New Enterprise Allowance scheme - My story

Andy2013

I would advise anyone in self employment to have a fall back position. If, by chance, you have a month where you can't meet your obligations, how are you going to make up the shortfall? This could be something like doing a car boot sale every week, or doing a few shifts at night in a friend's pizza parlour. If however, your solution would be to live off the credit card until the situation improves, then I agree with StevenB and Andy2013...that's a road to financial hell.

Loans and credit for a business are no different from personal credit, it needs paying back and unless the finance is going to provide a significant jump in profits it should be avoided because having the pressure of paying back a loan at x per month is something we can all do without.

If your payment is £100 a month and your making £90 extra, where is the logic and no one can be sure how much extra income will be generated from the loan because forecasts don't often work as we expect.

Its so tempting but it can lead to a real mess.

tomterm8

dktreesea wrote: »

What happens if you go on NEA and then it doesn't work out? Can you just close the business down and go back onto jobseeker's allowance?

It depends.

It's not as simple as saying you will qualify for JSA if the business fails. Sometimes, yes. Sometimes no.

Because your claim will be assessed at the moment you make it it will depend on NI contributions. If you are a sole trader you may not qualify for JSA contributions based. Sole traders pay the wrong type of contributions.

If you qualify for JSA IB you'll be eligable for JSA. If you don't you'll be out of luck.

However, JSA CB ends after six months anyway...

If operating as a ltd company you are actually an employee and things are different again...

And it's complicated by universal credit still further.

Andy2013

Also for those whom were on JSA for a long time, I believe around 18 months , if NEA fails then you are commonly put onto work programme as opposed to the standard JSA claim, this was something another member of my induction was told, and sure enough when he failed to make NEA work they placed him on work programme.

tomterm8

Think the rules have changed on that. Anyone who's been on JSA for over a year will be on the work program and not eligible for NEA until they're a WP completer. Once a WP completer you're not eligible for the work program.

Andy2013

Yes but my point being you can choose to go onto NEA at the point they try to put you onto WP (after the 12 months) , but if you fail to make NEA work after the 6 months you then go onto WP instead of a new JSA claim.

This avoids claimants going back and forth ever more, and gets them moving forward, supposedly

You can go onto NEA anytime you wish whilst on JSA but once on WP you cant go onto NEA.

www.parliament.uk/briefing-papers/sn05878.pdf

another rant on the forum to look at

https://forums.moneysavingexpert.com/discussion/4555389

Stevenb

Andy your absolutely right this happened to me when my jsa ran to the limit and work program was threatened, i chose nea but wad told if my business failed and i went back to jsa i would continue where i left of and go into work program and not start a new claim.

This certainly made me focus.

Maybe some areas vary but my experience was as Andy described.

TrueBlue1965

If your on the Work Programme. You cannot go on NEA. The W/P lasts for 2 years and your trapped (I know because i,ve been their and done it).

After the 2 years on the W/P. You move onto Next Step. You can go on NEA if you have moved onto the N/S programme. I had to wait the 2 years to start my business with the support of NEA and its loan. I had looked at several ways of getting the money to start my business before NEA and the W/P started. Each time I was told. Does not matter how great your business plan is. If you dont have capital in the bank 50% of the money you need o start the new business. or own your own home. You will not get a loan to start a new business!

If your on the W/P or N/S. You still sign-on in the normal way and you get your JSA. However, if you dont hit your higher target job searches and show willing to find a job. Any job. You will be santioned.

If you have completed the NEA 26 week paid period and your business is failing. You can close down your business or reduce your hours of working on your business to under 16 hours and you can make a new claim for JSA in the same way as if you have been made redundant or your hours have been reduced. If you reduce the hours worked on your business. You have to tell JCP the hours you are still working and any money earnt every time you sign-on. Any profit made from the business is taken into account when your paid JSA. If your claiming JSA. You lose any Working Tax Credits.

