Able To Work

• One of the main requirements to receive unemployment benefits is searching actively for employment and following up on employment leads offered by your local insurance agency. If you are starting your own business, you will be working on your own business and not available to search for employment or attend work interviews. Therefore, in most states -- 43 out 50 -- self-employed workers do not qualify for unemployment benefits and you will lose your right to benefits, if you start your own business.
  
  

Self-Employment Assistance

• The Self-Employment Assistance Program is an obscure program offered by the the Federal-State Unemployment Insurance Program to unemployed workers who wish to start their own business. The program offers workers weekly benefits, called a self-employment allowance, similar to the unemployment benefits offered to regular unemployed workers. However, under this program beneficiaries can work on building up their own business instead of searching for employment.
  
  

Voluntary Program

• The catch is the Self-Employment Assistance Program is a voluntary program for participating states in the The Federal-State Unemployment Insurance Program. As of 2011, the only states offering this program are Maine, Delaware, New York, New Jersey, Pennsylvania, Maryland and Oregon. Find the websites of these agencies at the United States Department of Labor Service Locator website (see Resources).
  
  

Eligibility

• To receive a self-employed allowance you must first qualify for regular unemployment benefits. That means you must be unemployed and meet the legal and financial requirements of your local unemployment insurance agency. Participating agencies profile unemployed workers when they file for unemployment based on their likelihood of finding employment before their benefits exhaust. Only those profiled as likely to exhaust regular benefits qualify for Self-Employment Assistance.