Budgeting Loans

What is a Budgeting Loan?

A Budgeting Loan is an interest free loan from the Social Fund to help with large one-off expenses. They are made from a cash limited budget set for each group of local offices which cannot be overspent. Crisis Loans are made from this budget as well. Any loans made are then recovered from the applicant's benefit.

You may not get a loan if there is not enough money left in the budget or if there are other applications of higher priority. You must also, in the opinion of the Social Fund Officer, be able to afford to repay the loan.

Who can apply?

Anyone who has been getting Income Support or Income Based JSA for at least 26 weeks. If you have savings over £500 (£1,000 if you or your partner are aged 60+) you will be expected to use these extra savings first.

What loans are available?

You can get a loan of between £30 and £1,000. Loans are available for many items. An application can only be made for a loan for the same item or service within 26 weeks of a previous application, if there has been a change of circumstances.

How are loans repaid?

Deductions will be made from Income Support or Income Based JSA. If you stop getting Income Support or Income Based JSA, you will have deductions made from a number of other benefits, or from a partner's benefit; or you may be asked to pay by instalments if you do not get any benefits.

The rate of repayment

There are three usual rates of repayment:

  • Usually made at 15% of your 'Applicable Amount' (excluding any housing costs).
  • This can be reduced to 10% or 5% depending on your other debts and financial commitments.
  • It can be increased to 25% with your agreement if this would be the only way that the loan could be repaid within the 78 weeks. (e.g. a £1,000 loan to someone on basic IS/JSA single personal allowance

Repayments are usually over a maximum of 78 weeks. In exceptional circumstances this can be extended to 104 weeks. It may be possible to have repayments reduced to nil if you have a lot of other debts .

Can you have more than one loan?

YES - but the maximum amount you can borrow will be reduced by double the amount of your outstanding debt.

What must the Budgeting loan be for?

The loan must be for one or more of the following categories:

  • Furniture and household equipment
  • Clothing and footwear
  • Rent in advance and/or removal expenses to secure accommodation
  • Improvement, maintenance and security of the home
  • Travelling expenses
  • Expenses associated with seeking or re-entering work
  • HP and other debts for any of the above items

How is a budgeting loan awarded?

Unlike Community Care Grants and Crisis loans, budgeting loans are no longer awarded on the basis of the Social Fund officer’s discretion. Each budgeting loan application is weighted in accordance with a set of factual criteria relating to the applicant’s personal circumstances. This determines the relative priority of the application which is expressed in terms of a figure. The weightings are applied nationally, but each district office determines the maximum amount they can pay for each weighting. Initially, two factual criteria are used to determine the weighting of the application:

  1. Initial criteria
    The length of time you or your partner have been in receipt of (IS/Ib-JSA). Breaks of 28 days or less are disregarded:
    • Six months on benefit - 1 weighting
    • Three years on benefit - 11/2 weighting
    • Any point between the two above – pro rata weighting
    Number of people in family
    • Applicant - 1
    • Partner - 1/3
    • First child - 2/3
    • Additional children - 1/3.
  2. Under Criteria
    If you can’t be awarded a loan of at least £30 on the basis of the ‘ initial’ criteria, a set of wider criteria are considered. The wider criteria are as follows:

    • The length of time you or your partner have been claiming secondary benefits such as WTC, HB, CTB, can be added together to the time spent on (IS/Ib-JSA).
    • Anyone who shares your private residence but not a member of your household and receives (IS/Ib-JSA) is given the same weighting as your family size.
    • If you or your partner is pregnant, the number of children you’re expecting are counted.

    The actual amount awarded depends on the following:

    • The amount you request (not more than you ask for)
    • Legal minimum and maximum rules £30 - £ 1000 and capital rules.
    • The weighting of your application and the maximum payable for that weighting.
    • The amount of any outstanding budgeting loan debt.
    • Your ability to repay the loan in 78 weeks.

How to apply?

On Form SF500, available from the local Social Security office.

What if an Application is refused?

You can request a review. However, a decision is only likely to be revised if it was based on an error relating to factual criteria or there has been an increase in the maximum amount of loan available at the local office. N.B. You can re-apply for a budgeting loan at anytime. You may then have been on (IS/Ib-JSA) for longer or your other loan be further repaid.

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Last Updated: 22.05.2008 at 10:34

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