Can I Get a Personal Loan While on Workers’ Comp

Lenders often resist approving loans for individuals solely dependent on workers’ compensation due to its non-traditional classification as income. Despite this hesitancy, workers’ compensation encompasses various advantages. The blog explains the process of getting a personal loan while on workers’ comp.
Can I Get a Personal Loan While on Workers' Compensation
Can I Get a Personal Loan While on Workers’ Comp
Workers' compensation is an insurance mechanism that benefits employees incapacitated or injured during work-related activities. But can you get a personal loan while on workers' compensation? Let's find out!
In this article

Navigating financial challenges while on workers’ compensation can be daunting. In such times, seeking a personal loan may be viable to meet immediate needs. Annually, the US sees 1.1 million reported Worker’s Compensation cases funded by employer contributions. However, the feasibility of obtaining a personal loan while on workers’ comp depends on various factors, including state regulations and individual circumstances. 

Workers’ compensation is an insurance mechanism that benefits employees incapacitated or injured during work-related activities. However, its unique nature as a form of financial support poses challenges for those seeking personal loans. Lenders often resist approving loans for individuals solely dependent on workers’ compensation due to its non-traditional classification as income. Despite this hesitancy, workers’ compensation encompasses various advantages. Foremost among these is limited payment, acting as a substitute when employees cannot engage in work. The benefits extend to covering medical treatments and occupational therapy, illustrating the comprehensive support provided to individuals navigating workplace injuries or disabilities. Also, check out Beem to explore multiple personal loan options ranging from $500 to $100,000 as well as personalized rates as per your financial requirements.

In this discussion, we’ll explore the possibilities, document requirements, and the pros and cons of pursuing a personal loan in such situations.

Personal Loan While on Workers’ Comp

Non-Traditional Income Challenge: Lenders hesitate due to the unconventional nature of workers’ compensation as it differs from regular income, impacting loan approval.

Workers’ Compensation Benefits: Workers’ comp provides essential benefits for job-related injuries but is not universally recognized as standard income by lenders.

Financial Strain for Sole Dependents: Individuals relying solely on workers’ comp may experience financial strain, especially with the limited payment and coverage for medical treatments.

Crucial Role of Personal Loans: Obtaining a personal loan becomes essential for those on workers’ comp, serving as a financial lifeline during periods of income disruption.

High Annual Workers’ Comp Claims: The prevalence of 4.9 million annual comp claims underscores the widespread need for financial solutions among injured workers.

Partial Wage Coverage: Workers’ comp payments covering only two-thirds of average wages highlight the financial gap, emphasizing the necessity for additional financial support.

Call for Accessible Loan Options: The evident financial struggle accentuates the demand for more accessible loan options tailored to individuals navigating the challenges of workers’ compensation.

Understanding the Possibilities

Unique Nature of Workers’ Compensation: Obtaining a personal loan while on workers’ compensation proves challenging due to its distinctive status as insurance for work-related injuries rather than a conventional income source. Lenders may express reservations about extending loans without the stability of regular job income.

Potential Hurdles: While challenging, it’s not an insurmountable obstacle. Some lenders may consider applicants with alternative income sources or strong credit histories. Additionally, providing collateral, such as a car or house, can enhance your loan eligibility.

Individualized Approach: Shopping around and consulting various lenders is crucial. Each institution has its criteria and flexibility, making it essential to explore multiple options to find one more accommodating to your situation.

Security for Loan Approval: Offering valuable assets as security can increase the likelihood of loan approval. Lenders may view collateral as a safeguard, mitigating their concerns about the unconventional nature of workers’ compensation.

Caution and Repayment Assurance: Exercising caution is vital while pursuing a loan on workers’ compensation. Ensuring the ability to repay is paramount to maintaining your financial standing. Understanding the terms and conditions and choosing a lender willing to collaborate can make the process more manageable and prevent unforeseen challenges.

States Where Workers’ Compensation is Available

Navigating the intricacies of workers’ compensation varies across the United States, with certain states offering distinct frameworks. In this context, understanding the presence or absence of workers’ compensation becomes essential for individuals grappling with occupational injuries and seeking appropriate support. Here are some of the states where workers’ compensation is available.

