New Enterprise Allowance: Remove Restrictions

Would-be entrepreneurs should be able to access the New Enterprise Allowance (NEA) from day one of claiming Jobseekers Allowance — and not have to wait six months, the All Party Parliamentary Small Business Group (APPSBG) has said.

Current rules allow unemployed entrepreneurs to apply for funding of £1,274 plus access to a guaranteed loan of up to £1,000 — but only after they have been claiming Jobseekers Allowance (JSA) for six months.

In its report, Breaking down the barriers to entrepreneurship, the APPSBG is calling for the New Enterprise Allowance to be made available from day one of signing on to JSA and for funds to be available for a full year. This would provide £3,692 plus the guarantee of a loan of up to £2,000.

The APPSBG says that this would encourage more budding entrepreneurs to set up in business, in turn helping to boost the economy and stem high unemployment.

The APPSBG is concerned that the current funding is too low to enable entrepreneurs to get viable business ideas off the ground. This is a view supported by figures from the FSB, which show it costs 14% of small businesses between £2,500 and £5,000 to set up.

Brian Binley MP, Chair of the APPSBG, said:

“What this report shows is the importance of nurturing business and developing the culture to enable it to thrive. Not only must we create the conditions to help ensure that the education and financial systems are available to supply potential entrepreneurs, but society embraces the enterprise culture whose full potential is yet to be explored in these difficult times.”

The APPSBG calls for further changes in order to encourage more people to set up their own businesses:

  • Support enterprise education in schools and colleges by incorporating it into the statutory curriculum;
  • Create a one-stop-shop to provide advice and support, such as a Small Business Administration;
  • Adopt and put in place the Breedon recommendations to bolster alternative sources of finance;

Provide a support network for older entrepreneurs and to ensure that Jobcentre Plus builds relationships with women’s networks to promote mentoring for women.


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