These U.S. States Will ‘Pay’ You To Become Self-Employed

In a handful of U.S. states, there’s great news is you decide to become self-employed because instead of receiving unemployment benefits, there’s a program that will pay you...

For any entrepreneur, cash is king. It always has been. It always will be.

But without a consistent flow of greenbacks into your business (especially for early-stage entrepreneurs), you’ll soon be pounding the pavement in search of a paycheck, instead of trying to live the dream of being your own boss.

That challenge can be particularly daunting if you’re just starting out.

Many times, launching a new business comes about as a result of being laid off from your job. Take Mark Cuban for example. In the early 80’s he came across an opportunity he didn’t want to pass up and asked a co-worker to cover for him at the office.

“The next day, Cuban was fired,” according to Fast Company. “Instead of wallowing in misery, Cuban used the experience as a determining factor to never work for anyone else. ‘I was thrilled to death,’ he says. ‘My worst fear was that I would have to stay,’ Cuban recalled.”

Programs that pay you to create your dream ‘job’

In years past, many would gladly trade the relative safety and security of a regular paycheck, letting go of a larger degree of freedom. When that’s no longer the case, and when the safety and security of a regular job are no more, many make the leap to self-employment.

In a handful of U.S. states, there’s great news is you decide to become self-employed because instead of receiving unemployment benefits, there’s a program that will pay you a self-employment allowance while you establish a business and transition to self-employment.

Self-Employment Assistance (SEA) Programs are currently available in Delaware, Mississippi, New Hampshire, New York, Oregon, Rhode Island, and Vermont. To collect SEA benefits, you must first be eligible to receive unemployment benefits in participating states. In addition, you must have a viable business idea and be willing to work full-time to develop it.

California and Louisiana have passed laws authorizing SEA programs, but have not yet established an active program. Washington state has created an SEA program, but it is not affiliated on the federal level in any way.

The primary reason states are enacting SEA programs is because they view them as long-term job generators. If you can build a successful business, then the thinking goes that you can eventually hire others, moving more people off the ranks of the unemployed.

Unemployment benefits vs. Self-employment assistance benefits

Under normal circumstances when you draw unemployment benefits, you are required to conduct a job search and document your results to the state to keep your unemployment benefits claim open and valid. But when you participate in a self-employment assistance program, you are allowed to direct your energies and efforts to launching your own business instead.

In addition to paying benefits, SEA programs assign counselors and provide startup entrepreneurs with training and access to experienced mentors to expedite the process.

These programs are supported by the Small Business Administration which has considerable resources to assist in the business planning phase. As part of the Department of Labor, the SBA continues to advocate for the enhancement of current self-employment assistance programs and the creation of new programs in other states.

The SBA can also bring considerable resources to the table to help in the transition from unemployed to self-employed. Through existing partnerships with Small Business Development Centers, the Service Corps of Retired Executives (SCORE), and Women’s Business Centers, among others, the SBA can accelerate the learning curve and minimize costly start-up mistakes for participants.

So, if you’re ready to hire yourself after a lay-off, programs like SEA offer a viable alternative to help you get started.

This article has been edited and condensed.

Paul Saitowitz spent 15 years a journalist before founding a research company in the finance industry. He has contributed to the LA Times, OC Register, OC Business Journal, and more. Connect with @saitowitzpaul on Twitter.

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