Service Loan Programs


Money troubles?  Considering a loan?

There is much to consider before taking out any type of loan. 

Each branch of the military offers a program to help service-members and/or their families.  They also want to help service-members and family members avoid Payday Loans and the like.

Each program varies depending upon branch of service.  Some programs allow loan access for spouses, some programs are only available to service-members.  Please see the related websites for more program details.

Air Force to launch loan program

U.S. Air Force personnel confronting a sudden financial hardship will soon have access to a modest but quick interest-free loan, according to the Air Force.

The loan program is an Air Force Aid Society initiative that begins March 3 at Air Force installations worldwide.

Under the Falcon Loan program, an airman can apply for a loan of as much as $500.

A similar effort was launched last month by the Navy-Marine Corps Relief Society. It includes a cap of $300.

The Air Force loan program "will be helpful in diverting some airmen faced with financial emergencies away from high-interest payday lenders," Gretchen Shannon of the U.S. Air Forces in Europe, Airman and Family Readiness Branch, said in a news release.

One of the primary features of this program, according to the Air Force, is the ease and speed with which an airman - or a spouse with power of attorney - can secure a loan. A person needs only to fill out a short application form, visit a family readiness center, and present their ID card and a current leave and earnings statement, according to the Air Force.

Loans must be paid back within 10 months, sooner if an airman is separating from the service during the load period.

"The streamlined application process for a Falcon Loan requires no budget information, backup documentation or first sergeant or commander approval," the news release stated.

Ultimately, the hope is that a cash-strapped individual will avail themselves to the guidance and financial services available at family readiness centers.

For more information, contact a family readiness center or visit the Air Force Aid Society Web site at:

Navy Marine Corps Relief program to offer quick loans for troops in a pinch

A $300 loan with no interest and no questions asked.

No, it's not free money - you have to pay it back in 10 months - but the Navy Marine Corps Relief Society's new Quick Assist Loan program offers servicemembers a quick financial fix and an alternative to predatory lenders.

QAL cuts the usual paperwork and aims to get the $300 in the hands of active-duty Navy or Marine Corps personnel within 15 minutes from the time they walk in the door, NMCRS Yokosuka branch director Andrea Bowen said Monday.

Sure, it's a small amount, Bowen said, but even small amounts can add up - especially if they end up in the hands of predatory lenders that charge exorbitant interest rates.

"That $300 will cost them $1,000 after a year with a payday lender," Bowen said. "We want people to come to us before they get in trouble, rather than after."

And, with no questions asked, QAL can be used for payments - like credit card and cellular phone bills - that NMCRS standard assistance cannot cover, she said.

Failure to repay the $300 loan could result in wage garnishments.

The program starts Jan. 23 - NMCRS' 104th birthday - but "the word is out already," Bowen said.

The program's popularity was proven in a pilot run last spring where loan traffic leapt over 75 percent in eight test locations.

The initial QAL pilot was a $500 loan with a 12-month repayment. This was scaled back to $300 and 10 months as a matter of "affordability" due to the program's popularity, according to the NMCRS Web site.

NMCRS is funded through contributions, loan repayment, thrift shop operations and interest from the group's investment portfolio. The group provides combat casualty assistance and education support through the dollars earned on investments, but its principal mission provides no-interest loans and financial counseling to servicemembers in a pinch.

For example, the Yokosuka branch loaned out $480,000 last year and raised about $390,000, Bowen said.

But business is expected to boom with the start of QAL overseas - even though predatory lending overseas is not the problem it is stateside, Bowen said.

Lenders target the military community due to their "guaranteed paychecks," and will contact the servicemember's chain of command as an added pressure, Bowen said. Servicemembers can lose their security clearance, or worse, their jobs due to debt.

The Military Lending Act, which went into effect Oct. 1, 2007, capped interest rates at 36 percent and prohibited payday loans, vehicle title loans and refund-anticipation loans. But lenders have already found loopholes, like using a third party to set up an allotment, Bowen said.

Applicants can pay off the loan in three to 10 months, with payments automatically deducted from their paychecks, Copson said. She said applicants must meet the following eligibility requirements:

  • All previous loans with NMCRS must be paid off.
  • Applicants cannot have pending or had any disciplinary action in the last six months.
  • Applicants cannot have filed for bankruptcy protection.
  • Applicants cannot have received a grant or had a loan converted to a grant in the last 12 months.
  • Members can apply for two Quick Assist Loans within a 12-month period, but the first must be paid off before a second is granted.

To expedite the process, applicants can fill out an application online at, and take the completed form to their local NMCRS, Copson said.

Because applications must be turned in to a representative at an office, the loans are not available for sailors or Marines on ships.

