Budgeting Loans are small interest-free government loans to help people on benefits cover certain essential expenses. If you get a Budgeting Loan, you’ll have to pay it back. The only thing that’s new with Budgeting Loans during the coronavirus pandemic is good news: Budgeting Loan repayments have been temporarily stopped. Repayments won’t start again until at least July 2020.
Are you eligible?
If you’ve been on an eligible benefit for at least the last six months, you could qualify for a Budgeting Loan to help you through the coronavirus lockdown.
Eligible benefits are:
- Income Support;
- Income-based Jobseeker’s Allowance;
- Income-related Employment and Support Allowance; and
- Pension Credit.
If you’re on Universal Credit, you need to apply for a Budgeting Advance rather than a Budgeting Loan. They’re similar, but not exactly the same, so make sure you check the details.
If you’re involved in industrial action or you already owe more than £1,500 in total for Crisis and Budgeting Loans, you aren’t eligible for a Budgeting Loan.
If you’re not eligible for a Budgeting Loan but you still need help with your bills during coronavirus, you can find useful advice here.
What can you use Budgeting Loans for?
You can use Budgeting Loans to help pay for essential items that are a bit beyond your budget:
- furniture or household items, like fridges and washing machines;
- clothes or footwear;
- rent in advance;
- costs linked to moving house;
- maintenance, improvements or security for your home;
- travelling costs within the UK;
- costs linked to getting a new job;
- maternity costs;
- funeral costs;
- repaying hire purchase loans; and
- repaying loans taken for the above items.
How much can you borrow?
How much you can borrow depends on your personal circumstances: whether you’re in a relationship, whether you have savings, your ability to repay the loan, whether you’re claiming Child Benefit, and whether you’re already paying back another Budgeting or Crisis Loan.
All budgeting loans are at least £100. You could get up to:
- £348 if you’re single;
- £464 if you have a partner; or
- £812 if you or your partner claim Child Benefit.
How do they work?
Budgeting Loans are helpful for spreading out large payments. They’re zero-interest loans, so you only have to repay what you borrow. Repayments come straight out of your benefit payments, so you don’t have to remember to make repayments.
The Budgeting Loan or Advance will be paid straight into your bank account.
You should repay Budgeting Loans within two years. In exceptional circumstances, that can be extended to 18 months.
Budgeting Loans aren’t included in benefit cap calculations.
How can you claim?
In England, Scotland and Wales, you can apply for Budgeting Loans online at the Gov UK website, or for Northern Ireland, the nidirect website. You can fill in the paper form to apply for a new loan, but online applications are processed faster. Remember, it can take up to two months to receive your loan.
You’ll need to give your personal details and select the category of expenses for your loan, but you don’t have to say exactly what you need it for.
What’s new with Budgeting Loans during the coronavirus?
To help people who are struggling financially during the coronavirus pandemic, the Government won’t be deducting Budgeting Loan repayments from your benefit until at least July 2020. You’ll receive your full benefit through the lockdown to help you through this difficult time.
This doesn’t mean you don’t need to pay the loan back, just that you have a temporary reprieve.
