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📅 Last Updated: June 5, 2024
✏️ Written By Bryan Daly
🕵️ Fact-Checked by Caitlin Wood

Being a parent is great in so many ways, but sometimes all the extra expenses can be overwhelming. If you have one or more young children, you probably qualify for the Canada Child Benefit (CCB). A government program that provides parents with financial assistance.

But did you know that you can use your CCB payment as a form of income to apply for a personal loan?

Keep reading to learn more about applying for child tax loans.

Note: As of July 20, 2016, the Canada Child Tax Benefit (CCTB) was officially renamed the Canada Child Benefit (CCB).

Can You Get A Loan With Your Canada Child Benefit?

Though any loan you take out is typically dependent on your income, employment, and credit history, you may be able to use your CCB as leverage to get a loan. Since your CCB is considered part of your income, you can use it as a means to qualify for a loan. However, to get approved for a loan while on CCB, you’ll need to find a lender that accepts child tax credit as a form of income.

Child Tax Loans

Loan Amount Interest Rate Term Province Availability
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Loans Canada
Up to $50,000prime to 46.96%4 - 60 monthsAcross Canada Learn More

Spring Financial
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Lend Direct
LendDirect
Up to $15,000Started at 19.99%Open-endBC, AB, SK, ON, NS, PEI, NL Learn More
iCash
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Up to $1,500Varies by province*Max 62 daysBC, AB, MB, ON, NB, NS, PEI Learn More
Speedy Cash
Speedy Cash
$200 - $1,500Varies by province*Next paydayBC, AB, SK, NS, YT, NT, NU Learn More
My Canada Payday
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CashMoney
Up to $1,500Varies by province*Up to 62 daysBC, AB, ON  Learn More
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$120 -  $1,500Varies by province*Max 62 daysBC, AB, SK, MB, ON, NS Learn More
goday
GoDay
Up to $1,500Varies by province*Max 62 daysBC, AB, SK, MB, ON, NB, NS, PEI Learn More
*The maximum borrowing cost for a payday loan varies by province, learn more here.
4 Easy Steps To Apply

How To Apply For A Loan With The Canada Child Benefit

Calculate Your Debt-to-Income Ratio
This is a good way for both you and your lender to know if you are financially stable enough to deal with the cost of a child tax credit loan. Add together the average total cost of your monthly loan payments and other debts, then divide it by your regular monthly income. You’ll then have your debt-to-income ratio. Ideally, your ratio should come out to 30-35%, lower if possible. If your ratio is higher than that, it might be a better idea to hold off on applying until you and or your spouse can increase your income or reduce your debt.
Do Research and Shop Around For Lenders
Once you know you’re financially capable of taking out a loan, you can start your search. There are many different lenders catering to all types of borrowers. Some have stricter qualification standards, such as a high credit score. If you don’t have a high score, there are other lenders out there that don’t use your credit score as a deciding factor. Similarly, there are lenders out there who do and do not accept non-traditional forms of income like the child tax credit, CPP, and other government benefits. Before applying with any one lender, make sure you meet their minimum qualifications for a child tax credit loan.
Get Pre-Approved
If you’ve found a couple of lenders that accept the child tax credit as income, you can find out how much you qualify for by getting pre-approved. Most lenders offer this, and you can do so by simply filling out a quick online application. If you’re unsure of who you should apply with, you can use a loan comparison website like Loans Canada. With a single application, you can get pre-approved with multiple lenders. Doing so will allow you to review your options and choose the one that best suits your needs.
Fill Out The Application
Depending on which lender you choose to work with, you’ll need to provide some additional information to complete your application. This includes personal identification and proof of income. You may also need to provide your bank statements and undergo a credit check.

Child Tax Loan Eligibility Requirements

When it comes to the majority of lenders, whether they’re banks or other organizations, the loan qualification standards will vary because no two loan situations are the same. The standards for the clients they take on, however, will remain relatively the same.