Army Takes Issue with Payday Loans

Everyone's heard the familiar radio spots cajoling people to take out a payday loan, which is paid back when your paycheck arrives. It sounds easy enough. In reality, these loans are dangerous and damaging, requiring sky-high interest rates and often sending people into a downward financial spiral. The Defense Department considers payday lending one of the top 10 key issues impacting the quality of life of Soldiers, and a Pentagon report summary posted on the Center for Responsible Learning's Web site estimates that about 17 percent of servicemembers use payday loans. The 2007 National Defense Authorization Act caps interest rates for military personnel at 36 percent and prohibits the use of a personal check or other method to access a borrower's bank account. The law won't stop Soldiers from using payday loans, said Leonard Toyer, a financial counselor with Army Community Service, but it will lessen the amount of debt servicemembers carry as a result. Payday loan requirements are simple: a bank account and steady source of income. The loan recipient writes a post-dated check to the lender for cash. Interest rates are extremely high, usually around 300 percent or more. Repayment is usually required within two weeks. If the recipient cannot pay the loan off when it's due, he or she must deal with late and bounced check fees and possible legal action. To avoid default, the borrower must roll the debt into a new loan with the same high rates. "Unfortunately, 75 to 90 percent of people can't pay it back in the prescribed time," said Mr. Toyer. "They're constantly rolling over two or three times trying to get out of the hole. Generally, unless they come into some kind of windfall where they can plunk a good chunk of money down, they're stuck. "When everything shakes out, you're talking about people paying anywhere from 400 to 600 percent in interest for those loans, and that's ridiculous." According to Mr. Toyer, the reasons Soldiers use these loans, or even how many are using them, are hard to pin down. "Since finances are so tied to careers nowadays, a lot of Soldiers are reluctant to come forward and say they used a payday loan," said Mr. Toyer. "They know a lot of times, units don't look favorably on that and might consider it irresponsible."

The director of the Financial Readiness Program here, Mr. Toyer helps teach Soldiers how to handle their money, and the Army offers alternatives to payday lending to help Soldiers in financial need. According to Trina Reliford, the Army Emergency Relief officer for ACS, Soldiers can fill out an application for an interest-free loan and receive a check the same day with a commander's approval under the Commanders Referral program. Soldiers may receive up to $2,000 a year in two loans and the first loan must be repaid before seeking Commanders Referral again. The timeline for paying back the funds is prorated depending on budget and current finances, Ms. Reliford said. Either way, the terms are much more flexible than those of a payday lender. She hasn't seen many Soldiers come in seeking the assistance, but encourages it. "We try to get Soldiers educated and tell them to come to us first and stay away from payday lending." The Army also offers an emergency food program that helps Soldiers buy food when funds are tight. "If it's a choice between paying your bills or buying food, pay your bills and then come to us," Mr. Toyer said. "We'll help you with that rather than you going to a payday lender and ending up deeper in debt." Many of these businesses stay "just under the wire of being legal," he said.

Army Emergency Relief

Army Emergency Relief (AER) is a private nonprofit organization whose sole mission is to provide financial assistance to Soldiers and their families. AER provides interest-free loans and grants for: emergency assistance to include rent, food, travel, car repair, funeral, medical and dental expenses; children and spouse scholarships; incidental expenses for Soldiers medically evacuated from Operations Enduring Freedom and Iraqi Freedom; support to families of fallen Soldiers. AER assistance is available 24/7 and worldwide. For more information, visit the Army Emergency Relief website.

Other money related information:

New Law Protects Military Families from Loan Sharks

"Military Saves" - is designed to teach servicemembers and families how to save and invest their hard-earned dollars and stay out of debt.

Payday Loan Smackdown

Military Money Matters

Money Matters for America's Military Families Finance Section

Payday Loans: Good for Them, Headache for You

Each branch of service has various offerings of financial counseling and financial management education available.  Check with your service family center for more information and take advantage of these free services.

Military OneSource offers free, confidential financial planners and counselors available toll-free 24/7 at          800-342-9647       .

Military Homefront provides information to help servicemembers and their families in the "Personal Finance" section.

Predatory Lending Regulation Takes Effect

The Department of Defense put into effect a new regulation Oct 2007, that protects servicemembers and their families from high-cost, short-term loans. The regulation limits the fees and interest that creditors can charge on three types of loans: payday loans, vehicle title loans, and tax refund anticipation loans, products that can often lead to a cycle of ever-increasing debt. The final regulation is available in the Federal Register PDF. In addition to financial and legal counseling available through a servicemember's chain of command, legal assistance office or military aid society, DoD offers several online resources to servicemembers and their families: Military OneSOURCE, Military HOMEFRONT; and Armed Forces Legal Assistance Services.

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