Losing your job can be stressful, especially when covering essentials like rent, groceries, and bills. If you’re currently unemployed and need help to bridge the financial gap while you find a new job, it is possible to get a loan.
Some lenders in Canada offer loans for unemployed individuals, that is, if they receive alternative forms of income such as Employment Insurance (EI) or other government benefits. While unemployment can make borrowing more difficult, there are various options available.
Key Points
- Loans for the unemployed in Canada are available from alternative lenders.
- While banks may typically require proof of income from employment, alternative lenders often accept non-employment income as part of the application process.
- Unemployment loans are more accessible but often come with higher rates, lower loan limits, and stricter terms.
Can I Get A Loan While Unemployed?
Yes, you can get a loan without a traditional job, but you’ll still need to prove you have some income to qualify. In other words, you’ll still require an alternative income source to secure a loan and have the means to cover your loan payments.
While traditional lenders, like banks, typically require conventional income from employment, others may accept non-employment sources of income, such as government benefits or pensions, as proof of financial stability. You’ll likely need to source these loans from alternative lenders who require proof of income, and not specifically proof of employment. Keep in mind that while you may qualify for an unemployment loan from these lenders, you’ll likely face higher interest rates and stricter loan terms.
Borrow Up To $50,000
Unemployed Loan Features
| Types of Loans | – Personal loans – Payday loans – Lines of credit |
| Loans Amounts | Generally lower amounts |
| Loan Terms | To offset this risk and reduce potential loan default, lenders tend to offer shorter loan terms to ensure faster repayment. |
| Interest Rates | As high as 35% |
Best Lenders That Accept Alternative Sources Of Income In Canada 2025
Several sources of alternative income may be accepted by certain lenders, such as Employment income (EI), Canada Child Benefit (CCB) and other government benefits. Here are some lenders that accept different types of income sources:
- Amount
- $300 – $35,000
- Rate
- 9.99% – 34.95%
- Term
- 6 – 60 months
- Amount
- $100 - $1,500
- Rate
- $14.00 per $100.00
- Term
- 14 to 62 days
- Amount
- Up to $1,500
- Rate
- $14 per $100
- Term
- Up to 60 days
Where Can I Get Emergency Loans For Unemployed Individuals In Canada?
If you need funds immediately, consider any of the above-mentioned lenders, who provide funding the same day that you apply. The payment time for some lenders are as follows:
- Spring Financial: Same-day funding via e-Transfer.
- Magical Credit: Access to funds via direct deposit within hours.
- iCash: Same-day funding via e-transfer.
- Cash Money: Funding within 15 minutes via e-Transfer, and immediately through cash.
- LoanMeNow: Funds typically available the next business day, though some loans may qualify for same-day funding.
- GoDay: Same-day funds release, often within hours if the loan contract is signed during business hours.
- My Canada Payday: Funds sent immediately via Interac e-Transfer.
Types Of Loans You Can Get While Unemployed In Canada
You can get a few types of loans if you’re unemployed but still collecting non-employment income sources. In these cases, lenders focus more on the actual income earned rather than traditional employment:
Payday Loans
Payday loans are one of the easiest loans to qualify for while unemployed. This is because many lenders accept non-traditional sources and typically do not require credit checks. As a result, payday loans are a good option for those who are looking for quick cash and have poor credit.
These small, short-term loans typically must be repaid in full by your next paycheque or next income/benefit deposit. Loans are usually made for no more than $1,500, and interest rates can be very high compared to traditional loan types.
However, it’s important to remember that there are numerous risks associated with payday loans, including high interest rates, short terms and the possibility of getting trapped in a payday loan cycle.
Learn more: Payday Loans
Unsecured Personal Loans
Some lenders offer unsecured personal loans based on non-traditional forms of income, such as government benefits, pensions, investment income, or freelance income. Generally, these loans will have higher rates, shorter term lengths, and lower loan limits due to the added risk they take by lending to someone considered risky.
