Document:

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                                                                    EXHIBIT 10.7

                                 April 15, 2003

To:      N M ROTHSCHILD & SONS LIMITED

Re:      MFI Finance II, LLC 8.00% Asset-Backed Notes, Series 2001-1:

         MFI II Permanent Waiver

Ladies and Gentlemen:

         BACKGROUND. Reference is made to the (1) form of Direction and
Permanent Waiver of Trigger Events and Servicer Events of Default ( "Ambac's
Permanent Waiver"), to be executed and delivered by Ambac Assurance Corporation
("Ambac") and the other parties thereto, attached hereto as Schedule A, (2)
Indenture, dated as of September 1, 2001 (as supplemented, the "MFI II
Indenture"), among MicroFinancial Incorporated, MFI Finance II, LLC, and Wells
Fargo Bank Minnesota, National Association ("Wells Fargo" or the "Back-up
Servicer"), pursuant to which Wells Fargo is appointed to serve as indenture
trustee (in such capacity, the "Indenture Trustee"), as supplemented by the
Supplement to Indenture, Asset-Backed Notes, Series 2001, dated as of September
1, 2001, among the parties to the MFI II Indenture, and (3) Servicing Agreement,
dated as of September 1, 2001, among MicroFinancial Incorporated, MFI Finance
II, LLC, the Back-up Servicer, and the Indenture Trustee. Capitalized terms not
otherwise defined herein have the meanings set forth in the Permanent Ambac
Waiver.

         DESCRIPTION OF AMBAC'S PERMANENT WAIVER. Pursuant to Ambac's Permanent
Waiver, Ambac will permanently waive the existing or future events described
therein under "Permanent Waiver; Direction to Indenture Trustee" (collectively,
the "Ambac Waiver Events") effective, with respect to past Ambac Waiver Events,
retroactively to the date on which such Ambac Waiver Events occurred. It is a
condition to Ambac's willingness to enter into Ambac's Permanent Waiver that you
execute and deliver this MFI II Permanent Waiver.

         YOUR WAIVER. Please execute this MFI II Permanent Waiver in the space
provided below to evidence your acknowledgement and agreement that, upon (1)
payment to you of a fee pro rata to any fee paid to Ambac in connection with
Ambac's Permanent Waiver, and (2) execution and delivery of the Permanent Ambac
Waiver by all parties thereto, N M Rothschild & Sons Limited:

     1.  permanently waives any and all existing or future "Trigger Events" or
         "Servicer Events of Default" under the MFI II Indenture and MFI II
         Servicing Agreement that arise or have arisen, directly or indirectly,
         out of any Ambac Waiver Events; and

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     2.  consent to the execution and delivery by the parties thereto of the
         Amendments (as defined therein), including without limitation, the
         changes to the Trigger Events and Servicer Events of Default described
         therein.

                                                   MICROFINANCIAL INCORPORATED

                                                   By: /S/ James R. Jackson
                                                       -------------------------
                                                       James R. Jackson
                                                       Chief Financial Officer

ACCEPTED AND AGREED TO BY:

N M ROTHSCHILD & SONS LIMITED

By: /S/ Glenn Beatham
    --------------------------------------
    Name: Glenn Beatham
    Title: Executive Director

By: /S/ Leigh Enevoldson
    --------------------------------------
    Name: Leigh Enevoldson
    Title: Assistant Director<PAGE>

                                                                    EXHIBIT 10.8

                               FIRST AMENDMENT TO
                         AMENDED AND RESTATED INDENTURE

         This First Amendment to Amended and Restated Indenture, dated as of
April 15, 2003 (this "Amendment"), is among MicroFinancial Incorporated, a
Massachusetts corporation (the "Servicer"), MFI Finance Corp. I, a Massachusetts
corporation (the "Issuer"), Wells Fargo Bank Minnesota, National Association
("Wells Fargo" or the "Back-up Servicer"), and Wells Fargo, as indenture trustee
(in such capacity, the "Indenture Trustee").

