Loans for People on Benefits: Options, Eligibility, and Tips

A clear path to short-term cash when money is tight

When money is tight, borrowing can feel urgent. If you are on benefits, you do have options, but they work very differently depending on which benefit you receive and how quickly you need the funds. Getting the rules straight can save time and protect your budget.

If you receive legacy income-related benefits, a government Budgeting Loan can help with essential costs. If you are on Universal Credit, the equivalent is a Budgeting Advance. Both are interest-free and repaid from your ongoing benefits, which makes them among the safest first choices. If those do not fit, credit unions can provide affordable lending with repayments taken directly from your benefits. As a last resort, FCA-regulated lenders may consider benefits as income, but costs can be much higher, so careful affordability checks are vital.

The right option should cover the need at the lowest realistic cost, with a clear plan for repayment that still leaves money for essentials.

We will explain who can apply, how much you could borrow, what it might cost, and where the risks lie. We also signpost to free, impartial support if you are unsure. The aim is simple - no jargon, no pressure, just the facts so you can make a confident decision that fits your circumstances.

Who this guidance is designed for

This guide is for UK residents receiving benefits who need short-term help with essentials, such as emergency bills, white goods, travel to work interviews, or moving costs. It covers England, Scotland and Wales. Northern Ireland has separate processes for government loans, so check NI-specific guidance if you live there. If you have ongoing debt worries, consider free advice alongside these options.

Your main choices at a glance

1. Budgeting Loan - For people on legacy income-related benefits for at least 6 months. Interest-free. Repayments are taken from your benefit payments. Not available to Universal Credit claimants.
2. Universal Credit Budgeting Advance - For Universal Credit recipients. Typical maximums are £348 if single without children, £464 for a couple without children, or £812 with children. Repaid from your UC, usually over up to 24 months.
3. Credit Union loan - Community lenders offering low-cost borrowing. Some take repayments automatically from DWP or HMRC benefits, which reduces missed payments and stress. Rates are capped and significantly below high-cost lenders.
4. FCA-regulated personal loan - Some lenders consider benefits as valid income and can fund quickly. Approval depends on affordability, not employment status. APRs vary widely, from relatively low to very high, so compare carefully.
5. Student maintenance support - In England, undergraduate living cost loans rise by 3.1% from August 2025. Maximums increase to around £13,762 in London and £10,544 outside for lower-income households.

Cost, impact and key risks compared

Who qualifies and who does not

Eligibility depends on your benefit. To qualify for a Budgeting Loan, you must have received one of the following for at least 6 months: Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, or Pension Credit. You cannot apply if you are on Universal Credit, or if you owe more than £1,500 from previous crisis or budgeting loans. People in Northern Ireland should use their local process rather than the GB system.

If you are on Universal Credit, you may be able to request a Budgeting Advance instead. The maximum depends on your household - generally up to £348 if you are single without children, £464 for a couple without children, and £812 if you have children. If you have more than £1,000 in capital, the amount you can get may be reduced. Repayments are taken from your future UC payments, and for requests made on or after 4 December 2024, you can repay over up to 24 months.

Credit unions and regulated lenders assess affordability. They often accept benefits such as Universal Credit or Disability Living Allowance as income. The key test is whether the repayments leave enough money for essentials once priority bills are covered.

Apply with confidence - step by step

1. List the essential cost and the minimum needed today.
2. Check your benefit type and match to eligible options.
3. Estimate repayments against your monthly budget and priorities.
4. Gather proofs - benefit letters, bank statements, identity documents.
5. Apply online or by phone, following the right route for you.
6. If refused, review affordability and try a credit union option.
7. If still stuck, contact MoneyHelper or local welfare support.

What helps - and what could hinder

Take a breath before you borrow

Before applying, map your next three months of bills, food, travel and priority commitments. If deductions from benefits will create a shortfall, consider a smaller amount or a different option. Where possible, choose the lowest-cost route first - interest-free support or a credit union. If you consider a commercial lender, compare the total repayable, not just the APR, and build in a buffer for price rises or variable bills. If you are already missing payments, seek free, impartial advice before borrowing more, as consolidation or breathing space might be safer than new credit.

If these do not fit, consider these alternatives

1. Local welfare assistance - In England, some councils offer emergency vouchers or essential household items. Scotland has the Scottish Welfare Fund. Wales has the Discretionary Assistance Fund.
2. Energy supplier support - Hardship grants, priority services, and repayment plans can help with arrears and emergencies.
3. Charitable grants - National and local charities offer targeted support for essentials, white goods or travel.
4. Talk to creditors - Ask for payment plans or temporary breathing space if you are struggling.

Common questions, clear answers

Q: Can I get a Budgeting Loan on Universal Credit? A: No. Universal Credit claimants use a Budgeting Advance instead. The loan type depends on the benefit you receive.

Q: How much can I get through a Budgeting Advance? A: Typical maxima are £348 if you are single without children, £464 for a couple without children, and £812 if you have children. The exact amount depends on your circumstances and any savings.

Q: How long do I get to repay a Budgeting Advance? A: For requests made on or after 4 December 2024, you can repay over up to 24 months. Repayments come directly from your Universal Credit payments.

Q: Will lenders count benefits as income? A: Many regulated lenders and credit unions accept benefits such as Universal Credit or Disability Living Allowance as income, provided repayments are affordable after priority bills.

Q: What if I have over £1,000 in savings? A: If you are applying for a Budgeting Advance, having more than £1,000 in capital can reduce the amount you can borrow. Budgeting Loans have separate rules tied to legacy benefits.

Q: How risky are commercial loans when on benefits? A: Costs can be high, with APRs ranging from relatively low to extremely high. Late payments increase the total cost and can damage your credit file.

Ready to move forward

Decide how much you actually need, then start with the lowest-cost option you are eligible for. Have your benefit letters and bank details ready, and set a realistic repayment plan that leaves room for essentials. If unsure, speak to a credit union or MoneyHelper for impartial guidance.

Important information

This guide offers general information for residents of England, Scotland and Wales. It is not personal advice. Borrowing can affect your benefits and credit standing. If you are struggling with repayments or priority bills, contact MoneyHelper or a regulated debt adviser before taking on new credit.