Types Of Loans Available For Gig Workers

Types Of Loans Available For Gig Workers

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated October 19, 2022

In Canada, 1.7 million Canadians worked in the gig economy in 2016. Since then, that number has proliferated due to the number of online platforms entering the industry such as Uber, Airbnb, TaskRabbit, and more. The addition of these companies has changed the way Canadians earn an income. 

While gig work has become a principal source of income for many Canadians, it has also brought certain disadvantages, particularly with access to credit. Due to the instability of gig work, getting approved for a loan as a gig worker can be difficult. 

Thankfully, despite the unique financial problems gig workers face, there are a number of different loans they can rely on for financial support. 

Types Of Loans Available For Gig Workers

Below, we’ve briefly discussed a few loan options that gig workers can use depending on the financial difficulty they are facing. 

Personal Loan

A personal loan is a classic loan for emergencies due to the fast approvals. There are many alternative lenders who provide funds to applicants the same day they apply, which makes it an incredibly convenient source of financial support during emergencies. Moreover, they are relatively inexpensive compared to other short term loans like payday loans and credit cards. Personal loans also allow you to spread costs by paying the amount over a generous period of time, usually 3 months to 10 years depending on the loan amount.

Equipment Loan 

Being a gig worker often means you have to purchase and maintain your own equipment to keep your business running. Sometimes, you’ll have the funds necessary to buy the equipment yourself, other times you may require some help or will want to use credit to keep your cash flow steady. 

For times like these, consider an equipment loan. An equipment loan is a loan that is secured by the equipment you buy. Rather than buying the equipment in one lump sum payment, you are able to pay for your asset in periodic installments over a period of time, with interest.  

Line of Credit 

A line of credit provides quick access to cash when business is slow or when there is an emergency. A line of credit gives you access to a certain amount of money, which you can use according to your needs. Interest is only paid on the amount you use. Moreover, like a credit card, you regain access to the amount borrowed as you pay it back. 

Invoice financing 

If you’re ever strapped for cash due to slow-paying customers, you can use invoice factoring which lets you sell your invoices to a third party for a certain rate. Meaning, you can expedite your payments and tap into any unpaid invoices that you have now, rather than waiting and struggling to get your customer to pay. 

Where Can You Get A Loan As A Gig Worker?

While traditional banks typically shy away from giving loans to gig workers, alternative lenders are a good substitute for banks, as they can provide gig workers with the financial resources they need to keep their businesses and personal life afloat. Unlike banks, alternative lenders use a number of different factors, in addition to credit scores, to assess the eligibility of a borrower. 

Best Lenders To Get A Loan As A Gig Worker

Filters

Loans Canada

Amount
Up to $50,000
Rate
2.00% to 46.96%
Term
3-60 months

Loanz

Amount
$1,000 - $15,000
Rate
29.9% - 46.9% APR
Term
12 - 60 months

Symple Loans

Amount
$5,000 - $50,000
Rate
6.99% - 22.99%
Term
Up to 84 Months

Spring Financial

Amount
Up to $15,000
Rate
14.99% to 46.96%
Term
6 - 12 Months

goPeer

Amount
$1,000 - $25,000
Rate
7.5% - 31.5%
Term
36 - 60 months

Cash Money

Amount
$1,500 – $10,000
Rate
Varies by province
Term
Varies by product (up to 60 months)

Lendful

Amount
$5,000 - $35,000
Rate
Starting at 9.99%
Term
6 - 60 Months

Loan Away

Amount
Up to $5,000
Rate
19.9% to 45.9%
Term
6 - 36 Months

LoanMeNow

Amount
$500 - $1000+
Rate
28 to 32%
Term
3 Months

Consumer Capital Canada

Amount
$500 - $12,500
Rate
19.99% to 34.99%
Term
No minimum term

Mogo Finance

Amount
$300 – $35,000
Rate
9.9% - 47.72%
Term
3 - 60 Months

Fairstone Financial

Amount
Up to $50,000
Rate
19.99% - 39.99%
Term
6 - 120 Months

How To Get A Loan As A Gig Worker

Getting approved for a loan as a gig worker typically requires that you have a reliable income and a steady job. While your income may be strong as a gig worker, you don’t have the stability of a salaried employee, which could be a deterrent when applying for a loan with a traditional lender. 

Try An Alternative Lender

As such, you may have better luck applying with an alternative online lender instead. Do some preliminary research into the lenders that offer loans to gig workers based on your income and credit score. Online loan aggregators let you quickly pull up a list of lenders along with their interest rates, fees, terms, and eligibility requirements.

What Do You Need To Apply For A Loan As A Gig Worker? 

