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The Government can provide a Budgeting Loan for people on low incomes who are struggling to keep up with the rising cost of living or who need extra cash in emergency situations.
Budgeting Loans can be much cheaper than borrowing from the bank who could be charging higher interest rates.
Britons can secure these Budgeting Loans interest-free, meaning people only pay back what they borrow.
The lowest amount someone can borrow is £100. But some people can get the total worth £812.
The amount someone gets depends on certain circumstances.
People could get up to £348 if they’re single, £464 if they have a partner and £812 if they or their partner claim Child Benefit.
How much someone could get depends on whether they:
- can pay the loan back
- have savings of more than £1,000 (£2,000 if you or your partner are 63 or over)
- are paying back an existing Budgeting Loan or Crisis Loan
- A Budgeting Loan can help pay for:
- furniture or household items (for example, washing machines or other ‘white goods’)
- clothes or footwear
- rent in advance
- costs linked to moving house
- maintenance, improvements or security for your home
- travelling costs within the UK
- costs linked to getting a new job
- maternity costs
- funeral costs
- repaying hire purchase loans
- repaying loans taken for the above items
Who is eligible for a Budgeting Loan?
To get the loan, Britons must have been getting the following benefits for more than six months:
Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance and Pension Credit
If someone has moved from Universal Credit to Pension Credit, any time spent claiming Universal Credit will count towards the six months.
If someone is getting Universal Credit, they cannot get a Budgeting Loan. Instead, they should apply for a Budgeting Advance instead.
Individuals also cannot get a Budgeting Loan if:
- They get ‘new style’ Jobseeker’s Allowance or ‘new style’
- Employment and Support Allowance
- They’re involved in industrial action (for example a strike, walkout or lockout)
- They owe more than £1,500 in total for Crisis Loans and Budgeting Loans
After someone applies for a Budgeting Loan, they’ll get an email, text or letter telling them if they’ve been offered a loan.
This explains how much their weekly repayments will be if they accept the loan.
The repayments will be taken automatically from one’s benefits. The amount people repay is based on their income – including any benefits they receive – and what they can afford.
Britons normally have to repay the loan within two years (104 weeks).
If people stop getting benefits during repayment period, they will get a letter from DWP Debt Management explaining how to repay and manage benefit money they owe.
People can pay back the loan in full or set up regular monthly payments.
Britons can check their eligibility for a Budgeting Loan on the Government website before they apply.
When someone applies online, they can choose to get a decision on their loan by either email, text message or letter.
The DWP explain that it is quicker to get the decision by email or text message and accept it online.