However, personal loans are typically a better choice than payday loans as they have longer terms and lower rates, making them a more affordable option if you can qualify.
Lines Of Credit
A small line of credit is another financing option to consider if you’re unemployed. These financing options are great for unexpected expenses, as you’ll have a reserve of cash you can use whenever you need it. You only need to pay interest on the amount you use, and like a credit card, you regain access to the funds as you repay the amount you use.
Interest-free lines of credit from online services like Nyble or Bree may be available without proving traditional income.
What Do You Need To Qualify For A Loan While Unemployed?
One of the best things about unemployment loans is that you don’t need a job to qualify for financing, which other credit products may require. That said, there are a few personal and financial criteria that you’ll need to meet, such as:
| Proof Of Income | With an unemployment loan, you don’t need a job to qualify; you just need to have some form of income regularly deposited into your bank account. This income can come from various sources, including government benefits and a pension. |
| Active Bank Account | Most lenders will use instant bank verification to verify that you receive some form of income via direct deposit. This is done for income verification and repayment purposes. |
| Credit Score | While some lenders don’t require credit checks, others do. A few negative marks on your credit report aren’t always a deal-breaker. However, a history of missed payments or a recent bankruptcy can limit your options. Be sure to check your credit score before you apply. |
| Debt-To-Income (DTI) Ratio | Given the unpredictability of non-employment income sources, having a low debt level is key to securing and managing a loan while unemployed. Generally, lenders prefer to work with borrowers with a DTI ratio of no more than 44%. |
Steps On How To Apply For EI Loans?
If you’re looking for a loan while unemployed, here are a few steps to apply for an EI loan.
Step 1. Do You Meet The Minimum Requirements
Before applying with any lender, check if you meet their minimum requirements. This will save you time and unnecessary credit checks (if the lender requires it). Moreover, ensure that your lender accepts your form of alternative income, such as EI benefits or disability benefits.
Step 2. Get A Quote
If you meet the lender’s minimum requirements, check if they offer a free loan quote. This will allow you to see how much you qualify for and help you compare offers without formally applying.
Step 3. Link Your Bank Account
Lenders typically deposit funds of an unemployment loan directly into your bank account. As such, you must have an active account to receive your funds. Your bank account is also needed to help lenders verify your financial stability and for automatic loan payment withdrawals.
Step 4. Wait For Response
Once you apply, it may take a few hours to a few days before you receive a response, depending on the lender.
Step 5. Get Funded
If approved, you’ll receive the funds via direct deposit or e-transfer.
Learn How To Qualify For Other Loan Amounts
How To Increase Your Chances Of Qualifying For An Unemployment Loan?
Getting approved for the best unemployment loan is all about your creditworthiness. While it can be embarrassing to declare your lack of employment, your lender simply wants to know you can pay off your debt without issue. As long as you’re a permanent Canadian resident with decent credit, are past the age of majority in your province or territory, and have an income large enough to cover your payments, then you should qualify for an unemployment loan.
In addition, there are a few things you can do to increase your chances of approval for a favourable loan amount, interest rate, and repayment plan, including but not restricted to:
Increase Your Credit Score
Not every lender checks your credit history. However, many do because it tells them how you’ve handled debt in the past. You can gradually improve your credit score by paying down your existing credit products and disputing errors on your credit report.
Provide Security
Some lenders will accept collateral, such as your vehicle, home, or another asset. This can both increase your approval odds and help you secure better loan conditions. Be careful. If you default on too many payments, your lender will have the right to seize your asset and sell it to cover your debt.
Get A Cosigner
You can also increase your chances of approval by getting a stronger candidate to cosign your application. Cosigners must pass the lender’s qualifications, such as having a strong income and credit score. With a cosigner, the lender’s risk will be reduced, as they’ll be responsible for making loan payments if you fail to pay at some point over the loan term.
