Recent times have been tough to say the least. For freelancers and the self-employed it’s been a time of struggle, looking for support amidst the global health and economic crisis of COVID-19.
That’s why we make it our mission to guide aspiring freelancers and budding business owners towards the grants, policies and support avenues that are out there to help them.
Today, we turn the spotlight on the New Enterprise Allowance (NEA), which has been in force since 2011 but is perhaps now more valuable than ever.
What is the New Enterprise Allowance?
The New Enterprise Allowance (NEA) is a flagship government grant put in place to help support those who have been unemployed and now looking to go self-employed, as well as those who are already self-employed and looking to grow their business.
The scheme includes an allowance paid out over a prescribed period, as well as the opportunity to apply for a startup loan of up to £25,000.
The NEA also enables new and developing business owners and those self-employed to tap into invaluable mentorship and support.
What do you get with your NEA?
First and foremost, you’ll be assigned your very own dedicated business mentor. They might not amount to money in the bank, but this person will be worth their weight in gold.
Your assigned business mentor will provide expertise and support in setting your business up, ready to trade, and will also help you put a strong, viable business plan together.
In terms of finances and funding, successful applicants will receive a total sum of £1,274 over a 26-week period.
This amount isn’t administered in full but will be drip-fed via the following payment process:
- £65 per week for the first 13 weeks.
- £33 per week for the final 13 weeks.
Successful applicants also become eligible to apply for a loan of up to £25,000 to help cover the costs of getting their new freelance venture off the ground.
This loan will need to be paid back but the initial £1,274 allowance does not have to be paid back.
Who can apply for the New Enterprise Allowance?
To qualify for the New Enterprise Allowance, the following must be in place:
- You must be 18 or over.
- You or your partner must be receiving Universal Credit, Jobseeker’s Allowance (JSA) or Employment and Support Allowance
- You get Income Support and are a lone parent, disabled, or suffering from a long-term illness.
If you are already self-employed and receiving Universal Credit, you won’t be able to apply for the allowance itself, but you will still be eligible for support from a business mentor.
Those already self-employed and developing an existing business are also still able to apply for a start-up loan, providing the business is less than 2 years old.
Other than that, you just need to be sitting on a knockout business idea and have the fire in your belly to turn this idea into a fully-fledged freelance career.
So, what’s the catch?
Money AND mentoring? It all sounds too good to be true, right?
Well, the great news is that there are only a couple of potential downsides to signing up for New Enterprise Allowance support:
You’ll have to surrender your JSA.
Throughout the initial application process, your Job Seeker’s Allowance will remain in place but as soon as you apply for a loan and/or receive any NEA payments, JSA will stop.
We’ve done the maths, so you don’t have to…
That means that over the 26-week NEA period, you’ll receive around 25% less than you would from JSA in the same timeframe. So, that’s something for you to consider.
The second thing you’ll need to think long and hard about is how:
You’ll probably need to seek out additional funding to supplement your NEA.
Loan applications can be a lengthy process and, in the meantime, £65 or £33 per week (without the cushion of JSA) is an extremely small amount to be working with.
You’ll likely need to invest a significant amount of time and energy into alternative sources of funding to supplement the modest £1,274 allowance.
So, seriously thinking about taking the leap and flying solo as a self-employed freelancer?
Good on you! We wish you every success – just make sure to keep your wits about you and don’t be afraid to ask for guidance from the experts or those who have been there and done it all before.