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When Steven Villegas donned his home-made kilt, he felt opportunity knock. Intrigued by the freedom and comfort of life without pants, it struck him that kilt-making could be a successful business.

Still, Villegas never thought he'd be the one to start that business. And he never dreamed Utilikilts, the company he founded with help from friend Megan Haas, would become a $1 million-plus enterprise.

Utilikilts has exposed a hidden fashion passion with remarkable results. Who would've guessed so many men would prefer the breeze between their knees over the security of trousers?

Even so, when it came to financing the company, conventional lenders balked at its unconventional product and approach.

"We're selling skirts for men," says Villegas. "Who's going to buy that?"

Says Haas, "The outside world sees us as a couple of hippies trying to start a business. The Small Business Administration has been a big help. They're the only people who believe in us."

It's been eight years since Villegas converted a pair of surplus Army pants into his first kilt and four years since he started selling his handiwork. Utilikilts are sold at fairs and festivals coast to coast and the company has received coverage in numerous publications. Villegas even obtained a patent on his pleat design.

What a long, strange--and surprisingly successful--trip it's been. "No matter how bizarre it might have seemed to other people, the bottom line is they did the work and it paid off," says Roland Chaiton, loan officer/vice president of Community Capital Development.

Community Capital Development is a Seattle nonprofit that makes direct loans under the SBA-backed 7(a) program and provides technical assistance to loan applicants. Working closely with Chaiton, Utilikilts qualified for its first loan in 2000. Two years later, Utilikilts qualified for a $105,000 7(a) loan.

"The loans have been vital," says Bill Geurts, the company's chief financial officer. "The company is thinly capitalized ... and you can only grow so fast on your profits."

The first loan in 2000 jump-started production, enabling Utilikilts to buy more fabric, hire employees and move to its current space. The 7(a) loan in 2002 enabled the company to buy still more fabric, add more employees and expand sales efforts.

Utilikilts sold 315 kilts before receiving its first loan. Since then, it's sold nearly 18,000. "Their growth has been pretty phenomenal," says Chaiton. Sales have soared from $800,000 in 2002 to $1.2 million in 2003 to a projected $2 million in 2004.

Booths at fairs and festivals account for 70 percent of sales, with the rest split between the Web site and the Seattle retail outlet.

Utilikilts bills its garments as "suitable for every occasion except bungee jumping." With prices starting at $115, Utilikilts come in a growing range of colors and styles, from denim blue to orange camo and from workman's garb to dress-up wear. Just don't ask for plaid. "We're not trying to be a Scottish kilt-making company," says Villegas. "We're an American kilt-making company."

Technically, Utilikilts is not a kilt-making company at all. "We use the term because it's easily understood," says Villegas. "I don't think the world, especially this country, is ready for manskirt, but that's what we make."

As offbeat as manskirts might seem, they're mainstream compared to what Villegas originally had in mind: Founding a theater company and hitting the road in a double-decker bus to spread "heightened social awareness" through music, dance and drama.

Villegas worked various jobs while saving to finance his Magical Mystery Tour Production Co. Kilt-making began as a spur-of-the-moment response to a hot and sticky day at work, evolved into a way to help pay for the bus/show, then took on a life of its own.

Utilikilts considers its customers a community, welcomes their suggestions and uses them, not models, to promote its garments. The company's Web site includes a busy chat room, amusing testimonials and notices of "Utilikiltarian" gatherings. The company also sponsors the Northwest Kilt Exchange, awarding free kilts to people for volunteering at various nonprofit agencies.

Wearing a kilt had never crossed Joe Germano's mind until he ran across Utilikilts online. Intrigued, the marine biologist visited the retail outlet and walked out with the first of five kilts. "I just kept buying more kilts for different occasions, so now I have a whole wardrobe," he says.

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"They allow you to move around freely," he says. "The best thing is all the pockets."

Richard Hatch, a cast member on the Survivor: All-Stars reality television show, wore a Utilikilt during filming.

Villegas and Haas hooked up four years ago at Fremont Market in Seattle, where Villegas was making his first attempt at selling kilts. He asked for her help, she ultimately agreed and they've worked together since.

"I was the muscle and vision and she was the articulator and interpreter," says Villegas.

They proved to be a successful team--so successful they soon couldn't keep up with demand. The answer? More capital to expand production.

By that time, Villegas had met with Chaiton and attended some classes, but had struggled to assemble a proposal that would meet SBA loan requirements. "Our mission is to help these businesses, but we also have to spend taxpayer money wisely," says Chaiton.

Two personnel additions saved the day. Danielle Villegas, Steven's sister and a former film and theater director/producer, joined the company as chief operating officer. Then Geurts, a former bank controller, arrived. With those two, the company was able to submit an application that justified a loan.

As Utilikilts grows, Villegas hopes to do more than sell an alternative to trousers. He also hopes to promote an alternative way of doing business through such practices as open books, profit sharing and caps on executive salaries--all of it an extension of his original desire to foster social change.

As for the Magical Mystery Tour Production Co., "It's still going to happen," says Villegas. "It'll be the coolest road show you've ever seen."

THE UTILIKILTS CO.

Steven Villegas

1819 15th Ave. W., Seattle, Wash. 98119

(206) 282-4226

www.utilikilts.com

Year founded: 2000

Annual revenue: $1.2 million

Number of employees: 14

SBA loan amounts: $138,000

Story by Brad Broberg