If you’re on social assistance and looking to get a payday loan to cover some bills or expenses, you have options. Use this guide to find out where you can apply for payday loans as a welfare recipient in Canada, what other loans you can get with your income and what you should know before signing on the dotted line.
Yes, you can. Loans that you can apply for that accept social assistance and often offer e-Transfer include payday loans, installment loans, cash advances and lines of credit. Out of these options, payday loans and cash advances are generally easier to get – but watch out for high interest rates.
Compare installment loans on social assistance
The Canadian lenders below accept welfare as valid income and offer e-Transfer installment loans. These types of loans can be funded quickly and are repaid over time with a set number of scheduled payments.
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To make comparing even easier we came up with the Finder Score. Interest rates, fees and features across 110+ personal loans are all weighted and scaled to produce a score out of 10. The higher the score the better the loan - simple.
Compare cash advances for social assistance recipients
These providers offer small cash advances for social assistance recipients. There are no credit checks. You pay no interest on these cash loans, but you may pay a monthly subscription fee.
Perks include instant approval and instant funding (but for a fee).
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Finder Score for personal loans
To make comparing even easier we came up with the Finder Score. Interest rates, fees and features across 110+ personal loans are all weighted and scaled to produce a score out of 10. The higher the score the better the loan - simple.
High-cost payday loans are unsustainable for borrowing over a continued period of time and are expensive as a means of longer-term borrowing. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). You may also want to consider payday loan alternatives.Maximum borrowing costs will vary by province. Review the maximum borrowing cost for your province before entering into a loan agreement.
Compare payday loans that accept social assistance in Canada
There are also payday loan providers in Canada that accept social assistance as a legitimate source of income. That said, since payday loans are a very expensive loan option, only consider them as a last resort.
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Compare line of credit loans on social assistance
If you’re looking for a more flexible loan option, a line of credit provides access to a predetermined amount of money, which you can access whenever you need it. Interest is only charged on the money you actually borrow, not on the entire credit limit.
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Finder Score for personal loans
To make comparing even easier we came up with the Finder Score. Interest rates, fees and features across 110+ personal loans are all weighted and scaled to produce a score out of 10. The higher the score the better the loan - simple.
What do lenders consider as social assistance income?
Social assistance is financial support from the government to help people pay for essential living expenses. Examples of social assistance you can use to qualify with some lenders include:
Ontario Disability Support Program (ODSP) or Ontario Works in Ontario
Income Support, Alberta Works or AISH in Alberta
Income Support in Newfoundland
Income Assistance or PWD Assistance in BC
Income Assistance in New Brunswick and Nova Scotia
Employment and Income Assistance (EIA) in Manitoba
Saskatchewan Income Support (SIS) in Saskatchewan
Social Assistance in PEI
Types of loans you can get while on social assistance
Are payday loans with e-Transfer easy to get while on social assistance?
Many payday lenders in Canada do not accept social assistance as valid income, so be sure to apply to a payday lender, like those in our list above, who can accept it. You’re more likely to get approved if you can show the lender there’s more money coming into your bank account than coming out.
Once you’re approved, you can get your loan via e-Transfer as long as your bank account is registered to accept Interac e-Transfers.
Features of payday loans for welfare recipients with e-Transfer
Loan amount. You can borrow $100 to $1,500, but some provinces limit the amount to a percentage of your income — 50% in Ontario, BC, Saskatchewan and Newfoundland and 30% in Manitoba and New Brunswick.
Loan term. Payday loans are typically repaid by your next payday.
Borrowing fee. You’ll pay anywhere from $14 to $17 for every $100 borrowed.
Bad credit is OK. Having poor credit doesn’t necessarily mean you’ll be denied a payday loan. Payday lenders have more flexible eligibility requirements than other lenders.
Non-employment income is OK. Some payday lenders accept non-employment income and that includes social assistance.
How to apply for payday loans as a welfare recipient
While the application process varies among lenders, you will usually need to supply the following information to get a payday loan on social assistance:
Valid ID with your name and address
Valid phone number
Pay cycle frequency (i.e. monthly)
Proof of social assistance income (you can get this by logging into your CRA MyAccount)
Bank account information where your funds will be transferred (chequing account, routing and institution numbers)
The use of payday loans in Canada
As living costs remained high in Canada, more people appeared to rely on short-term credit. According to results from the Finder: Consumer Sentiment Survey Q2, 44% of respondents used a payday loan in the first three months of 2023, compared to 19% of respondents who used a payday loan in the last three months of 2022.
