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Before launching her ethnic-themed cookie-cutter business two years ago, Heather McCartney had no track record as an entrepreneur, little credit history of her own, and only a passing interest in the culinary arts. In short, she was hardly the model candidate for a small-business bank loan.

Moreover, the amount McCartney estimated that she needed to give her fledgling business a boost -- $5,000 -- was well below the radar of most banks, which generally prefer to make loans of $50,000 or more.

Yet last week, McCartney, an arts educator in New York City, achieved what she thought would be impossible: She got the loan she wanted. The cash came not from a traditional bank but from a nonprofit micro-lender called Count Me In for Women's Economic Independence. "It was a wonderful validation," says McCartney, one of the first 39 recipients from Count Me In's revolving-loan fund.

Since its launch in March, the group has won media attention for its focus on women, its populist approach to fund-raising (individuals are asked to donate $5 or more to build the loan fund), and the connections of its CEO, Nell Merlino, who created "Take Our Daughters to Work Day" seven years ago. But amid all the hoopla, one aspect of Count Me In has gone largely unnoticed: the way in which it processes and approves loan applications.

Unlike hundreds of community-based micro-lenders, Count Me In is aiming for a national presence -- though one that's strictly online. Entrepreneurs can go to the group's Web site (www.count-me-in.org) to read about its loan fund, learn how to write a business plan, and fill out a loan application. What's even more unusual is that the loans are then evaluated using a special credit-scoring system developed by Count Me In.

Described as "woman appropriate," the system is designed to be more forgiving than those used by most banks. One example: Banks typically ask how long an applicant has been in business. Count Me In also wants to know how long a woman has been making or informally selling a core product. "It's not the ownership that matters to us. It's the practical experience of what they've done," says Kathryn Keeley, who oversaw the development of the credit-scoring system by a team of consultants that included bankers, women business owners, anthropologists, and sociologists. With Count Me In, women also have a chance to explain blemishes on their credit records, such as debt that resulted from a divorce or medical emergency. Count Me In also takes into account lack of credit, a situation common among married women with accounts under their husbands' names. "We really view ourselves as a bridge between loan sharks or borrowing money from family and commercial institutions," says Merlino.

For all the effort put into Count Me In's process, one major question remains: Will it work? "That's the great unknown," says Livingston Parsons, vice-president for lending operations at micro-lender Accion USA, which shared information on 1,000 of its loans to help develop Count Me In's credit-scoring system.

Some experts wonder whether such a system will ever work as well as face-to-face meetings with loan officers. Most micro-entrepreneurs have few assets and little credit history, so loan officers must base their recommendations on more subjective qualities, such as an applicant's commitment to a business or attitude toward debt repayment. "It's a very character-based process," says Parsons, adding that Accion's loan officers always make at least one visit to the applicant's place of business, and typically spend several hours helping them complete forms.

The Digital Divide is another concern. Micro-entrepreneurs are often immigrants with low to moderate incomes. "I would be very surprised if there's a huge percentage of them who have Internet access on their home computers," says Parsons, who nonetheless hopes to launch a small pilot program for Accion that would allow applications to be made online within the year. But Accion isn't likely to adopt the all-online model anytime soon. In focus groups, its clients have said they would welcome some form of Internet contact with the group, but none was willing to give up a personal relationship with a loan officer.

Still, if Count Me In's online experiment works, it could lead to a dramatic expansion of micro-lending. "There are a lot of places in the U.S. that are not served by a local micro-enterprise lending organization," says Bill Edwards, executive director of the Association for Enterprise Opportunity, a trade group for U.S. micro-lenders. To prove that Count Me In's credit scoring system is statistically valid, the group must make and manage at least 2,000 loans over the next two and a half years, says Keeley. So far, Count Me In has raised just over $1 million (from individuals and corporate partnerships) of the $8 million needed for its fund. Loans range from $500 to $10,000, with interest rates 2% to 4% over the prime rate. And what would qualify as a success? An overall default rate of 1% to 8%, says Keeley, though the results won't be known for several years.

For McCartney, who received $5,000 in the first round of loans, the anonymity of Count Me In's online application proved appealing. Walking into a bank, or even a community micro-lender, felt intimidating. "I thought they would laugh at me," says McCartney who teaches dance at a public high school in Manhattan while running her business, Ethnic Edibles, from her home in the Bronx. She plans to use the cash to improve packaging on her African-inspired cookie cutters and introduce a new line of Puerto Rican-themed cookie cutters in time for the holidays. "It's easy to get your family and friends to be in your corner," she says. "But when you see an outside organization that has faith, well, that's really important." Only time will tell if the promise of the Internet pays off for other micro-entrepreneurs.