asking boss for a loan

A reader writes:

I started working for my new employer on September 15, 2008. I was pregnant and I had to go on maternity leave on January 1, 2009. The company did not pay me while I was on maternity leave. I have financial problems and could not pay rent. The owner switched off my electricity and I decided to go back to work. I started working again in mid-February, with my baby one month old. I would like to ask my boss if the company can help me with a loan to sort out my financial crisis. Is it right to ask this of a boss?

First, I’m sorry to hear about your situation.

Do you have any other options besides asking your boss? Family, friends, others you could ask for help? In general, I don’t think it’s a good idea to ask your employer for a loan or pay advance, especially when you’re new to the company.

Of course, if you’re truly desperate, you’re desperate, and you’ve got to do what you’ve got to do — but I would exhaust all other options first (including looking into public assistance programs and bank loans, if you’re eligible).

But I’ll be honest: I’ve never been in this situation (on either side) and I might be wrong about this. What do other people think?

I wish you the best of luck, and I hope things turn around for you soon.

{ 11 comments… read them below }

  1. dave wags*

    Absolutely right, AAM. Only as a last resort should you ask your employer for something like an advance or loan.

    Unless you’ve never, ever asked for money from family, I would avoid that too. There’s so much more at stake with playing with money from family members than meets the eye.

    I suggest she look for public assistance. I know through my interactions with United Way that they have a “hotline” in most areas that you can call with just about any question relating to services. That #, if memory serves, is 211 (Check with your local United Way, as this number isn’t country-wide).

    Really hope things turn out well for the reader.

  2. Christine*

    I have taken (small) loans from my boss on one or two occasions. The trouble is that I work casual and so I don’t get paid as regularly as the salaried employees — and sometimes my cheque has been one or two weeks late and I’ve simply run out of money.

    In both cases my boss offered me a loan; I didn’t ask for it. It’s still an uncomfortable situation, though, and I’d be happier if I didn’t have to take her money sometimes. I don’t like being beholden to someone like that.

  3. Anonymous*

    I have been in a similar situation. A sudden change in my relationship status prompted me to have to make a quick move with few resources to do it.

    I had been working at the company for several years. I asked for help getting a deposit on a new apartment together and they did, as a pay advance of course.

    I paid it back as quickly as I could and that was the harder part to be honest. Since my pay was effectively reduced to pay the loan off I needed to live off of less for a few months until the loan was repaid. I would advise that if you were to do something similar you make sure you know what your new (temporary) budget will be. Make sure you don’t end up where you started again because you are repaying a loan and have less income from it and are running up debts because you didn’t adjust your budget.

    I will say our company is a pretty small one, has a sort of family feel to it, and I would imagine that the boss wouldn’t have felt comfortable doing this if he thought maybe I wasn’t here for the long haul or might leave before I’d repaid the loan. If you decide to ask for it, be prepared to suggest the repayment plan, showing you have this worked out will make them feel better about doing it in the first place.

    I also agree it should be a last resort. But if you do it, make sure you are comfortable with the arrangement and so is your employer. You don’t want this loan to be a point of resentment between you two.

  4. Anonymous*

    I’m sensitive to your situation and I’m so sorry that you’re in a bind. But I agree with the other posters that a loan from your company should be a last resort. I mean, you already put them through a pregnancy (which probably means a lot of time out of office for dr. appts and such) and then a month and a half of maternity leave. and I’m assuming you didn’t tell them before you took the job that you were a couple months pregnant. And with a down economy… I think you should consider yourself lucky that you even have the job. You’re protected against discrimination, but if I were the employer, I would be biding my time until I could safely let you go without legal repercussions. Sorry if that sounds mean, but it’s true. So once you sort out your financial situation, I suggest being an absolute STELLAR performer and/or looking for another job in case they decide to let you go from this one… which will put you right back in the same situation. I’m sure you didn’t ask for any of this, and it’s probably just really bad timing, but the situation sucks, and I really hope your employer is one of the rare few who is really understanding and decent. Good luck.

  5. HR Godess*

    Spot on advice. Here’s the problem: an employer is not a financial institution and should not put themselves in the position of one. If they lend money to one employee, it inevitably will get out and the expectation is that they will be able to loan money to ANY employee that asks. It could create huge problems for the company. That should always be kept separate in my opinion. Business is business.

    One other option is taking a loan from your 401K if you have it. I don’t recommend it but like AAM said, if you’re deperate, you’re deperate.

  6. Anonymous*

    While I agree with all the postings above, it bugs me when people say it almost like a cliche – go to friends and family. It’s taken for granted that everyone has those. 10 years ago I immigrated from another country, alone, and at that time I didn’t have any network. When the first job didn’t work out and shortly after, the landlord showed me to the door, I literally had nowhere to go. A few aquintencies that I had from the survival job all nicely switched the subject and excused themselves from being involved.
    I guess my point is – if “friends and family” were always there to go to, one would not need to write and ask for help.

  7. Anonymous*

    I’m the President of a small business (about a dozen employees). We regularly give our top salesperson a “loan” on future commissions (the business is very slow in the winter months).

    Recently, another employee (our accountant!) asked for a loan of a few thousand dollars. This employee has been with the company for more than two years, is very reliable, and an excellent performer.

    My thought on this is that if a small loan will help reduce the stress of valued employee, and there is a repayment plan, I’m glad to help. A stressed employee is more likely to make mistakes and be distracted from their job.

  8. Anonymous*

    I just want to thank you for your advise. I did not ask my manager for a loan. I decided to wait for my pension fund from my ex-employer.I paid all my debts. My situation has changed. I am very happy now and my baby is fine. Thank you to all have sent comments. God bless.

  9. Anonymous*

    As an employer, I'm willing to make a small loan (under $1,000) to an employee or to pay a paycheck a week or two in advance. However, I really don't appreciate it when the same worker asks for paycheck advances repeatedly. Makes me distrust the worker.

  10. Anonymous*

    Just a word of warning for employers. In some states, giving loans/pay advances to employees is risky business. The employee can quit on you and you cannot legally deduct the remaining balance from said employee’s final check! In other states, it takes careful legal documentation in order to be safe, even requiring notarization in some cases!

  11. Pere*

    hello friends!
    Its rather unfortunate i find myself in the same situation. I just changed job about two months ago and my rent is expiring in June, howver i had made arrangents with my bankers for a loan tompay the rent advance at my old job.
    Now that i have a new job, my bankers claim i could not access the loan because i must be confirmed by my new job before they could grant me the lon. What do i do now as i need to payn the rent or get evicted? is it right to ask my company for a loan? Please i need urgent advise. My company actually gives loans to the public.

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