Those on benefits may find it more difficult to get a loan, but there are still various options available if they are in need of funds.


Can I Borrow Money if I’m on Benefits?

If you are currently claiming benefits, this does not make you ineligible for a loan. The situation will vary between different lenders and based on the personal circumstances of the borrower, including how much they are looking to borrow and for how long, in addition to their financial situation.

Explore whether you can get a loan if you are unemployed.




The most important factor will be if the loan is affordable for the borrower. This means that lenders will most likely look at existing outgoings, including any outstanding debt to see if the individual will be able to meet their loan repayments on top of that.


Is It More Difficult To Get a Loan on Benefits?

It is generally harder to get a loan if you are receiving benefits as you will need to demonstrate to the lender that you are able to comfortably meet repayments. However, there are options available be it taking out a personal loan or looking to specific organisations, such as credit unions or local councils, which may be able to offer help.


What Loans Are Available for People on Benefits?

If you are currently receiving benefits, you will either be receiving one single payment (universal credit), or several payments under the old benefit system.

Regardless of which type of benefits you are receiving, you will be eligible to apply for a budgeting loan or budgeting advance from the government. These are no-interest loans meaning that you need only pay back what you borrow. This money is repaid from your benefit payments.




Depending on your personal situation, you may also be eligible for a loan from a credit union. They are often able to provide specialist loans for individuals with low-income.

There are a range of lenders available who are able to provide short-term loans for people on benefits. However, beware of extremely high interest rates and penalty fees if repayments are not met. Many of these companies try to target low-income individuals and trap them in a cycle of debt which is difficult to overcome.


What Funds Does the Government Offer?

Government loans offer both direct loans or guaranteed loans. With direct loans, the borrower is receiving money directly from a government agency and all loan repayments are payable to the government. For guaranteed loans, however, the money will be coming from a private government-approved lender.

If you are on Universal Credit, or are receiving other benefits, you may be eligible to apply for a Budgeting Advance or a Budgeting Loan

Advances of Benefit are a type of financial support that replaced the formerly available ‘Social Fund’. They can include short-term advances, budgeting advances or budgeting loans.

You might be able to apply for this kind of financial support if you are currently waiting for a decision on a benefit claim or are waiting to be paid but struggling financially. These loans are designed to help with the cost of essential items such as furniture, clothing, rent and other daily expenses.

You can apply for a Budgeting Loan if you have been on any of the following benefits for a minimum of 6 months:

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

These loans are interest-free and, depending on personal circumstances, will range from £100 to £812.

There are also short-term advances available for those who are struggling to meet payments before receiving their first benefit payment.


How Can You Get a Loan if You Are on Benefits?

If you are wanting to apply for a government loan whilst on benefits, you can access the website, which will display all available options. Additionally, your local JobCentre could provide valuable information as well as contacting the universal credit helpline.




Once starting an application, you will need to meet certain criteria in order to get a loan. The first step will be assessing your personal circumstances and financial profile to make sure you can afford the loan.

You should only ever take out a loan if you can afford to repay it. However, in the case of emergency costs, a short-term loan may be a good option. Budgeting loans or budgeting advances given by the government tend to be the cheapest option as they are no-interest short-term loans.


What Alternatives Are Available if You Are on Benefits?

If you are having financial troubles, there are many different debt charities available to provide specific support. It could be that you are not currently receiving all the benefits you are entitled to. Resources such as Turn2Us have a free benefit checker to ensure that you are getting all the available support.

If you do decide to take out a loan and have doubts about your ability to meet the repayment plan, always speak to your lenders first. They may be able to help you by lowering the interest on your monthly payments.