NEW YORK - Teaching a loan officer trained in credit scoring and collateral assessment to lend to micro-entrepreneurs is like teaching classical musicians to play in a jazz band - it can be done, but they must deploy existing skills in a whole new way.

When a potential borrower arrives with financial records in a shoebox and has borrowed only from a streetcorner prestamista - a loan shark - who charged 20% interest a month, measuring creditworthiness involves far more art than science.

"We have historically used a character-based loan methodology; it's a very high-touch approach," says Leslie Barcus, senior loan officer at Accion New York.

"The cardinal rule is that character is always the most important consideration. In this business, things are not always so verifiable. We are dealing with a handshake, and the relationship between a client and a loan officer is critical," she says.

Potential borrowers are required to attend the group's 45-minute orientation to learn the basics of installment credit. Those who choose to continue submit a credit application. The application requires borrowers to demonstrate six months of profitability in whatever business they operate. They are also asked to submit utility bills to document an address and a payment history.

"We get all of the information from the credit application," Ms. Barcus says. She says most clients do not have financial statements for their businesses.

Applicants then undergo a long interview with a loan officer, often at their place of business. If the loan officer decides that a borrower is creditworthy, the application is submitted to Accion's credit committee. The entire process takes about three weeks.

Ms. Barcus began her banking career as a commercial lender at a small bank that was bought by Bank One Corp., and later worked in international banking at Citibank. She says the Accion model, though very different from what bankers are used to, produces good results. Only 6.5% of borrowers are 30 days or more past due, she says.

Still, it's impossible to extinguish a former commercial loan officer's credit training. "Personally, I look at some of these loans we make and I take a deep breath," Ms. Barcus says. "But it is surprising how much you can learn about a person's ability to repay just by talking to them."

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