People on certain benefits may be able to get a budgeting loan to pay for essential products or services if they are struggling with their finances.
Those who have been claiming Income Support, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance or Pension Credit for at least six months may be eligible for the loan, which is repaid through deductions from their benefits. These loans are not available to those claiming Universal Credit, however, they may be eligible for a Budgeting Allowance.
If someone has moved from Universal Credit to Pension Credit, the Department for Work and Pensions (DWP) will add the time they were getting Universal Credit to the six months. New online guidance, which could potentially help more people access the service, has been published and simplifies the process including eligibility, what it can be used for and how it is paid back to the DWP, reports the Daily Record.
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Who cannot apply for a Budgeting Loan?
People claiming these benefits cannot apply:
- New Style Jobseeker’s Allowance
- New Style Employment and Support Allowance
If you have a job and are currently involved in a trade dispute, you cannot get a Budgeting Loan. You cannot get a loan if you owe more than £1,500 in total of Crisis Loans and Budgeting Loans. Find out more about eligibility on GOV.UK here.
What can a Budgeting Loan be used for?
The loan is to help pay for essential things or services. This might include:
- Furniture in your home
- Household white goods such as a washing machine, cooker, hoover or fridge
- Clothing or footwear
- Rent you have to pay in advance
- Any moving house costs such as a removal van
- Essential work needed on your home, including maintenance
- Security for your home, such as new keys or locks
- Some travelling costs in the UK
- Things that will help you get a new job, such as a suit for interviews or taxi fares to get to an interview
- Costs due to pregnancy and childbirth
- Costs for a funeral
How much you could get
The lowest amount you can borrow is £100.
You could get up to:
- £348 if you’re single
- £464 if you have a partner
- £812 if you or your partner claim Child Benefit
How much you could get depends on whether you:
- 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
Paying the Budgeting Loan back
The money is paid back in full to the DWP at 0% interest within two years. When the DWP pays your benefit, it will take an amount off to help pay your loan off.
The amount taken depends on your total income, which includes any benefits you get and what you can afford. If you stop getting benefits, the rest of your Budgeting Loan must still be repaid.
If you can get a loan, the DWP will also tell you how much your weekly repayments will be from your benefits and if you accept, your weekly repayments from your benefit will start straight away.
How to apply
You can apply for a Budgeting Loan online or by post, however, the DWP guidance states: “You will get a quicker decision on your Budgeting Loan by applying online.”
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