Budgeting Loan or Advance

What is a Budgeting Loan?

A Budgeting Loan is an interest-free loan. It is paid on top of your benefits by the Department for Work and Pensions (DWP). You repay the loan through deductions from your benefits.

Who can apply for a Budgeting Loan?

To get a Budgeting Loan, you must have been receiving one or more of these benefits for the past six months:

• Income Support
• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance
• Pension Credit

If you recently moved from Universal Credit to Pension Credit, the time spent claiming Universal Credit will count towards the six months.

You cannot get a Budgeting Loan if you receive Universal Credit. Instead, you can apply for the Budgeting Advance.

You also cannot get a Budgeting Loan if you receive New Style Jobseeker’s Allowance or New Style Employment and Support Allowance. Neither will you be able to apply if you owe more than £1,500 for Crisis Loans (no longer available) and/or Budgeting Loans.

There is one more exclusion. If you’re involved in industrial action, such as a strike or walkout, you can’t get a Budgeting Loan.

What is a Budgeting Advance?

A Budgeting Advance is an interest-free loan. It is available to those on Universal Credit to help pay for certain expenses. You can also apply if you need the money to help you get or keep a job. It is usually repaid over:

• Six months
• One year
• Two years

Who can apply for a Budgeting Advance?

You can apply for a Budgeting Advance if you meet this eligibility criteria:

• You’ve been getting Universal Credit, New Style Employment and Support Allowance, Income Support or New Style Jobseeker’s Allowance for six months or more – unless you need the money to help you start a new job or stay in work
• You’ve earned less than £2,600 (£3,600 if you’re in a couple) in the past six months
• You’re not already paying off another Budgeting Advance (you can only have one at a time)

How much can I get?

The amount you can get is the same for both the Budgeting Advance and Budgeting Loan. The smallest loan you can take out is £100, while the maximum is based on your living situation.

You could get less than the maximum if you have savings of more than £1,000. Having other Budgeting Loans or old-style Crisis Loans that you’re still paying back can also affect how much you’re allowed.

How quickly do I get the money?

For a Budgeting Loan, you’ll get the money within seven days if you accept the loan offer online. If you accept it by post, it can take up to 21 days.

If you applied online, the loan will be paid into the same account that your benefit is paid into. If you applied by post, the money will be paid into the account you put on the form.

Budgeting Advances arrive faster. Generally, you can expect the money to land in your account within three days.

What can a Budgeting Loan/Advance be used for?

A Budgeting Loan or Budgeting Advance can pay for essential items like buying a new cooker or clothes for a new job. It can also pay for travel costs and a rental deposit. The cash is designed to cover unexpected bills too, such as paying for a funeral.

Acceptable expenses

Here’s a list of acceptable expenses that you can use a Budgeting Loan or Budgeting Advance for:

• Furniture
• Household items and white goods
• Clothes and footwear
• Rent deposit
• House-moving costs
• Repairs, improvements or security for your home
• Travel costs within the UK
• Costs linked to getting a new job, such as a uniform or tools
• Costs linked to having a baby
• Funeral costs
• Repaying hire purchase loans or loans taken for the above items

How to apply for a Budgeting Loan

The application process for a Budgeting Loan is fairly straightforward. You can apply online or using a paper form (online is faster).

You can apply online on gov.uk. You’ll need your National Insurance number. You will also need to provide details of who lives with you (partner and children if any) and details of savings and any debt payments.

Once you’ve applied, you can choose to get the decision about your loan by email, text message or letter. It’s quicker to get it by email or text message.

If you prefer to apply using a paper form, you need to fill in form SF500. You can either:

• Download and print the form yourself
• Phone the Social Fund Enquiry Line (0800 169 0140, Monday to Friday, 8am to 5pm) and ask for a form to be posted to you

You then return your completed form by post.

How to apply for a Budgeting Advance

To apply for a Budgeting Advance, you can do any of the following:

• Update your journal in your Universal Credit account
• Contact your nearest Jobcentre Plus
• Call the Universal Credit helpline (0800 328 5644, Monday to Friday, 8am to 6pm)

You’ll need your National Insurance number. Plus, information about who lives with you (partner and children if any) and details of any savings and debt payments.

You'll normally get a decision on the same day.

Repaying your Budgeting Loan/Advance

Repayments are worked out when you take out the loan. The DWP usually takes money from your Universal Credit or other benefits for your loan repayments.

Repayment terms

The repayment terms are usually:

• One year to repay a Budgeting Advance
• Two years to repay a Budgeting Loan

From December 2024, the repayment period on new Budgeting Advances will increase from one to two years.

If you stop getting benefits while you’re making repayments, you’ll need to agree another way to pay the money back.

Interest and fees

There is no interest to pay on a Budgeting Loan or Budgeting Advance. They are both interest-free so you only pay back what you borrow. There are no fees either.

Bear in mind that you will get less benefit money each month you are repaying a Budgeting Loan or Budgeting Advance.

Advantages of Budgeting Loans/Advances

A Budgeting Loan or Budgeting Advance is a useful way to borrow money. There are no interest rates or fees to pay. This means it’s a much cheaper way to borrow money compared with a bank loan, bad credit loan, credit card or overdraft.

If you have a poor credit score, you may also find it easier to apply for a Budgeting Loan or Budgeting Advance than a credit product from a bank or building society.

Financial relief for beneficiaries

A Budgeting Loan or Budgeting Advance can help you manage unexpected expenses or afford essential items.

Maybe your washing machine has broken or you’ve just found out you’re pregnant. Or perhaps you need to pay a rental deposit or buy new work clothes. If someone close to you has died, the money can go towards funeral costs.

Budgeting Loans and Advances can give you valuable breathing space at a stressful time. They can also give you some financial relief as you start a new chapter of your life – for example, starting a new job or having a baby.

What happens if you cannot repay on time?

If you are struggling to repay the money, ask for another repayment plan to be agreed. It’s important you don’t get into debt trying to pay off the loan.

For example, you can ask the DWP to:

• Pause repayments for up to three months
• Extend the repayment time

FAQs

Can I appeal if my application is denied?

If your Budgeting Loan application is denied, you can ask for the decision to be reviewed. You’ll need to write a letter explaining why you think the decision is wrong and send it to the address on your decision letter. If you’re still not happy, you can ask the office of the Independent Case Examiner for a review.

You can't appeal if your Budgeting Advance application is rejected, but you can ask for the decision to be looked at again. Speak to your work coach or leave a message in your Universal Credit journal. It will help if you can give new evidence or show that your circumstances have changed.

Can I apply if I have a previous Budgeting Loan?

There is no limit to the number of Budgeting Loans you can apply for. But you may get less if you are paying back an existing Budgeting Loan.

You won’t be able to get a Budgeting Loan if you already owe £1,500 or more in total for Crisis Loans and Budgeting Loans.

If you’re applying for a Budgeting Advance, you can apply if you have a previous Budgeting Loan. However, if you are currently paying off a Budgeting Advance, you can’t apply for another one.

What if I can't repay the loan?

If you’re finding it difficult to repay the loan, contact the DWP to discuss possible adjustments to your repayment plan.

Summary: Budgeting Loan Advances

A Budgeting Loan or Budgeting Advance can help get you out of a tight spot financially. They’re often better than taking out a loan or other form of credit, where you have to pay interest and/or fees.

Remember to check if there are other benefits that may help cover unavoidable or unexpected expenses. For example, you could be eligible for a Funeral Payment, a Hardship Payment or help with maternity and baby costs.