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What is a crisis loan? A guide to emergency financial help

What is a crisis loan? A guide to emergency financial help

Maxine McCreadie


If you’re struggling to make ends meet in the UK, you may be eligible for a Government crisis loan.

Crisis loans are interest free loans designed to help people with essential expenses like food and shelter.

In this guide we’ll what you need to know about how to qualify for a crisis loan and how they can help you get back on your feet.

What is a government crisis loan?

Interest free loan for the financially insecure

A Government crisis loan was a scheme that offered an interest free loan from the UK Government. It was aimed at individuals and families that facing financial hardship.

A crisis loan helped them to cover the costs of living expenses such as rent, food, clothing, travel and other household necessities.

The loan was also available to cover any sudden, unexpected costs, including disasters like flooding or fire damage.

Changes to crisis loans

The government has moved away from crisis loans and now provides ‘social fund budgeting loans’ for sudden unexpected costs.

Social fund budgeting loans

These unique loans offer a short-term fix to those in need, ensuring they can cover important expenses when they don’t have access to funds themselves.

Costs that can be covered by a social fund budgeting loan might include things like travel costs within the UK, items to help you look for or start work, furniture for your home, clothes, footwear or uniform, moving house costs (such as advance rent or removal costs), improving, maintaining or securing your home, and maternity or funeral expenses.

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Who can apply for social fund budgeting loans?

To be eligible for a Social Fund Budgeting Loan, you must have been receiving one of the following benefits for at least six months:

  • Income Support Allowance
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Pension Credit.

Before applying for crisis loan support, make sure to check your eligibility online.

If you recently switched from Universal Credit to Pension Credit, you may still be eligible; the time spent on Universal Credit will be taken into consideration and added towards your six-month total.

The regulations are slightly distinct in Northern Ireland – please read through them more thoroughly here to get a better understanding.

How do I apply for a budgeting loan?

There are a couple of ways to apply for a crisis loan. We’ve listed them below.

Online via Government website

The easiest way to apply for a social fund budgeting loan is online, via the government website.

Applying online involves completing a straightforward questionnaire:

Simply provide your personal information, some details of your financial situation, and choose if you’d prefer updates on the status of your application via email, text message, or post.

Through your local council

If you prefer not to apply online, you can apply via your local council. Just download the application form here, fill it out, and drop at your local council office.

Alternatively, contact your local authority and arrange to pick up a paper form from their office.

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Crisis grant alternatives for low income people

If you’re on low income and aren’t eligible for a social fund budgeting loans, there are alternative forms of financial support available.

Hardship payment

If your Universal Credit has been reduced due to a penalty for fraud, you may be eligible for a hardship payment.

This provides you with short-term financial assistance while sanctions are in place, and can help you cover housing, food, heating, and medical costs.

To qualify, you need to be receiving one of three benefits:

  • Jobseeker’s Allowance
  • Employment and Support Allowance
  • Universal Credit.

When you receive a hardship payment, it is essentially like taking out a loan. After the sanction ends, this will have to be repaid in order for your benefits to become fully active again.

Your Jobcentre can do this for you by reducing your benefit payments each month until all funds are returned.

You can find out more about hardship payments at your local JobcentrePlus.

Discretionary housing payment (DHP)

If you’re struggling to make ends meet with your housing costs, such as rent shortfalls and deposits, then you may be eligible for a discretionary housing payment (DHP) from the local council.

This financial assistance can help cover rent in advance (if you need to move home), rent deposits, and even rent shortfalls if you’re struggling to make payments.

Because it’s a discretionary payment, decisions are left to your local authority as to whether you meet the eligibility requirements.

To qualify for discretionary housing payments, recipients must already be receiving either Housing Benefit or Universal Credit’s ‘Housing Costs’ element.

Personal independence payments (PIP)

Are you living with a prolonged physical or psychological disability you might qualify for a Personal Independence Payment (PIP).

This government benefit was created to support those who are facing financial hardship due to their condition.

If you are in a situation that qualifies for this benefit, the extra money will help you cope with living costs and housing expenses.

A healthcare professional will evaluate if you’re eligible for this aid before providing support, with the exact sum being decided based on individual conditions.

To find out more about the application process, you can contact the Department of Work and Pensions (DWP) on 0800 917 2222.

Short term benefit advance

A short-term benefit advance is a type of emergency support put in place by councils to help people who are awaiting the outcome of their application for certain benefits.

For example, if you have applied for Universal Credit but require money before your next benefit payment is due—especially likely if you expect benefit payments to be backdated—a council may offer some kind of emergency support.

If you’re making a benefit claim and find yourself in need of immediate financial assistance for whatever reason, head to the local Jobcentre.

It’s essential that you take evidence backing up your application and explain why it is necessary for you to receive money quickly.

Where can I get support if I’m having trouble with my financial situation?

If you’re overwhelmed with your current payments and are worried what the future may hold, it’s time to consider professional debt advice.

At Your Debt Expert we specialise reliable debt advice and debt repayment plans that are tailored to your individual needs.

Our team can help you find a lasting solution which will allow you to move beyond money troubles – just contact one of our friendly advisors today.

Where can I get more advice on What is a crisis loan? A guide to emergency financial help and other debt solutions?

To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 082 8086 or click the button below to get started.

Maxine McCreadie
Maxine McCreadie

Maxine is an experienced writer, specialising in personal insolvency. With a wealth of experience in the finance industry, she has written extensively on the subject of Individual Voluntary Arrangements, Protected Trust Deed's, and various other debt solutions.

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