In other words, what any legitimate lender will want to know, first and foremost, is that you’re financially stable enough to pay back whatever amount of money they’re letting you borrow, along with any interest charges that apply. Depending on your chosen lender, their application process might include them checking:

  • Your credit (report, history, and score)
  • Your financial records (history of debt/bankruptcy, income, debt, etc)
  • Your employment history (usually from the last 2 years)

Loan Requirements For Personal Loans That Accept Child Tax

Depending on the lender you apply with, requirements may vary. For example, while one lender may require a good credit score, another may not. Similarly, while one lender may require you to be employed, another may simply require a stable source of income.

Requirements For Payday Loans That Accept Child Tax

Most payday lenders require proof of income, a valid bank account, and proof of identity to qualify. Most lenders also do not require a credit check, which makes it a good option for those with bad credit.

While these categories are likely going to be the most important points to check off, other qualification areas might be subject to inspection, so it’s best to have all your financial and personal information updated and organized prior to applying.

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Tips To Help You Improve Your Chances Of Qualifying For Child Tax Loans

  • Find A Trusted Co-Signer. Getting a close friend or family member to co-sign your loan application can help increase your chances of approval. Just make sure that they are also financially stable and ready for the lender’s review process.
  • Look Into Guarantor Loans. These loans are meant for borrowers who can’t get approved on their own. With a guarantor loan, your cosigner’s credit will be checked instead of your own. By co-signing your loan, they’ll be agreeing to take over the remaining balance in the event that you can no longer pay it. 
  • Check Your Credit. As we said above, many lenders don’t check your credit before approval, but doing it yourself is a good way to know if you’re financially stable enough to handle going into debt.
  • Pay Off Your Other Debts. This is one of the most important things to do before making any financial decisions. If you already have other debts (credit card bills, etc.) it’s best to pay them off before applying for a loan. If you can pay your debt and still afford the loan, it’s safer to apply.

Cost Of A Personal Loan Or Installment Loan That Accepts Child Tax

Personal loans (a.k.a installment loans) have lower interest rates and longer repayment periods than payday loan, so it tends to be cheaper and more manageable to pay off. When you get a personal loan, you’ll receive a lump sum of cash that you’ll have to repay with interest in equal installments over a period of time. Here are some common factors you should consider before taking out a child tax loan.

Main Features To Consider When Calculating The Cost Of A Personal Loan Or Installment Loan That Accepts Child Tax

  • Personal Loan Amount –  The larger the loan amount you qualify for, the more you’ll have to pay back. When you apply for a personal loan that accepts child tax as a source of income, you’ll be able to qualify for a larger amount than with a payday lender. These amounts can easily range between $300 to $10,000.
  • Interest Rates – Interest rates have the greatest impact on your loan cost. Thankfully, interest rates on personal child tax loans are lower than payday loans, making them a cheaper option. The most a lender can legally charge you, the criminal interest rate limit in Canada, is 47% annual percentage interest (APR), which is 60% annual percentage yield (APY).
  • Term Length – One of the main reasons a personal loan is more affordable, is because it has loan terms than can extend to 5 years or more. However, longer terms lead to higher interest payments over the course of the loan. Be sure to factor in your loan term when calculating your total loan cost. 

Cost Of A Payday Loan That Accepts Child Tax

Taking out a payday loan that accepts child tax (a.k.a. baby bonus payday loan) is becoming increasingly popular among cash-strapped parents. CCB payday loans are easy to get but should only be taken out in emergencies or in small amounts as interest is accrued immediately. Here are some factors to consider when calculating the cost of your child tax payday loan. 

Main Features Of A Payday Loan That Accepts Child Tax

  • Payday Loan Amount – To accurately calculate your loan cost, you need to find out how much you can qualify for. The larger the amount, the more interest you’ll pay. In Canada, you can only borrow up to $1,000 to $1,500 with payday lenders. However, that amount can shrink further as some provinces limit the amount you can borrow up to 50% of your net income. 
  • Interest Rate – As mentioned, the interest rate charged has the biggest impact on your loan costs. One of the reasons payday loans are recommended as a last resort is due to their high-interest rates and fees. The APR on payday loans that accept child tax can go as high as 600%. 
  • Term Length – Another aspect to consider when getting a payday loan is the loan term. Payday loans have extremely short terms, most varying between 14 and 30 days. Depending on your term length, the total cost will vary. 

