What are budgeting loans?

Posted bySophie Knight | Category Uncategorized | Date 12 October 2018

A budgeting loan is essentially a loan which provides extra money to those in society who are on benefits. This extra money is lent out in order to help people on benefits who are struggling to buy necessities and essentials. Unlike benefits, however, you will be required to pay back a budgeting loan.


What can a budgeting loan help you pay for?

  • Furniture
  • Household equipment
  • Rent in advance
  • Costs which are linked to moving to a new house
  • Clothing and shoes
  • The costs of improving, maintain and securing your home
  • Travelling expenses
  • Expenses associated with getting or starting a job
  • Maternity expenses
  • Funeral expenses
  • Other debts, but only if the money was borrowed for any other expenses listed in these categories.

Who is eligible for a budgeting loan?

In order to get a budgeting loan, you must have been getting one or more of these benefits for the past six months:

  • Jobseeker’s Allowance
  • Income Support
  • Employment and Support Allowance
  • Pension Credit

You will not be able to get a budgeting loan if:

  • You currently claim Universal Credit – you will have to apply for a budgeting advance in place of a traditional budgeting loan.
  • You are involved in the industrial action – this could be a strike, lockout or walkout.
  • You owe more than £1,500 in total for Crisis Loans and Budgeting Loans.

What can you get from a budgeting loan?

With a budgeting loan, the lowest amount you will be able to borrow is £100. But, you could get up to:

  • £348 if you are single
  • £464 if you have a partner
  • £812 if you or your partner claim Child Benefit

In addition, how much you will be allowed to borrow will depend on a few factors. One of which is whether you are deemed able to repay the loan in full. Furthermore, if you have savings of more than £1,000 in your account (this criteria changes to £2000 if you are your partner are 63 or over). And also, if you are paying back an existing budgeting loan or crisis loan, this may affect the amount you get.

Paying back a budgeting loan

Due to the nature of a budgeting loan, it is interest-free so you will only be paying back exactly the amount that you borrowed.


The repayments will be taken by the lender automatically out of your benefits package, rather than your current account, like with other loans. The amounts which are payable at one time will be dependent on how much benefit you receive and therefore what you can afford to repay each time.

You will normally be given a period of 2 years to repay the loan. However, if it becomes the case that you stop receiving benefits, you will need to set up a new way to pay off your budgeting loan.

Applying for a budgeting loan

If you fulfil the criteria listed above, you can apply online. Once you have applied online, you will be told with 20 working days whether your application has been approved or rejected. If you accept the offer of the loan, you should receive the money within 12 working days.

Another way you can apply is by printing and filling in form SF500. This method will take up to 25 working days.

You are also able to pick up a form from your nearest Jobcentre Plus. Or you can phone up the Social Fund and ask for a form to be posted to you – for this, you should allow up to five working days for this form to arrive.

Guarantor loan

If you are not eligible for a budgeting loan but still are struggling to get a conventional loan, such as a payday loan, you might want to consider a guarantor loan.


This is a type of loan by which you co-sign with a person who has a good credit score. Their signature will help you to obtain the loan and if you cannot pay it back, then the guarantor will have to pay on your behalf. However, we aware that letting your guarantor pay off your debt will only worsen your credit score and your chances of getting credit in the future.