The New Enterprise Allowance programme closed on 1 January 2022. Read more on how to start a business and an overview of small business grants available.
The New Enterprise Allowance (NEA) is one of the government’s flagship policies to support the unemployed to start their own business.
You could access funding, support, and mentoring to get your business idea off the ground. But what are the rules and payments, and how can you benefit?
What is the New Enterprise Allowance?
The New Enterprise Allowance is a support scheme 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.
New Enterprise Allowance – business plan template
Our article explains how much you can claim to start your business and how to apply. If you already have a business idea, why not download your free business plan template?
My enterprise allowance: how much could I claim?
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.
Do I have to stop my JSA?
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 won’t affect your tax credit position, and isn’t considered when calculating your income tax bill.
What are the disadvantages?
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.
How do I apply?
Applications for the NEA are made through your JobcentrePlus. Talk to your JobcentrePlus work coach to find out how to put your name forward.
More guides for small business owners
- How to go self-employed in the UK
- A guide to small business grants in the UK and how to apply
- Best small business ideas
- What is business insurance?
Have you used this scheme to start your own business? Let us know in the comments.
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