A budgeting loan is a government scheme that helps people on certain benefits borrow money to pay for essentials.
Budgeting loans may help people cover the costs of certain things, like home maintenance or funeral costs, for example.
Find out below who is eligible for a budgeting loan and how much they could borrow.
What is a budgeting loan?
A budgeting loan is an interest-free loan from the Department of Work and Pensions (DWP) that can be used to cover things like furniture or household items (for example, washing machines or other ‘white goods’), clothes or footwear, rent in advance, costs linked to moving house, maintenance, or improvements or security for your home.
It can also cover travelling costs within the UK, costs linked to getting a new job, maternity costs, funeral costs, repaying hire-purchase loans, and repaying loans taken for the above items.
Budgeting loans are available to people on certain benefits, and recipients only have to pay back the amount they borrow, which is taken automatically from their benefits.
The amount that will be taken from the benefits depends on how much the individual can afford, but the full amount is usually repaid within two years.
Who is eligible for a budgeting loan?
People who have been getting benefits, such as Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, and Pension Credit for at least six months could be eligible for a budgeting loan.
However, people receiving Universal Credit cannot get a budgeting loan, but they can get a budgeting advance.
People will not be eligible for a budgeting loan if they receive ‘new style’ Jobseeker’s Allowance or ‘new style’ Employment and Support Allowance.
Additionally, people who are involved in industrial action, like a strike, and people who owe more than £1,500 in total for Crisis Loans and Budgeting loans are also ineligible.
How much of a budgeting loan is available?
The lowest amount someone can borrow is £100, but the highest amount depends on circumstances.
Single people can get up to £348, couples can get up to £464, and people who claim Child Benefit can get £812.
But the amount individuals can borrow will depend on whether they can pay the loan back, whether they have at least £1,000 in savings, and whether or not they are already paying back an existing budgeting loan or crisis loan.
How to apply for a budgeting loan
People can apply for an eligible loan either online or with a paper form, though applying online is quicker.
To apply online, head to https://www.gov.uk/budgeting-help-benefits/how-to-apply.
To apply using the paper form, download the SF500 form from the same website as the online application, or phone the Social Fund Enquiry Line on 0800 169 0140 to ask for the form to be posted to you.
People who apply online can expect to hear back within seven days, if they opted to find out via text or email.
People who opted to find out via letter, and people who applied with a paper form, can expect to find out within 21 days.
After accepting the loan, either online or via another form, people can expect to receive the money within seven days or within 21 days, again depending on how they applied.