UK residents who are in receipt of certain eligible benefits are suffering from financial difficulties or are in urgent need of money, they can take out loans from the DWP through Budget Loans. Budget loans offer short-term relief to users with quick loan availability.
DWP budget loan
The Department for Work and Pensions managed the UK Government’s Budgeting Loan initiative to provide interest-free financial help to eligible UK citizens when they need money. If you are a Universal Credit recipient, the Budgeting Credit will become a Budgeting Advance where people can borrow more than the Budgeting Credit.
Under the Budgeting loan initiative, eligible recipients can borrow a minimum amount of £100 to £812 depending on whether they have saved more than £1,000 (£2,000 partner), can pay off a loan or have repaid an existing loan. Eligible UK residents can borrow up to the following amount based on partner, child benefit claim etc.:
- You can borrow up to £348 if you are an individual or single
- When you have a partner living with you, you can borrow up to £464
- When either you or your partner claim Child Benefit, you can borrow up to £812.
How does the DWP Budgeting Loan work?
Eligible UK residents can take out budget loans when they need help or money for any of the following unexpected expenses:
- Rent in advance
- Funeral expenses
- Needed furniture or household edMrmentally
- Improving home security or maintaining an existing home security system
- Clothing and footwear expenses
- Maternity expenses
- You are moving and the costs associated with moving
- You need new money to get a new job, like improving yourself, etc.
- Your domestic travel expenses
- You must repay any loan taken for the above items
When you qualify for a Budgeting loan, you receive an interest-free loan, which you must repay after a certain period. Because it’s interest-free, you only pay back what you borrow and get money for unexpected expenses.
The DWP will cover repayments from your benefit automatically based on your income and affordability.
What makes you eligible for a DWP Budget Loan?
UK residents who meet the following eligibility conditions can apply for or receive a Budget Loan from the DWP:
- When you receive any of the following benefits for more than six months:
- Pension credit
- Income support
- Employment and Maintenance Allowance
- Jobseeker’s Allowance
- Recipients who have switched to Pension Credit from UC can count their UC claim time for 6 months.
Exemption:
- However, you can’t Mrloan if you meet one of the following conditions:
- You participated in any strike, lockout or industrial action.
- You get a new style JSA or ESA
- You have an existing loan or budget loan of more than £15.00.
Repayment period for budget loan or advance
Repayment of the Budgeting loan is automatically taken from the fee amount within 2 years of the Budgeting loan. Borrowers do not need to do anything, however, if you stop receiving benefits from the DWP, you will receive a letter from the DWP’s debt management office explaining how to repay the loan and manage the payments you owe to the agency.
You can repay the loan all at once or take the installment method to pay monthly installments to repay the loan. The UK Government has made some changes to the Budgeting Advance repayment period (for Universal Credit Claimants) from one year to two years, giving them plenty of time to repay the loan.
The change to the repayment period for the Budgeting advance is effective from December 2024, so if you applied for a loan advance before the effective date, the previous repayment period (one year) will apply to your loan application.
How to apply for a DWP budget loan?
UK residents eligible for a Budgeting Loan can apply to borrow up to £812 in the following ways:
- Online: You can visit the official website of the British government services at and complete the Budgeting loan application online without any hassle.
- Paper form: You can download the Budgeting Loan SF500 paper form from the official website and after entering the correct information, send the form to the DWP office according to the region in which you live. You can also request a paper Budgeting Loan form via Freepost from respected DWP offices.
If you would like to ask the DWP to send you a claim form or make any changes to your submitted budget credit claim, you can call the Social Fund inquiry line on 0800 169 0140 or text 0800 169 286 weekdays from 10am to 3pm hours. . If you have hearing problems, you can call Relay UK by dialing 18001 followed by the phone number mentioned above.
After you submit an application for a Budgeting loan, the authority will send you a decision on the application, and you should agree to the decision. If you applied online, you may receive a decision by email or text within seven days of applying, or if you applied by post, it may take up to 21 days for you to receive a decision.
Once you accept the decision to apply for a Budgeting loan, the requested money will be sent to you in the same way that you receive your benefits. So, if you need urgent funds and meet the conditions for a Budgeting loan, you need to apply quickly and get an interest-free loan.