Unemployment Loans Pros
There are several perks to applying for an unemployment loan:
- Fast Funding: Many lenders offer fast approvals and funding shortly after, typically within the same business day. If you have any urgent expenses to cover, an unemployment loan may provide you with the fast cash you need without a long wait.
- No Traditional Employment Required: Perhaps you may want to consider an unemployment loan because you don’t have the traditional income documents needed to qualify for a conventional loan. Instead, these loans don’t require standard employment income to qualify. Rather, you can qualify with alternative income sources, including government benefits or pension earnings.
- Flexible Loan Options: Several loan options may be available to you if you’re unemployed. These can include personal loans, payday loans, lines of credit, and cash advances.
- Build Good Credit: If your lender reports payments, you can gradually improve your credit score over time with on-time payments. Eventually, a good credit score can open the doors to more and better financing products in the future.
- Convenient Online Application: Alternative lenders who offer unemployment loans often make applying for financing easy. Typically, you can apply online from the comfort of your home, making applying very convenient.
Unemployment Loans Cons
There are a few risks that you must consider before you apply for an unemployment loan in Canada. Although you shouldn’t have trouble finding a loan that suits your preferences, these dangers can affect your credit and finances. Here are a few warning signs to look out for:
- Additional Financial Burden: While a loan can help you deal with your expenses, it’s a debt you need to repay, which can be challenging when you’re not working.
- Higher Interest: Unemployment loans are riskier for lenders. In turn, they tend to charge higher interest rates to offset the risk they assume.
- Additional Fees: While interest will likely make up the main portion of your final loan balance, there may be several administrative fees associated with your unemployment loan, like loan origination, cheque cashing, etc.
- Automatic Debits: Most lenders will automatically withdraw your loan payments from your bank account. They may charge you a non-sufficient fund (NSF) or overdraft penalty if you don’t have enough money in the account on the due date.
- Shorter Terms: Although conditions vary from lender to lender, many will only offer you a short repayment term to minimize the risk involved. With a minimal amount of time to repay the loan, you may find it difficult to come up with the funds needed to make a full repayment by the due date.
- Scammer Lenders: Predatory lenders lurk in the realm of alternative lending, as borrowers tend to have limited options due to their sub-par financial or credit profiles. As such, you may be more vulnerable to scams if you’re not careful.
Financial Resources For Unemployed Individuals In Canada
Several financial resources may be available to help you manage expenses if you’re unemployed:
Job Boards
Many online job boards are available that list job openings in various industries. These platforms help connect job seekers with employers by listing available job openings, eligibility criteria, and application details. Simply filter your results by location and job type, and a list of job postings will populate.
Here are a few popular online job boards in Canada:
| Monster | Learn More |
| Jobboom | Learn More |
| Jooble | Learn More |
| Indeed | Learn More |
| Learn More | |
| Canadian Job Bank | Learn More |
Government-Backed Skills Training Programs
Canada offers several government-backed skills training programs to help job seekers develop skills to find work and advance their careers. These programs provide financial assistance, training resources, and job placement guidance to qualifying individuals. Here are a few examples:
| Class AZ License Funding | Learn More |
| Immigrant Education Loans | Learn More |
| Canada Training Credit | Learn More |
| Canada Apprentice Loan | Learn More |
Online Search Platforms
Canadians can use web-based search platforms, like www.211.ca, to find financial assistance programs. This website lists information about various government and community-based services that assist individuals in finding financial and employment support. Some of the local programs you may find on this website include the following:
| Food Banks | Learn More |
| Utilities Assistance | Learn More |
| Rent & Housing Assistance | Learn More |
| Disabilities Assistance | Learn More |
Final Thoughts
No matter the reason for your unemployment, there are sure to be some lenders in your area that can offer you a loan that’s not dependent on traditional employment income. Instead, you may find lenders near you who are willing to accept alternative income sources while you’re between jobs. If you’d like to be connected with those financing sources, there’s no better referral network than Loans Canada.
