Can I Get a Loan or an Advance on My Social Security Benefits?

The Social Security Administration pays retirement and disability benefits to those who qualify by contributing to the system through payroll taxes. In addition, the Supplemental Security Income program pays a monthly stipend to disabled individuals who don't qualify for the Social Security Disability Insurance program. In general, the agency does not pay advances or loans on benefits, but there is a loophole around this rule for retirement beneficiaries, and the SSI program may qualify a pending applicant for an emergency advance payment.

Can I Get a Loan or an Advance on My Social Security Benefits
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Retirement and Disability

An individual covered by Social Security may claim retirement benefits at age 62, at the earliest, or disability at 18 and older, if he qualifies for the benefit. Social Security does not extend loans or advances on these benefits, even if the agency has approved the application and payment is pending. However, the SSI rules allow a one-time expedited or emergency advance payment, in case an applicant is facing a financial emergency and is unable to pay for essentials: food, clothing, shelter or medical care. To approve the payment, Social Security must reach a finding of "presumptive eligibility" based on the financial resources and medical status of the applicant. If the agency approves the emergency advance but does not approve the application, then it considers the advance an overpayment, and will insist on repayment.

A Loan, in Effect

Although the Social Security rules do not allow loans as such, an individual eligible for retirement may stop benefit payments already received and restart the benefits at a later date. Any benefits paid out must be returned to Social Security, but there's no interest charged. To do this, a new applicant can simply "withdraw" his application within 12 months of becoming entitled to benefits by completing Form SSA-521. This is only allowed one time, but the rule creates, in effect, an interest-free loan to cover temporary shortfalls or expenses. Any family benefits paid out to a spouse or dependents, as well as Medicare premiums and withheld taxes, must also be repaid.

Cash Advances on Benefits

One private option is to secure an advance or loan on future benefits from a third party. Payday or commercial lenders, for example, may extend short-term loans to an individual awaiting a lump-sum Social Security Disability benefit. A firm offering a settlement advance charges interest to the beneficiary and may insist on a contract that assigns the lump-sum benefit to the lender as collateral. Such a contract, by Social Security rules, is not enforceable: Social Security does not allow assignment of its benefits to a third party. The only exception to the rule is the case of a representative payee, <atarget="_blank"> </atarget="_blank">an individual approved by the agency to handle payments for the beneficiary.

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