A Small Business Administration loan program is disproportionately benefiting companies in affluent suburbs while bypassing low-income neighborhoods, according to a Chicago-based activist group.

The study by Woodstock Institute examined 340 loans granted under the SBA's 504 certified development company program in 1992-96.

About 30% of the manufacturers, for instance, were located in low- to moderate-income neighborhoods, but only 17% of the companies in those areas received loans, according to the study.

Similar conclusions were made regarding wholesale and retail companies. In fact, the study suggested too many SBA loans were going to suburban restaurants and not enough were benefiting the areas that generally needed job creation.

The 504 program, which lends up to $1 million to companies that need to make capital improvements and create jobs, is market-driven. Therefore, the loans are marketed more to booming suburbs than poorer neighborhoods, said Daniel Immergluck, vice president of Woodstock and co-author of the study.

The institute proposed the SBA amend its rules to encourage more lending both in low-income areas and to minority-owned businesses. The loans are made through nonprofit groups called certified development companies and banks.

"Our point is we have 30 years of research that says where the jobs are needed is not necessarily where the market is dictating where they're created," Mr. Immergluck said.

But the SBA disputes that contention.

"We're very proud of the progress we've made," said Peter Barca, SBA administrator for the Midwest. He said his agency has a number of other programs that cater to minority business owners. He said the Woodstock report focused on "one snapshot in time for a program that is continuing to improve."

Nonetheless, Woodstock said the SBA and its lenders should set goals for the proportion of loans made to low-income neighborhoods and minority businesses. Reporting requirements should be implemented and terms of loans should more attractive for borrowers in low-income areas, it said.

Mr. Barca declined to comment on specific proposals because he said he had not read the Woodstock report.

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