Unemployment benefits for the self-employed | Family finances

But thanks to COVID-19, small business owners, workers in the odd-job economy, and independent contractors who have lost income can access a range of benefits, including unemployment insurance.

So if you’re your own boss but your finances have taken a hit this year, it’s important to understand what programs you can access and what the application process looks like. Here is what you need to know about unemployment benefits for small business owners.

The Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, allows states to extend unemployment insurance to independent contractors and others who are generally not eligible for the program.

You may be eligible if you have lost your job and are not eligible for regular unemployment assistance.

This expanded unemployment benefit is based on disaster unemployment assistance, says Michele Evermore, senior research and policy analyst for the National Employment Law Project. So while a self-employed person technically cannot “get laid off,” “in the event of a disaster, the self-employed can in fact become involuntarily unemployed,” Evermore says.

How much is unemployment insurance worth for the self-employed? This Pandemic Unemployment Assistance, or PUA, provides up to 39 weeks of benefits to eligible people who are unable to work due to COVID-19. In addition, the additional weekly payment of $ 600, which is part of the federal pandemic unemployment compensation program, is also available for self-employed people on unemployment insurance.

The exact amount of your benefits will vary depending on the state and your reported income.

Keep in mind that you may still be eligible for the additional weekly allowance of $ 600 even if you are on minimum unemployment insurance. So it’s worth staying in the program even if your base allowance is low. “If you get even a dollar in unemployment benefits, you still get $ 600,” said Ed Gjertsen II, former national president of the Financial Planning Association.

How can I apply for unemployment insurance? Your state will administer the program, so it is important to check with your state’s benefits office for specific procedures and the unemployment application portal.

The information you will need to apply for unemployment insurance varies by state, but may include:

People who encounter a backlog and delays should be paid retroactively.

If you start to reopen your business or take a job while you are unemployed, be sure to report your income to the appropriate office. It will be used to calculate the amount of your benefit. “You don’t want to run into a state’s unemployment insurance program,” Gjertsen said.

When her independent clients come to her for advice, Nadine Burns, a certified financial planner based in Ann Arbor, Mich., Also likes to remind them of the Paycheck Protection Program, or PPP loans. “The first thing I tell them about is a P3 loan,” she says.

PPP loans received a lot of attention when they were first launched, and funds were used up within a matter of weeks. But after a raise, there is still money available.

Under the PPP loan program, business owners can claim 2.5 times their average monthly salary costs up to $ 100,000 per year. Burns calculates that the maximum one of his independent clients can get is $ 20,833, which can make up for several months of lost income.

The loans offer a discount if a defined percentage is used for the payroll. Otherwise, the loans are repaid at an interest rate of 1% over five years.

Keep in mind that various lenders and agencies are helping struggling individuals and businesses during the pandemic. There may be bills you don’t have to pay if you can work with your landlord, utility companies, credit card issuers and other creditors. Some relief programs are mandated under federal law while others may be designed by your state or individual companies.

Burns also recommends looking for other loans, such as those from your local bank or a peer-to-peer service like LendingClub if you’re looking to make ends meet.

For its independent customers, Burns recommends considering the use of multiple relief programs. For example, a business owner could purchase Unemployment Insurance until July 31, when the additional $ 600 under the CARES Act expires, and then in August, qualify for the PPP loan to replace the salary for the coming weeks.

One pitfall to avoid, says Gjertsen, is to count on any new stimulus package before it is enacted. “Until something becomes law, which is what they’re currently fighting in Congress, please don’t anticipate any benefits that flow from it,” he said.

In the meantime, use the resources of your local chamber of commerce, small business association, or other local groups to seek advice and help.