The UK residents receiving certain eligible benefits suffer from some financial hardship or require urgent money, can take loans from the DWP through Budgeting loans. Budgeting loans offer short-term relief to beneficiaries with quick loan availability.
DWP Budgeting Loan
The Department of Work and Pension administered the Budgeting loan initiative of the UK government to provide interest-free financial assistance to eligible UK residents when they need money. If you are a Universal Credit recipient, the Budgeting loan will become Budgeting Advance where people can borrow a higher amount than the Budgeting loan.
Under the Budgeting loan initiative, the eligible recipients can borrow from a minimum amount of £100 to £812 depending on whether they have saved more than £1000 (£2000 partner), can pay the loan, or have paid back the existing loan. The eligible UK residents can borrow up to the following amount based on partner, claiming child benefit, etc.:
- You can borrow up to £348 when you are individual or single
- When you have a partner living with you, you can borrow up to £464
- When anyone you or your partner has claimed the Child Benefit, you can borrow up to £812.
How does the DWP Budgeting Loan work?
UK-eligible residents can take budgeting loans when they need assistance or money for any of the following unexpected expenses:
- Advance Rent
- Funeral Costs
- Furniture or Household items needed urgently
- Improving the security of the house or maintenance of the current security system of the house
- Clothes and footwear expenses
- Maternity costs
- You are moving house and the cost associated with moving house
- You need new money to get a new job, like upskilling yourself, etc.
- Your traveling cost within the country
- You need to repay any of the loan taken for the above items
When you get eligible for the Budgeting loan, you get an interest-free loan, which you have to pay back after a certain period. Since it is interest-free, you repay what you borrow only and get the money for unexpected expenses.
The DWP will cover the repayments from your benefit automatically based on your income and affordability.
What makes you eligible for a DWP Budgeting Loan?
UK residents who meet the following eligibility requirements can apply for or receive the Budgeting loan from DWP:
- When you receive any of the following benefits for more than six months:
- Pension Credit
- Income Support
- Employment and Support Allowance
- Jobseeker Allowance
- Recipients who have moved to Pension Credit from UC can count their UC claiming time for 6 months.
Exclusion:
- However, you cannot get the loan, if you meet any of the conditions:
- You have participated in any strike, lockout, or industrial action.
- You receive the New style JSA or ESA
- You have an existing loan or Budgeting loan of more than £15,00.
Repayment Period for Budgeting Loan or Advance
The repayment of the Budgeting loan is taken care of automatically from the benefit amount within 2 years of the Budgeting loan. The borrowers do not need to do anything, however, if you stop getting benefits from the DWP, you will receive a letter from the DWP debt Management office with an explanation of how to repay the loan and manage the payment you owe to the agency.
You can pay back the loan either in one go or take an installment method to pay monthly payments to repay the loan. The UK government has made some changes in the repayment period for Budgeting Advance (for Universal Credit Claimants) from one year to two years, giving them ample time to repay their loan.
The Repayment period change for the Budgeting advance is effective from December 2024, so if you have applied for the advance loan before the effective date, the previous repayment period (one year) will apply to your loan application.
How to claim the DWP Budgeting Loan?
The UK residents who qualify for the Budgeting Loan can apply to borrow amounts up to £812 through the following ways:
- Online: You can visit the official UK government services website at https://www.gov.uk/budgeting-help-benefits/how-to-apply and complete the Budgeting loan application online without any hassle.
- Paper Form: You can download the Budgeting Loan paper form SF500 from the official website and after entering the accurate info send the form to the DWP office as per the region you live in. You can also request the Budgeting loan paper form through Freepost from the respected DWP offices.
If you wish to request the DWP to send the application form or make any changes to your submitted Budgeting loan application, you can call the Social Fund Enquiry line at 0800 169 0140 or text at 0800 169 286 on working days between 10 AM to 3 PM. If you have a hearing problem, you can call Relay UK by dialing 18001 and then the telephone number mentioned above.
After you apply for the Budgeting loan, the authority will send the decision on the application and you need to agree on the decision. If you have applied online, you may receive the decision by email or message within seven days of application or if you have applied through mail, it may take 21 days to receive the decision.
After you accept the Budgeting loan application decision, the asked money will be sent to you via the same method you receive the eligibility benefits. So, if you need urgent funds and you qualify for the Budgeting loan, you must apply quickly and get an interest-free loan.