Firestop, said If your new business depends on the enterprise allowance then it will be underfunded and it will fail as the vast majority do.If you have a good business plan you'd be better off going to a bank. If the bank won't touch it then chances are it is not as good as you think/hope it is.
Even if it is the greatest idea, if you don't posses the right qualities - determination, tenacity and sheer bloody mindedness - then again it will fail. Don't underestimate the difficulties of running your own business especially a start up

The vast majority who have completed NEA are still trading after 1 years. More new businesses still trading after one year than those who start their own business without the support of NEA! So, your talking rubbish! The stats are on this forum a few pages back!

I had to depend on NEA and its loan to start my business. The £2,500 loan and the NEA payments go a very long way in giving me the chance and the time to make my business work. Im 8 months into running my own business and im making money. Not loads but im better off than before I started NEA. Im in the process of getting a second bigger loan from the Start-Up Loan Company. The key to getting that loan is being able to show that I can make money from my business. Banks would not touch me or my business because of the lack of free cash but thats were the NEA and The Start-Up Loan Company schemes work!

I agree with you last startment. You have to posses the right qualities - determination, tenacity and sheer bloody mindedness - then again it will fail. Don't underestimate the difficulties of running your own business especially a start up.

Banks will not give loans to new start up businesses unless you already have money in the bank. They expect you to have 50% of your own cash and the will double your investment if your business plan adds up. 50% of nothing is no bank loan even if you have a great business plan! If you own your own home. You can then get a business loan. If you rent your home. What then? No money, no business loan!

Stevenb

Banks will not give loans to new start up businesses unless you already have money in the bank. They expect you to have 50% of your own cash and the will double your investment if your business plan adds up. 50% of nothing is no bank loan even if you have a great business plan! If you own your own home. You can then get a business loan. If you rent your home. What then? No money, no business loan!

Afraid this is wrong TrueBlue1965 , I rent my home and have just been offered a considerable loan via a high street bank who have used my books to decide the finance so your info is totally incorrect.

They don't ask for security and are not interested in my own available fianc!s .

I have not accepted as yet as mentioned in previous posts but banks are lending money.

Not sure which newspaper your reading or where your info comes from but if your business is viable, profitable and well run then they will lend.

Im still classed as a start up in the eyes of the bank and my application was based on that .

firestop

TrueBlue1965 wrote: »

Firestop, said If your new business depends on the enterprise allowance then it will be underfunded and it will fail as the vast majority do.If you have a good business plan you'd be better off going to a bank. If the bank won't touch it then chances are it is not as good as you think/hope it is.
Even if it is the greatest idea, if you don't posses the right qualities - determination, tenacity and sheer bloody mindedness - then again it will fail. Don't underestimate the difficulties of running your own business especially a start up

The vast majority who have completed NEA are still trading after 1 years. More new businesses still trading after one year than those who start their own business without the support of NEA! So, your talking rubbish! The stats are on this forum a few pages back!

Curious. I did start my business via an enterprise allowance and within a year, of all the startups in my local region, I was the only one still trading. All those agencies involved with the enterprise allowance were falling over themselves to become involved with my business in any way - my continued existence was a life line for their own existence. Four years later I'm still trading and it has taken that long for the business to become viable. I was fortunate in that I had no dependants to support and £10k of my own. Without that I would have been just another statistic Interestingly all the business advisors fell by the wayside too.
The statistics you refer to may state otherwise but I prefer my own experience.

Another point worth mentioning - as soon as you sign up for the enterprise allowance you will become responsible for your own "self employed" NI contributions. If things do go wrong then you may not have even enough contributions to go back onto JSA and if your partner works more than 25 hours a week then you will be expected to become financially dependent on him/her.

Andy2013

TrueBlue1965 please show us these stats so we can make up our own mind.

If I remember rightly last time we discussed this you failed to show this information that backed up your claim of NEA being a success , have you found it yet. ????

I still await the Freedom of info request I have asked the gov for to get a true picture of how successful NEA actually is.