New Enterprise Allowance scheme - My story

skater_kat · 30 August 2011 at 12:16AM

Truegho wrote: »

I thought the jobcentre gave you a weekly payment for six months or so to get your business off the ground. I didn't know it was a loan that you had to pay back.

the job centre give you approx £65 per week allowance, IN ADDITION to a £1000 loan (apparently with cr*ppy terms)

what i;d like to know is do you get your £65 per week, then add on business earnings, and potentially WTC?

shaneo85, any ideas?

honestinjun · 31 August 2011 at 9:08PM

I've been messing about with this now for 6 weeks. Been and done the Business Plan with the mentors, had it approved. They now say I have to sign off jsa and onto the allowance scheme (£65 a week) BEFORE I can apply for the £1000 loan (which is not guaranteed to be given) plus they do not know who is administering the loan or when. Big !!!! up already it seems.

shaneo85 wrote: »

Passed the interview (Step 2) as the advisor said my business idea was viable.

Given forms to fill out to apply for the £1000 loan, which can be paid back over 3 years at 10% APR. Also you only have to pay the interest in the first year, which works out at about £9 per month. After 12 months you have 2 more years to pay back the loan, but I'm going to pay the £1000 back at the end of the first year.

I asked how it would effect my JSA as I'm on a joint claim with my partner. He said it would actually benefit us more, as insted of getting £105 per week, I would now get £65 per week from the NEA and my partner would get £65 as a single JSA claim, so we're £25 better off per week. He said the NEA scheme has no effect on Housing/Council tax benefit.

Got another meeting with the NEA in 2 weeks to show them my business plan and get the ball rolling on the business. The loan is expected to take 3 weeks to come through.

All in all it seems like a very good scheme for those wanting to go it alone insted of looking for work.

roguedesigner · 2 September 2011 at 11:51AM

I have also been on this scheme since July and to be quite honest my experience of it has been one of disappointment and frustration. The initial eight week period is supposed to be set aside so that a business plan can be written with the help of a business mentor. I have seen my mentor twice since July and despite asking for assistance in several areas have received none at all.

At our first meeting, I was told that training and workshop sessions would be available to me through the NEA's own provider and immediately asked for a place on several of these. At the second meeting with my mentor, I was told that no training was being provided and if I felt that I needed any I would have to organise my own. That, in itself, is not a tremendous problem as Business Link provide very good support and training for start-ups, but it was less than useful to find this out so far into the initial eight week planning period. Bear in mind that by organising your own training, you are liable for the travel expenses involved as well. It's also worth mentioning that the government, in their wisdom, are virtually pulling the plug on Business Link in November and so the future availability of this excellent free resource is unclear.

In addition to what has been, at least in my experience, a shoddy support network, there is the matter of funding to consider. The total funding package consists of payments up to £2274; breaking this down, what you actually stand to receive consists of:

£65 per week for the first 13 weeks
£33 per week for a further 13 weeks
A loan of up to £1000 may be available (with an interest rate of 10% APR)

So almost half of the funding package is tied up in a loan that you are by no means guaranteed to receive, and for which you are not even able to apply until you have signed off JSA. In other words, you are encouraged to base a business plan on funding that you may not even get. That could be a very nasty surprise a short way down the line and given that many people who turn to the NEA will have little or no funding from other sources, being refused access to the loan could easily sink their business very quickly. I have been unable to find out whether any form of credit checking is carried out in regard to the loan, I would hope that this is not the case as many people who have been receiving JSA for the pre-requisite six month period may have an unpaid bill or two against their name.

My advice to anybody considering the NEA would be to try to find out the experiences of other people in your area of the scheme before committing yourself to it; I was an "early adopter" and was unable to do this. Certainly the impression that I get is that the NEA is a cash cow for the training providers rather than a service user centered scheme.

Nyfle · 2 September 2011 at 4:45PM

For those of you that are thinking about signing up to this scheme, I'd think very, very carefully before doing so. I was on the old scheme so my experiences may not all apply, but from reading this thread and from talking to others that are trying to go down the self-employment route, things don't seem to have changed much sadly.

Initially I was told that I'd be able to stay on JSA whilst developing my business idea and finalising my business plan. My adviser at the time told me that, as I was intending to sign off of JSA and move onto SEC, I wasn't required to keep looking for work as it'd be pointless, and that the steps I was taking to start my business were enough to satisfy my JSAg.

A couple of weeks later I was allocated a different adviser and informed that I'd been incorrectly advised and that I risked being sanctioned if I didn't continue to look for work. As I was close enough to being ready to sign off, I filled in my declaration and then filled out the SEC forms.

I was promised support, referred to BLIL (Business Link London), and told that I'd have 3 reviews whilst on SEC. I was also told that if I needed any extra support, all I had to do was contact BLIL or wait until one of my reviews at the Jobcentre.

