Small loan - what that means

What is a small loan or mini loan?

A small loan, sometimes called a mini loan, is a colloquial term for a loan of a relatively low amount. Typically, these loans are used to cover unexpected expenses, such as a dental bill, when the funds aren’t immediately available.

In English-speaking countries, small loans are sometimes referred to as «payday loans», a concept tied to short-term borrowing against one’s next salary – a practice that doesn’t exist in Switzerland due to its distinct financial regulations.

In essence, a small or mini loan is a type of consumer loan if it meets certain criteria. In Switzerland, any loan exceeding CHF 500 that fulfils these criteria is classified as a consumer loan. There’s no official cap on what qualifies as a «small loan» – whether an amount feels significant depends on your income and financial situation.

Who provides small loans?

When seeking a small loan from a commercial lender, three main categories of providers are relevant:

• Banks

Banks account for the majority of loans in Switzerland. Some, like Migros Bank, offer loans alongside other financial services, often through dedicated divisions such as BANK-now or CREDIT-now (e.g., UBS, formerly Crédit Suisse). Others, like Cembra Money Bank or bob finance, focus specifically on consumer loans.

• Peer-to-Peer (P2P) Lending Platforms

Crowdlending, a subset of crowdfunding, involves platforms that connect borrowers with investors. These investors, whether individuals or institutions, fund the loans. Since 2019, P2P lending platforms in Switzerland have been subject to the Consumer Credit Act if the loans meet the relevant criteria.

• Loan brokers

Loan brokers, whether individuals or companies, facilitate loans on a professional basis. They typically require authorisation in their canton of operation and assist clients by offering advice and handling administrative tasks related to the loan agreement.

Not all brokers work with the same lenders or offer identical options. However, a good broker understands the basic requirements for various situations and can improve your chances of securing a loan. The more lenders a broker works with, the better they can explore and present options tailored to your needs.

How easy is it to get a small loan?

Since the lenders are generally the same, the loan amount doesn’t fundamentally change the approval process. If a small loan falls under the Federal Law on Consumer Credit, the procedure mirrors that of a larger loan.

Naturally, a smaller loan poses less risk to the lender. However, as previously noted, lenders are legally required to assess your credit capacity («Kreditfähigkeit») under the Consumer Credit Act as soon as the loan qualifies as a consumer loan.

Even for smaller loans, lenders apply their own non-public evaluation criteria. A rejection remains possible, for instance, if your budget is too constrained or if your creditworthiness raises concerns.

Larger loans often come with more favourable interest rates, while smaller loans may carry higher rates.

How quickly can you get a small loan?

The time it takes to secure a small loan depends on several factors. Depending on your personal circumstances, obtaining an offer from a lender may take more or less time.

In some cases, certain requirements may delay the process, such as needing a stable employment history or meeting specific eligibility criteria.

The time to receive an offer varies based on your individual situation. The period between requesting an offer and signing the contract depends on the loan details, your profile and whether additional information or documents are required.

If the small loan falls under the Swiss Consumer Credit Act—which applies to most consumer loans in Switzerland—a 14-day cooling-off period begins after the contract is signed. During this period, you, as the borrower, can withdraw from the agreement without justification or penalty.

In short:

The time until a small loan is disbursed largely depends on your individual situation. The 14-day cooling-off period for consumer loans applies, if the loan requested meets the criteria.

As a borrower, you can speed up the process by preparing all required documents and responding promptly to requests.

We strive to make the process as smooth and swift as possible. If you’re under time constraints, let us know – we can’t guarantee a specific timeline, but we’ll do our best to accommodate your needs.

What does a small loan cost?

With most lenders, the annual percentage rate (APR) is only revealed once you receive an offer. For each offer, the lender conducts a thorough review of your financial situation, creditworthiness, and internal evaluation criteria to determine your interest rate.

Beyond the interest rate, the loan term significantly affects the overall cost. A longer repayment term means higher total interest payments.

A longer term reduces your monthly instalments, but since interest is calculated on the remaining balance, a lower instalment means the balance stays higher for longer – making the loan more expensive overall.

That said, avoid choosing a term that’s too short. Opt for a term that allows financial flexibility for unexpected expenses, and pay more when your budget permits. This approach lowers the total cost while keeping you flexible.

When you submit your request to Credaris, you’ll get an estimated interest rate. This isn’t a guarantee, as the lender ultimately decides whether to approve the loan and at what APR.

What are the requirements for a loan in Switzerland?

To apply for a loan, you must meet several conditions:

• Age: You must be at least 18 years old.
• Between the ages of 18 and 25, you may be eligible for a loan, though some lenders impose restrictions, particularly on the maximum amoun
• Beyond a certain age, securing a loan becomes more challenging. This varies by lender – for instance, approval may require homeownership, and repayment terms are often constrained, such as requiring full repayment, including interest, before a specified age.
• Employment or income: You must provide documentation, such as payslips, to verify this.
• Residence permit: No restrictions apply to Swiss citizens, those from the Principality of Liechtenstein, or, typically, C permit holders. However, significant limitations may apply to other permits (B, G, L), and certain nationalities with a C permit may also face restrictions.
• Creditworthiness: A credit check is essential in all cases, assessing your credit score, debt enforcement records, and payment history, among other factors.
• For consumer loans, a credit capacity check is legally mandated.

Further details on requirements and restrictions are available here:

How does the process work?

Check your options with a non-binding enquiry

• You send us your non-binding enquiry.
• We review your initial situation and complete your profile, including the necessary documents.
• To estimate your approximate loan capacity, we assess your income and expenditure. This budget calculation complies with the Federal Law on Consumer Credit (FLCC).
• We determine which bank or banks might offer you a loan and at what interest rate.
• We present this initial assessment of your options to you clearly and transparently.

Submit an application to the bank or lender

• After discussing with you and receiving your approval, we submit your application to a suitable lender.
• The lender performs a credit check, including reviews by ZEK and IKO.
• Once we receive feedback on your application, we’ll go over it with you.
• If you’re happy with the offer, we’ll arrange the contract for you. After you sign and return it, the 14-day cooling-off period (right of withdrawal) for consumer loans begins.
• Loans not covered by the FLCC are disbursed without a waiting period.

Disbursement and repayment

• The loan amount is paid into your bank account.
• You arrange payment of your agreed monthly instalments via direct debit or individual monthly payments.
• Making payments on time is crucial to build a positive loan repayment history.
• Repay more when your budget allows—this reduces the loan term and lowers interest costs.