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SIGNATURE GEORGE R. SCHONATH
TITLE CHIEF EXEC. OFFICER
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Price Waterhouse LLP
To the Board of Directors of
Bando McGlocklin Capital Corporation
In planning and performing our audit of the consolidated financial
statements of Bando McGlocklin Capital Corporation and its subsidiaries
(the "Company") for the year ended June 30, 1996, we considered its
internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the purposes
of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, and not to provide assurance on the
internal control structure.
The management of the Company is responsible for establishing and
maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives of an internal
control structure are to provide management with reasonable, but not
absolute, assurance that assets are appropriately safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors
or irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that
it may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be
material weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a condition in
which the design or operation of the specific internal control structure
elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the
financial statements being audited may occur and not be deleted within a
timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving the internal
control structure, including procedures for safeguarding securities, that
we consider to be material weaknesses as defined above as of June 30,
1996.
This report is intended solely for the information and use of management
and the Securities and Exchange Commission.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
August 8, 1996
For Period ending 6/30/95 Attachment 77.P.
File Number 811-3787
Per Bando McGlocklin Capital Corporation's et al. exemptive order
received on November 10, 1992 (Release Nos. 19092) as amended by
exemptive orders received on August 17, 1993 (Release No. 19636)
and May 25, 1994 (Release No. 20317), Bando McGlocklin Capital
Corporation is permitted to file on behalf of itself, Bando
McGlocklin Small Business Investment Corporation (File No. 811-7526)
and Bando McGlocklin Small Business Lending Corporation (File No.
811-8566), its wholly owned subsidiaries, semi-annual reports on
Form N-SAR containing information with respect to parent and the
subsidiaries on a consolidated basis only. As a result of this
order, all responses have been answered on a consolidated basis.
