As my day job winds down (t-minus 9 days!), I have been investigating my post work options. Unemployment benefits have never really been an option for me, but out of curiosity I checked out how the system works. As I was reading the online material on NY State unemployment, I came across an interesting program called SEAP or Self Employment Assistance Program. The basic concept, as I gathered, was that instead of taking unemployment while you look for a job, you can receive the same benefits while starting your own business. Now this was something I would potentially try out… until I read the fine print. Let me breakdown the main reasons why I took one look at this joint State and Federal program and decided it was not a good fit for me (and probably many aspiring entrepreneurs)*.
The Eligibility Criteria
Some of the criteria for the program’s eligibility is down right silly and no matter how hard I try – I cannot seem to figure out the intended incentives and restrictions of the rules. One of the eligibility rules states that if you have already started your business prior to your program approval, you are no longer eligible. What does “start” mean? “Start” includes things like incorporating, putting up a website, talking to a client, or creating mock ups. Any one of these would disqualify you from the program – even if you have never made any money on the business. How does that make sense? Don’t they want people with experience and a head start on their business? Shouldn’t that be seen as a positive. I was already out at this point since I have already started my business, but I kept looking through the rules for fun. Quickly, here are some more eligibility rules: you have to be unlikely to be employed in the near future (“likely to exhaust unemployment benefits”), you cannot have owned and operated a similar business to the one you are proposing in the past, and you cannot be taking any classes (even if they are business courses that might help you run the business more efficiently).
For programs like this one there obviously needs to be a certain amount of hoops to jump through in order to qualify for the program. This makes it harder to take advantage of it and does some vetting based on persistance. However, when the tasks you have to do to stay in the program are significantly harder and more cumbersome than those of simply being on regular unemployment benefits, it hardly creates incentives to use the program.
First, there is the training. The 20 classroom hours and 2 in person meetings with a state counselor are not necessarily over the top in itself, but when compared to regular unemployment where you have to do nothing – it seems fairly extreme. There is also the mandatory weekly in-person check-ins to prove you are working on the business. I understand they want to make people are not cheating the system, but this takes your eye off the business and incentivizes you to take actions for the meetings not for the business. Additionally, it is hard enough to make the time and mental energy you need to start business without the stressful eye of weekly checkins on your performance. And again, there are no mandatory in-person meetings as a requirement for regular unemployment, which makes them even more difficult to swallow. Regular unemployment only requires you to fill out online paperwork as proof you are actively looking for a job.
And finally there is the no extension clause, which states that by entering this program you are no longer eligible for unemployment benefit extension (from 26 to 99 weeks) that regular unemployment benefits provide. Again, What? To be eligible for the SEAP program you must first prove that you are likely to go all 99 weeks without getting a job, but some how you are expected to start a profitable business in 26 weeks. That just does not seem to add up for me.
Things are not all bad though. The program does provide a couple of major benefits. One, you get a stipend to start a business. That is a pretty good deal in itself and should not be overlooked. The $405 per week you get from the program can be a life saver when you have no income. Two, you do not have to immediately come off the stipend if you start making money in the business like you would if you got a job on regular unemployment. It is unclear to me what the limit is for this clause, but the general concept is that you get to keep your stipend plus the money you start to make through the business. This extra bit of on hand cash may allow you to reinvest in the business more, which hopefully gives you a better chance at success.
But for me, when I take everything into account, I simply have to pass on the program. It was really fun to check it out though and I hope they keep coming up with programs like these (but with better rules)! On to the next post work option.