The self-employment assistance program began as part of the Middle Class Tax Relief and Job Act. Collecting unemployment while self-employed allows jobless people to create jobs through starting their own small businesses.
This self-employed unemployment program offers dislocated workers the chance to obtain early re-employment by becoming self-employed. Participants receive a weekly self employed unemployment benefit payment while they work to get their businesses started. Although assistance for self-employed workers is only available in a few states, it can be of great benefit to entrepreneurs. Review the following sections to learn more about UI benefits for self-employed workers, how to apply and which states currently offer this option for dislocated workers.
The United States Department of Labor (DOL) and the United States Small Business Administration (SBA) joined forces to offer the self-employment assistance program to states that wish to participate. Self-employment assistance is a voluntary program, but currently only the following states participate:
The state workforce agency in each of these states administers the self-employment assistance program to dislocated workers living there. Participants collecting unemployment while self-employed and starting their own business receive the same allowance they would get with regular unemployment insurance benefits. However, collecting unemployment does not come with the same job-hunting work requirements. Workers in the program can focus full-time on building their own businesses because they are receiving financial aid for up to 26 weeks.
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In addition to receiving monetary benefits, self-employment assistance recipients have access to a website that has extensive SBA resources to support new entrepreneurs. These self-employment assistance courses not only teach participants how to build a business from scratch, they also benefit others by creating jobs for other unemployed individuals. This SBA toolkit provides the following lessons, and more:
Self-employment assistance eligibility requirements can vary by state. However, a primary requirement to apply for this type of assistance applies in all participating states. Petitioners for these benefits must first be eligible to obtain regular unemployment insurance (UI) benefits according to state law and be receiving these benefits. If an unemployed petitioner does not qualify for regular UI benefits, they will not qualify for assistance either.
Qualifying for unemployment insurance for self-employed workers involves submitting an application and waiting for approval. Workers permanently laid off by their previous employers and identified as likely to use up regular employment benefits are good candidates for unemployment. These candidates for assistance are usually identified through their state’s profiling system.
Self-employment assistance program participants must also have a solid business idea, be able to work full-time developing the business and the money to start and sustain the business until it becomes self-supporting. Women receiving assistance also have access to women’s business ownership representatives to get help with the issues unique to women business holders.
Applicants are also eligible for the self-employment assistance program while fully engaged in business-building activities. These self-employment activities include business counseling, entrepreneurial training and receiving technical assistance. Note that collecting unemployment while self-employed is a one-time privilege; you cannot participate in the program more than once.
If you lose your job and decide to pursue your self-employment dreams, the self-employment assistance program can provide financial stability while you are working to get your business off the ground. You should contact your state unemployment insurance office as soon as possible after losing your job. Even though the current states providing self-employed assistance are listed above, it is always worth asking when you apply for UI benefits if this program is available. The DOL expects more states to take advantage of the self-employment assistance program to help its workers and the economy.
Each state offers a different process for submitting unemployment insurance claims, including applications for the assistance program. Most states offer at least two of the following options for submitting any type of UI claim:
The types of documents you need to apply for self-employment assistance are similar to the documents needed to request other types of unemployment insurance benefits. Specific documents needed to file a claim for self-employment assistance program benefits may vary by state, most will require the following information:
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