The New Enterprise Allowance (NEA) has been extended for another two years, with 30,000 new mentoring spaces available. Providing funding and other support as well as mentoring, the NEA is one of the government's flagship policies.
But what does it consist of, and can you benefit from it?
The New Enterprise Allowance is a support aimed at would-be entrepreneurs aged 18 and over and currently in receipt of Jobseeker's Allowance (JSA), Universal Credit, or Employment and Support Allowance, or those on Income Support who are also a lone parent, sick, or disabled.
The NEA provides practical and financial support to people in those categories who want to start their own business. It consists of a combination of business mentoring, a weekly allowance, and a business loan.
Once you join the scheme you'll be assigned a business mentor. This person will help you put together your business plan, and will support you in turning your idea into a realistic, revenue-generating venture. Your mentor will stay with you, providing ongoing assistance during your first few months of trading.
When your business plan has been approved, you'll be given access to the financial support. This is a weekly allowance, and a start-up loan facility.
Once your business plan has been approved, you may get a weekly allowance worth up to £1,274 in total over 26 weeks. In addition, you can apply for a loan to help with the costs of starting your business.
You can carry on receiving JSA while you develop your business idea with your mentor. However, you can't claim the allowance or apply for the loan until you stop your JSA benefit claim.
You should remember, though, that the NEA doesn't affect your entitlement to Housing Benefit or Council Tax Benefit. It also will not affect your tax credit position, and isn't considered when calculating your income tax bill.
Although the New Enterprise Allowance can be very useful for those who wish to start a business, you should know that there are some potential downsides to the programme. The first is that you have to give up your JSA before you receive the NEA payments. You should work closely with your mentor to make sure you're confident about your business proposal before you do this.
Finally, it's also worth remembering that £1,274 may simply not be enough to start your business. In this case you could explore other potential funding avenues, such as the government's Start-Up Loans scheme.
Applications for the NEA are made through your JobcentrePlus. Talk to your JobcentrePlus work coach to find out how to put your name forward.
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