Darrell Minniear said the credit union's directors know all about calloused hands, blue-collar wages and tugging hard to make ends meet.

At least seven of nine members of the credit union's board of directors once lived the working-class life, according to Minniear, president and chief executive officer of the Martinsville DuPont Credit Union.

"They [the directors] have all been there before, so they have a lot of empathy for people who have to make a living in a blue-collar job and live paycheck to paycheck," he said. Minniear was interviewed this week at MDCU's new branch in Rocky Mount. The credit union has offices also in Collinsville and Martinsville.

And those directors' experiences helped shape a new borrowing option at the credit union, said Minniear and others -- an option designed to be an alternative to short-term, high-interest rate loans offered by payday lenders.

The payday loan industry in Virginia is encountering fierce opposition this year, and members of the Virginia General Assembly are reviewing legislation that could reform, or even hamstring, the industry statewide.

The credit union's Salary Advance Loan mirrors payday loans in many ways. Loans are approved as long as the borrower has a paycheck or a check from another regular income source, such as Social Security. The application process is brief and does not include a credit check. And the SAL advances are short-term loans for amounts that range from $100 to $500.

But Minniear said MDCU's cash advance loans do not include the "usurious fees and interest charges that are typically applied to payday loans." The application fee is a flat $5, he said. And the loan's annual percentage rate is 18 percent.

By comparison, payday loans, also limited to $500, can include fees that reach $75 per loan, at an annual percentage rate of up to 782 percent.

A recent article published as a staff report for the Federal Reserve Bank of New York suggested that most payday loans should not be characterized as predatory lending. A disclaimer said the article did not necessarily reflect the views of the Federal Reserve System and was being distributed to "stimulate discussion and elicit comments."

But for Minniear and a host of others, payday loans are "just legalized loan sharking." Wade Register, vice president of lending for the credit union's Rocky Mount office, said one SAL borrower works for a payday lender.

Minniear said the credit union does not anticipate making money from its new loan program. But it has already attracted new members because borrowers must be or become MDCU members. Joining the credit union costs $5 and new members must open a savings account with a $20 deposit. In addition, the credit union anticipates recruiting some customers for debt consolidation loans.

Michael Tipton operates a small business in one of the four counties served by MDCU -- Henry, Franklin, Patrick and Pittsylvania. All four counties have suffered repeated manufacturing shutdowns in recent decades.

Tipton, once an employee of a textile manufacturer, said he's turned several times to payday lenders when money was short. He said they have served him well. He said he typically pays off one loan before taking another -- a disciplined approach many customers of payday lenders do not or cannot follow. Tipton said he has a poor credit history.

"Who else is going to loan you money? A lot of people complain about these payday lenders charging too much money in fees and interest," Tipton said. "But it's their own decision to agree to the terms. It's their responsibility."

He said payday loans can help pay for unexpected funeral expenses, trips out of town and Christmas expenses.

"I've used them for several years. Some high-class people look down on them. I don't know why."

But when Tipton heard a radio ad about the credit union's new alternative to the increasingly controversial payday loans, he turned to MDCU to borrow money to pay off two loans from payday lenders. He said the credit union offered "an excellent rate, a whole lot less than I've been paying."

He added, "It's a super alternative, because of the low rate and fees."

The credit union, with few exceptions, requires full payment of each loan before a customer takes another. On occasion, a borrower can use a new paycheck advance to pay off an existing loan. But Minniear said controls on the process, including financial counseling, prevent people from digging too deep a hole. Customers whose employers provide direct deposit for paychecks are asked to make MDCU a payee.

MDCU launched the SAL program in late November and has since granted 240 loans. One customer has used the program for nine cash advances, but his loan balance is only $275, according to Register.

Opponents to the current laws governing payday loans argue payday lenders and industry annual percentage rates in Virginia often trap the working poor in a cycle of debt. They say high fees, staggering interest rates and seductive campaigns to persuade customers to re-borrow provide fertile soil for such cycles. Several bills designed to reform payday loans have been introduced this session in the Virginia General Assembly.

The payday loan industry has grown dramatically in Virginia since 2002, when the General Assembly eliminated for payday lenders a 36 percent interest cap on small loans.

Supporters of payday lenders, including industry lobbyists and satisfied customers such as Tipton, respond that payday loans provide a service for people who need cash in a hurry. The loans, which are essentially a loan on the customer's next paycheck, can appeal to many people with poor credit histories because lenders do not perform a credit check.

Aside from recruiting new members and generating good will, why would MDCU offer a loan program that does not promise a direct profit?

"It helps people," Minniear said. "That's what we like to think we do. And it makes us look like we want to look and it builds loyalty."

Founded in 1953, the Martinsville DuPont Credit Union also has blue-collar roots, though many early members worked white-collar jobs. It emerged from the DuPont nylon plant in Martinsville, a factory that once employed thousands but shut down in 1998, a plan announced well before the closing. Minniear said MDCU became a community chartered credit union in 1997.

Minniear said the much-reported income gap between the nation's wealthiest and other income groups makes it harder these days for many households to avoid problem debt. In addition, he said, a society focused on consumerism leads many people to buy cars, houses and other items they cannot truly afford.

Meanwhile, Mark Smith, another SAL customer, said he believes the loan program could help him emerge from debt's dark hole.