How to compare payday loans that accept social assistance in Canada
When comparing payday loans as a welfare recipient, ask yourself the following questions:
What is the reputation of the lender? Check out the best payday loans in Canada to find a good payday lender.
Does the lender follow provincial regulations? Each province has its own regulations for payday loans, such as maximum borrowing cost, loan terms, loan extensions and more.
Is the lender transparent about fees? The provinces also have rules about how lenders should disclose fees. Your lender should be upfront about how much it’s charging you.
Does the lender assess your ability to repay? Lenders must make a reasonable judgment on a welfare recipient’s ability to repay the loan. They do so by looking at factors such as your income and debts. They might also do a credit check. Avoid lenders that guarantee you’ll get approved no matter what. Learn more about guaranteed approval loans.
What to watch out for with payday loans for welfare recipients
While payday loans are helpful when you’re in a financial bind, there are some details you should keep in mind when considering an e-Transfer loan on social assistance:
Cycle of debt. The high rates, short repayment terms and late payment fees of payday loans can cause a cycle of debt. If you think you might have problems repaying the loan or having enough income left for other expenses once you repay, avoid getting the payday loan in the first place.
Scams. There are lenders who prey on people who need money urgently. Be careful when selecting a lender, and do research to find one who is reputable and trustworthy. Learn more about payday loan scams.
How can I get my payday loan funds aside from e-Transfer?
Aside from e-Transfer, payday lenders offer these funding options:
Direct deposit. With this method, you give your banking information or void cheque to your lender, who will then deposit the funds directly into your bank account.
Cash in-store. You can visit a physical store, get approved on the spot and walk out with your money.
Installment loans for social assistance recipients
Online installment loans are another option for people receiving social assistance. These loans, which you can get from alternative lenders, are similar to traditional personal loans you’d get from a bank, except they have smaller loan amounts and higher interest rates.
Features
Unsecured. You don’t have to put up any collateral.
Fixed loan terms. Loan terms are usually anywhere from 3 - 60 months.
Fixed loan amounts. Loan amounts are typically between $500 and $10,000.
Social assistance is OK. Lenders can consider you as long as your social assistance is over their minimum income.
Low credit score is OK. Alternative lenders are more lenient than traditional lenders, so you can apply with bad credit.
What to watch out for
Installment loans are a convenient way to get the funding that you need, but they come with drawbacks. They include:
High interest rates. If you have bad credit or your income is unstable, lenders will charge higher rates.
Potential fees. See if the lender charges extra fees, such as broker fees, late payment fees and NSF fees.
Cash advances for social assistance
You can apply for an cash advance using your social assistance. These loans have smaller loan amounts and they don’t involve a credit check.
Features
Unsecured. No collateral required.
Loan terms. Next pay cycle or flexible.
Loan amounts. Borrow $20 – $350.
Social assistance is OK. Cash advance lenders are open to any legitimate recurring income.
Low credit score is OK. Since there are no credit checks involved, it’s possible to get approved even when your credit isn’t the best.
No interest. You’ll pay zero interest on these loans.
What to watch out for
Subscription fee. You’ll pay a monthly subscription fee to access the loan.
Express funding fee. Pay an extra fee to get instant e-Transfer funding.
Lines of credit for welfare recipients in Canada
A line of credit is also worth considering, but it’s harder to qualify for than other types of loans.
Features of online lines of credit
Open term. Unlike a payday loan, you can pay off your balance partially or in full any time. A flexible term allows you to repay the balance when you’re in a better financial position.
Borrow up to your limit. You can borrow as much or as little as you want up to an approved limit.
Potentially cheaper than a payday loan. As long as you don’t wait too long to pay off the balance, it could cost you less than a payday loan.
What to watch out for
High interest rate. Even though an online line of credit is potentially cheaper than a payday loan, it still comes with a very high interest rate.
Waiting too long to repay your loan. With an open term, it can be tempting only to pay the interest and hold off on repaying the whole balance. But if you wait too long, especially with such a high interest rate, you could end up paying more interest than a payday loan.
Overspending. With easy access to funds, it can be tempting to borrow more than you need.
Can I get a $300 loan while on social assistance?
Yes, it’s possible to get a $300 loan while on social assistance. Lenders generally consider this amount to be a small loan, and it’s easier to approve people for a small loan than a large loan.
Tips to get e-Transfer loans on social assistance
Do not rush. Don’t rush into signing a contract without first understanding the terms of your loan, including the cost, loan term and repayment schedule. Avoid lenders that do not clarify the terms of your loan and the overall cost.