         WHEREAS, the parties hereto are parties to the Amended and Restated
Indenture, dated as of March September 1, 2001 (as amended, restated, or
supplemented from time to time, the "Indenture"), which is currently
supplemented by the (a) Supplement to Indenture, Contract Backed Notes, Series
2000-2, dated as of December 1, 2000, among the parties to the Indenture, (b)
Supplement to Indenture, Contract-Backed Notes, Class A, Series 2001-3, dated as
of September 1, 2001, among the parties to the Indenture, and (c) Supplement to
Indenture, Contract-Backed Notes, Class B, Series 2001-4, dated as of September
1, 2001, among the parties to the Indenture;

         WHEREAS, Ambac Assurance Corporation (the "Note Insurer") is currently
the "Controlling Party" as defined in the Indenture;

         WHEREAS, Section 9.01(i) of the Indenture permits the parties to the
Servicing Agreement to amend the definition of "Trigger Event" contained in the
Indenture, with the consent of the Controlling Party, but without requiring the
consent of the noteholders under the Indenture, so long as (a) such amendment
will not have a material adverse effect on any Noteholder, (b) no Note Insurer
Default has occurred and is continuing with respect to any Series of Class A
Notes then Outstanding, and (c) the Rating Agency Condition has been met with
respect to all Series then Outstanding;

         WHEREAS, "Rating Agency Condition" means, with respect to any action
and a Series of Notes, that each Rating Agency with respect to such Series shall
have been given ten Business Days (or such shorter period as is acceptable to
such Rating Agency) prior notice thereof and that no Rating Agency shall have
notified the Issuer, the Servicer, the Indenture Trustee or the Note Insurer in
writing that such action will result in a qualification, reduction or withdrawal
of its then-current rating, whether explicit or implied (including any notice to
the Note Insurer regarding the "shadow rating") of such Series of Notes;

         WHEREAS, the agent and lenders party to the Credit Agreement have
negotiated an amendment thereto in which the agent and lenders permanently waive
certain defaults or events of default thereunder, and the Credit Agreement is
amended (a) to contain a modified payment schedule, (b) to eliminate the
financial covenants previously contained therein, and (c) adds certain reporting
and other covenants; and

         WHEREAS, the agents and lenders have, as a condition to effectiveness
of such amendment, required that the Note Insurer, as the Controlling Party
under the Transaction Documents, waive and instruct the Indenture Trustee to
waive, certain existing or future Events of Default (as defined in the Insurance
Agreements referred to therein), Servicer Events of Default and Trigger Events
described therein, and pursuant to a letter agreement dated as of April __, 2003
(the "Ambac Waiver"), the Note Insurer has done so;

         WHEREAS, the Note Insurer has requested that the Indenture be amended
as provided for herein to document fully the effect of such waivers; and

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         WHEREAS, (a) the Note Insurer has issued Note Insurance Policies with
respect to the Issuer's (i) Contract Backed Notes, Series 2000-2, and (ii)
Contract-Backed Notes, Class A, Series 2001-3, which are the only Series of
Class A Notes currently Outstanding; and (b) no Note Insurer Default has
occurred and is continuing with respect to either of such Series; and

         WHEREAS, the only remaining Series of Notes currently Outstanding is
the Issuer's Contract- Backed Notes, Class B, Series 2001-4 (the "Class B
Notes");

         WHEREAS, pursuant to Section 12.02(d) of the Indenture, absent the
Controlling Party's waiver, no payment would be made on the Class B Notes on or
after the first payment date following initial occurrence of the aforementioned
Trigger Events until such time as all Outstanding Class A Notes had been paid in
full; and

         WHEREAS, the parties hereto have determined that the amendments
provided for herein are of a type permitted by Section 9.01(i) of the Indenture
without requiring the consent of the Noteholders under the Indenture.

         NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

SECTION 1.        DEFINITIONS.

