Finding stable employment can sometimes be tough in Canada, especially if you have to go through training or education to qualify for it.
Depending on the trade you pick, the required courses can be time-consuming, not to mention expensive. Then again, any cash and effort you invest are usually worth it when you land a well-paying job you enjoy.
Thankfully, there are a few different ways you can obtain funds for technical training directly through the Government of Canada, such as the Canada Apprentice Loan.
Key Points
- The Canada Apprentice Loan allows you to borrow up to $4,000 interest-free to cover the cost of an apprenticeship program.
- To qualify for this loan, you must be registered in a Red Seal trade apprenticeship program, excluding Quebec, which has its own financial assistance program.
- Other financial assistance programs may be available to help you pay for your apprenticeship program, including RESPs or personal loans.
What Is The Canada Apprentice Loan?
The Canada Apprentice Loan is a financial initiative that was created by the Federal Government to help eligible residents finish their apprenticeships in designated Red Seal Trades. With it, you can get up to $4,000 in interest-free loans for each period of your technical training. You can then use the money to cover the cost of things like:
- Tools
- Tuition fees
- Living expenses
- Forgone wages
- Support for your family
What Are Red Seal Trades?
A Red Seal Trade is an approved trade that’s governed by regulations under the Provincial and Territorial Apprenticeship Acts, like the professions listed below. Those regulations outline the necessary administrative procedures and, in certain cases, the standards and conditions of technical training for specific types of trades, such as:
- Methods of registering apprentices
- Curriculum
- Accreditation
- Certification
Types of Red Seal Trades You Can Finance
There are numerous Red Seal Trade apprenticeship programs that you can finance, including, but not limited to:
- Automotive Service Technician
- Baker
- Carpenter
- Heavy Duty Equipment Technician
- Industrial Electrician
- Motorcycle Technician
- Painter and Decorator
- Refrigerator and Air Conditioning Mechanic
- Sheet Metal Worker
- Welder
Are You Eligible For The Canada Apprentice Loan?
To qualify, you must meet all of the following criteria:
- Be a Canadian Citizen, Permanent Resident or Protected Person
- Pass a standard credit check (if you’re applying for the first time)
- Be registered in a Red Seal trade apprenticeship program that’s assigned by the province or territory where you were registered as an apprentice
- Be enrolled in block release technical training or an equal amount of full-time technical training with an acceptable technical training provider
You are not eligible for the Canada Apprenticeship Loan if you:
- Are a registered apprentice in the province of Quebec
- Are studying in high school
- Are already receiving this loan for the same technical training
- Have already collected 6 years of interest-free status
- Have already gone through 5 periods of technical training
- Have been restricted from receiving this loan or a Canada Student Loan
How To Apply For The Canada Apprentice Loan
You can easily apply for the Canada Apprentice Loan online by following these steps:
- Confirm if you are eligible for the loan
- Register for a Canada Apprentice Loan online service account
- Apply online (include your banking information in order to get your money faster)
- Agree to the Terms and Conditions of applying for and receiving this loan
- Submit your application
You can check your application status by logging into your Canada Apprentice Loan online service account. That service will then notify you of any important updates.
When Do I Have To Repay My Canada Apprentice Loan?
After your official apprenticeship end date, you’ll normally enter a 6-month term known as the “non-payment period”. However, if that period ends or you aren’t eligible for the interest-free status, you have to start repaying your Canada Apprentice Loan when:
- You finish your Red Seal Trade apprenticeship program
- You’re no longer registered in an eligible apprenticeship program
- Your registration is not verified by your Apprenticeship End Date
- You reach your lifetime maximum of interest-free status (6 years)
- A restriction on your account stops you from receiving an interest-free period
How To Make Canada Apprentice Loan Payments
During the last month of your non-repayment period, you’ll receive a payment notice in the mail regarding your Canada Apprentice Loan and repayment information. Payments can usually be made via automatic debit, cheque, online banking, or telephone banking.