To apply for a loan as a gig worker, you’ll need to provide the lender with the following: 

  • Your personal information and photo identification
  • Your income information
  • Your debt information
  • You may also be required to supply documents supporting any valuable assets that can be used as collateral. 

If you apply with an online lender, you can usually get approved within 24 to 48 hours and receive your funds electronically shortly after. 

What Are The Loan Requirements For Gig Workers

  • Income – The amount of money you make will be looked at. So long as you make over a certain amount, you can be eligible for a loan.
  • Employment stability – The longer you’ve had your job, the more trust your lender will have in you. 
  • Debt-to-income ratio – The lower your debt-to-income ratio, the less debt you have in comparison to your income, which will increase your chances of approval.
  • Credit  – Many lenders will check your credit to determine your creditworthiness, especially if your employment and income are unstable. Most lenders will be more inclined to loan you money if you have good credit, however, if you have really bad credit, there are lenders who do not require a credit check. Just be aware that these lenders often charge higher rates and fees.

Who Qualifies As A Gig Worker? 

Freelancers, temporary workers, contract workers, and other independent workers are the typical terms used to describe gig workers. What these workers all have in common is that they are paid based on completed tasks rather than the number of hours worked. This work style provides an incredible amount of flexibility for the worker. In fact, there are a number of benefits that come with being a gig worker. 

  • Flexibility – Unlike traditional workers who are shackled by 9 to 5 jobs, these workers have the power to create their own hours.
  • Extra Source of Income – If you’re currently working full-time, but need some extra cash, you can take up a few side-gigs for an extra source of income
  • Be Your Own Boss – Micromanagement is a thing of the past for these workers, as they can work at their own pace and complete jobs how and when they want. They are free to be as creative as they want in their approach when they are tackling an assignment. 

Financial Problems Gig Workers Face 

As freeing as it may seem to work in the gig economy, it also comes with some restraints. Unlike traditional workers who have a steady income, steady hours, and benefits they can fall back, many Canadians who work in the gig economy are faced with financial insecurity due to the low pay, irregular hours, volatile payments, and lack of benefits.

  • Slow Payments – Due to slow-paying customers and the inability to accept different modes of payments, gig workers struggle with slow payments.
  • Low Pay – According to Statistics Canada, gig workers have a low annual income with it averaging around $4,300 annually. In fact, approximately 50% of gig workers had at least one wage job in addition to their gig job. 
  • Lack of Job Benefits – If you get sick or need a day off due to an emergency, gig workers don’t have paid time off, insurance, or retirement funds to fall back on. They literally cannot afford to. 
  • Inconsistent Income Gig workers don’t have a set number of hours they work, so their income is usually quite volatile. Moreover, work is not always readily available even though you are. 
  • Inability to get Credit – Banks typically require a healthy credit score and a steady income to approve you for a loan. However, with a volatile income, many traditional banks won’t give gig workers a loan.  

Loans For Gig Workers - Faqs

Can I get a business loan as a gig worker?

Gig workers aren’t typically eligible for business loans. These types of loans are difficult to get approved for, as they require good credit, proof of business income, and a history of positive financials. Your business may also need to be set up a specific way for tax purposes, which gig workers often don’t do. 

How do I show proof of income as a gig worker? 

Conventional lenders generally require proof of employment for loan approval. However, alternative online lenders often don’t have such requirements. That means you can still secure a loan as a gig worker without proof of employment. You may need a good credit score to get approved, as well as tax receipts from the past few years to prove your earnings. 

Can I get a payday loan as a gig worker?

Yes, payday loans are easy to get approved for, including for gig workers. All you need is proof of income to qualify.

Bottom Line

Being a gig worker can be rewarding and more engaging than a regular 9 to 5 job, but it’s important to be aware of the difficulties people face in this industry. Due to the irregularity of their jobs, many banks are unwilling to lend to gig workers. Fortunately, alternative lenders have different lending standards and are able to support gig workers and their businesses during financially difficult times.


Rating of 5/5 based on 3 votes.

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Save With Loans Canada

Special Offers

Borrow $500-$50,000

Borrow $500-$50,000
NEW!

Don’t pay until March with this offer from our partner, Fairstone.* Ends January 31st.

View Offer
Cashback & Bonus Offer

Cashback & Bonus Offer
Ends March 1st, 2023

New Offer! Get up to $2,000 cashback + a $50 bonus on signing up. Conditions apply.

View Offer
Earn 5% Cash Back With Neo

Earn 5% Cash Back With Neo
No annual fee!

Earn an average 5%¹ cash back at thousands of partners and at least 0.5%² cashback guaranteed.

View Offer
Build Credit For $10/Month

Build Credit For $10/Month
Popular

With KOHO’s prepaid card you can build a better credit score for just $10/month.

View Offer
Best Personal Loan Provider by Greedy Rates
Icon

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.