How to get a loan when you’re on welfare

Find a lender that accepts all types of income.

Being on welfare can limit your options when you need a loan. Especially if it’s your only source of income. However, you might be eligible for short-term loans from CDFIs, credit unions and payday lenders. Just make sure you’re working with a legit lender and read about the drawbacks before you apply.

How do I get a loan on welfare?

You can get through a direct lender or by using a broker service while you’re on welfare. Generally, you’re limited to short-term loans if you rely on welfare.

Contact the lender to make sure they accept government benefits as a source of income before you apply.

Which lenders accept welfare as income?

Provider	Generally accepted	Conditions
ACE Cash Express		Full application determines whether it’s acceptable or not.
Advance America		Full application determines whether it’s acceptable or not.
CashNetUSA		Benefits count as an acceptable source of income.
Cash Central		Retirement pensions and Social Security benefits count as an acceptable source of income.
Check City		Varies based on state laws.
Check into Cash		Varies based on state laws.
LendUp		Varies based on state laws.
LendYou		Full application determines whether it’s acceptable or not.
OppLoans		Fixed income is accepted, but not preferred.

How to apply

While the application process can vary from person to person, you can typically apply for a loan by following these steps:

1. Go over your monthly income

If welfare is your only source of income, your options are slightly limited. However, you might have more choices if you have other sources like a have a regular paycheck, alimony or child support.

2. Research lender that accept welfare as income

Before comparing, narrow down your options to lenders that accept your source or sources of income. This information often is not not be available online, so you might need to call ahead.

If you don’t have the time to do the research yourself, consider using a broker or connection service. Connection services are typically free. Brokers might charge a fee but can give you more personalized results.

3. Compare your options

Weigh factors like available loan amounts, rates, fees and terms. You might also want to read about out customer reviews on sites like Trustpilot and the Better Business Bureau — you might have to do this separately if you use a connection service.

Also make sure you can meet the lender’s other eligibility requirements.

4. Fill out the application

Most lenders that offer loans to welfare recipients offer online and in-person applications. Apply online and you can typically finish in a few minutes get your funds the next day.

Applying in-person might take slightly longer, but you might be able to get your funds in as little as 30 minutes.

5. Review the terms and conditions before signing

Watch out for red flags in your loan agreement — especially if you’re getting a payday or installment loan. These include large blank spaces, or missing information about your loan like rates, fees and terms.

What types of loans can I get on welfare?

You might be eligible for several types of loans, even if you rely on welfare as your main source of income. These include:

• Short-term loans from a CDFI. Community Financial Development Institutions (CDFIs) are nonprofit lenders that often offer affordable short-term loans to borrowers with all types of income. You can often find a CDFI near you.
• Payday alternative loans (PALS). These low-interest short-term loans come with APRs capped at 28%. However, they’re only available at some federal credit unions.
• Payday loans. If speed is your top priority, these high-APR small-dollar loans could be in your hands within 30 minutes if you apply in-person. If they’re legal in your state.
• Installment loans. These high-interest loans work a lot like with payday loans with slightly longer terms and at higher amounts.
• Auto title loans. A fast short-term loan based on the value of your car with high rates and fees.

Can I qualify for a loan on welfare?

You might. Whether you can qualify depends on several factors, including the type of loan and how much you want to borrowers. Typically lenders look at the following factors:

• Amount of income. Even if a lender accepts welfare as income, you need to receive enough each month to afford repayments.
• Where you live. Many short-term lenders, CDFIs and credit unions are only available in limited locations.
• Age. The legal age to get a loan is 18 in most states. It’s 19 in Alabama and Nebraska, 21 in Mississippi.
• Citizenship or residency status. You generally must be a citizen or permanent resident to qualify for a short-term loan, though there are options for nonresidents.
• Bank account. While, some lenders don’t require a checking account, most do.

Compare short-term loans

• Payday loans
• Installment loans

What to watch out for

Some of the faster options available to welfare recipients come with risks. These include:

• High rates. Payday loans cam come with APRs as high as 700%. Installment and title loans are often similarly expensive.
• Hidden fees. Some short-term lenders bury extra fees in the fine print of your loan documents.
• Renewing a loan. The real risk of payday and title loans is that most borrowers renew them at least once. This increases the cost and can make it more difficult to pay off the loan.
• Predatory lenders. Some predatory short-term lenders target low-income borrowers with misleading terms designed to get them to pay even more fees and interest.
• Cycle of debt. Even legit short-term loans come with a high risk of getting stuck with a loan you can’t afford to pay off if you renew it more than once.

How does income affect my ability to get a loan?

How much money you have coming in each month and where it comes from can affect your ability to get a loan in a two ways.

• How much you can borrow. In most states, lenders are required to ask for proof of income when you apply for a loan. Many also consider your monthly debt obligations.
• If you can qualify. Some lenders only accept income from a full-time job, while others are happy to work with you as long as you have proof of money coming in regularly.

Does being on welfare affect my credit?

Being on welfare doesn’t affect your credit. Credit bureaus are not notified when you apply for welfare, and by law they’re not allowed to include welfare benefits when calculating your credit score.

As with any loan, you’ll have a better chance of receiving one if you have good credit. There are still loan options if you have poor credit, but the terms will not be as favorable — you will receive higher interest rates, for example.

If your credit currently is not where you want it to be, consider rebuilding it with a secured credit card.

Frequently asked questions

• Do I need a good credit score to get a loan on welfare?

  Not necessarily. Most of the loan options available to welfare recipients are also open to all credit types.

• Can a past bankruptcy affect my loan application?

  It can. If you’ve field for bankruptcy in the past seven years, your options might be even more limited. You can learn more about what your options by checking our our guide to loans after you’ve filed for bankruptcy.

• How do short-term connection services make money?

  Connection services get commission for referring you partner lenders. So while you might not pay, your options are skewed by who’s paying the service.