Enterprise Allowance scheme – Good for business?

Recently the government has announced the new Enterprise Allowance scheme to support people who have been unemployed for more that 6 months into self employment.

The support is 3 fold

1. A financial package of £2000

2. Business mentors

3. £1000 loan for equipment

What has not been made clear is the amount of cash being made available for the first 6 months of trading. In the past schemes such as test trading offered unemployed people the opportunity to test their business idea by enabling them to stay on their benefit whilst trading.

Details have not been announced how the £2000 will be distributed. Is it is going to be a weekly or monthly payment or is it be

used for training and support With the new Enterprise allowance scheme is has not been made clear if entrepreneurs will sign off their benefits before starting there business.

The other thing which is not clear is if they can go back onto the same benefits if there decide to cease trading. With regards to the £1000 loan for equipment, details have not been announced if there is any interest on the loan and the consequences of not paying the loan back, should the business fail.


Cash payments

One of the biggest barriers to an unemployed person wanting to start up, is how they will support them selves when they first start to trade. As we keep on hearing, the majority of businesses do not make or make a modest profit in the first year of trading. If the cash payments replace their benefits, it could persuade people to come off there benefits and start up in business. £1000 loan – If the loan is a “soft loan” with a low interest rate and no legal penalties for non payment, then it can only be a good thing.

It seams that funding for business start up is decreasing every year and although not a grant, the loan could provide the capital needed for a small business to start up.

Experience business mentors

Having advice from an experienced person can save a business time and money. Often people start up in isolation and don’t have the time, know where to go or who to trust for business advice. A good mentor not only can advise from first hand experience, but could also introduce a new business to valuable contracts.

If the government want to archive their target of getting 10,000 businesses to start up by next year then I feel they need to do a combination of the new Enterprise Allowance scheme and the old Test Trading Scheme. Some people are going to be sceptical about coming off their benefits unless they have a guarantee that the will be able to get back on them and quickly.

The advantage of the Test Trading scheme was if the person did not want to carry on with the business (for what ever reason) the could cease trading and stay on their current benefits. The Government has realised that experience business mentors can have a huge value to a business. I felt the old Test trading Scheme had too many business mentors who had not been in business them selves and were inexperience in business start up and development.

I also feel that too much emphasise is put on teaching people the principles of business, like business plans, marketing, legal structures etc. Instead on focusing on the reasons people do not go into business.

For people with a disability, an holistic approach needs to be taken to address issues, such as,

• Lack of own financial resources (savings, home ownership).

• Poor credit rating after long-term benefit receipt.

• Disinterest / discrimination on the part of banks/business advisers

• Lack of accessible information on sources of grants and loans.

• Fear of losing the security of regular benefit income.

• Lack of information on financial support whilst in business, such as; Working Tax Credit, Test Trading or Permitted Work.

• Lack of access to appropriate training and support.

• Lack of and inaccessible advertising of self employment services.

• Lack of information produced in alternative formats.

• Lack of transport/funding for transport to and from advice centers.

• Inaccessible training centers.

• Training not tailored to individual needs.

This new Enterprise Allowance scheme has the potential to make a real impact in enabling disabled people to start up in business. But until the details of the scheme have been announced the true potential will not be known.

What is stopping you from going into business? Please comment below

6 Responses to “Enterprise Allowance scheme – Good for business?”

  • Paul F Perkin:

    I have a fantastic idea for setting up a charity/ club/ trust/business?
    I've already run it by a Bank Manager & he also said it was a fantastic idea.
    I have been Disabled for 20yrs & been in business 7yrs before disability. So I'm  now benefit dependant & very scared for what the Government will do in the future.
    My idea is revolutionary in approach, to the benefit of all Disabled with Mobility issues & thier Carers. That's a community of Millions & will help Children or Adults alike. In time this approach can also diversify into other areas for again the benifit of the users.
    I'm so excited, motivated & passionate about this, never before used approach, but, like you say, where do i get start-up funding, the contacts neccessary etc?
    Maybe you can suggest some of the rite people to approach?

