What Were Government Crisis Loans?

A Crisis Loan is a government loan that the UK offered to those who were experiencing financial problems; specifically to cover their daily living expenses. These loans were designed to provide emergency help with finances, especially for individuals who were low income or had a benefit claim.

What Has Replaced the Government Crisis Loan?

Today, although the Crisis Loan is no longer available from your local council, several other options are, namely the Budgeting Loan. The social fund Budgeting Loan has effectively replaced the Crisis Loan and is one of the most commonly relied upon forms of financial help today.

Social fund Budgeting Loans

A social fund Budgeting Loan is designed to assist those who are low income, such as those who receive employment and support allowance. It’s designed to help with handling essential costs of living expenses or as emergency help to pay for unexpected expenses.

How do Budgeting Loans work?

Budgeting Loans are very simple. They are interest-free and you only pay back the amount that you accept in the loan offer letter. Repayments are deducted automatically from your benefit payment, so you never have to worry about making the payment yourself.

What can Budgeting Loans be used for?

Your budgeting Loan can be used for a wide range of things; including:

• Household equipment, such as appliances and furniture
• Footwear and clothing
• Expenses related to job seeking
• Paying for rent in advance
• Costs associated with a funeral
• Maternity related costs
• Expenses related to moving to a new home
• Repaying a hire purchase loan
• Costs associated with travel inside the UK
• Home improvement costs, such as security or maintenance
• Repaying loans that were taken for any of the above expenses

How To Apply for a Budgeting Loan Online

You can apply for a Budgeting Loan either online or through the post – the IVA Helpline can help you decide the best way.

After you apply for a Budgeting Loan

The currently established timeline for the DWP (Department for Work and Pensions) response and action to an application form depends upon the method in which you apply.

If you apply online, the DWP has between 7 to 21 days to either approve or deny your application. An email or text message notification will typically arrive within 7 days, while an actual decision letter can take up to 21 days to arrive by post.

For mail-in applications, the DWP has up to 21 days to forward to your decision regarding your application, which will arrive via the post.

How Much Can I Borrow?

There are varying loan amounts in which budget loans can be approved, and each depends upon an individual’s specific situation. Having said that, the lowest amount that will be approved for any Budgeting Loan is £100.

Currently, the following scheme is in effect regarding loan amounts and the maximum amount you can be approved for given your specific circumstances:

• A single person is eligible for £348
• An individual with a partner is eligible for £464
• If you claim or have a partner with a Child Benefit claim, the eligible amount is £812

Other Forms Of Financial Support Are Available From The Government

A Budgeting Loan may not be the only financial help option that is available to you.

Hardship Payment

A Hardship Payment is another type of Universal Credit loan handled through the Jobcentre. It’s for individuals who have been sanctioned or penalised for fraud but need assistance with living expenses.

Typically, the loan is repaid by monthly deductions from your Universal Credit until the total sum is paid back.

To qualify you must:

• Be at least 18 years of age or 16 in cases of fraud.
• Prove that you are in financial difficulty and struggling to meet the basic needs of either yourself, your child, or a young person who is dependent upon you. (Basic needs include living costs such as housing, food, hygiene, and heating.)
• Prove that you have attempted to budget and spend your current income responsibly, and yet you continue to struggle.
• Establish that you have exhausted all other sources of potential financial assistance.
• Have satisfied all of the job-related activities you were responsible for in the previous 7 days before applying.

Personal Independence Payment

A PIP, or Personal Independence Payment, is for those who have both a long-term mental or physical disability or condition and have difficulty with mobility or conducting daily tasks.

Discretionary Housing Payment

The Discretionary Housing Payment is available to those who either currently receive housing benefits or the housing element of Universal Credit.

Short term benefit advance

A short term benefit advance is an advance you can get on your benefit payment under certain situations, such as having made a new claim or having not yet received a benefits increase.

Final Thoughts

While Crisis Loans are no longer an option, there are several other options available, at least one of which you most likely are eligible for.

At IVA Helpline, we offer free advice about these options and as well as how to assist you in finding a better way than simply living to your next benefit payment. We are here for you.