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Posted by Revive Financial on Oct 24, 2023 2:23:31 PM

According to the latest NAB Consumer Insights Survey, financial hardship is rife in Australia right now, with 44% of us reporting to have experienced some form of it.

Some of the most common forms are not having enough money in an emergency, followed by not having enough to pay for food, necessities and bills. The result is that 1 in 3 people are significantly stressed about money, and almost 1 in 4 believe they’re struggling to make ends meet.

If you fall within these statistics, financial hardship loans can help ease the pressure. Here, we look at the definition of financial hardship, available loans, and some borrowing-free alternatives.

Financial Hardship Defined

Financial hardship can be defined as a situation where you or your household are struggling to meet your financial obligations and cover essential expenses. This typically occurs when you have difficulty paying your bills and meeting repayments on loans and debts when they are due.

It can be caused by a wide range of factors or a combination, including:

  • High living costs
  • Unemployment or underemployment
  • Unexpected expenses
  • Illness or injury
  • High levels of debt
  • Relationship breakdown (e.g. divorce, separation)
  • Economic downturn
  • Addiction or gambling issues
  • Lack of financial literacy
  • Natural disaster

When you’re experiencing financial hardship, you’ll have difficulty maintaining a reasonable standard of living. This can lead to financial stress and instability. It can also lead to high levels of personal stress, affecting your wellbeing and relationships.

Options for Financial Hardship Loans

Here in Australia, several loan options are available to you if you find yourself in financial hardship. These loan options are designed to provide temporary relief and help you get through times of struggle.

Financial hardship assistance from current lenders

If you're already repaying a loan (such as a home loan, personal loan, or credit card), contact your lender immediately if you're facing financial difficulty. Many lenders have hardship assistance programs that can offer temporary relief, such as reduced interest rates, deferred payments, or extended loan terms.

Government No Interest Loans (NILs)

NILS is a community-based program that offers small loans to low-income individuals or families to cover essential expenses such as medical bills, car repairs, or household items. These loans let you borrow up to $3,000, are interest-free, and have flexible repayment terms (over 12-18 months).

To be eligible for a NIL, you need to:

  • Have a health care card/pension card, or
  • Earn less than $57,000 a year (after tax) for singles or $75,000 a year for couples or people with dependents, or
  • Have experienced family or domestic violence in the last 10 years.

Two key providers of no-interest loans are Good Shepherd and The Salvation Army.

Centrelink advance payments

If you're receiving government benefits through Centrelink, you may be eligible for financial assistance in the form of an advance payment. This allows you to receive a portion of your future benefits upfront, which can be used to address immediate financial needs. Technically, this isn’t a loan but an advance on your own benefits.

Financial hardship loans (bad credit)

If you have a poor credit report score or you don’t have one at all, banks might say no, but you may be able to get a financial hardship loan from a specialist lender. However, because you’re considered a high-risk borrower, the terms and conditions aren’t always very appealing. This includes high-interest and short terms.

There are three common types of financial hardship loans for bad credit in Australia:

  1. Payday loans (otherwise known as cash advances - next payday loan repayments)
  2. Short-term loans (typically 3 to 12-month repayment period)
  3. Instalment loans (longer term repayment period or 12-36 months)

Related: 5 Questions to Ask Before Applying for a Loan


Alternatives to Financial Hardship Loans

While financial hardship loans can provide some relief if you’re facing temporary financial difficulties, they’re not always the best option.

If your financial problems are caused by a one-off unexpected event, a hardship loan might provide relief. But, if your problems are caused by financial mismanagement or excessive debt, they likely won’t be sustainable and could put you in an even worse financial position.

That’s why you should always consider your specific needs and circumstances before taking out a financial hardship loan.

Here are some other avenues you could explore to help manage your situation:


Taking control of your finances is always a great place to start if you’re experiencing financial difficulties. Even if you’ve already hit hardship, it can help you work your way out of a hole.

Budgeting involves collecting all your financial documents (bank statements, bills, pay slips, receipts), calculating your total monthly income and expenses and creating a detailed budget based on your spending. Try our handy budgeting tool.

You need to ensure that your expenses never exceed your income. If they are exceeding, look for any unnecessary spending you can cut back on.

Debt Agreements

A debt agreement is another way you might be able to find relief from your financial hardship. There are two types of debt agreements: informal and formal (Part 9).

Whether formal or informal, a debt agreement is where you come to an arrangement with your creditors to manage your debts.

  • Informal debt agreement - You (or a service provider representing you, such as Revive Financial) directly speak with your creditors and negotiate a realistic repayment plan. Terms are flexible. Creditors may agree to reduce the total amount owed or create a structured payment plan with lower monthly repayments.
  • Formal (Part 9) agreement - You (or a service provider representing you, such as Revive Financial) negotiate with your creditors to pay back a reduced amount of the total debt over a specified period. This reduced amount is typically based on what you can afford. You then make a single payment through an administrator (e.g. Revive Financial) that’s then distributed to your creditors. You’re offered legal protection from being pursued (no more debt collection calls or emails!), and interest and fees are frozen. It’s a great way to become debt free.

Debt Consolidation Loans

Debt consolidation involves combining multiple existing debts, such as credit card balances, personal loans, and other unsecured debts, into a single, new loan.

Debt consolidation aims to simplify your financial obligations and potentially secure more favourable terms, such as lower interest rates or longer repayment periods, to make it easier to manage and pay off your debts.

There are several ways you can consolidate debts:

  • Personal loan
  • Balance transfer credit card
  • Home equity loan or line of credit
  • Debt consolidation loans

Is a Financial Hardship Loan Right for You?

While hardship loans can be great for some people in some situations, they’re not the right fit (or even available) for everyone.

Before applying for a hardship loan, make sure you have a clear picture of your financial situation, read the small print and ideally, seek the opinion of a financial counsellor or specialist.

There are other ways to ease your money stress, from smart budgeting to debt agreements and consolidation, so consider all your options before leaping into a hardship loan. You’ll have to pay it back, with interest or without.

If you’re experiencing financial difficulty, get in touch with our team of debt solution specialists today on 1800 534 534 for professional, non-judgmental support, advice, and vetted specialist loan products. Equally, you can complete a FREE Online Debt Assessment in just 5 minutes to understand your options better.

Topics: Budgeting, Debt Agreements, Debt Consolidation, Personal Debt, financial support, Recent Articles, advice, Australia, financial hardship loans, personal loans, loans

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