Congress has approved legislation to allow states to tap the federal unemployment insurance trust fund to help jobless workers start small businesses.

The legislation, approved late last month as part of the $600 billion budget reconciliation bill, authorizes the secretary of labor to set up demonstration programs using the insurance fund to provide what amounts to seed capital for small ventures.

It is the first time Congress has authorized the use of the $30 billion insurance trust fund for anything other than the payment of unemployment compensation claims and represents what could be a major new source of federal aid to the states during a time of tight budgets.

Several states -- including Michigan, Massachusetts and New Jersey -- have begun venture capital programs on their own, using a combination of state funds and private money. However, none of the programs is directed at the unemployed.

Sponsored by Rep. Ron Wyden (D-Ore.) and Sen. Thomas A. Daschle (D-S.D.), the legislation authorizes the secretary of labor to start three, three-year state demonstration programs to determine the feasibility of providing "self-employment allowances" to individuals eligible for unemployment benefits.

"At a time of record-setting deficits, legislators have an obligation to look at every available resource and make it stretch," Wyden said yesterday. He said the next logical step would be to allow people receiving unemployment benefits to use a portion of the money to enroll in training courses.

Under the new law, states selected to have the demonstration programs will be allowed to select up to 3 percent of those receiving unemployment benefits for the self-employment allowances. Individuals will be paid in the same way as those receiving weekly unemployment benefits. In addition, the state will be required to establish a program to assist those trying to start their own businesses.

Any administrative costs of the new program will have to be paid by the state out of general revenues. As part of the pilot program, a state must demonstrate to the Labor Department that there will be no additional costs to the trust fund as a result of the project.

Wyden estimated that the self-employment allowances would not exceed $5,000 per individual. He said that would be enough "seed capital" for the types of small business operations envisioned under the program. "A lot of this is low-tech," he said. "We're talking about people with working-class kinds of skills."

He described the program as "blue-collar entrepreneurship" and said it was designed to see if people with skills could "bootstrap their way into business."

Wyden said the target of the program would be "structurally unemployed workers who have real marketable skills," such as an auto worker who has lost his job and wants to open a bicycle repair shop.

Stephen Wandner, the Labor Department official in charge of setting up the three state projects, said yesterday he hoped to have the states selected within two or three months and have the demonstration projects operating by fall. He said his office was somewhat taken by surprise by the congressional action. "We didn't know it was there {in the reconciliation bill}," he said. Wandner said the bill did not get much attention because it was an authorization bill rather than an appropriation bill.

He said the program is in keeping with the type of experimentation the Reagan administration has been seeking in the jobs area.

Wandner said it was impossible to estimate how much money might be available for the self-employment allowances. But he said he guessed it would not be more than $10 million in each of the three states eventually involved in the program.

The self-employment program was initially opposed by some small business groups that expressed fears it amounted to little more than social engineering through the unemployment trust fund. Other critics, according to Wyden, thought it was a crazy idea.

"A lot of people kind of rolled their eyes," he said.