Exhibit 10.2


                              CONSULTING AGREEMENT

     This CONSULTING  AGREEMENT (this  "Agreement") is dated as of July 1, 2001,
between  Gary  C.  Granoff   ("Consultant"),   Ameritrans  Capital   Corporation
("Ameritrans"),  and Elk Associates Funding Corporation  ("Elk")  (collectively,
Ameritrans and Elk are hereinafter referred to as the "Company").

     1.   ENGAGEMENT

     The Company hereby  engages and retains  Consultant to perform the Services
(as that term is  hereinafter  defined),  and  Consultant  hereby  accepts  such
appointment on the terms and subject to the conditions hereinafter set forth and
agrees to use his best efforts in providing such Services.

     2.   INDEPENDENT CONTRACTOR

     Consultant  shall be, and in all  respects be deemed to be, an  independent
contractor  in  the  performance  of  his  duties  hereunder,  any  law  of  any
jurisdiction to the contrary notwithstanding. Consultant shall not, by reason of
this  Agreement or the  performance  of the Services,  be or be deemed to be, an
employee or agent of the Company,  and  Consultant  shall have no power to enter
into any agreement on behalf of, or otherwise bind the Company. Without limiting
the  foregoing,  Consultant  shall not enter into any contract or  commitment on
behalf of the Company without the Company's prior written consent.

     3.   COMMENCEMENT AND TERM

     3.1.  Commencement.  This  Agreement  shall not be effective  and shall not
commence  unless and until the  Employment  Agreement  between  the  Company and
Consultant dated July 1, 2001 (the "Employment Agreement"), is terminated due to
(i) the voluntary  resignation  of Consultant  from his  employment  pursuant to
Section 6.2 of the Employment Agreement or (ii) a notice of non-renewal from the
Company or Consultant pursuant to Section 6.2 of the Employment Agreement.

     3.2.  Term.  Provided the  Employment  Agreement is terminated  pursuant to
clauses (i) or (ii) of Section 3.1,  above,  this Agreement  shall commence upon
the date of termination of the Employment  Agreement (the "Commencement  Date"),
and shall continue for a period of five (5) years (the "Consulting Period").

     4.   SERVICES

     4.1.  Consultant  agrees to provide  the  following  services,  hereinafter
collectively referred to as the "Services":

     Serve as business consultant for the Company,  which shall include, but not
be limited to,  general  advice and  consultation  regarding  the  business  and
operations  of the Company,  investor  relations,  and  providing  assistance in
setting the business direction and strategic objectives of the Company.

     4.2. BEST EFFORTS. Consultant shall devote such time and effort as he deems
commercially reasonable under the circumstances to the affairs of the Company as
is reasonable and adequate to render the  consulting  services  contemplated  by
this Agreement;  provided,  however, in no event shall Consultant be required to
devote more than half-time or twenty (20) hours per week to the

<PAGE>


performance of the Services.  It is further understood and agreed by the parties
that Consultant shall make himself  available,  and the non-use of Consultant by
the Company  shall in no manner  affect the  Company's  obligations  to make the
payments provided hereunder.

     5.   COMPENSATION AND RELATED MATTERS

     5.1.  Compensation.  In consideration for his availability and/or providing
the Services,  Consultant shall be paid an amount equal to one-half (1/2) of the
sum of (i)  Consultant's  monthly Base Salary that was in effect at the time the
Employment  Agreement was  terminated,  and (ii) any Bonus that the Board at its
discretion may authorize.  All  capitalized  financial terms having the meanings
defined in the Employment Agreement are herein incorporated by reference.

     5.2. Other Benefits.  During the Consulting  Period,  subject to and to the
extent  Consultant  is eligible,  Consultant  shall be entitled to receive fifty
percent  (50%) of the  benefits,  set  forth in  Section  4.3 of the  Employment
Agreement,  that  Consultant  was  receiving  from  the  Company  at the time of
termination of the Employment  Agreement and at the levels in effect at the time
of such  termination,  except for the following,  to which  Consultant  shall be
entitled to the same extent as under the Employment  Agreement,  (i) premiums on
disability  insurance  not to exceed  $5,500 per annum,  (ii)  husband  and wife
medical  coverage,  and (iii) the  contributions  to Consultant's SEP IRA, which
shall continue at up to 15% of Consultant's fee compensation.

     5.3. Expense Reimbursement.  The Company shall reimburse Consultant for all
business  expenses  reasonably  incurred by him in the performance of his duties
under this Agreement in accordance with the Company's procedures and policies as
adopted and in effect from time to time and applicable to its senior  management
employees.