In actuality, I got zero support. BLIL were great, but their funding had been heavily cut and were struggling, so I had to make do with what (admittedly excellent) information was available on their website and one very poorly put together seminar for new business start-ups. I also had no reviews at the Jobcentre, and when chased for appointments, I was told that the adviser who'd put my SEC claim through hadn't done so properly so I wasn't on their system, but that would be fixed and I'd be contacted.

Unsurprisingly I wasn't contacted; I didn't have a single review at the Jobcentre. It also took 8 weeks for me to actually receive any SEC, and by the time I did, I was struggling and in debt. Surviving on 2 weeks' JSA and a £100 job grant for 2 months whilst trying to run a business really wasn't fun.

To make matters worse, the clients I had managed to secure decided that they were unable to justify increased IT expenditure. After a few months of trying and failing to secure new clients, I gave up and made a new claim for JSA.

Fortunately I wasn't on JSA for long and things are going much better now. But the last 9 months have been a massive struggle, and really quite stressful and depressing. If I'd known then what I know now, I wouldn't have tried to better myself like that and would gone straight into further education instead.

If anyone here does sign up to this new NEA programme, be prepared. Be prepared that you might not get the level of support that you're told is available, and plan for the absolute worst so that you don't get any nasty surprises further down the line.

BathGooner · 8 September 2011 at 1:50PM

I went to the Job Centre Plus today hoping to get on NEA and was told they are only allowed to refer 2 CLIENTS A MONTH and therefore I couldn't join yet. My adviser really didn't help much and said they might have more info in 2 weeks when I go back.
Regarding the 'up to' £1000 loan I was told it IS based on your credit status and therefore rule out a lot of people with bad credit history.

skater_kat · 8 September 2011 at 2:24PM

it sounds awful!!

roguedesigner · 8 September 2011 at 2:48PM

skater_kat wrote: »

it sounds awful!!

Eight weeks to come up with a viable business plan (which by default means you are also going to be creating a marketing plan) with zero support and the chance of a loan that is more expensive than your credit card? What's not to like?

This is my advice to anybody embarking upon this scheme;

Be prepared to become your own training provider. Get in touch with your local Chamber of Commerce and see what they have available in terms of free workshops and training. Although after November it will no longer be possible to speak to a real person at Business Link, there will still be a website; use it.

Ask hard questions of your NEA mentor. What qualifies them to mentor you? How much time will they actually be spending with you doing their job of helping you build a business plan? The powers that be are under the impression that you will see your mentor once a week, if they won't be committing to this call your regional provider and insist on a mentor who is committed. Remember that your local Chamber of Commerce also run mentoring schemes which are free and available to anybody starting a business.

Unless you have absolutely no other source of funding, forget the £1000 loan. The interest rate is scandalous and you are required to begin repayments the instant you start trading. There are better deals out there.

XEO25 · 8 September 2011 at 6:23PM

Sorry for the late reply, I've been working on my business and forgot about this thread

Just to confirm, you are paid £65 per week for 13 weeks and then £33 per week for the next 13 weeks.

There seems to be a lot of confusion about the loan, so allow me to explain...

The loan of £1000 is provided by a third party loan provider (depending on your area), not the DWP. The loan is 10% APR but you only have to pay £9 per month back during the first year (interest only) and then it goes up to about £45 per month for the remaining 2 years.

The loan is based on your credit rating, but the loan providers are VERY understanding of bad credit and even accept people with CCJ's. I have very bad credit myself, no CCJ's but about 5 defaults and many missed payments and was still accepted.

For those worried about signing off JSA and then being refused for the loan, you can contact the loan provider BEFORE you sign off JSA and ask them if you will be accepted. This is what I did and was told it would be no problem and my loan has been processed today and is on it's way to my bank account.

My loan provider was very understanding that I was setting up on my own and assured me there were no hidden charges, no late payment fee's and if I have a quiet month, I can pay next month and even have payment holidays.

With regards to the training, I assume all trainers will be different. Mine is a nice chap but doesn't know squat about web design (my business). The mentors are more for business training rather than your chosen field training.

@Skater_Kat - You get the £65 per week AND whatever you make from your business on top. You could be making £100,000 per week and you would still get the £65 regardless. You can also get WTC but I think they are paid in accordance with what you're earning, but I'm still trying to find out about this

@Dane_Katie - The £1000 loan is from a third party loan provider.

@WPN - It's true what you say about paying back £9 per month when you're only getting £65 per week from NEA, but remember you're also supposed to be running a business and turning a profit. The £65 is for those quiet weeks when you might not have as much work.

@Bathgooner - you are paid the £65 per week regardless of how much you make from your business.

XEO25 · 10 September 2011 at 10:20AM

So has anyone else signed up to the scheme?

skater_kat · 10 September 2011 at 3:12PM

i'm ineterested to know what they think a reasonable turnover is, given that most business make a loss in the first year or two...?

New Enterprise Allowance scheme - My story

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free