About Crisis Loans pre April 2013

The Independent Review Service for the Social Fund: Crisis Fund informs readers that crisis loans were interest free loans. As the name suggests, they were intended to meet urgent needs when no other help was available. Their aim was to provide help in the case of an emergency.

Who qualified for a crisis loan:

Anyone aged 16 and above, who did not have enough money for urgent expenses could apply. Receiving a crisis loan was independent of having being a recipient of a Social Security benefit from the Social Fund. A crisis loan was helpful if one was waiting for a first payment from the Social Fund to come through or if one had been placed by Jobcentre Plus and needed a loan to tide one over until an interim payment came through or until the first salary. There were no conditions set as to what kind of payments could be made with a crisis loan, except that they had to relate to immediate living expenses which were a matter of health, safety and emergency.

The Independent Review Service for the Social Fund: Crisis Loans, instructed that terms for repayment had to be agreed upon before the loan could be made. The repayment rate was usually set at 5%, 10% or 12% of income, depending on what other commitments had been made by the applicant.  The total Social Fund debt had to be repaid within 104 weeks.

http://www.irs-review.org.uk/faq/cl.htm#what

Following April 1 2013:

It was then announced that crisis loans would be scrapped. Instead, the British government was going to devote £178.2 Mill. to local control. Crisis funds would no longer be available from the government’s Social Fund via the Jobcentre Plus, but that from April 1 2013 onwards such emergency loans were reverted to councils in England and to the Scottish and Welsh governments.

Alternative Support for loans in UK

They were now redirected and became

  • budgeting loans
  • help from your local council in the UK
  • Scottish Welfare Fund in Scotland
  • Discretionary Assistance Fund in Wales

https://www.gov.uk./crisis-loans

Payday Loans as an Alternative

Under these new conditions, individuals needing an urgent loan, knowing the bank will not approve one at short notice or who might not want to go to a credit union, therefore, the option of applying for a payday loan remains as a viable alternative.  The conditions are that you can afford the 25% repayment fee on top of the amount borrowed. It is then advisable to repay the full loan plus interest back within the period agreed. Multiple roll-overs or extensions for repayment are not in the interest of those already struggling financially. Interest rates are compounded under default and may land you into a more serious situation than you are already. Under all problematic financial situations, it might be wise to get advice from your local financial advice bureau. Should you, however, be in the fortunate situation, that taking a short-term loan and defaulting is part of your personal financial strategy, then by all means, go ahead.  As in all situations in life, knowledge is power.