Loans for people on benefits

If you’re in receipt of benefits and have been hit with a financial emergency, you might wonder what options could be available to help you.

Can I get a loan if I’m on benefits?

You might be able to get a loan if you’re in receipt of benefits, although this will depend on several factors, including what type of benefits you receive; your financial situation; your credit history; and the lender you apply with.

Some lenders will only consider applications from people who are employed.

A loan might not be your only option. When a financial emergency strikes, it can be easy to go into panic mode. This is understandable but could lead to us making a quick decision that may not necessarily be right for us. Take a step back and think about all the options that could be available to you.

Alternatives to benefit loans

If you’re in need of money but are unsure whether a loan is quite right for you, you might be interested to have a think about some of the following alternatives.

1. Are you getting all the help you’re entitled to?
You can use StepChange’s handy calculator to see what support you’re entitled to. Even if you’re in receipt of benefits already, it’s worth checking to see if you could be eligible for any additional help.

2. Are you eligible for a Budgeting Loan?
If you’ve been on certain types of benefit for at least 6 months, you may be able to apply for a Budgeting Loan to help you pay for essential items, such as:

• Clothes and footwear.
• Furniture.
• Some home maintenance, such as security measures.
• Advanced rent.
• Expenses associated with moving house.
• Expenses associated with getting a new job.
• UK travelling expenses.
• Maternity and funeral costs.

A Budgeting Loan is interest-free. You can find out more and check your eligibility for a Budgeting Loan on the Gov.uk website.

If you are in receipt of Universal Credit, you may be eligible to apply for a Budgeting Advance instead.

3. Speak with friends and family
Very few of us like talking about money and it can be even more uncomfortable when we’re struggling. However, your friends and family may offer to help you out while you get back on your feet. If you do borrow funds from a loved one, it’s very important that both parties agree on a clear repayment plan. This should cover the following:

• Will you be charged interest? If so, how much?
• How will the money be repaid: in instalments or in one lump sum?
• If in instalments, how much will you pay each time?
• When will you have to start repaying the money?

I need financial advice; who can help me?

You can get free, confidential, and impartial advice on a range of money and debt topics through charities and organisations such as StepChange, MoneyHelper, Citizens Advice, and National Debtline.

If you need money in an emergency – for instance, if you have no food – please visit StepChange’s page for help and advice.

Before you search for a loan for people on benefits

• You should set some time aside to go through your finances and consider how much of an impact a loan will have on your monthly outgoings. You’ll be required to make monthly repayments on your loan, which will include interest. You should be certain that you’re able to make these repayments without leaving yourself short when covering the cost of your essentials, such as mortgage or rent, bills, and food.


• Consider how you’d keep on top of your loan repayments if your circumstances were to change; for example, if your benefits were reduced or stopped or, if you’re in employment, you found yourself unable to work.


• If you do decide that a loan could be suitable for you, you should bear in mind the impact of making a late repayment or missing one altogether. Missed and late repayments could result in fees and charges, as well as a decline to your credit score. This could have a negative effect on your chances of approval should you need to apply for credit again in the future.


• Your benefits could be affected by a loan. You should do thorough research into this before you begin your search. Depending on the type of benefit(s) you receive, you may need to report any changes to your income, which could include a loan payment. You can find out how to report a change in your circumstances here.


• If you search for a loan, make sure that the broker or lender you choose is authorised and regulated by the Financial Conduct Authority (FCA). All authorised and regulated companies will appear on the FCA register, which you can check here.

Does Cashflex offer loans for people on benefits?

Cashflex is a credit broker, not a lender. The 30+ lenders on the Cashflex panel offer short-term, personal loans between £100 and £10,000. Depending on the amount of money you apply to borrow, you could repay your loan across a term between 3 to 60 months.

You can use Cashflex to search for a loan if you:

• Are over the age of 18;
• Are a UK resident;
• Have a UK bank account and valid debit card; and
• Have a regular source of income paid into your bank account.

Some lenders may consider certain types of benefit as a regular source of income and therefore may be willing to consider your application for a loan.

Which benefits could be counted as regular income?

Certain lenders could class the following benefits as a regular source of income, although this is not guaranteed.
Please be aware that each lender will have their own eligibility criteria.
Your application will be assessed on an individual basis and a number of points will be taken into consideration, including your affordability and credit history.

• Universal Credit.
• Employment and Support Allowance (ESA).
• Disability Living Allowance (DLA)/Personal Independence Payment (PIP).
• Industrial Injuries Disablement Benefit.
• Child and Working Tax Credit.
• Child Benefits.
• Fostering Allowance.

Usually, the following types of benefit will not count as income:

• Income support.
• Job Seeker’s Allowance (JSA).
• Housing Benefit.
• Pension Credits.

I was approved for a loan, but I can no longer afford my repayments; what should I do?

If you’ve taken out a loan that you’re having difficulty repaying, you should get in touch with your lender. There may be things that they can suggest to help ease some of the financial pressure you’re experiencing.