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what is a budgeting loan
what is a budgeting loan

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What is a Budgeting Loan?

A Budgeting Loan is an interest-free loan from the Social Fund to help you pay for necessary things while you are on benefits. These loans are repayable over two years.
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Budgeting Loans are ideal for people on a low income who receive certain benefits. Since they don’t count as income, they won’t affect other benefits you’re getting or be included in the Benefit Cap.

Loan amounts generally range from £100 to £812 and depend on whether you can repay the loan, how much savings you have, and if you are paying back an existing Budget Loan or Crisis Loan.

A Budgeting Loan can help to pay for some things such as:

  • Improvements to your home

  • Normal rent

  • Repaying hire purchase loans

  • Furniture and household items

  • Costs linked to moving house

  • Maternity expenses

  • Funeral expenses

You may also use the loan to pay for travelling expenses, like season tickets, or other things that help you search for a job or that are required for you to start work.

Although there is no limit to how many loans you may have, your circumstances, including any outstanding loans, will be assessed to determine if you’ll be able to pay the loan back. 

The Social Fund provides a number of benefit types to U.K. residents. During the 2020-2021 reporting year, it has provided £428 million in benefit payments.

How does a Budgeting Loan work?

The amount you can apply for will depend on the following:

  • The number of people in the household

  • The money you already own from previous loans 

  • Your ability to repay the loan

  • Your savings (the loan amount will be reduced with the amount of savings you have above £1,000 or if you are a couple, above £2,000)

The lowest amount you can apply for is £100 and the maximum amount you could get is £812 broken down as follows:

  • £812 if you or your partner claim Child Benefit

  • £464 if you have a partner

  • £348 if you are single

Budgeting Loans are interest-free loans from the Social Fund and they are similar to the Crisis Loans that were previously offered by the government.   

When you apply for a loan, the urgency of your need will be taken into account, as well as any health problems you or members of your family may have. 

Note: The application process is different when applying for a Budgeting Loan in Northern Ireland.


You may qualify for a loan if you (or your partner) have been receiving one of the following benefits for at least 26 weeks by the time you apply:

  • Pension Credit

  • Income-related Employment and Support Allowance

  • Income-based Jobseeker’s Allowance

  • Income Support

If you moved to Pension Credit from Universal Credit, your application will take into account the time you were on Universal Credit and it will be counted towards the required 26 weeks. 

Keep in mind that if you or your partner are on Universal Credit you cannot apply for a Budgeting Loan. Instead, you can apply for a Budgeting Advance. 

If you are involved in any industrial action or owe more than £1,500 for an existing Budgeting Loan, you also won’t be able to qualify for a Budgeting Loan. 

Note: If you already have children and you’re expecting another child, or if you’re expecting your first child, you may qualify for a £500 SureStart maternity grant instead. This is a one-off payment to help with the costs of having a child - you don’t have to repay it.

Applying for a Budgeting Loan

Before applying for a Budgeting Loan, make sure that you are eligible. If you or your partner get Universal Credit you can’t apply for a Budgeting Loan and will need to apply for a budgeting advance. 

You can apply for a Budgeting Loan online or by filling out a paper form. 

When you apply using a paper form, you’ll need to complete form SF500. You can download the form online, print it, and post the completed form back. You can also phone the Social Fund and ask for the form to be posted to you - it may take up to five days to arrive.

When you apply online you have the option of receiving the decision via email, text, or letter. Getting the decision by text or email is quicker, and you can then accept the offer online.

After you apply

Once you have submitted your application, you’ll receive a decision that you’ll need to accept before you can get your payout. You will receive your loan offer within: 

  • Seven days if you choose to be notified via email or text

  • 20 days if you choose to be notified by letter

If you applied via post you’ll be notified of a loan offer within 31 days.

Accepting the offer

If you receive your offer by email or text you can follow the instructions to accept the offer online.

If you accept the offer via post you’ll need to sign the four-page acceptance letter and return it in the pre-paid envelope provided. Make sure that the slip is properly folded so that the return address is completely visible in the window of the envelope.

Return the form to the address on the letter - do not send it to your local Jobcentre Plus as this may cause delays in getting your loan processed.

Getting your money

You will receive the money within:

  • Seven days after accepting the loan offer online

  • 21 days after applying online and accepting the offer by post

  • 25 days after applying and accepting the offer by post

The money will be paid into your bank account, credit union or building society account. You will also receive a text message or a phone call to confirm that the payment has been made.

What documents are required to apply for a Budgeting Loan?

To claim for a Budgeting Loan you’ll need to provide your national insurance number. You’ll also need to provide details of people living with you (your partner and children, if any), as well as details of current debts and savings you have. 

Can a Budgeting Loan decision be challenged?

No, you can’t challenge the decision. However, if you are not happy with the decision, you can ask for a review by writing to the Social Fund within 28 days of receiving your decision. 

If you still feel the decision is wrong, you may contact the Independent Case Examiner to carry out another review. The review process typically takes less than 21 days.

Paying back a Budgeting Loan

Repayments are taken from your benefits automatically and the amount you repay is calculated based on your income and what you can afford. Any benefits you receive will also be taken into consideration.

You’ll typically need to repay the loan within two years.

If you are struggling to pay your debts, you may get free debt advice from the Money Advice Service. You can also get debt advice online for options on how to deal with your debt

What is a budgeting advance?

If you are on Universal Credit, instead of claiming for a Budgeting Loan, you can claim a Budgeting Advance. To qualify for a Budgeting Advance you have to:

  • Have been claiming Universal Credit for at least six months 

  • Have received no more than £2,600 in earnings during the last six months (£3,600 as a couple)

  • Not currently be repaying another budgeting advance

You’ll have to start repaying the advance as soon as your next Universal Credit payment comes through and repay the whole amount within one year (12 months). 

Your local Jobcentre Plus coach can also assist in claiming a budgeting advance.

The amount you can apply for varies between £100 and £812, broken down as follows:

  • £384 if you are single and 25 or older

  • £464 if you are a couple

  • £812 if you have children

It’s also important to note that if you have more than £1,000 in capital, your budgeting advance will be reduced by the excess amount. For example, if you have £1,350 in capital, the Jobcentre will reduce your advance by £350.

Applying for a budgeting advance can be done over the phone. The advisor will decide if you are eligible and you’ll typically get a decision the same day.

Should your application be rejected,  you won’t be able to appeal but you can ask for the decision to be revisited. It might help if you could show that your circumstances have changed since you’ve applied. 


Can you still apply for a Crisis Loan?

Crisis loans were suspended in March of 2013. In cases of severe financial hardship, your local council is responsible for helping you. 

Can Budgeting Loan payments be lowered?

If you are unable to make the repayments on your Budgeting Loan, there are ways to reduce the burden, e.g. extending the repayment period. To make arrangements, contact your nearest Jobcentre Plus office or the Pension Service for more information. 

How long does a Budgeting Loan take?

Online Social Fund loan applications usually take around three weeks to be processed. You can ensure that there are no processing issues by making sure your details are completed accurately and applying online or hand-delivering your documents to your nearest Jobcentre Plus branch.

When will my loan claim begin?

Your application starts the day it is received by the Department for Work and Pensions (DWP). If your application is incomplete or you need to submit additional information, the application will be treated as made on the day originally received by the department.

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