Departments Directions Social Fund GuidePart 3 - Crisis Loans
Directions 5, 22 and 49
Direction 5 - RepayabiltyThe Department directs that
Any award within direction 2 or 3 shall include a determination that it is repayable; an award within direction 2 is referred to in these directions as a budgeting loan and an award within direction 3 is referred to as a crisis loan.
Repayability considerations
5100Guidance on repayability considerations is given under Direction 22.
5101-5149
Direction 22 - Ability to repayThe Department directs that
No crisis loan may be awarded in excess of the amount which the applicant is likely to be able to repay.
Ability to repay
5150The likelihood of repayment is to be judged solely on the applicant's ability to repay. An applicant's ability to repay will depend on:
- their total debt to the social fund
- any other continuing commitments they may have
5151Take account of the following, which are determined by officers acting on behalf of the Department:
- the recommended maximum repayment period
- the likely rate of repayment
- all the circumstances of the application, in particular the consequences for the applicant if you refuse the payment
- the level of multiple debt
5152If an applicant plainly cannot afford a further loan, e.g. because an existing debt has recently been rescheduled and the applicant is already repaying his loans over a period of 130 weeks you are advised to consider whether to refuse or make a lesser award.
5153If as a result of the refusal of a loan on the grounds of inability to repay, the applicant claims a CCG, the DM must take account of this fact when considering the CCG application.
5154If an applicant has requested an amount that is more than s/he can afford, offer the amount the applicant can afford to repay.
5155-5179
Total debt
5180Total debt means the total amount that an applicant owes to the social fund at any one time. Under no circumstances award a loan which takes the amount over £1500.
5181Applicants' total debt at any one time will depend on whether they already have a loan from the social fund and, if so, how much of any outstanding loans they have repaid. SFCS will show the total amount of debt outstanding. Before awarding any further loans consider any additional off-system debts. The total debt to the social fund will reduce as repayments are made.
5182In each case,
- you are advised normally not to allow an applicant more than they could be expected to repay within a repayment period which is most appropriate to the applicant's individual circumstances but
- you must not allow an applicant no more than £1500 total debt to the social fund
5183Consider carefully all the circumstances before offering a loan which would require repayment either:
- at a rate approaching the recommended maximum deduction
- over a period approaching the recommended maximum for repayment.
5184In particular, consider the applicant's:
- ability to meet other demands on their income
- likely future need for, and the ability to repay a further loan for essential items
5185Remember that daily living expenses are not excluded for community care grants where a crisis loan cannot be awarded for such expenses due to the £1,500 loan limit. Consider inviting a community care grant application (unless there is sufficient information to convert to a community care grant).
5186 - 5199
Direction 49 - Crisis Loan applications treated as Community Care Grant applications and vice versaThe Department directs that
(1)Where an applicant applies for a crisis loan and information supplied by the applicant in support of the application indicates that a grant may be appropriate, the decision maker may determine the application as an application for a grant, provided there is no application for a crisis loan, or for a grant, to meet the same need which is being considered by a decision maker, or by a social fund inspector, as at the date of determination.
(2)Where an applicant applies for a grant and the information supplied by the applicant in support of the application indicates that a crisis loan may be appropriate, the decision maker may determine the application as an application for a crisis loan, provided there is no application for a crisis loan, or for a grant, to meet the same need which is being considered by a decision maker, or by a social fund inspector, as at the date of determination.
Applications
5200It is possible for a Decision Maker (DM) to receive a CL application and decide to award a CCG or vice versa, since both are subject to the same discretionary basis of decision making. This involves treating the CL application as though it was an application for a CCG.
5201DMs are not required to consider a CCG in every case of a CL application or vice versa. Such consideration may be appropriate where the information declared by the applicant in support of a CL application alerts the DM to the possibility of a CCG being appropriate, and where:
- an application for a CL or CCG to meet the same need is not being considered by a DM or SFI at the date of application; and
- the DM considers that a CCG may be awarded in respect of the need specified in the application.
Similarly, an application for a CCG may be treated as an application for a CL where the reverse circumstances apply.
5202Where nothing on the application has prompted the DM to consider using the power in direction 49 to convert the application to a CCG, there is no need to refer to the direction in the decision record. However, where evidence has prompted such consideration but the DM has ultimately decided to determine the application as a CL, the thought-process leading to that conclusion should be documented.
5203Directions and guidance on how to decide CCG and CL applications are in the respective parts of the Guide dealing with CCGs and CLs.
5204-5219
Budgeting Loans
5220A BL should be applied for on the appropriate application form, or in such other manner, in writing as the Department accepts is sufficient in a particular case, and can only be awarded on the basis of such an application. If a BL application form contains information which would suggest that an application for a CL or a CCG might succeed, the applicant should be invited to apply on the appropriate application form. The BL application form should then be processed in the normal way (see applications section in Part 4 Budgeting Loans.
5221-5999
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