What Now, Design Darlings? : Unless Sarah Phillips quickly finds financial backers, she’ll lose her big chance to capitalize on inaugural success.

Sarah Phillips should be on top of the world.

When Hillary Rodham Clinton tapped the virtually unknown, 37-year-old designer to whip up her inaugural gown, she was christened “7th Avenue’s Cinderella” and was overwhelmed by an avalanche of publicity.

Pictures of the violet lace-and- mousseline gown appeared everywhere, from the “Today” show to Paris Match. Even “Saturday Night Live” did a knockoff. People magazine clamored for an interview, store buyers were buzzing to place orders (Fred Hayman requested some gowns for Oscar night), Hanes stockings wanted her for an ad, and Katie Couric thrust her before the cameras at the Arkansas Ball on inaugural night.

But the other afternoon, as Phillips sipped a cappuccino in a darkened corner of the tony Royalton Hotel, she seemed weary and discouraged. Unless she quickly finds a backer to infuse her tiny, undercapitalized, 2-year-old company with a sizable sum, she won’t produce a fall line and reap the rewards of all her publicity. In the fickle world of fashion, particularly in today’s bleak economic climate, money people are hard to find, even for the First Lady’s celebrated designer.

“It’s sooo frustrating,” she said, removing her sweeping black coat to reveal a sleeveless black turtleneck and tight black jeans. “This is the moment when everybody is looking at me and I might not even have a line! We’re such a small business that without capital we just can’t go forward.” She sighs and sinks back into the cushions of her chair. “Ugh, I just don’t want to talk about it.”

So the conversation switches to a sunnier topic: the inaugural gown.

“It’s a fairy-tale sort of dress, very traditional, which really isn’t typical of my style,” said Phillips, who described her clothes as sculptural, streamlined and a bit dramatic. “I thought it was a beautiful design, but I never thought it would be selected since there were a million other gorgeous gowns submitted by designers far more established than I.”

Phillips was urged to submit gown sketches to Clinton by Michelle Revere, a buyer from Barbara Jean Ltd., the Little Rock, Ark., boutique where Clinton discovered Phillips’ clothes. (She wore the designer’s pale yellow silk suit for her husband’s acceptance speech at the Democratic National Convention.)

Originally, the gown was to be navy, but Phillips thought the color looked too drab. While shopping for fabric with her husband, Tom Hatch, a sculptor, she spied a bolt of iridescent violet mousseline . Phillips deemed it “sensational” for the overskirt and found matching lace for the long-sleeved sheath.

In mid-December, Phillips and Barbara Matera, a New York theatrical designer who sewed the entire gown, flew to Little Rock for a fitting--and Phillips’s first meeting with Hillary Clinton.

“She was very down to earth, very focused and very easy to work with,” said the designer of the First Lady, who requested no changes in the sketch.

At the second fitting, 10 days before the Inauguration, the staff oohed and aahed as Clinton showed off the gown. “She just flipped over it,” said Phillips.

The tall, willowy Phillips, whose pale skin is accentuated by deep wine lipstick, was born in New York. She attended Stephens College in Missouri for two years before transferring to Parsons School of Design to concentrate of fashion studies. She quit before graduating (“I was bored”) and eventually worked for the firms of Yves Saint Laurent, Ralph Lauren and Christian Dior.

In 1991, working out of her lower Manhattan loft, Phillips introduced her first collection of 15 pieces, mostly suits and evening clothes. The following season her clothes caught the eye of Revere as well as buyers from Saks Fifth Avenue and Neiman Marcus. Phillips’ sleekly tailored suits retail for about $1,600; her evening creations, about $1,400.

Asked about current trends, she said she isn’t a fan of grunge or the ‘70s revival being ballyhooed for spring. “Why is ugly hip?” she asked. “I just don’t understand it. Women are smarter than that.”

She’d prefer to see them wearing her refined, softly tailored clothes with signature details like antique buttons and intricate seams. If she can only get them into production.

“I’ve been interviewing sales reps, seamstresses and staff, but my hands are tied until I can find a backer,” Phillips said. “Hopefully, something will turn up.”

And with that, Seventh Avenue’s Cinderella finished her cappuccino , gathered up her coat and headed for home.