Canada Child Benefit Loan Applications

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Billions of dollars are distributed to eligible Canadian families through the Canada Child Benefit (CCB) tax program. ~ Global News 

This benefit is designed to help families with costs related to raising children under 18 years of age. The government is reported to provide poverty relief for over 300,000 children through this initiative. Parents of those children may apply for child benefit loans to cover unexpected household expenses.

CCB assistance is received in the form of a monthly tax-free payment to parents of minor children. The payments include child disability benefits, if needed, as well as proceeds from provincial programs. Because the benefit is paid on a regular basis (monthly), it is considered qualified income which can be used in an application for a personal loan. In fact, due to popular demand, there is an abundance of loan products exclusively geared to child tax benefit recipients.

Canada Child Benefit Overview

The CCB was included in the 2016 Federal Budget to revamp child benefit programs. In July of 2016 the program rolled out and replaced both the Universal Child Care Benefit (UCCB) and the National Child Tax Benefit (NCTB). Although the CCB is similar to the former tax benefits, the main differences are that the new child tax credit is income based and non-taxable.

When a child is born in Canada, the parents are given a birth package that includes documentation to verify birth. A CCB application and information about the program are supplied at this time. Parents also have the option of applying for the benefit when they file the first tax return after the birth. 

Payment is disbursed per child living in the home. Calculations are formulated from a basic federal government amount with additional funds added depending on the province of residence. The payment is discontinued for each child when they turn 18 years old. Eligibility and the amount of the payment are based upon the following:

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    Household income

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    Number of children

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    Ages of children

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    If a disabled child(ren) lives in the home

When a CCB application is approved, the recipient may choose to receive the payment in the form of a check or direct deposit. Benefits are paid on the 20th of each month or the next business day after that date if it falls on a holiday or weekend.

In order to continue receiving the CBB, parents must file a tax return every year. A return must be filed by all adults in the household, including spouses and domestic partners, even if there was no household income for a given year. The Canada Reserve Agency uses information from prior year income tax returns to calculate the CCB payment amount. The benefits are paid over a 12-month period and are recalculated every July. 

Loan Application Process

For the purpose of borrowing money, CCB payments are counted as income. However, the usual factors such as credit score also play a part in the personal loan approval process. There has been an increase in the demand for these loans, which are sometimes called “family loans”.  Proceeds do not affect the benefit because it is considered debt and not income. Before making an application, borrowers should:

  • Check their credit score to see where they stand
  • Consolidate or pay off as many debts as possible
  • Compare lenders for interest rates, terms, fees and approval requirements
  • Contact potential lenders to see if they are eligible for a loan

The chances of getting a “yes” for a child tax benefit loan can be increased by maintaining good financial habits like consistently making on-time credit payments. Some lenders will require a co-signer if a credit score is under 650; the chances of finding one are pretty slim. However, many lenders will approve a loan if the applicant is willing to secure it with collateral. Since every lender is different, it does not hurt to apply to another one who may have terms the borrower can live with if the loan is denied.

Cash Advances on Child Tax Benefits

There is no shortage of lenders ready to quickly hand over a cash advance check to child tax benefit recipients. People with bad credit turn to cash advance loans because most of these lenders do not require a credit check or will approve low credit score applicants.

It is a very short-term loan that is based on the amount of the borrower’s child tax benefit. Like all payday loans, interest rates for this loan can be close to 600%! Only an individual in dire financial trouble should consider these types of loan products. It is next to impossible to break the cycle of repayment and borrowing if the loan cannot be paid in full by the due date. 

CCB Loans Best Uses

Critics of CCB loans suggest it is not appropriate to borrow against funds that are intended for day-to-day expenses. Supporters, however, make the point that emergencies can happen to anyone at any time. Most lower income families do not have savings set aside for unexpected financial crises that occur before the monthly benefit is due to arrive. For those families, the ability to borrow against funds they have coming is a lifesaver.

CCB loans and cash advances are rapidly becoming more popular due to a variety of circumstances that present themselves to recipients. The following is information for cash-strapped Canada Child Benefit applicants to consider:

  • An installment or personal loan is much less expensive than a payday loan or cash advance. They have longer repayment terms, which means the interest rate and payments will be lower. 
  • A loan against the CCB may require automatic payment deductions out of the benefit each month. It is important to budget accordingly, since there will be a reduction in income until the loan is paid.
  • Cash advances should be saved for emergency situations and applicants should borrow as little money as possible.
  • Borrowers should apply for a little less than their benefit amount to account for interest and fees.

Getting the most out of the child benefit starts with maximizing tax returns since the amount of the benefit payment is based upon income. This starts with reducing the tax burden using legitimate deductions, which means reporting all allowable deductions for children and adults in the household. It is worth the effort to get an accountant or tax preparer to help identify expenses that can be deducted such as childcare and medical expenses. 

If the need arises, the best way to get a loan is to shop around to find affordable options with flexible terms. Borrowers should only consider applying to lenders that are transparent when it comes to explaining fees and other charges. They should be watchful of loan scams and only deal with lenders that are licensed in their province.

Lastly, eligibility requirements, benefit amounts, and other qualifications for the CCB are different among Canadian provinces. People should never assume their benefits will be the same as someone else that they know. For the most accurate information, individuals must carefully research the regulations of their province and use government approved online calculators to estimate their benefit payment.

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Sheila Kay

Sheila Kay is an author, ghostwriter and editor residing in the Atlanta, GA area. Among her favorite writing genres are creative nonfiction, self-improvement, and finances. Her first published book, PTSD and the Undefeated Me, is a memoir which has been a stepping stone to her involvement with mental health advocacy for military and civilian men and women. She is currently working on the first fiction novel to be published under her name. For more information or to purchase her books, visit Sheila’s Author Page on Amazon.com.

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