Part of the historic stimulus package passed at the end of 2020 was more funding for Economic Injury and Disaster Loans (EIDL) advances and Paycheck Protection Program (PPP) loans, which is good news for small business owners. But can these programs be combined with unemployment as a self-employed person?

Here’s what you need to know about getting unemployment for yourself as a business owner. This post is based on our current understanding of the legislation and guidance from the Small Business Administration (SBA), which administers these programs. As more information becomes available things may change and we will update this post. *This is not legal advice and you should contact your state or federal government if you need further clarification on your specific situation.

Can Small Business Owners Get Unemployment Benefits?

Right now, people qualify for unemployment benefits who normally can't. Usually, self-employed workers, gig workers and others who are not employees cannot get unemployment, but thanks to stimulus funding these people qualify for Pandemic Unemployment Assistance (PUA), which is an expansion of unemployment benefits which includes independent contractors. Business owners who have lost their income during the pandemic can get PUA benefits through their state’s unemployment departments. The stimulus bill passed in late December funds the PUA  program until March of 2021, but it could be extended when President-Elect Joe Biden takes office.

There is also a provision in the stimulus package that people receiving unemployment, including sole proprietors, will also get an extra $300 a week from the federal government for the next 11 weeks. Your unemployment payments before the federal boost could range from $50 to $450, depending on your income.

Can You Get an EIDL Advance and PUA Benefits?

The SBA has not released specific guidance for this round of EIDL funding on whether business owners can receive both EIDL funding and PUA. However, based on our understanding of the new legislation, business owners can receive both EIDL funding and the PUA as long as they don't use their EIDL advance to pay themselves and instead use it to cover other business costs.  

If business owners receive unemployment benefits through the PUA and also pay themselves with their EIDL advance, it would be considered “double-dipping” in stimulus funding by the IRS and could be prosecuted as unemployment fraud. You could use your EIDL advance or EIDL loan to cover other business expenses, however, and still be eligible for unemployment benefits through the PUA.

Can You Get a PPP Loan and PUA Benefits?

Unlike the EIDL, our current understanding is that PPP funding and PUA unemployment benefits are incompatible; because the PPP is designed to cover payroll expenses for businesses, you can’t collect funds from both programs. You can apply for both, but if you are approved for the PPP you will not be able to collect unemployment for yourself from the PUA. Once you have used your PPP funding, you can resume collecting unemployment benefits from the PUA.

As we learn more from the SBA, we will continue to share the latest info on stimulus funding. To keep up to date, be sure to download our app. We even have a free tracker you can use to track your EIDL application and stimulus check.