The honest answer: borrow last, not first
Before considering any loan, check whether you qualify for help that doesn't need to be repaid (or that's interest-free). Hundreds of millions of pounds in grants and benefits go unclaimed in the UK each year because people don't know they exist.
Start here:
- EntitledTo or Turn2us calculator — free benefits checks that take 10 minutes
- StepChange, Citizens Advice, MoneyHelper — free, impartial debt and money advice
- Turn2us grants search — searches thousands of UK charities offering grants
⚠️ Avoid payday loans, doorstep loans, and "guaranteed approval" loans for benefits claimants. These products typically charge APRs of 1,000% or more and are heavily marketed to vulnerable households. Free help is always available — start with the options below before considering high-cost credit.
Option 1: Budgeting Advance (Universal Credit)
The Budgeting Advance is the official "loan" for Universal Credit claimants. It's interest-free and repaid from future Universal Credit payments over up to 12 months (24 months in some cases).
- Maximum: £348 single, £464 couple, £812 with children
- Eligibility: on Universal Credit for 6+ months, low recent earnings, no previous Budgeting Advance unpaid
- Interest: none
- Apply: through your Universal Credit journal at gov.uk/sign-in-universal-credit
For a full walk-through, see our Universal Credit loan guide.
Option 2: Budgeting Loan (legacy benefits)
If you're on Income Support, Pension Credit, income-based JSA or income-related ESA — and have been for at least 6 months — you may qualify for a Budgeting Loan. It works similarly to the Budgeting Advance:
- Minimum: £100
- Maximum: £348 single, £464 couple, £812 with children
- Interest: none
- Apply: via gov.uk/budgeting-help-benefits or by post using form SF500
Option 3: Local welfare assistance schemes
Most UK councils run their own emergency support schemes — sometimes called Discretionary Support, Local Welfare Provision, or Emergency Assistance Fund. These can provide grants or vouchers for food, fuel, white goods, beds and other essentials, and you don't usually have to repay them.
Eligibility and what's offered varies dramatically by council. Search your local council's website for "welfare assistance" or "emergency support", or call the council directly. Find your local council on gov.uk.
Option 4: Credit unions
Credit unions are not-for-profit financial co-operatives that often lend to people on lower incomes — including those on benefits — at fair rates. By law, credit unions cannot charge more than 42.6% APR (3% per month), and many offer rates well below this.
Key advantages of credit union loans:
- They consider your full financial picture, not just credit score
- Many offer small loans (£100–£3,000) that mainstream lenders won't touch
- Repayments are usually deducted directly from your benefits or bank account, making them manageable
- You build a savings balance alongside the loan — useful for future emergencies
Find your local credit union via the ABCUL credit union finder.
Option 5: Specific government grants
Depending on your circumstances, you may qualify for one of these targeted grants — none of which need to be repaid:
- Sure Start Maternity Grant — £500 one-off grant for first child if you're on certain benefits
- Funeral Expenses Payment — help with funeral costs if you're on qualifying benefits
- Cold Weather Payment — £25 for each 7-day cold spell if you receive certain benefits
- Winter Fuel Payment — annual heating help for State Pension–age claimants on means-tested benefits
- Discretionary Housing Payment — extra help with rent if you receive Housing Benefit or Universal Credit housing element
Option 6: Charities and grant-making trusts
Thousands of UK charities offer grants for specific situations — by occupation (former teachers, nurses, miners, military veterans), by religion, by illness, by region, or by household type. Most are little-known and have funds available because few people apply.
The Turn2us grants search is the easiest way to find grants you might qualify for — it covers thousands of UK charities and lets you filter by your situation.
Why mainstream personal loans usually aren't an option
Most high-street and online personal loan lenders require:
- A regular income from employment or self-employment (benefits income usually doesn't qualify on its own)
- A credit score above 600–700 depending on the lender
- Time at current address (typically 3 years) and on the electoral roll
- No recent missed payments, defaults or CCJs
If your income comes mainly from benefits, mainstream lenders are likely to decline — and applying anyway can hurt your credit score with a hard search.
If you have some employment income alongside benefits, you may be assessed on your total income and have more options. But for most benefits-only households, the credit union and government routes above are the better starting point.
What to do if you're already in debt
If you're considering a loan because you're struggling to pay existing debts, taking on more credit is rarely the right answer. Free debt advice from one of these charities should always come first:
- StepChange Debt Charity — UK's largest debt charity, offers free Debt Management Plans and breathing space schemes
- Citizens Advice — free in-person and phone advice, including help applying for benefits and challenging benefit decisions
- MoneyHelper — government-backed money guidance covering debt, benefits, pensions and more
- National Debtline — free debt advice phone line operated by the Money Advice Trust
Under the Breathing Space scheme, you can also apply for 60 days of legal protection from creditor action while you sort out your finances — and 12 months if you're in mental health crisis treatment.
Frequently asked questions
Can I get a loan if my only income is Universal Credit?
The DWP's Budgeting Advance is the official option (interest-free, up to £812). For larger amounts or non-emergency use, credit unions are the next best route. Most mainstream lenders require employment income and will likely decline.
Will applying for a Budgeting Advance affect my credit score?
No. The DWP doesn't credit-check Budgeting Advance applications, and the advance isn't reported to credit reference agencies.
Are there really "guaranteed acceptance" loans for benefits claimants?
No. Any UK lender authorised by the FCA must carry out affordability and creditworthiness checks — they cannot legally guarantee acceptance. Adverts promising guaranteed approval are usually unauthorised lenders or lead-generators routing applications to high-cost firms. Avoid them.
Can I use a logbook loan or doorstep loan if I'm on benefits?
You may be approved, but the cost is enormous — APRs of several hundred percent are common, and missed payments can lead to your car being repossessed (logbook loans) or aggressive collection visits (doorstep loans). The free options above are almost always a better choice.
What's the difference between a Budgeting Loan and a Budgeting Advance?
The Budgeting Advance is for Universal Credit claimants. The Budgeting Loan is for people still on legacy benefits (Income Support, JSA, ESA, Pension Credit). Both are interest-free DWP loans repaid from future benefits.
Can I get help with funeral costs if I'm on benefits?
Yes — you may qualify for the Funeral Expenses Payment if you're on certain benefits. It contributes towards funeral director fees, burial or cremation costs, and up to £1,000 towards other funeral costs.
Speak to a free debt adviser first
If you're considering borrowing while on benefits, please speak to a free, impartial debt adviser before applying for any credit. StepChange, Citizens Advice, MoneyHelper and National Debtline all offer free help, will not judge your situation, and have helped millions of people find better options than high-cost loans.