MILWAUKEE — It wasn't hard for Jim Schrimpf to spot a disturbing trend at Brewery Credit Union: Members were using payday lenders instead of the credit union for small, short-term loans.

In a payday lending transaction, borrowers can get money in just a few minutes by writing a check for the amount of the loan plus a finance fee. The lender agrees to hold the check until the customer's next payday when, in theory at least, there will be enough money in the account to cover it.

Schrimpf said payday lenders were coming into the credit union regularly to cash checks written to them weeks earlier by Brewery members.

"We estimate probably 15 percent of our membership either had a payday loan or were doing business with a payday lender within the last 12 months," said Schrimpf, who is president and chief executive of 7,000-member Brewery Credit Union in Milwaukee.

That meant that credit union members were paying the going rate of at least $20 for every $100 borrowed — which amounts to interest of more than 500 percent when expressed as a yearly rate — for the typical $350 loan.

Moreover, some couldn't pay back the loan after two weeks and were forking over an additional fee to extend it another 14 days or longer.

Schrimpf said he felt compelled to do something.

After seeking guidance from the industry's Filene Research Institute, Wisconsin Credit Union League and Milwaukee consumer finance lawyer Amy Salberg, Schrimpf set up a payday-like program called "Fast Cash," which offers loans to members at less than half the cost of traditional payday loans.

In Brewery's program, members pay $9.95 for every $100 borrowed, and, in the process, receive some financial education and encouragement intended to eventually get them off the high-cost borrowing cycle.

Brewery Credit Union has made about 100 Fast Cash loans to its members since it started last winter, and Schrimpf is hoping the concept catches on to the extent that it poses some real competition to payday lenders in the Milwaukee area.

"It's been very well-received," Schrimpf said. "We're proud of what we're trying to do."

It's hard to say whether efforts like Schrimpf's — and similar programs around the state and nation — will put a dent in the growing payday lending industry. But consumer advocates are happy to at least see someone trying.

"It's a good sign that more mainstream financial institutions are starting to serve the small loan needs of their own customers," said Jean Ann Fox, a spokeswoman for the Washington-based Consumer Federation of America.

Fox said payday loan outlets, which critics say add to the burden of people with low incomes or little personal finance know-how, have grown rapidly.

"This industry has spread to the point where you can't turn around without running into a payday loan outlet in low- to moderate-income neighborhoods," Fox said.

Since 2000, the number of payday lending locations in the U.S. has more than doubled from 10,000 to 22,000, said Steven Schlein, a spokesman for the industry's trade organization, the Community Financial Services Association in Washington. Nationwide, payday lenders issued $40 billion in loans in 2005, he said.

Defending the industry, Schlein said it fills a niche that banks and most credit unions have shunned: small cash loans with little or no collateral. He said it started in the 1990s, when pawn shop operators decided to start making loans of $100 and $200 to people who otherwise would come in to hand over jewelry and other valuables as security for small, short-term loans.

It's "demagoguery" to classify payday loans as predatory lending, Schlein said. He defined predatory lenders as those who cause borrowers to lose whatever they've put up as collateral.

"We want people to pay their loans back," Schlein said.

Often, he said, a payday loan is a less expensive and less troublesome alternative to bouncing a check and being assessed a $30 overdraft fee by a bank.

Brewery Credit Union's Schrimpf tips his hat to payday lenders for one thing: They know how to cater to their customers. And for the credit union to be successful with its loans, it has to treat them just as well or better, he said.

"We knew they would be expecting at least the same type of experience. Because to be honest with you, payday lenders do a really good job of serving people," Schrimpf said. "They are friendly; they do this quickly with a smile on their face and all the rest."