Start up businesses are a welcome asset to the UK economy. Not only do they create jobs and incomes for the individual, they help to increase the overall wealth and profitability of the nation. Starting a business can be a stressful and testing experience for those with no prior knowledge of how business works. Thankfully, there is now many resources which are in place to help the budding entrepreneur at the beginning of their start-up journey. One of these resources has been introduced by the Department for Work and Pensions and has been praised as a welcome addition to a government department which often comes under intense criticism.
The New Enterprise Allowance Scheme, is designed for those who want to come out of long term unemployment and work on a freelance basis. The programme offers various types of support to those who are eligible for the scheme, such as business mentors and loan funding. Open to any person who is in receipt of benefits, it is a procedural based programme, with different stages which must be achieved within certain time frames. The first step is to apply with a business idea, which will then be assessed for it's viability, both in financial and practical terms. If the idea is deemed viable, the applicant will be allocated a business mentor, who will assist them in the writing of their business plan, with a view to then applying for a New Enterprise Loan of £1000, which is repayable in instalments at a later date.
Once the business plan is written, along with cash flow forecasts and a profit and loss account, it can be submitted for the purpose of obtaining the loan. As well as this, the applicant will also be eligible for further payments once they have signed off from their benefit entitlement. The first 13 weeks will entitle the applicant to £65, with the following 13 weeks giving the applicant an entitlement to £33 per week. This is to ease the pressure of coming off benefits and takes into consideration that self employment does not mean automatic earnings. Not every applicant is entitled to the loan and this will rest on the quality of the business plan and the financial forecasts which are included. The support of the business mentor is crucial in writing and developing a plan which will be eligible for full funding, particularly for those who do not have any experience within business. Typically, the scheme is better suited to those who plan to operate as sole traders, although this is not a condition of the programme.
The New Enterprise Allowance is an interesting measure which the government have decided to take, in order to cut unemployment within the UK. Although feedback has been mixed, there is an overall sense that the government are becoming more supportive of start-up enterprises and this is evident in the New Enterprise Allowance Scheme and the opportunities which it creates. More opportunities and financial support for start-ups, means that more people will be able to successfully operate their businesses, reaping benefits for themselves and the wider economy as a whole.