Budgeting Loans

The Social Fund lends out budgeting loans to people in need of them, if they meet certain criteria. Budgeting loans are interest free loan and are designated for people who are classified as low income. In order to be eligible for a budgeting loan, an individual or their partner has either been claiming or receiving payments from income support, an income based Jobseeker’s allowance, income related employment, support allowance or pension credit for 26 weeks or more.

Budgeting loans can go toward the purchase of clothing or footwear, household equipment or furniture, items to help an individual search for or begin work, expenses for travel, home improvement or maintenance. There are budgeting loan, borrowing limits. A person has to borrow at least £100 but no more than £1000.

Budgeting loans cam be paid to the following accounts, a credit union account, basic bank account, a building society account, a current account or a Post Office card account. The repayment schedule may differ from one loan to the next. It is determined at the time the loan is given. In the majority of cases, the money is taken from a person’s benefit. If the borrower does not receive benefits, a special repayment schedule will be worked out. Budgeting loans typically have to be repaid within two years or 104 weeks. All loans are interest free, which is quite nice. A person only has to pay what they owe and nothing more.

It is important to note that people who are currently receiving benefits won’t have their benefits effected in any way by applying for a obtaining a budgeting loan. It also doesn’t count as income, which is important to note for those individuals concerned that they may no longer qualify for their benefits if they accept a budgeting loan.

Individuals that wish to apply for a budgeting loan can do so by contacting their pension centre or Jobcentre Plus. The form a person needs to use in order to apply for the loan is the SF500.

In Summary

Budgeting loans can be extremely helpful for people who are currently on benefits and who need help paying for furniture or household items, clothes, shoes, advance rent, expenses for travel and job related goods. It offers them a way to improve their life and take care of expenses that they wouldn’t normally be able to. Many people benefit a great deal from budgeting loans.

Again, not everyone qualifies for budgeting loans. A person or their spouse has had to have received the following benefits for 26 weeks or more in order to be eligible for a budgeting loan, income support, pension credit, income related employment and support allowance and income-based jobseeker’s allowance.

It is important that people remember that budgeting loans have to be paid back. It is not a gift or a grant. Budgeting loans, however, aren’t without their perks. A person who takes out a budgeting loan doesn’t have to payback any interest. They only have to pay back what they borrowed, which makes it much cheaper than a conventional loan.