Avoid lenders that require loan insurance. Loan insurance should be completely optional, never required.
Avoid lenders that ask for upfront payment. Legitimate lenders do not ask for upfront payment for welfare loans. If you encounter someone asking for this, it could be a scam.
Other financing options for people receiving social assistance
Here are other loan options for people on welfare:
Credit card cash advances. This may be an option if you already have a credit card and haven’t borrowed up to your credit limit. Credit card cash advances are expensive but have lower rates than payday loans, with APRs usually around 20% to 23%.
Car title loans. With an auto title loan, you put your vehicle up as collateral. If you fail to pay back your loan, the lender can repossess your car, boat, RV or motorcycle. For these types of loans, you’ll have to outright own your vehicle.
Home equity loans. Are you a homeowner? You may be able to borrow against your home’s equity through a home equity loan or line of credit. This is a secured loan – meaning you use your house as collateral – but it often comes with more lax eligibility criteria than an unsecured personal loan. Only apply if you know you can make the payments because you could lose your home if you default.
Can I get a loan on welfare in Ontario?
Yes. Although fewer Ontarian lenders accept welfare as a legitimate source of income, you can still get a loan on welfare in Ontario from certain lenders, like the ones listed above. These Ontarian lenders tend to have more lenient eligibility requirements, which often include accepting a wider variety of income as long as you can prove that you’ll be able to pay back what you borrow.
When is the next welfare payment in Ontario?
To help plan if you need a loan, and for how much, you’ll need to consider how long you have left to go before your next social assistance payment. You can expect to receive your next Ontario welfare payments deposited in your bank account on these dates:
Ontario welfare
Payment date
ODSP
July 31, 2024
Ontario Works
July 31, 2024
Ontario Child Benefit
July 19, 2024
Installment loan vs payday loan: Which is better if you’re receiving welfare?
To illustrate what you can expect from an installment loan vs a payday loan, as a recipient of Ontario Works income support, here’s an example of the costs based on a $500 loan:
Feature
Payday loan
Installment loan
Loan amount needed
$500
$500
Cost of loan
$15 per $100 borrowed ($75 total). This is an APR of 391.07%
22% APR + $225 broker fee
Loan term
14 days
90 days
Payment amount
One full payment of $575
Six bi-weekly payments of $125
Total loan cost
$575
$752
When you compare the dollar amounts of the total loan costs, the payday loan is cheaper. However, you must repay a payday loan in full by your next payday, whereas you can break up an installment loan into smaller, more manageable payments over a longer period of time. When choosing a loan, ask yourself which method would put less strain on your finances.
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
Survey methodology
The results of the Finder: Consumer Sentiment Survey Q2 were collected through an online Pollfish survey conducted between April 27 and April 29, 2023. In the survey, 1,011 Canadians from across the country were asked about their past use and current plans to use Payday loans and other forms of short-term credit. The estimated margin of error for the survey is +/- 3%, 19 out of 20 times.
Bottom line
Look for lenders that accept welfare as a valid source of income because not all do. Carefully compare rates and fees, and take the time to understand the terms and conditions of any loan you’re interested in getting. If you apply online and you’re approved, many lenders can e-Transfer your social assistance loan to your bank account within minutes.
Frequently asked questions
Yes, you can get a payday loan on Ontario Works – you simply need to apply with a lender that accepts Ontario Works as a valid form of income. Payday loans have lenient eligibility criteria, so some payday lenders in Ontario can consider your application. Learn more about payday loans in Ontario.
It's possible. There are payday loans that accept welfare as a valid source of income. Other loan options include lines of credit, installment loans and cash advances.
Payday loans are considered an easy loan to get approved for, but there are still some basic eligibility criteria you would need to meet. A payday loan is not guaranteed, and you should avoid lenders that say they guarantee approval because they may not be legitimate.
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To make sure you get accurate and helpful information, this guide has been edited by Romana King as part of our fact-checking process.
Leanne Escobal is a publisher for Finder. She has spent over 11 years working with financial products and services, specializing in content and marketing. Leanne has completed the Canadian securities course (CSC®) as well as the personal lending and mortgages course by the Canadian Securities Institute. She has a Bachelor of Arts (Honours) in English literature and creative writing from Western University. See full bio
Emma Balmforth is a producer at Finder. She is passionate about helping people make financial decisions that will benefit them now and in the future. She has written for a variety of publications including World Nomads, Trek Effect and Uncharted. Emma has a degree in Business and Psychology from the University of Waterloo. She enjoys backpacking, reading and taking long hikes and road trips with her adventurous dog. See full bio
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