     6.   TERMINATION

     6.1. Voluntary Termination by Consultant.  Consultant may, by notice to the
Company at any time during the Consulting  Period,  upon thirty (30) days' prior
written notice, terminate this Agreement.

     6.2.  By the Company  for Cause.  The  Company  may, at any time during the
Consulting Period, by notice to Consultant,  terminate this Consulting Agreement
for  "Cause."  As used  herein,  "Cause"  shall  mean (i)  incompetence,  fraud,
personal  dishonesty,   defalcation,  or  acts  of  gross  negligence  or  gross
misconduct on the part of Consultant,  (ii) substantial and continued failure by
Consultant to perform the Services,  (iii) Consultant's conviction by a court of
competent  jurisdiction  of, or  pleading  "guilty"  or "no  contest"  to, (x) a
felony,  or (y) any other criminal charge (other than minor traffic  violations)
which has or could  reasonably be expected to have a material  adverse impact on
the Company's  reputation  and standing in the community,  or (iv)  Consultant's
violation of any of the provisions of Section 8 herein.  Any notice given by the
Company  pursuant  to this  Section 6.2 shall  specify in writing in  reasonable
detail the event or the nature of  Consultant's  action or inaction  that is the
cause for  giving  such  notice.  Consultant  will have 30 days to cure,  to the
reasonable  satisfaction of the Company,  any action or inaction  charged by the
Company  for Cause  under  (ii),  above.  In the event of a  termination  of the
Consulting  Period for Cause under (i),  (iii), or (iv),  above,  the Consulting
Period shall terminate immediately upon notice by the Company of termination for
Cause and the reason therefor, unless such actions or inactions can be cured and
Consultant has satisfactorily cured such actions or inactions.


                                      -2-
<PAGE>


     7.   TERMINATION COMPENSATION

     7.1. Termination by Consultant.  If Consultant terminates this Agreement in
accordance with Section 6.1 or Section 6.2, the Company shall pay to Consultant,
within thirty (30) calendar days of the date of  termination,  Consultant's  Fee
through the date of termination.

     7.2. Certain Other Terminations.  If the Consulting Period is terminated by
the Company for Cause  pursuant to the  provisions  of Section  6.2, the Company
shall  pay to  Consultant,  within  thirty  (30)  calendar  days of the  date of
termination, Consultant's Fee through the date of termination.

     8.   CONFIDENTIALITY

     Unless  otherwise  required by law or judicial  process,  Consultant  shall
retain in confidence  during the Consulting Period and after termination of this
Agreement  all  confidential  information  known to  Consultant  concerning  the
Company and its  businesses.  The  obligations  of  Consultant  pursuant to this
Section 8 shall survive the expiration or termination of this Agreement.

     9.   NONCOMPETITION

     Consultant shall not directly or indirectly,  whether by way of employment,
consulting,  advising, ownership,  partnership,  joint venture, or other method,
engage in any  Competitive  Activity (as defined  below)  during the  Consulting
Period.  "Competitive  Activity"  shall  exclude those  activities  described in
Section 3 of the Employment  Agreement and shall include business activity which
is the same as or  substantially  similar to or is or would be competitive  with
the  business  activity  in which the Company is engaged  during the  Consulting
Period.

     10.  NONSOLICITATION

     During the Consulting  Period and for a period of one year  thereafter (the
"Nonsolicitation  Period"),  Consultant shall not directly or indirectly solicit
to enter into the employ of any other Entity,  or hire,  any of the employees of
the  Company.  During  the  Consulting  Period,  and for a  period  of one  year
thereafter, Consultant shall not, directly or indirectly, solicit, hire, or take
away or attempt to solicit, hire, or take away (i) any customer or client of the
Company or (ii) any former  customer or client  (that is, any customer or client
who  ceased  to do  business  with  the  Company  during  the  three  (3)  years
immediately  preceding  such date) of the Company or  encourage  any customer or
client of the Company to terminate its relationship with the Company without the
Company's prior written consent.  The obligations of Consultant pursuant to this
Section 10 shall survive the expiration or termination of this Agreement.

     11.  SUCCESSORS; BINDING AGREEMENT

     This  Agreement and all rights of Consultant  hereunder  shall inure to the
benefit of and be enforceable by Consultant and  Consultant's  personal or legal
representatives,  executors,  administrators,  successors,  heirs, distributees,
divisees,  and legatees.  If Consultant should die while any amounts would still
be payable to him  hereunder  if he had  continued  to live,  all such  amounts,
unless otherwise provided herein,  shall be paid in accordance with the terms of
this Agreement to Consultant's  devisee,  legatee,  or other  beneficiary or, if
there be no such beneficiary, to Consultant's estate.


