Initially we helped employees in rural North Carolina form worker-owned cooperatives and gain ownership of local mills that were being shut down. Over and over we saw workers stopped in their tracks because they couldn't get conventional financing. In response, we started Self-Help Credit Union and a nonprofit loan fund. Our first capital was $77 raised through a bake sale organized by a baker that Self-Help assisted. Early investors also included Catholic women religious orders.
Self-Help co-founders are Martin Eakes and Bonnie Wright, and Self-Help's first "office" was Martin's VW Bug. After the car caught fire (taking Self-Help's files with it!), Martin tried towing a trailer around to meet with rural customers. Finally, in 1982 we got "real" office space in an unheated, unfurnished office building in downtown Durham, North Carolina. Today, we have 47 credit union branches and lending offices nationwide.
Helping small businesses grow
Self-Help's early lending focused on small businesses, as these are often the engine for a community's economic growth. We adapted international microlending models to the U.S. market, and then expanded into larger loans well-suited to bigger firms that were a main source of employment in rural communities. Over the years, we have diversified our lending to businesses and nonprofits. To date we have made over $800 million in loans to entrepreneurs.
In 1985 we began making home loans to North Carolina families who were unable to get conventional mortgages. We saw that homeownership was the primary way for lower- and middle-class families to build wealth and financial security, and that most small business owners relied on their home equity for start-up capital. Our home lending success (less than 1% of capital lost on the loans we made) affirmed our belief that low-wealth families pay back their loans if given the chance.
In the early 1990s, we began to partner with North Carolina banks who offered mortgages in the communities we served, but lacked liquidity to meet the lending needs in those communities. In 1998, we expanded this to a national secondary market mortgage program, which to date has supported homeownership for over 50,000 households nationwide.
Our first real estate development project took place in Durham, NC, where we converted a downtown office building into affordable space for local nonprofits and small businesses (and our own lending office). Since then we have developed and invested $144 million in commercial real estate projects to invigorate downtown areas and neighborhoods, and we have created affordable housing for 228 families.
Fighting predatory lending
In the late 1990s, homeowners began coming to Self-Help Credit Union seeking help to avoid foreclosure after unscrupulous subprime lenders had siphoned off their home equity. Our "tipping point" came the day one family showed us the paperwork on their $29,000 mortgage--where they had also been charged $15,000 in fees! In response to these abusive--and completely legal--loans, Self-Help worked with a state coalition in 1999 to help pass the North Carolina Predatory Lending Law, the first such law in the country. In 2002, Self-Help established the Center for Responsible Lending (CRL) to build on initial successes and expand our focus nationally, and to tackle practices such as payday lending in addition to mortgage lending. Since then, CRL has worked with community advocates, policymakers, and industry groups to achieve predatory lending reforms that save American households millions of dollars annually.