Small business group calls for extension to New Enterprise Allowance

Published on Friday, 18 May 2012 16:17
Posted by Scott Buckler

The New Enterprise Allowance (NEA) should be extended to encourage more budding entrepreneurs to use the scheme, the All Party Parliamentary Small Business Group (APPSBG) said today

Current rules allow jobless 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.

Now the APPSBG is calling for the New Enterprise Allowance to be made available from day one of signing onto JSA and for funds to be available for a full year to provide £3,692 plus the guarantee of a loan of up to £2,000. The APPSBG believes 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 budding entrepreneurs to get viable business ideas off the ground – a view supported by figures from the FSB, which show it costs 14 per cent of small businesses between £2,500 and £5,000 to set up.

Also in the new report, ‘Breaking down the barriers to entrepreneurship', the APPSBG is calling on the Government to:

  •     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 to ensure that Jobcentre Plus builds relationships with women's networks to promote mentoring for women 

The report comes following an Entrepreneurship Inquiry launched by Iain Duncan Smith MP, Secretary of State for Work and Pensions to see how the barriers to self-employment can be removed and entrepreneurs can be supported in setting up their business in difficult economic times.

John Walker, National Chairman, Federation of Small Businesses, said:
 
"As this report shows, breaking down the barriers to entrepreneurship is crucial if we are to turn the economy around. We all know that unemployment is worryingly high. That is why it is even more important to make it more attractive to go it alone, and encourage those that have a great business idea to make it a reality. The current New Enterprise Allowance does not achieve this. But if the Government extends the scheme to make funds available and at higher rate, more budding entrepreneurs will be encouraged to become self-employed."
 
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 is these difficult times."
 
Karen Freyer, Managing Director of the Creative society, said:
 
"Since 2009 we have been pushing for the reintroduction of the Enterprise Allowance Scheme but as it stands it does not go far enough. The FSB is absolutely right to push for its extension to help reduce unemployment and drive economic recovery"
 
Shaun Williams, Director of Corporate Affairs at Leonard Cheshire Disability said:
 
"It is vital more disabled people are given the funding support they need to increase self-employment opportunities. Extending the New Enterprise Allowance scheme to make funds available at higher rate will enhance their chances of success. Our research shows a quarter of disabled people in work are self-employed as this is often the only viable option."
 
Richard Morris, founder and CEO of Heropreneurs, the only independent military charity to support armed forces leavers and veterans into business, said:
 
"What is clear from this report is that entrepreneurs urgently need more financial support to enable them to start up and meet operational costs. The barriers which block the emergence of new and small banks must be rapidly taken down because we need more loan funds not less.  It is bad for the UK economy that these barriers remain."

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