Rhode IslandTennessee

States Where Workers’ Compensation isn’t Available

Navigating workplace injuries takes a unique turn in certain US states where the safety net of workers’ compensation is notably absent. In these regions, individuals face distinct challenges, as the legal landscape refrains from providing the structured support that workers’ compensation typically offers in other parts of the country.

New HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth Dakota
OregonPennsylvaniaSouth CarolinaSouth DakotaTexasUtah
VermontVirginiaWashington DCWest VirginiaWisconsin
Can I Get a Personal Loan While on Workers' Compensation?

What are the Documents Required?

Proof of Workers’ Compensation Benefits: Essential documentation includes evidence of your workers’ compensation benefits, affirming your eligibility for financial assistance during injury-related absences.

Details of Other Income Sources: If applicable, providing information about alternative income streams offers lenders a comprehensive view of your financial stability beyond workers’ compensation.

Job History Information: Documenting your employment history is crucial, enabling lenders to assess your overall work stability and reliability.

Credit History: Some lenders may request your credit history to evaluate your creditworthiness, though this may vary.

Bank Statements: Submitting recent bank statements provides insight into your financial transactions and management.

Collateral Documents: If using valuable assets as collateral, lenders may require relevant documentation, adding a layer of security to the loan application.

What are the Pros and Cons?


  • Financial Support: Provides immediate financial assistance, helping individuals meet essential needs during reduced or halted regular income.
  • Flexibility: Offers flexibility in fund utilization, allowing borrowers to address various financial obligations, from medical expenses to everyday living costs.
  • Credit Improvement: Responsible loan management can improve credit, as timely repayments positively impact credit scores.


  • Limited Income: Workers’ compensation is often limited, potentially creating a financial gap, especially if the compensation is less than the individual’s regular income.
  • Debt Burden: Taking on additional debt during a period of income disruption may lead to a heightened debt burden, impacting financial stability in the long run.
  • Potential for High Costs: Some loans, mainly if obtained under challenging circumstances, may come with higher interest rates or fees, increasing the overall cost of borrowing.
  • Risk of Overborrowing: The availability of loans might tempt individuals to borrow more than necessary, leading to overborrowing and subsequent challenges in repayment. Responsible borrowing is crucial to avoid this risk.


In conclusion, obtaining a personal loan while on workers’ comp presents a nuanced scenario with advantages and potential pitfalls. While it offers crucial financial support and flexibility during challenging times, individuals must navigate the limitations of limited income and the risk of accruing additional debt. The potential for credit improvement underscores responsible borrowing practices, yet the associated high costs and the risk of overborrowing require careful consideration. Ultimately, deciding to pursue a loan in such circumstances demands a thorough assessment of individual financial needs, disciplined repayment planning, and a commitment to maintaining long-term financial well-being. Use Beem to find the best personal loan offers and compare the best options that work for you.


Can I apply for a personal loan while receiving workers’ compensation benefits?

You can apply for a personal loan while receiving workers’ compensation benefits. However, it might be challenging as some lenders may be hesitant due to the non-traditional nature of workers’ compensation income. Credit history, collateral, and alternative income sources could influence approval. It’s advisable to shop around and communicate with lenders to find those more willing to work with individuals on workers’ comp.

Can you claim compensation twice for the same thing?

You cannot claim compensation twice for the same injury or incident. Workers’ compensation is designed to provide benefits for work-related injuries, and once a claim is settled, seeking compensation for the same incident through another channel is usually not allowed. However, specific regulations may vary by jurisdiction, so consulting with legal professionals or the relevant workers’ compensation authority is crucial.

Can workers comp follow you around?

Workers’ compensation claims generally do not “follow you around” in the sense of affecting future employment opportunities. Employers should not discriminate against employees who have filed legitimate workers’ comp claims. However, it’s essential to note that employers may consider various factors when making hiring decisions, and the specifics can vary. Knowing your rights and seeking legal advice if you suspect any discrimination based on past workers’ compensation claims is advisable.

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Picture of Raman Gujral

Raman Gujral

An achievement-oriented professional, Raman has 10+ years of experience in B2B SaaS and B2C products across Fintech, Telecom, Digital Media, Social Media and Logistics domains. Defining and communicating product vision and strategy, product roadmap development, product positioning, and data analysis, he is also an expert in health insurance and personal loans content.


This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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