Who uses payday loans? Not who you might think.

Inside the offices of Advance America Cash Advance, posters telling stories of "the working mom," "the mailman " and "the hair stylist" reveal the payday lender's target audience.

As traffic zoomed by on Military Highway one recent Friday morning, customers trickled in. One paid off her $500 loan and ripped up the paperwork, declaring "I'm done!" About a dozen others borrowed money they said they needed, their thick office files indicating they had been there before.

Edwin Cruz, a pipefitter at the shipyard who lives nearby, paid off one loan and took out another to cover some bills.

Elected officials and civic activists who criticize payday lending say the businesses feed off low-income residents and military personnel, trapping them in high-interest loans and keeping them in poverty.

But an analysis by The Virginian-Pilot reveals the face of payday lending is closer to what's happening at Advance America: Lenders are targeting middle-income neighborhoods, usually near shopping malls, and avoiding poor areas.

It's why neighborhoods with lower median incomes - such as Norfolk's Berkley and Portsmouth's Brighton/Prentis Park - have no payday lenders, while Portsmouth's solidly suburban subdivisions along Portsmouth Boulevard near Chesapeake Square Mall have a cluster of them.

Payday lenders have even opened shop in upscale areas such as Chesapeake's Edinburgh Commons, which is near million-dollar homes.

Census data show that the population of South Hampton Roads has about a quarter of Virginia's population but about a third of Virginia's payday lenders.

Jamie Fulmer, director of public affairs for South Carolina-based Advance America, said payday lenders have flocked to Hampton Roads because of its large middle class.

Advance America is one of 12 payday lending outlets within a half-mile of The Gallery at Military Circle. According to the 2000 census, neighborhoods in that area reported median incomes of $30,000 or more, placing them solidly within Norfolk's middle and working classes.

"These are our customers - they're just good, hard-working, middle-class people," said Rob Ivison, Advance America's regional manager, as he watched business flow. Advance America and Ace Cash Express together own 55 payday loan outlets in Hampton Roads, and about 200 statewide.

Jay Speer, executive director of the Virginia Poverty Law Center, an outspoken opponent of payday loans, said he was surprised at The Pilot's findings.

"It's almost sadder that they're hitting the middle-income folks," he said.

"It's people struggling to make ends meet, which includes people at fairly high income levels these days," Speer said, adding that borrower statistics show that customers take out an average of 8.3 loans from a single outlet each year. "The problem is, once you get in, you have such a hard time getting out."

Payday loans work like this: Borrowers have to show a current paycheck and proof of an active checking account to obtain up to $500. The borrower writes a post-dated check for the amount of the loan, plus $15 in interest for every $100 borrowed. If the borrower doesn't return to repay the loan in cash when it's due - most loans are for two weeks - the lender cashes the post-dated check.

Advocates say payday loans provide easy access to cash to a population often ignored by institutional lenders. According to several academic and industry studies done since 2002, when Virginia first permitted payday lending, the average client is a high school graduate with a job and an average income of $40,000 a year. That still is the case today.

"The product exists because consumers like it," Fulmer, of Advance America, said. "There's nobody out there meeting this need with a less expensive product."

Payday lending has become a major issue in the General Assembly in recent years, as legislators have moved to curtail short-term lenders' ability to do business in Virginia, saying the poor must be protected.

Sen. Mamie Locke, D-Hampton, sponsored legislation this year to limit the annual interest collected by payday lenders to 36 percent. Currently, payday lenders can earn an annual percentage rate of 390 percent on a typical two-week loan. Locke, who also represents parts of Suffolk and Portsmouth, did not respond to several requests last week for interviews with the Pilot. She phoned a reporter Monday but could not be reached by return call.

Last year, the Norfolk Federation of Civic Leagues asked for stricter regulations on payday lenders, telling legislators that the businesses exploited "vulnerable citizens."

Barbara Scott, who led the federation's legislative committee, said she became concerned about the issue when more payday lenders located near Wards Corner, down the street from her neighborhood of Cromwell Farms, a few years ago.

Norfolk City Councilman W. Randy Wright said payday lenders aren't the type of business Norfolk wants to attract. Two years ago, the council passed a law that prohibited new payday lending outlets unless the businesses received council approval. Since then, no new lenders have been approved.

Wright said the perception was that payday lenders were predatory "bottom-feeders" who trap those struggling from paycheck to paycheck.

"It's not like you have one or two - they cluster," Wright said. "It makes the area look more downtrodden. And it gives the perception that this is an area that's slipping."

Despite Norfolk's ban and a 2006 federal law that prohibits payday lenders from making high-interest loans to active military personnel, payday lenders have become only more intent on setting up shop in commercialized and middle-class areas, said Michael Zarpas, president of Global Real Estate Investment. The Norfolk-based company owns, manages and develops commercial properties.

The federal law was passed after military leaders complained that lenders were saddling low-paid enlisted men and women with financial strains they couldn't handle.

"A lot of them, they got to the market under thoughts of lending to the military personnel but ended up lending to the civilian market instead," said Zarpas, whose company also finds new locations for Ace Cash Express. "Now, if they can have a free-standing building in front of a major shopping center, that's their dream deal."

Meghan Hoyer, (757) 446-2293, meghan.hoyer@pilotonline.com