Maximum Cost Of A $100 Payday Loan By Province

ProvinceMax cost per $100 borrowed Max Penalty for Returned ChequeCooling Off PeriodLoan Rollover or Extension
Ontario$15n/a2 business daysNot allowed
British Columbia$15$202 business daysNot allowed
Alberta$15$252 business daysNot allowed
New Brunswick$15$2048 hours (not including Sundays and holidays)Not allowed
Manitoba$17$2048 hours (not including Sundays and holidays)Allowed
Saskatchewan$17$25Next business dayNot allowed
Nova Scotia$15$40 (default penalty)Next business day (or 2 days for online payday lenders)Not allowed
Newfoundland and Labrador$14$202 business daysAllowed
Prince Edward Island$15n/a2 business daysAllowed
Quebec35% AIRn/a10 daysNot allowed
Note: Payday loans are extremely expensive and can lead to a cycle of debt if you’re unable to repay the full amount borrowed. To Learn about the payday loan laws in your province, click here.

What Is The Canada Child Benefit (CCB)?

The Canada Child Benefit is a government program that provides families and single parents with financial assistance. It is a tax-free payment that families or single parents can apply for when they have a child or children who are currently under the age of 18. 

The amount you can get through the child tax credit is dependent on certain criteria, including: 

  • How many children you have 
  • How old your children are
  • How much income you make annually
  • Your marital status

The maximum amount you can get under the CCB program is:

  • $6,997 per year for each child under the age of six.
  • $5,903 per year for each child between the ages of 6 and 17 years old.  

Parents who have a child with a physical or mental disability can also qualify for an extra $2,985 per year for each child under the Disability Tax Credit (DTC).

Are you and your family eligible for the GST/HST tax credit this year?

Are You Eligible For The Canada Child Benefit?

To be eligible for the CCB, you must have a child under 18 years of age under your primary care and be a Canadian resident. Parents that are eligible can apply online via their CRA accounts or submit the RC66 CCB application form. 

In order to continue receiving these benefits, you must submit your income tax returns every year, no matter what your income is, even if you aren’t currently earning any income. This rule also applies to your spouse or common-law partner, if you have one. 

How Will You Receive Your CCB Payments? 

Once the parent is approved for the benefit, they’ll receive the payment in monthly installments via direct deposit or cheque, from July of that year until June of the following year. Once the parent and/or their spouse/common-law partner have filed their income tax returns, the sum of their benefit will be recalculated that coming July, based on the details of their return, until the child or children reach the age of 18.

Canada Child Benefit FAQs

Will applying for a loan decrease my Canada Child Benefit?

Taking out a loan while receiving Canada Child Benefits will have no effect on the amount you currently receive. Why? Because a loan is considered a debt and not income.

Can I apply for a loan online? 

Yes, there are many lenders available online. Just make sure to read customer reviews and look for the lender in the Better Business Bureau database to confirm that they are a real company.

What is a baby bonus payday loan?

A baby bonus payday loan is essentially a very short-term loan based on the amount you receive from your Canada Child Benefit.

What documents do I need to apply for a loan that accepts the child tax credit? 

Whether you apply for a personal loan or a payday loan, you’ll need to provide proof of income. So you may need to provide bank statements or some government form that shows you receive CCB payments. You will also need to provide a photo id for identification purposes. Depending on your lender, you may also need to provide bank statements and undergo a credit check for approval. 

Loans And Your Canada Child Benefit

Depending on the number of children you have and what age they are, the amount you receive from your Canada Child Benefit could be quite favourable. This, coupled with your yearly income could help you along towards getting approved for the loan that you need. As long as you and your spouse, or you as a single parent can show that you’ll be able to afford the cost of the loan payments, you should be able to find a lender that will suit your financial needs. 

Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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