How the New $300 Weekly Federal Unemployment Benefits Can Help Your Business
In late December 2020, Congress passed a new relief package, which included $300 per week of additional federal unemployment benefits. This is part of the Pandemic Unemployment Assistance (PUA) program, which helps provide unemployment benefits to freelancers, self-employed people and independent contractors. As of the first week of January 2021, 965,000 people made first-time filings for unemployment benefits. There is a massive need for help as the job market has taken a hit amid the lingering pandemic and economic crisis.
These extra federal unemployment benefits are in addition to any state-level unemployment benefits that people may qualify for after losing a job. They also are unique because freelancers, self-employed people and independent contractors are eligible to apply. Many people who were not covered by the traditional unemployment system have been able to get assistance because of these expanded PUA federal unemployment benefits.
Learn more about what the new $300 weekly federal unemployment benefits mean to you and how they can help.
Lost Your Job or Lost Business Income? These Benefits Can Help
If you have lost your job or suffered a downturn in business because of the pandemic, check with your state unemployment agency to see if you qualify for the additional $300 per week of federal benefits. The new benefits are available for new applicants through March 14, 2021, and continue through April 5 for people who are currently receiving benefits but have not reached their maximum number of weeks.
If you’re a freelancer, solopreneur, gig worker, self-employed person or independent contractor, you may qualify for these unemployment benefits. This is separate from and in addition to any Paycheck Protection Program (PPP) loans or other emergency low-interest SBA loans that your business might be eligible to receive.
Unemployment Benefits for the Self-Employment
In the spring of 2020, the federal government was trying to approve as much relief as possible and get as much money into people’s pockets as fast as they could. The first version of the PUA unemployment benefits didn’t require much documentation for people who were claiming benefits as unemployed freelancers, independent contractors or self-employed.
Now, the latest version of the PUA that passed in December 2020 is requiring people to provide more documentation to prove that they are legitimate self-employed workers. According to CNN, if you file for unemployment before January 31, 2021, you should be prepared to show paperwork to prove that you were self-employed, such as business receipts, business licenses, tax returns or a federal Employer Identification Number (EIN).
The exact rules and guidelines will vary by state, but be prepared to show some kind of documentation of your self-employment. This is another reason why forming an LLC and getting an EIN can be an important part of making your business legitimate and getting you connected to the financial system.
You Can Use Unemployment Benefits to Start a Business
Now could be an ideal opportunity to use your benefits to start or expand your business. Hardship and moments of crisis are sometimes the best time to try something new and build a new career for yourself. If you have been thinking about starting a business for several years, but haven’t known when or how to take the leap, you can use your unemployment benefits as “seed money” to get started with your new venture.
Keep in mind that if you start a new business while receiving unemployment benefits, and your business starts earning income, you will likely have to deduct that income amount from your unemployment benefits. However, this can be a good problem to have, because it means your business is already generating profit! But even if your business does not start creating income for you right away, your unemployment benefits can help bridge the gap between paychecks and help you pay the bills while you get your new business off the ground.
Several states, including Delaware, Mississippi, New Hampshire, New York and Oregon, offer a program called the Self-Employment Assistance Program (SEAP) that helps unemployed workers start their own businesses and become successfully self-employed. With SEAP, you get the same amount of money as your regular unemployment insurance benefits, but you don’t have to look for a job — instead, you can work full time at building your new business idea.
What to Do Next to Get Federal Unemployment Benefits
If you have lost your job or lost your self-employment income, start by filing for unemployment benefits with your state unemployment agency. If you qualify for the $300 weekly federal unemployment benefits, those extra benefits will be sent to you as part of your state program’s process. Some states are not able to process the federal benefits as quickly as others and some states are making the federal payments retroactive. So even if you qualify as of January 15 for federal benefits, and your state is not able to send the benefits until January 31, you will still receive your full allotted amount.
State unemployment systems have been overwhelmed by the huge demand for unemployment benefits, so don’t give up if you can’t get through on the first try. Keep calling, emailing or logging in to the system. The pandemic is a massive crisis that has upended daily life for everyone; you deserve support during these stressful times. The new $300 weekly federal unemployment benefits can help you recover lost business income or potentially start a new venture. Whatever you do with your unemployment money, good luck and we hope you can get to a more secure, comfortable place in life very soon!