         Each capitalized term used and not otherwise defined herein has the
meaning ascribed thereto in the Indenture.

SECTION 2.        AMENDMENTS TO INDENTURE.

         Effective as of the date hereof, Section 1.01 of the Indenture is
amended so that:

         (a)      the definition of "Net Worth Requirement" is removed
                  therefrom; and

         (b)      clause (d) of the definition of "Trigger Event" shall read in
                  its entirety as follows:

                  "(d)     [Intentionally omitted];".

SECTION 3.        REPRESENTATIONS AND WARRANTIES.

         Each party by executing and delivering this Amendment represents and
warrants that the person executing and delivering this Amendment on behalf of
such party is duly authorized to do so, such party has full right and authority
to enter into this Amendment and to consummate the transaction described in this
Amendment, and this Amendment constitutes the valid and legally binding
obligation of such party and is enforceable against such party in accordance
with its terms.

SECTION 4.        MISCELLANEOUS.

         (a)      Ratification of Indenture. The terms and provisions set forth
in this Amendment shall modify and supersede all inconsistent terms and
provisions set forth in the Indenture and, except as expressly modified and
superseded by this Amendment, the Indenture is ratified and confirmed in all

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respects and shall continue in full force and effect.

         (b)      References. The Indenture and any and all other agreements,
documents or instruments now or hereafter executed and delivered pursuant to the
terms hereof or pursuant to the terms of the Indenture as amended hereby, are
hereby amended so that any reference in such agreements to the Indenture shall
mean a reference to the Indenture as amended hereby.

         (c)      Counterparts. This Amendment may be executed in multiple
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile transmission
shall be as effective as delivery of a manually executed counterpart of this
Amendment.

         (d)      Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the application of choice of law principles of any jurisdiction.

         (e)      Binding Agreement. This Amendment shall be binding upon and
inure to the benefit of the Issuer, the Servicer, the Indenture Trustee, the
Back-up Servicer, the Note Insurer, and the Noteholders and their respective
successors and permitted assigns.

         (f)      Effectiveness; Notice to Rating Agencies and Others. Upon
satisfaction of the Rating Agency Condition, this Amendment shall be effective,
retroactive to the date first above written. The Servicer shall cause a
conformed copy of this executed Amendment to be: (a) delivered to the Rating
Agencies via facsimile transmission, promptly upon its execution and delivery,
and (b) sent to the Indenture Trustee, the Note Insurer, and each Noteholder via
facsimile transmission and first class U.S. mail promptly upon satisfaction of
the Rating Agency Condition.

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         IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Indenture to be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.

                                           ISSUER

                                           MFI FINANCE CORP. I

                                           By: /S/ Peter R. von Bleyleben
                                               ---------------------------------

                                           Name: Peter R. von Bleyleben

                                           Title: President

                                           SERVICER

                                           MICROFINANCIAL INCORPORATED

                                           By: /S/ James R. Jackson
                                               ---------------------------------

                                           Name: James R. Jackson

                                           Title: CFO

                                           INDENTURE TRUSTEE

                                           WELLS FARGO BANK MINNESOTA,
                                           NATIONAL ASSOCIATION, as indenture
                                           trustee

                                           By: /S/ Cheryl Zimmerman
                                               ---------------------------------

                                           Name: Cheryl Zimmerman

                                           Title: Corporate Trust Officer

                                           BACK-UP SERVICER

                                           WELLS FARGO BANK MINNESOTA,
                                           NATIONAL ASSOCIATION

                                           By: /S/ Cheryl Zimmerman
                                               ---------------------------------
                                           Name: Cheryl Zimmerman
                                           Title: Corporate Trust Officer

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                                           CONSENTED TO BY:

                                           AMBAC ASSURANCE CORPORATION

                                           By: /S/ Harris C. Mehos
                                               ---------------------------------
                                           Name: Harris C. Mehos
                                           Title: First Vice President

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