                                      -3-
<PAGE>


     12.  SURVIVORSHIP

     The  respective  rights and  obligations  of the  parties  hereunder  shall
survive  any  termination  of this  Agreement  to the  extent  necessary  to the
intended preservation of such rights and obligations.

     13.  MISCELLANEOUS

     13.1. Notices. Any notice,  consent, or authorization required or permitted
to be given pursuant to this Agreement shall be in writing and sent to the party
for or to whom  intended,  at the  address  of such  party set forth  below,  by
registered or certified mail, postage paid (deemed given five days after deposit
in the U.S.  mails) or  personally  delivered or sent by facsimile  transmission
(deemed  given upon  receipt),  or at such other  address as either  party shall
designate by notice given to the other in the manner provided herein.

          If to the Company:  Ameritrans Capital Corporation
                              Elk Associates Funding Corporation
                              747 Third Avenue, 4th Floor
                              New York, New York 10017
                              Attn:

          If to Consultant:   Mr. Gary Granoff
                              2 Fir Drive
                              Great Neck, New York 11024

     13.2.  Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without reference
to the principles of conflicts of laws therein.

     13.3.  Arbitration.   Any  dispute  or  controversy  arising  under  or  in
connection  with this Agreement  shall be settled  exclusively by arbitration in
the city in which the Company's main corporate  headquarters  is then located in
accordance  with  the  rules of the  American  Arbitration  Association  then in
effect.  Judgment  may be entered on the  arbitration  award in any court having
jurisdiction.

     13.4. Headings. All descriptive headings in this Agreement are inserted for
convenience  only,  and shall be  disregarded  in  construing  or  applying  any
provision of this Agreement.

     13.5. Counterparts. This Agreement may be executed in counterparts, each of
which  shall be deemed to be an  original,  but all of  which,  together,  shall
constitute one and the same instrument.

     13.6.  Severability.  If any  provision  of  this  Agreement,  or any  part
thereof,  is held to be unenforceable,  the remainder of such provision and this
Agreement,  as the case may be,  shall  nevertheless  remain  in full  force and
effect.

     13.7.  Entire  Agreement  and   Representation.   This  Agreement  and  the
Employment Agreement contain the entire agreement and understanding  between the
Company  and  Consultant   with  respect  to  the  subject  matter  hereof.   No
representations  or warranties of any kind or nature  relating to the Company or
its  several  businesses,  or  relating to the  Company's  assets,  liabilities,
operations,  future  plans,  or prospects  have been made by or on behalf of the
Company to Consultant.


                                      -4-
<PAGE>


     13.8.  Validity.  The  invalidity or  unenforceability  of any provision or
provisions of this Agreement shall not affect the validity or  enforceability of
any other provision or provisions of this Agreement,  which shall remain in full
force and effect.  If any  provision  of this  Agreement  is held to be invalid,
void, or unenforceable in any  jurisdiction,  any court or arbitrator so holding
shall substitute a valid,  enforceable provision that preserves,  to the maximum
lawful extent, the terms and intent of such provisions of this Agreement. If any
of the  provisions  of, or covenants  contained in, this Agreement are hereafter
construed to be invalid or unenforceable in any jurisdiction, the same shall not
affect the  remainder of the  provisions  or the  enforceability  thereof in any
other jurisdiction,  which shall be given full force and effect,  without regard
to the  invalidity  or  unenforceability  in such other  jurisdiction.  Any such
holding  shall  affect  such  provision  of this  Agreement,  solely  as to that
jurisdiction,  without  rendering that or any other provisions of this Agreement
invalid,  illegal, or unenforceable in any other  jurisdiction.  If any covenant
should  be  deemed  invalid,  illegal,  or  unenforceable  because  its scope is
considered  excessive,  such  covenant will be modified so that the scope of the
covenant is reduced only to the minimum extent  necessary to render the modified
covenant valid, legal, and enforceable.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.


                                        AMERITRANS CAPITAL CORPORATION


                                        By:  /s/ Ellen M. Walker
                                             ----------------------------------
                                        Ellen M. Walker



                                        ELK ASSOCIATES FUNDING CORPORATION


                                        By:  /s/ Ellen M. Walker
                                             ----------------------------------
                                        Ellen M. Walker

                                          /s/ Gary C. Granoff
                                        ---------------------------------------
                                        Gary C. Granoff


                                      -5-