If you become unemployed, then you might be eligible to receive self-employment help as part of your state unemployment benefits.
The national Unemployment Insurance System, which provides funding for state unemployment benefits, also provides for Self-Employment Assistance (SEA), a special program in which state unemployment offices may voluntarily participate.
The program provides self-employment help and encouragement to eligible unemployed workers, including those with disabilities, who want to become self-employed and are willing to work full time at it. At last check, the following states were participating in the program.*
- New York
- Rhode Island
State unemployment laws require unemployed workers to routinely seek new employee jobs as one of the conditions to remain eligible to collect weekly unemployment compensation. However, under the Self-Employment Assistance program, unemployed workers may remain eligible to collect a weekly sustenance allowance by working to become self-employed instead of looking for jobs.
Self-employment under the program includes starting up a small business or becoming an independent contractor, such as a consultant. The weekly sustenance allowance is the same dollar amount as standard weekly unemployment compensation, which varies by state and eligibility.
Generally, to become eligible for the Self-Employment Assistance program, as indicated, you must have first become eligible to collect standard state unemployment benefits, such as because your employer permanently terminated your employment through no fault of your own.
Then the state unemployment office must identify you as an unemployed worker whom, according to statistics, is likely to exhaust up to 26 weeks of standard state unemployment benefits before landing a new employee job.
Note: Be aware that SEA participants typically are not eligible to collect unemployment benefit extensions after their standard state benefits run out.
Other requirements apply, depending on the state. If you're interested in receiving self-employment help, then ask about the program when applying for unemployment benefits. If and when the time comes, you would apply for unemployment benefits at the relevant state unemployment office or a full-service One-Stop Career Center.
If the state unemployment office notifies you that you are not eligible to participate in the Self-Employment Assistance program, then you likely may appeal the decision; follow the instructions provided in your benefit denial notice. Consult a lawyer if you're not comfortable appealing on your own.
As a self-employed individual, you must pay quarterly taxes on your own and provide yourself with "employee" benefits, such as
health, disability and life insurance. Meanwhile, you might be entitled to extend your employer-provided group health insurance through COBRA.
To learn more about becoming self-employed, visit the Web site of the U.S. Small Business Administration (SBA), a government agency that provides free self-employment help.
If you are disabled, also visit Self-Employment Technical Assistance, Resources, & Training (START-UP USA), a cooperative effort funded by the U.S. Department of Labor to help disabled workers become self-sufficient. Visit Disability.gov too, a government Web site designed to assist disabled people, including help with economic independence through self-employment.