At a recent dinner for participants in Fortune magazine's Most Powerful Women program, Barbara Goodstein, the chief marketing officer at AXA Equitable, found herself seated next to Small Business Administration chief Karen Mills, and after nearly three hours of conversation, Mills offered Goodstein a job. Goodstein turned her down - the pay was terrible - but she recalls being mighty impressed with her "unassuming" dinner companion.

"I just thought she was amazing." One would never know Mills managed an increasingly high-profile government agency "until you probe," Goodstein says.

Mills, a former venture capitalist and a champion of women in business, was nominated by President Obama last winter and confirmed by the Senate in April.

She has taken the helm at a pivotal time for the agency. Under the Bush administration, the SBA, chronically understaffed and underfunded, appeared to want to kill some of its own programs, but it assumed a new relevance with the passage of the stimulus package in February. Its budget and staff have increased; it has launched new loan-guarantee programs and redoubled its outreach to lenders and businesses across the country.

It is in this brave new world that Mills is making her mark. She says she is focused on reviving SBA lending and strengthening the agency's "bone structure" - its network of business-development centers and regional offices devoted to educating lenders and entrepreneurs.

"It's not rocket science," Mills says. "It's really just taking a look around and recognizing and appreciating the assets, and then it's breaking down silos. It's making sure that our small business development centers are hooked into our district offices; that everybody understands the programs."

Her approach appears to be working.

After dropping off during the credit crisis last fall, lending through the SBA's flagship 7(a) program has picked up again. SBA lenders made $1.41 billion worth of new loans in July, close to the monthly average of $1.5 billion for the 2008 fiscal year.

Much of the rebound in SBA lending, of course, can be attributed to the stimulus itself, as well other government initiatives aimed at unclogging the secondary market for small-business loans. But observers say Mills deserves a chunk of the credit as well for her getting bankers and borrowers comfortable with using SBA loan programs again.

Tony Wilkinson, the president of the National Association of Government Guaranteed Lenders, says Mills has been an intent listener and has made herself more available to banks than past SBA officials did. "There were times under the previous administration where staff was not allowed to communicate with us," he says. "I've been pleased with the way the agency has been managed this far."

Mills is expecting lending volume to continue to rise, and she intends to seek more funds to extend stimulus-born changes to SBA lending programs that have become popular with bankers and borrowers. Whether she'll succeed remains to be seen, but observers say she has built up enough political capital in her short tenure to at least get lawmakers' ears.

"No other administrator that I can remember had so much placed on them at one time," says James Ballentine, the senior vice president for political operations at the American Bankers Association. "From what I gather, she's just been tremendously well received in both the House and the Senate and that will go a long way in helping the SBA."

Mills has been touring the country with members of Congress to promote the SBA's programs, and despite her status as a newcomer with no previous experience in the federal government, she has successfully forged alliances with top officials in the Obama cabinet.

"Everybody now realizes small business is the linchpin" in the efforts to stimulate the economy," Mills says. "So we have a great collaboration with [the Department of] Energy, with [the Department of] Commerce, with the Treasury [Department]."

Mills, 56, is a Massachusetts native who, as she describes it, "grew up around the kitchen table talking about how many machines were running and what was going on on the floor."

Her family owns Tootsie Roll Industries, the candy maker, and Mills says that her childhood experience made managing factories and other kinds of businesses seem like the most natural of professions for her.

Mills worked for General Foods Inc., the consulting firm McKinsey & Co., and in venture capital firms before co-founding her own private-equity firm, Solera Capital, with two other women in 1999. She later started her own private-equity advisory firm, MMP Group, which she operated from Brunswick, Maine, where she lives with her family.

She got her start in the public sector as a volunteer for the State of Maine in 2005.

At the behest of Maine's governor, Democrat John Baldacci, she chaired the state's Council on Competitiveness and the Economy and helped apply a concept of industry "clusters" to Maine's economic development. The Council nurtured specialized industries, such as boatbuilding and eco-tourism, in different parts of the state.

In Maine, Mills was a driving force behind a change in procurement rules to put funding for research and development in the state through a competitive bidding process rather than through a system of earmarks.

"She volunteered to go around the state listening to people's concerns, business concerns, and come up with thoughtful, strategic investments that Maine could make," Baldacci says, reflecting on Mills' time in Maine. "She was not a partisan person so she came to the arena with just a lot of credibility and a lot of real-world experience."

Baldacci added that he "was sorry to lose her, but I think she's serving the country with her position."

Liz Reynolds, a researcher at the Massachusetts Institute of Technology's Industrial Performance Center who worked with Mills on economic development in Maine, agreed.

"Karen brings to the field of economic development a business perspective," she says "She's got a micro perspective on how businesses operate. But she also has a macro perspective on issues of competitiveness for the U.S. that gives her a real perspective on how an agency like the SBA can be effective."

During her career in the private sector, Mills developed an interest in advising other women in business. She has spoken to women at Harvard Business School, of which she is a graduate, about how to navigate the world of choices in their career and family lives.

"The thing I tell women is play your game," Mills says. "Do not play the game of the person sitting next to you if it's a guy or a girl."

Mills emphasized that women should not feel they have to race to achieve career goals right away. "There's a lot of years," she says, "and you'll make different choices that are right for you."

She says she didn't begin her career in the male-dominated world of business management with a sense of herself as different or disadvantaged.

"For me it was about finding the places where I fit," she says. "I fit in business. I fit in business school. I fit in managerial kinds of things, so it was like coming home for me. So it wasn't that I was trying to do the things that men did. I was trying to do the things that I wanted to do."

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