegations are similar or related to those asserted in the
consolidated  securities  litigation,  the Company  believes that the claims are
without  merit,  and the Company and the other  defendants  intend to vigorously
defend against the claims.

                                       19
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) The following exhibits are filed herewith:

   Exhibit No.                     Document
   -----------                     --------

        4      1992 Stock Incentive Plan, as amended.+

      10.A     Letter Agreement Between Leucadia National Corporation and The
               FINOVA Group Inc., dated November 10, 2000.

       12      Computation of Ratio of Income to Fixed Charges (interim period).

       27      Financial Data Schedule

       99      Earnings Release dated November 14, 2000.

     ----------
     +    Relating to management compensation

     (b) Reports on Form 8-K:

     A report on Form 8-K dated  August 28, 2000 was filed by  Registrant  which
reported under Item 5 Other Events, for the sale of substantially all the assets
of Commercial Services Division.

                                       20
<PAGE>
                              THE FINOVA GROUP INC.


                                   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 thereunto duly authorized.

                              THE FINOVA GROUP INC.
                                  (Registrant)



Dated: November 14, 2000         By: /s/ Bruno A. Marszowski
                                     -------------------------------------------
                                     Bruno A. Marszowski, Senior Vice President,
                                     Chief Financial Officer and Controller
                                     Principal Financial and Accounting Officer

                                       21
<PAGE>
                              THE FINOVA GROUP INC.
                         COMMISSION FILE NUMBER 1-11011
                                  EXHIBIT INDEX
                          SEPTEMBER 30, 2000 FORM 10-Q

   Exhibit No.                     Document
   -----------                     --------

        4      1992 Stock Incentive Plan, as amended.+

      10.A     Letter Agreement Between Leucadia National Corporation and The
               FINOVA Group Inc., dated November 10, 2000.

       12      Computation of Ratio of Income to Fixed Charges (interim period).

       27      Financial Data Schedule

       99      Earnings Release dated November 14, 2000.