The last few times have been difficult to say the least. It has been a time of struggle for freelancers and the self-employed to seek support amid the global health and economic crisis of COVID-19.
That’s why we’re committed to leading aspiring freelancers and aspiring business owners to the grants, guidelines, and support opportunities that are out there to help them.
Today we’re putting the spotlight on the New Enterprise Allowance (NEA), which has been in place since 2011 but is now perhaps more valuable than ever.
What is the New Enterprise Allowance?
The New Enterprise Allowance (NEA) is a flagship government grant that was set up to help those who were unemployed and are now seeking self-employment, as well as those who are already self-employed and want to grow their businesses.
The program includes an allowance paid over a mandatory period of time and the option to apply for a start-up loan of up to £ 25,000.
The NEA also enables new and developing business owners and the self-employed to take advantage of valuable mentoring and support services.
What do you get with your NEA?
First and foremost, you get your own dedicated business mentor. You may not have money in the bank, but that person will be gold.
Your assigned business mentor will provide expertise and assistance in setting up your business, ready to trade, and also helping you put together a strong, workable business plan.
In terms of finance and funding, successful applicants will receive a total of £ 1,274 over a 26 week period.
This amount is not managed in full, but rather fed via the following payment process via drip:
- £ 65 per week for the first 13 weeks.
- £ 33 per week for the last 13 weeks.
Successful applicants can also apply for a loan of up to £ 25,000 to cover the cost of starting their new freelance business.
This loan is repayable but does not need to repay the initial £ 1,274 allowance.
Who can apply for the New Enterprise Allowance?
To qualify for the New Enterprise Allowance, you must have:
- You must be at least 18 years old.
- You or your partner must be granted Universal Credit, Jobseeker’s Allowance (JSA), or Employment and Support Allowance
- You receive income support and you are a single parent, disabled person or suffering from a long-term illness.
If you are already self-employed and receive a universal loan, you will not be able to apply for the allowance yourself, but you will still be entitled to support from a business mentor.
Those who are already self-employed and are building an existing business can still apply for a start-up loan, provided the business is younger than 2 years.
Aside from that, all you need to do is sit on a dazzling business idea and have the fire in your stomach to turn that idea into a full-fledged freelance career.
So what’s the catch?
Money AND mentoring? It all sounds too good to be true, doesn’t it?
The good news is that signing up for New Enterprise Allowance support has just a few potential downsides:
You have to hand in your JSA.
Your job seeker’s allowance will remain in effect during the initial application process. However, once you apply for a loan and / or receive NEA payments, JSA will be discontinued.
We did the math so you don’t have to …
This means that during the 26-week NEA period, you will get around 25% less than you would from JSA over the same period. So that’s what you should take into account.
The second thing to think long and hard about is how:
You will likely need to find additional funding to supplement your NEA.
Loan applications can be a lengthy process and in the meantime £ 65 or £ 33 per week (excluding JSA’s pillow) is an extremely small amount to work with.
You will likely need to invest a lot of time and energy in alternative sources of funding to top off the modest £ 1,274 allowance.
So seriously thinking about taking the plunge and flying alone as a self-employed freelancer?
Good to you! We wish you every success – just keep your wits about you and don’t be afraid to seek advice from the experts or those who have been there before and done everything they can.