If you don’t get this notification by mail, contact Employment and Social Development Canada before your 6-month non-repayment period ends. Additionally, don’t forget to review all the most essential aspects of your Canada Apprentice Loan, including:
- Your total unpaid balance
- The start date of your repayments
- Your bi-weekly or monthly payment amount
- The time it will take to repay it
- The interest rate and type that applies to it
- When payments will be withdrawn from your account (with pre-authorized debits)
- The other ways you can make payments (without pre-authorized debits)
Benefits Of The Canada Apprentice Loan
The Canada Apprentice Loan can also be a great option because of these benefits:
- Government of Canada Tax Credits For Apprentice Loans – You get a 15% tax credit on any interest you pay toward your Canada Apprentice loan each year. The required documents will be delivered to you before income tax season.
- Help Repaying Your Loan – If you can’t afford to repay your loan, the government offers options like the Repayment Assistance Plan (RAP), where you can qualify for no monthly payment or a reduced monthly payment. Similar options and benefits are available for borrowers with severe disabilities.
- Non-Repayment Period – As mentioned, there’s a 6-month period at the end of your apprenticeship when you don’t have to make payments. Then again, paying a loan faster can reduce how long you’re in debt and how much money you pay in interest.
- Canada Apprentice Loan Interest Suspension Update – The Government of Canada permanently eliminated the accumulation of interest on the Canada Apprentice Loan as of April 1, 2023. Current loans and loans being repaid will not accumulate any more interest. However, interest accumulated prior to April 1, 2023, must be repaid.
Other Government Programs To Help Pay For Your Apprenticeship
In addition to the Canada Apprenticeship Loan, there are other government-backed programs available to help you cover the cost of your apprenticeship:
Registered Education Savings Plan (RESP)
A Registered Education Savings Plan is a type of savings account designed to help save for post-secondary education, including trade schools and apprenticeship programs. You can contribute up to $2,500 per year, and the government will match your contribution by 20%. In addition, RESP contributions are hedged against taxes, and account balances can earn interest without you having to pay tax on both the principal and growth amounts.
Apprenticeship Incentive Grant
The Apprenticeship Incentive Grant is a taxable payment of $1,000 per year or training level, up to a maximum of $2,000 per person. The grant is available to registered apprentices who finish their first or second year or level of an apprenticeship program for a Red Seal trade.
Tradesperson’s Tools Deduction
The cost of eligible tools used as part of your job as a tradesperson, including sales tax, may be deducted on your income tax return.
Additional Options To Pay For Your Apprenticeship
If you don’t qualify or if the loan doesn’t offer enough funding to cover your technical training, there are several alternatives you can try, such as:
Personal Loan
A personal loan is a lump sum of cash that you can borrow from a bank or other lender. You’ll then slowly repay what you’ve borrowed over a predetermined payment term, with interest and fees added to your total loan amount. This can be a good option because:
- You can spread your apprenticeship costs out over multiple months or years
- You may qualify for more money than the Canadian Apprenticeship Loan offers
- Interest rates can be lower than with other credit products
With a personal loan, keep in mind that you’ll need good credit and solid finances to obtain a low-interest rate, flexible term, and large loan. So, you should always make sure to check your credit score, income, and bank account balance before you apply.
Line Of Credit
A line of credit is similar to a personal loan since it allows you to borrow money over a set period. That said, it’s closer to a credit card since it’s a form of revolving credit that allows you to borrow up to your credit limit. A line of credit can be a better option to fund your apprenticeship because:
- Interest is only applied to your outstanding balances
- You can make minimum or partial monthly payments to avoid penalties
- You can divide your training costs up and only borrow when you need to
If you plan on choosing this product over a personal loan, it’s important to understand that some lines of credit come with high-interest rates of over 19.99% APR. So it’s best to pay your full monthly balances whenever possible.
Final Thoughts
The cost of an apprenticeship program shouldn’t stand i the way of getting the necessary training you need to begin a profitable and rewarding career in the trades. With the Canada Apprenticeship Loan, you can get the funding you need to cover your education and get on the road to a good-paying job.
