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Contractors & Freelancers

The Updated New Enterprise Allowance

By October 6, 2017March 9th, 2021No Comments

Some people are born entrepreneurs, but not every potential entrepreneur finds themselves in an environment that can nurture a new business. The New Enterprise Allowance is designed to help these individuals start their own business.


What is the NEA?

The new ‘New Enterprise Allowance’ scheme is an update to the 2011 scheme currently in operation provided by the Department of Work and Pensions.

In brief, to be eligible for the New Enterprise Allowance you must be over 18 and be receiving;

If you have a business idea, you can approach the JobCentre Plus to check if you would qualify for the NEA. This scheme is a great option for those who have been made redundant, or fallen on hard times but have the drive to become their own boss and start a business.


The scheme provides:

  • Workshops on self-employment
  • A business mentor to help you develop your business idea over 8 weeks
  • A weekly allowance for up to 26 weeks up to a total of £1,274 (not available if you claim Universal Credit)
  • Help to apply for a loan to help with start-up costs


So what’s New?

Changes came into effect this year which may open up the NEA to more self-employed people. If you’re self employed and struggling to make the equivalent of the National Minimum Wage for the hours you currently work, you could become eligible for the new NEA.

Currently, it is estimated that over 40% of self-employed workers do not manage to make the minimum wage every week, so many people could find themselves eligible under this update.

The updated NEA also includes a new stage called ‘Link Up / Start Up’ which is an additional pre-assessment stage of the application programme, designed to help applicants better understand the impact and responsibilities of becoming self employed.

Mentoring has been a difficult area for the scheme, mentors volunteer their time and some are better than others! So in the NEA the quality of mentors will be assessed as well as the mentoring time extended from 8 weeks to 12 weeks. In addition, the scheme hopes to provide more comprehensive mentoring in marketing and finance areas.

It is also expected that the updated NEA will include access to an online hub of information to help the participants with additional support, tutorials, financial planning and marketing support.


Is the NEA right for me?

Well this greatly depends. If you qualify you should certainly consider it. But similarly, you should also be considering other business loan options as well as investment options available to you.

The NEA scheme requires you to stop your job-seeker’s allowance payments before you receive your NEA weekly payments, which total £65 per week for the first three months, then only £33 per week for the following three months. In some circumstances, taking another route may be preferable.

Investment can also be a daunting prospect, and requires a good level of work to be underway, read our ‘Investment Pitch Survival Guide’ for more.


Could you be a mentor?

If you’re a successful business person, and think you could become a mentor for the scheme, you can apply here. One of the biggest areas the scheme must work on is the quality of the mentors available to the people accepted onto this scheme. A good mentor can be the difference between a successful business and one that never even gets off the ground.

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