  • Having been on incapacity/income support due to ongoing pelvic problems re endometriosis and having extensive adhesions which cause problems with my bowels and stomach/pelvis for several years, complicated by various operations and subsequent anxiety and depression due to chronic pain issues, I struggle although will not let go of my desire to one day run maybe initially a part time (see how i go) business working with animals ie dog walking locally.
    Unfortunately although the word sounds negative my condition is fluctuating meaning it worsens the majority of the time and then lulls.  I am still having ongoing investigations although I may still face a Bilateral Salingo Oopherectomy meaning a full hysterectomy but at present being into my early fifties they are putting that on hold whilst they see if menopause in time eases the symptoms as my oestrogen levels drop which can increase the risk of endometrial growth and subsequent adhesion risk (scar tissue).  Basically each further operation is likely to increase the scar tissue which they at this time feel may be causing my chronic pinching, pulling pain in my pelvic area and lower back pain.
    I find walking for short distances being upright is less painful but because of adhesions pulling on internal organs and subsequent lower back pain which fluctuates i get tired and achey quickly.  So to come to the point if there was a way i could do some part time dog walking which i presently do in the form of walking a neighbours dog which helps keep my depression in check and gives me a reason bluntly to live! without losing my housing benefit and  allowing me something to buy food and pay bills I would embrace this opportunity.  I am at my age going to struggle to find employment having had years out of work, i could not do a sit down job as i cannot sit for long periods which causes pain, nor can i at this time consider a full time position.  This illness has made me somewhat reclusive and animals would be excellent therapy for me if i can find a way to combine a small income with a small grant to get started on a part time basis,  I have a large hole in my cv due to this onging illness but am striving for answers and have been seeking help from counsellors for some time.  I just pray with the new schemes some frankly quite terrifying to me there is some help not just for the healthy jobless but for those with health conditions who still have ambitions but not money to help them get started and support thereafter.  Of course i fear a worsening of my condition as likely do many people out there who struggle with health conditions that may or may not be cured.  I need to know that should that happen I will not go through some long winded red tape without any financial support and stress.  Jumping off a gang plank even to a healthy person is frightening to a person with health problems it is fraught with problems and agonising paralysing fear, this issue needs to be addressed urgently.  I get the impression only those on job seekers will qualify for these grants meaning only healthy people need apply yet in the next breath the government wants even people with ongoing health problems to jump into the abyss!  if that is the case there need to be schemes for the 'not so well' to be encouraged to be entreprenaurs too even if part time is the only option intially for them.   I believe a seperate scheme for the long time sick is long overdue!

  • Mike:

    You need to speak with your DEA an see watch schemes are available to you which will not effect your benefits. Have a look at this guy http://www.k9-solutions.net he started out walking 2 dog now he has people working for him and a van.

  • Mike:

    Hi Paul

    There is very little money about at the moment. Speak with your DEA about the enterprise allowance scheme, you might get some funding there

  • Emily:

    I just wanted to update everyone  about the NEA scheme. I have, after  5 months of trying to get on the scheme, been signed off benifits and put on the NEA.    Clients are offered 8 weeks mentoring BEFORE they are even considered for the NEA. And only when you have a completed business plan that has been signed off by the company in your area who are running the scheme. (The gov offered tenders out to business support companies so in each area of the UK , who runs the scheme differs)
    The company who got the tender in my area are a huge barrier for myself and my mentor ( a business professional, who is mentoring voluntarily!) What we have both found is that when this scheme was supposed to have come online at the end of April, the  support company were not even set up, and the financial insitution who were dealing with the loan had not been put in place-let alone the terms and conditions of the loan. They seem to be making it all up as they go along, and then change their minds and make  up another stipulation to what they require to get on the scheme.
    My Job centre advisor has been great, but is the last to know anything about the scheme. I have infact been telling her whats going on! This does not bode well for the longetvity and success of the scheme. It appears to have been very poorly thought out and  very poorly organized .The 'financial package' offered is 65 pounds a week for the first 3 months and then 33 for a further 3 months, the incentive being that if your are coming off benifits and are seen as self employed you can apply for tax credits to increase your income. The 1000 pound loan is NOT a given, you have to have a suitable business plan, and get passed on through 3 different gov agencies before you get to APPLY for the loan, and STILL no one can tell me how long this process will take! 
    Anyone who has had any dealings with business knows that  in the first year of a new business you spend, spend, spend, and it's VERY unlikely you will make any profit-therefore how does the government expect a person coming off benifits, with no savings to be able to pay back 1000 pounds in the first year of trading?
    My mentor, my job center advisor and me all agree the scheme is doomed to fail through shambolic mis-management and lack of funds.  However I have decided to continue with the NEA process to at least try and get my business up and running, even if it just gets me off the dole for 6 months, at least i'm doing something to try and better my lot!  I hope this hasn't been too depressing for any one out there thinking of doing the NEA, i believe it's better to have the facts before hand! good luck

  • Mike:

    Hi Emily, Thanks for the update. it seems that there are major hiccups in this scheme, which is very disappointing. The department of Work and Pensions needs to hear about the experiences of its customers and i hope you forward this to them.

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