The cost of living in the UK has risen in the past few years and more households than ever before are struggling to make ends meet.
This has led to an increase in the amount of people searching for extra help to get their finances back on track.
However, you may be eligible for additional financial support from the UK government to help you cover essential costs, from rent and mortgage payments to clothes and groceries.
What are government crisis loans?
Government crisis loans were an interest-free loan offered by the UK government to individuals struggling to afford basic essentials.
They were designed to support those experiencing unexpected financial hardship, such as a sudden decrease in benefits that left them with no money to pay for food, clothing, or housing.
The government is no longer offering crisis loans but has replaced them with Social Fund budgeting loans, which are similar in that they’re also designed to cover unexpected financial emergencies. The Social Fund is a government scheme designed to help people with the kind of expenses that are typically difficult to meet when you’re on a low income.
However, it’s important to remember that, like most loans, any money you receive will eventually need to be repaid to the government within a certain timeframe. This money will typically be taken from your benefits payments automatically, so you shouldn’t need to negotiate a repayment plan.
Do I qualify for a Social Fund budgeting loan?
Just like a crisis loan, there are certain eligibility criteria you must meet to qualify for a budgeting loan.
For example, you will only be eligible for a budgeting loan if you or a partner has been claiming certain benefits for at least six months, or 26 weeks, prior to your application either consecutively or with a break of no more than 28 days.
To qualify for a budgeting loan, you must claim one of the following benefits:
- Income Support
- Pension Credit
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
If you switched from Universal Credit to Pension Credit, the time you spent claiming Universal Credit will count towards the six months.
However, if you or a partner has more than £1,000 in savings up to the age of 62, or more than £2,000 in savings at age 63 and above, you will not qualify for a budgeting loan.
How much could I get with a budgeting loan?
The minimum amount you can ask for with a budgeting loan is £100, but there are some exceptions depending on your financial situation.
For example, you can ask for a maximum of:
- £384 if you’re single
- £464 if you’re part of a couple
- £812 if you have children
What are budgeting loans for?
Budgeting loans are primarily designed to cover essential or unexpected costs when you’re on a low income, including:
- Rent in advance
- Moving home
- Maintenance or security improvements for your home
- Furniture or household items
- Clothing
- Costs associated with getting a new job
- Funeral costs
- Maternity costs
A massive thank you
“I’d like to say a massive thank you to Carrington Dean for helping me. It feels like I have control of my life again.”
How do I apply for a budgeting loan online?
There are various ways you can apply for a budgeting loan online. Before applying, you must check you meet the eligibility criteria.
The UK government website
The quickest and easiest way to apply for a budgeting loan is through the UK government website. Simply follow the steps outlined and choose whether you would like to receive a decision via text, email, or letter.
This option is not available in Northern Ireland, but a similar process can be found on the Northern Ireland government website.
Written application form
Alternatively, if you have internet access but don’t want to apply online, you can apply by downloading, printing, and completing a claim form known as Form SF500.
The completed form should be returned to the address listed at the top of the form.
Social Fund enquiry line
The Social Fund enquiry line can be accessed on 0800 169 0140 Monday to Friday 8am-5pm for any queries you have about your budgeting loan application.
This helpline can also be used to request a paper copy of Form SF500 if you don’t have internet access or are having problems with the UK government website.
Jobcentre Plus
Lastly, you may be able to request a claim form at your local Jobcentre Plus (Jobs and Benefits Office in Northern Ireland).
How do I repay a budgeting loan?
Budgeting loan repayments are interest-free and calculated at the time your loan is agreed. Depending on how much borrow, you will typically have to repay the full amount within two years.
Repayments are usually taken from your benefit payments automatically, meaning there’s no need to set up a repayment plan.
However, if your benefits payments stop at any point while you’re repaying your budgeting loan, you may have to come to an alternative agreement over how to pay the remainder of what you owe.
Similarly, if you have a budgeting loan but can no longer afford to keep up with the agreed payments, you must ask the office that paid you to work out another repayment plan better suited to your financial situation. Remember, there’s help available and it’s important not to get into debt tying to pay off your budgeting loan.
What other forms of financial help and support are available?
Depending on where you live, you may be eligible for additional financial help and support from the UK government or your local council to help you meet your essential payments, including:
Personal Independence Payment
Personal Independence Payment (PIP) can help you cover the cost of extra living costs if you have a long-term physical or mental health condition and struggle to complete everyday tasks due to your condition.
PIP is available even if you work, have savings, or are receiving most of the other benefits you’re entitled to.
Discretionary Housing Payment
Discretionary Housing Payment (DHP) can provide financial support to help with housing costs if you’re on a low income.
DHP is available to individuals that claim Housing Benefit or the housing element of Universal Credit but need extra help with housing costs.
Short-term benefit advance
Short-term benefit advances can help you cover immediate costs if claim benefits and are in a situation where you need money quickly.
However, it’s important to remember that the money will come from future payments so you will be paid less when you receive your next benefits payment.
