Universal Credit Emergency Loan: Who can claim an emergency loan on Universal Credit?

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Universal Credit is expected to become a lifeline to more people as a staggering amount of job losses have been recorded across the UK, in a number of sectors. As more households become adversely financially affected, either through redundancy, unemployment, illness or a reduction in wages, many will be able to claim additional support through Universal Credit and the Department for Work and Pensions (DWP).

Who can claim an emergency loan on Universal Credit?

Thousands of Universal Credit claimants may be unaware that when you apply for Universal Credit, the first payment can take up to five weeks to come through.

For those in immediate need of support, it is now possible to apply for an advance payment.

However, it is important to be aware that this emergency loan must be paid back – starting from the first Universal Credit payment you get.

At the moment, the advance has to be repaid within 12 months, extended to 24 months from October 2021.

You can ask for en emergency loan on Universal Credit if you have been accepted onto the benefits scheme.

In order to apply for the scheme, you will need to:

  • Explain why you need an advance
  • Verify your identity (when you apply online or on the phone with a work coach)
  • Provide bank account details for the advance (talk to your work coach if you can’t open an account)

You will usually find out on the same day if you have been accepted for an emergency loan or not.

The GOV website states: “If you do not have enough to live on while you wait for your first payment you can ask for an advance payment after you’ve made a claim.”

When paying back you loan, you can choose how many month you pay the advance back over.

You must do so within a 12-month period.

Claimants will not have to pay interest on the loan they take out, meaning the total amount you pay back will be exactly the same as you received.

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If a Universal Credit claimant fails to report a change in their circumstances, their payments could halt as a result – this is known as a sanction.

A claimant who receives a sanction may be able to ask for a hardship payment if they’re unable to pay for rent, heating, food or hygiene needs.

The Gov website adds: “You can also ask for a hardship payment if you cannot pay for rent, heating, food or hygiene needs because you got a sanction.

“You need to pay it back through your Universal Credit payments – they will be lower until you pay it back.”

People experiencing financial hardship may also be able to apply for an Alternative Payment Arrange (APA).

This measure could see the rent be paid directly to a landlord, the benefit be paid more frequently than once a month, or the payment be split between the person and their partner.

There is also a Budgeting Advance which can help with certain costs, including:

  • Emergency household costs such as replacing a broken cooker
  • Getting a job or staying in employment
  • Funeral costs

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