For:                                            From:
Ameritrans Capital Corporation                  Gregory FCA Communications
Gary C. Granoff                                 David R. Evanson
212/355-2449                                    610/642-8253

For Immediate Release

                   Ameritrans Merger with Medallion Cancelled

New York,  NY,  February  1 -  Ameritrans  Capital  Corporation  (Nasdaq:  AMTC)
announced today that the proposed merger with Medallion Financial Corp. (Nasdaq:
TAXI) has been terminated. According to Ameritrans' chairman and chief executive
officer  Gary C.  Granoff,  "The  extended  closing date set forth in the merger
agreement  was  January 31,  2001.  The  parties  were unable to reach  mutually
acceptable terms for a further extension of the merger agreement."

Mr.  Granoff said  further  that,  "Prior to  Ameritrans'  proposed  merger with
Medallion,  we reorganized  into a holding company  structure in order to enable
Ameritrans to pursue investment funding  opportunities  previously not available
to our wholly owned subsidiary,  Elk Associates Funding Corporation,  which is a
Small Business  Investment  Company licensed by the United States Small Business
Administration  (SBA)." Mr.  Granoff also  stated,  "While  Medallion  offered a
larger company  through the proposed  merger,  we will now pursue the growth and
expansion of our portfolio into non-government  regulated investment and lending
opportunities."

Ameritrans also recently  announced the payment of its quarterly  dividend based
on  estimated  earnings  of $0.19 per share,  payable on January  31,  2001,  to
stockholders of record as of January 23, 2001. Because of the termination of the
proposed merger,  Ameritrans  further stated that it expected to take a one-time
charge  against  earnings  for its  third  quarter  ending  March 31,  2001,  of
approximately $400,000 of pre-paid merger expenses.

Ameritrans Capital  Corporation is a specialty finance company engaged in making
loans  to  and  investments  in  small  businesses.   Ameritrans'  wholly  owned
subsidiary Elk Associates Funding  Corporation has been licensed by the SBA as a
Small Business  Investment Company since 1980. The company maintains its offices
at 747 Third Avenue, Fourth Floor, New York, NY 10017.

This announcement contains certain forward-looking statements within the meaning
of the Private  Securities  Litigation  Reform Act of 1995.  Such statements are
subject to certain risks and  uncertainties  that could cause actual  results to
differ  materially  from those  presently  anticipated or projected.  Ameritrans
Capital   Corporation   cautions  investors  not  to  place  undue  reliance  on
forward-looking  statements,  which speak only as to management's expectation on
this date.