People applying for certain benefits from the Department for Work and Pensions (DWP) may be eligible for a budget loan to help them pay for essential goods or services that they otherwise could not afford due to their current situation.
People who have applied for 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 reimbursed by their benefits.
Budgeting Loans are not available to those applying for Universal Credit, however, they may be eligible for a Budgeting Allowance. If someone moved from Universal Credit to Pension Credit, the DWP will add the length of time they got Universal Credit to the six months.
New easy-to-read online guidance, which could potentially help more people access the service, has now been released and simplifies the process, including eligibility, what it can be used for and how it is reimbursed to the DWP.
What is a budget loan?
A budget loan is a sum of money that people who have been claiming the previously mentioned benefits for at least six months can apply for financial assistance from the DWP.
It is important to know that since this is a loan, the money must be repaid and is done through benefit payments.
Who cannot apply for a budget 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 business dispute, you cannot get a budget loan.
If you owe more than £1,500 from another budget loan or crisis loan, you cannot get a new budget loan.
What can a budget loan be used for?
The loan is intended to help pay for essential things or services.
This could include:
- Furniture in your home
- Household appliances such as a washing machine, cooker, vacuum cleaner or refrigerator
- Clothes or shoes
- Rent you have to pay in advance
- All moving costs such as a moving truck
- Essential work needed on your home, including maintenance
- Security for your home, like new keys or locks
- Certain UK travel costs
- Things that will help you get a new job, like a suit for interviews or taxi fare to get to an interview
- Costs related to pregnancy and childbirth
- Fees for a funeral
how much you could get
The lowest amount you can borrow is £100.
You could go up to:
- £348 if you are single
- £464 if you have a partner
- £812 if you or your partner are claiming Child Benefit
The amount you could get depends on whether you:
- Can repay the loan
- Have savings of over £1,000 (£2,000 if you or your partner are 63 or over)
- You are repaying an existing budget loan or crisis loan
Repay the budget loan
The money is repaid in full to DWP at 0% interest within two years.
When the DWP pays your benefit, it will take an amount to help pay off your loan.
The amount withdrawn depends on your total income, which includes the benefits you receive and what you can afford.
If you stop receiving benefits, the rest of your budget loan must still be repaid.
If you can get a loan, the DWP will also tell you the amount of your weekly repayments from your benefits and if you agree, your weekly repayments from your benefits will start immediately.
How to register
You can apply for a budget loan online or by mail, however, DWP guidelines state, “You will get a faster decision on your budget loan by applying online.”
What happens after an application is submitted?
The DWP will send you an email, text or letter telling you whether or not you can get a budget loan – you should ask for which notification method when you apply.
But it should be noted that if you requested a decision by email or SMS, you will get it within seven days.
If you requested a decision by mail, it will be sent to you within 21 days.
How to accept a loan
If you can get a budget loan, you have to “accept” the decision before you get the money.
How you “accept” your decision depends on how you applied:
- If you applied online, you will receive an SMS or email telling you what to do
- If you applied by mail, you can accept the decision by mail
Once you have accepted the offer
Once you have accepted the loan offer, the DWP will release your money to your account, but when you will receive your money will depend on how you accepted your loan offer.
- accepted the loan offer online, you will receive your money within seven days
- accepted the loan offer by mail, you will receive your money within 21 days
If you have given your mobile number to the DWP, they will text you when they deposit the money into your account.
To find out more about applying for a budget loan by post, or how to appeal a decision, visit the GOV.UK website here.
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