Air Force Aid Society provides alternative to pay-day loans Published Feb. 29, 2008 Air Combat Command Public Affairs LANGLEY AIR FORCE BASE, Va. -- Air Force Aid Society officials announced a new loan program available to Air Force members beginning March 3, called the Falcon Loan. A Falcon Loan is an interest-free loan of $500 or less that can be used for emergency needs such as basic living expenses -- rent, utilities and food -- car repairs, emergency travel or other approved needs. Applying for a Falcon Loan requires three steps: 1. Download the application from the AFAS Web site. 2. Print a current leave and earnings statement 3. Take the LES and military ID to the Airman and Family Readiness Center "The ease of the Falcon Loan program will hopefully encourage Airmen to turn to their Airman and Family Readiness Centers in times of financial need and not be ensnared by potentially career-damaging debt traps," said Chief Master Sgt. Pamela Derrow, the U.S. Air Forces in Europe command chief master sergeant. An example of "debt traps" are payday-loan lenders who, according to the Center for Responsible Lending, collect 90 percent of their revenue from borrowers who can't pay off their loans when due. Information on the CRL Web site states a typical borrower pays $793 for a $325 loan. Additionally, CRL claims "predatory payday lending now costs American families $4.2 billion per year in excess fees." Furthermore, payday lenders often require their borrowers to repay their loans within 14 days at interest rates between 300 and 600 percent APR, said Michelle Padgett, 1st Mission Support Squadron community readiness consultant. Alternatively, the Falcon Loan is interest free and borrowers are granted up to 10 months to repay it. If the borrower's estimated separation date is under 10 months he/she will be required to repay the loan before separation. The application process for a Falcon Loan requires no budget information, backup documentation or first sergeant or commander approval. All that is needed to complete the application is information required to process an allotment or Paymatic transaction -- automatic withdrawal from bank account -- and a signature. In other words, when applying for the Falcon Loan, finance automatically sets up an allotment for repayment. The relaxed approach to the loan process comes with the hope that Airmen will feel less threatened to come forward for help, and perhaps after getting a Falcon Loan will establish a relationship that draws them back to the A&FRC for a follow-up visit to discuss their financial situation. "One of the important missions of Airman and Family Readiness Centers is to promote financial readiness," said Ms. Gretchen Shannon from the USAFE Airman and Family Readiness Branch. "The new AFAS Falcon Loan program will be helpful in diverting some Airmen faced with financial emergencies away from high interest pay-day lenders." According to Ms. Padgett, irresponsible borrowing can affect the Air Force's readiness. She said financial issues are "at the top of the list" of reasons why people have trouble acquiring, or maintaining, security clearances. To be eligible for a Falcon Loan, borrowers must be an active duty Air Force member or spouse with power of attorney stationed at an Air Force base with an A&FRC, and cannot have a current Air Force Aid Society loan. Air Force Reserve and Air National Guard personnel activated on Title 10 orders at the time of application are eligible for a Falcon Loan as well. The Falcon Loan is a complement to the AFAS's standard emergency assistance loan/grant program. Receiving a Falcon Loan does not make you ineligible to receive a standard AFAS loan/grant while you are repaying your Falcon Loan. For more information on the Falcon Loan program, please visit your Airman and Family Readiness Center or the AFAS Web site.