Budgeting loans are interest-free loans from the social fund available only to people claiming certain income-related benefits.
What is a budgeting loan?
A budgeting loan is a one-off payment from the social fund, a cash-limited fund of money provided by the UK Government. Each area has a limited amount of money available for the social fund.
Once the budget is spent, no more grants or loans can be paid.
Budgeting loans are intended to help people who claim benefits to pay for large costs which would otherwise be unaffordable.
You don't pay any interest on budgeting loans, so they can be a useful alternative to other types of borrowing.
What can you use a budgeting loan for?
You may be able to get a loan to pay for housing-related costs such as:
- rent or rent in advance
- furniture and household equipment
- removal expenses when you move home
- essential home improvements, maintenance or security
You can also apply for a budgeting loan for other items such as clothes and shoes, maternity costs and funeral costs.
If you have hire purchase or other loans taken out for any of these purposes, budgeting loans can also be used to repay these loans. This includes repaying expensive payday loans.
Who can apply for a budgeting loan?
To get a budgeting loan, you or your partner must have been claiming any of these benefits for at least 26 weeks:
- income support
- income-based jobseeker's allowance
- income related employment and support allowance
- pension credit
Your chances of getting a loan and how much you might get will depend on your personal circumstances.
The minimum amount you can apply for is £100. There are three maximum amounts available:
- one for single people
- one for couples without children
- one for families (including lone parents) with children
You won't be given a budgeting loan if you are not able to repay it.
Budgeting advances if you claim universal credit
If you claim universal credit, you won't be able to apply for a budgeting loan. Instead, you have access to a new system of budgeting advances.
Contact your local Jobcentre Plus office to find out more about budgeting advances.
How to apply for a budgeting loan
You can apply at your local Jobcentre Plus office, either in person or by telephone.
Claim forms are also available online from Gov.uk.
Paying back a budgeting loan
You must pay back what you borrow within 2 years.
A fixed amount is taken out of your benefits until the loan has been repaid.
Ask for a review if a budgeting loan is refused
You can ask for a review if you are unhappy with the decision not to give you a budgeting loan.
To ask for a review, write to your Jobcentre Plus within 28 days of receiving your decision letter. You must explain the reasons why you think the decision was wrong.
Get advice immediately if you are not happy with any decision made on your application and you want to ask for a review
Use Shelter's directory to find a face-to-face adviser in your local area.
Get advice on budgeting loans
A welfare rights or benefits adviser may be able to:
- explain the forms and help you work out how much you need to ask for
- suggest other sources of funding for the items you need
- help you ask for a review of a decision you don't agree with
Use Shelter's advice services directory to find a face-to-face adviser in near you.
Alternatives to budgeting loans
There may be other sources of help you could try if you need money in a hurry.