How to Get a Personal Loan With Your Government Benefits in Canada?

Life is full of surprises, many of which come at a cost! To tackle these expenses, Canadians often get personal loans. But what if you can’t rely on a steady paycheck to get approved for one? Well, you can use your government benefits instead!

In the sections below, we show you how to do just that! We cover eligibility criteria, different options, as well as useful tips that will ensure success!

So, let’s take a deep dive into the money pool!

Getting a Personal Loan With Government Benefits in Canada

Canada implements social benefits programs to help citizens without work, those employed as low-wage workers, and other groups in dire need.

For instance, the Canada Workers Benefit (CWB), the Canada Pension Plan (CPP), the Guaranteed Income Supplement (GIS), and other government programs help Canadians that can’t cover their monthly costs and expenses.

However, what happens if an unexpected life emergency puts a strain on your finances? Well, let us tell you how to apply for a loan using one of these programs.

1. Canada Workers Benefit (CWB)

This refundable tax credit program is designed to help Canadians with or without families who are employed yet receive insufficient paychecks. Applicants can claim their CWB when they file their income tax returns. If approved, they will receive up to $1,428 as individuals or $2,461 as families, which can also be paid in advance.

Various payday loans and a few personal loans are accessible to CWB recipients. For instance, Spring Financial—a Canadian private lender—allows you to apply for a loan online and improve your chances of success with your CWB benefits.

To do so, you only have to access the corresponding online application and follow the on-screen prompts to provide the required information, from your email address to personal information, credit score, and the loan amount you need (up to $35,000).

Other payday and personal loan leaders may have different application steps.

2. Canada Pension Plan (CPP)

If you are 60 years of age or older, you are most likely receiving CPP benefits—monthly, taxable pension payments sent out for the rest of your life. However, the amount you are entitled to will be based on your average earnings and paid contributions.

Seeing as how the CPP payments are made on a regular basis (the average being around $550 per month), pensioners qualify for different types of loans. For instance, standard predatory payday loans are available to you if you need to cover urgent financial needs, but a few private lenders also offer different cash loans.

For example, a quick way to get a loan is to apply with Magical Credit, a Toronto-based lender that offers products designed for recipients of government benefits. 

Best of all, their application process is fairly straightforward, and you only need to complete an online application that requires you to provide everything from your name, SIN, birth date, contact information, and place of living.

3. Guaranteed Income Supplement (GIS)

Low-income Old Age Security (OAS) pensioners may also qualify for the Guaranteed Income Supplement (GIS) program, which pays out anywhere from $621.25 to $1,032.10 per month as of 2023, depending on the applicant’s marital situation.

Similar to how loan applicants can utilize the CPP program to obtain benefits (described above), GIS recipients also have access to more or less the same options.

Therefore, if we take for granted the availability of payday loans, which should be anyone’s last option, GIS pensioners can and should apply for a loan via a private lender.

As you’ve already seen, the application process to get a loan with a pension requires you to contact all prospective lenders and complete their application procedure. Most creditors will allow you to provide the necessary information via an online application.

4. Canada Child Benefit (CCB)

Are you a recipient of the Canada Child Benefit (CCB) fund that is administered by the Canada Revenue Agency (CRA)? If the answer is ‘yes’, you can utilize this tax-free monthly payment to get a loan that fully covers the costs of raising your children.

The amount you would receive will depend on several factors: the number of children in your household, whether or not any of them are disabled, their current age, and the size of your income, with the maximum being almost $7,000 per year for a child.

With such income, you would definitely qualify for several loans. Besides every payday loan out there, you can also apply with several personal loan lenders.

For instance, Spring Financial—the lender mentioned above—considers your CCB payments as income and will include them in your cash advance loan applications. 

The application process is fairly straightforward, and you are only required to complete a 3-minute online application via their official site. If approved, you can expect to get as much as $35,000, provided you show sufficient income.

5. Employment Insurance (EI)

Last but not least, many Canadians are also receiving Employment Insurance (EI) benefits, which are paid to workers who have lost their jobs through no fault of their own. Eligible applications could receive up to 55% of their weekly earnings.

These benefits typically last up to 45 weeks; therefore, EI recipients can use them to apply for certain loans as they can provide regular payments. 

Depending on the size of the EI income, applicants may be able to obtain anything from payday loans to a line of credit and car and personal loans.

Your Chances of Getting a Loan With Government Benefits

Since having a stable source of income is by far the most important factor in the lender’s decision-making process, various government benefits help you meet that requirement. After all, they provide you with a regular source of income.

However, since Canadians on benefits receive a reduced income amount compared to full-time workers, their options are somewhat limited.

For instance, the surest bet under such circumstances is applying for a payday loan since these lenders offer smaller funds and enforce lenient requirements. Despite that, getting a payday loan should be your last option due to their predatory nature—this type of loan has a compounding interest rate of between 400% to 700% APR.

Thankfully, some lenders offer cash loans for applicants on government subsidies of between $20,000 to $35,000 at standard interest rates. As an example, Magical Credit—a countrywide private lender—only requires you to have a fixed government income on a monthly basis and may even forgive bad or no credit.

So, while many benefit programs can be used as a source of income when applying for a loan, your chances of getting approved for one and the amount you will receive depend on the government income you use and the lender you apply with.

Loan Amount Available With Government Benefits

At the end of the day, the loan amount you can access with your government benefits will depend on several factors, such as the lender you choose, the type of loan you access, your credit score, income amount, and the specific loan terms.

For instance, payday loans of up to $1,500 are the most common options available when applying with benefit checks. However, some creditors also offer personal loans of up to $35,000 if you are receiving substantial and regular benefits.

That said, contacting individual lenders and providing your circumstances is the best way to determine the amount you can borrow. Doing so allows you to explore and compare several offers so you know you have made the right choice!

Bottom Line

There you have it—a personal or payday loan obtained under government benefits can be the way to cover unexpected expenses if you are a low-income employee or no longer working full-time. That said, your options might be limited depending on the exact government benefit you are receiving and the type of loan you are applying for.

Therefore, review all of the options we listed above and their eligibility criteria since staying informed is a crucial step in avoiding financial hardship in any situation!


Can I obtain a personal loan with my Canada Workers Benefit (CWB)?

Yes, you certainly can obtain a personal loan with your Canada Workers Benefit (CWB), as some lenders consider it a source of income. However, the loan amount available will depend on your credit history, income, and other factors determined by the lender.

How much can I borrow with my pension plan?

The maximum loan amount you can borrow with your pension plan will depend on the value of your pension plan and other factors determined by the lender. Pensioner loans offer higher loan amounts than other loans since the pension serves as collateral.

What should I consider before agreeing to a loan?

Before agreeing to a loan, carefully review the applicable terms and conditions and ensure you can afford the repayment schedule you are offered. Other factors to consider are the interest rate, other service fees, and late and early payment penalties.

How can I compare the loan options from different lenders?

You can use various online personal loan comparison websites, such as Engine by MoneyLion, or contact lenders directly. Remember to compare interest rates, additional fees, repayment terms, and any other factors that may affect the total cost of the loan.