In October 2019 the Government announced that the New Enterprise Allowance (NEA) has helped launch over 200 new businesses a week. Since 2011 the NEA has been accessed by 209,000 benefit claimants.
What is the NEA?
The NEA is a government scheme that aims to get people off benefits and starting their own business. It’s been running since 2011, in which time it’s helped set up 130,000 new businesses.
What can I get under the NEA?
The scheme offers three things:
- A cash allowance for up to 26 weeks
- A business mentor for up to a year
- A potential business loan from £500 to £25, 000 (with interest at around 6% APR)
Am I eligible for the NEA?
To be eligible for the NEA, we have to be over 18, receiving certain benefits and have a
viable business idea.
For those of us on (or with a partner on) Job Seekers Allowance, ESA or Universal Credit, the scheme is available.
If we’re on Income Support and a lone parent, sick or disabled, we could be eligible too.
If we’re on UC and have been running the business for two years or more, the loan aspect of the scheme is unavailable.
What’s the catch?
If we’re claiming JSA and we enrol in the scheme, we have to give up our benefit and take up a much reduced rate.
The 26-week allowance comes in two stages. For the first 13 weeks we get £65 per week, and that is cut to just £33 for the final 13 weeks. That’s the gamble, and it’s a big one.
If we’re on Universal Credit, we need to be hitting the minimum income floor within a year of our business starting. If not, we may be found to not be in ‘gainful self-employment’ and have to seek other paid work.
Remember – interest is charged on the loan aspect. This means we’ll pay back more than we borrow. We’ve also got to be as sure as possible that we’re able to pay back the instalments on time.
The duration of support is short – up to 26 weeks for the allowance and 1 year of mentoring. Most businesses don’t begin to make a profit until their second year, so the support would ideally last longer.
As Jonathan Lima, from the Association of Independent Professionals and the Self Employed told Politics Home:
“Although early support for the self-employed is extremely welcome, it would also greatly help […] if NEA benefits and mentoring were extended to two years. This would be a big step towards securing the future of our growing and dynamic flexible workforce.”
Quids in! advise anyone thinking of applying for NEA to first make sure their business idea is rock solid. This means making a realistic business plan and a personal budget, too.
How do I apply?
To begin the application process, we first speak to a work coach at Jobcentre Plus. If our
business idea is seen as financially viable, they will set us up with a business mentor.
For more info:
- Starting your own business from Gov.uk
- Information on NEA from startuploans.co.uk
- The NEA campaign from Gov.uk