New Opportunities for Business Ownership and Self-Sufficiency Act
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The bill would expand state Self-Employment Assistance programs by doubling the participation cap to 10% of unemployment beneficiaries and dropping the requirement that participants be likely to exhaust their unemployment benefits.
It would also let participants qualify through a state-approved business plan and market study, not just formal entrepreneurial training, while adding a weekly certification requirement to keep them on track toward self-employment.
What this bill would do
What it would do
The bill would amend the Internal Revenue Code's rules for state Self-Employment Assistance (SEA) programs, which let eligible unemployed workers receive an SEA allowance instead of regular unemployment benefits while they work full-time to start a business. It would raise the cap on program participants from 5% to 10% of a state's regular unemployment compensation recipients, and would eliminate the current requirement that a participant be identified as likely to exhaust their unemployment benefits before joining. It would also broaden how participants can satisfy the self-employment activity requirement, allowing them to qualify either through entrepreneurial training and counseling (as under current law) or by following a state-approved business plan and market feasibility study. Participants would have to certify their activities weekly. The changes would take effect two years after enactment, though states could update their laws sooner, and the Secretary of Labor would issue implementing regulations and guidance to state workforce agencies.
Key provisions
- 1Would eliminate the requirement that SEA program participants be identified as likely to exhaust regular unemployment compensation benefits
- 2Would allow participants to meet the activity requirement via entrepreneurial training or via a state-approved business plan and market feasibility study
- 3Would require participants to certify their self-employment activities at least weekly to a state-designated agency
- 4Would raise the cap on SEA program participation from 5% to 10% of individuals receiving regular unemployment compensation in a state
- 5Would direct the Secretary of Labor to issue regulations, subject to OMB approval, to administer the Act
- 6Would direct the Secretary of Labor to issue guidance to state workforce agencies, including a model list of qualifying activities and verification best practices
Who would be affected
Unemployed workers seeking to start businesses through state Self-Employment Assistance programs, state unemployment insurance agencies that administer them, and the Department of Labor, which would issue regulations and guidance. State workforce agencies would also need to update verification and certification processes for participants.
Why it matters
More unemployed workers could pursue self-employment as an alternative to traditional job searching, since eligibility would no longer depend on being deemed likely to exhaust benefits and more people could participate under the higher cap. States and the Labor Department would need to update program rules, verification practices, and guidance to implement the broader eligibility and new certification requirement.
What would change
Changes to existing law
Amends 26 U.S.C. § 3306(t)(3) (Sec. 2(a)-(c))
Strikes the requirement that a participant be likely to exhaust unemployment benefits and redefines qualifying self-employment activities and certification.
Amends 26 U.S.C. § 3306(t)(4) (Sec. 2(d))
Raises the cap on SEA program participants from 5% to 10% of regular unemployment compensation recipients.
Agencies directed to act
Effective dates
- The amendments modifying SEA program rules
Funding and costs
Congressional Budget Office estimate
CBO estimates that enacting H.R. 6431 would have an insignificant effect on the federal deficit, with all changes to direct spending, revenues, and the deficit falling between -$500,000 and $500,000 over the 2026–2036 period.
CBO estimates H.R. 6431 would have an insignificant effect on direct spending (mandatory outlays) over the 2026–2036 period, because expanding Self-Employment Assistance (SEA) programs is not expected to significantly change the number of weeks participants receive unemployment benefits. Revenues — drawn from payroll taxes that fund the Unemployment Trust Fund — are likewise expected to be insignificantly affected, as states historically adjust trust fund balances to offset changes in benefits paid. Any effect on the Department of Labor's operating costs would be subject to appropriations and is not estimated to be significant over 2026–2031. CBO identified no intergovernmental or private-sector mandates in the bill.
How implementation would work
States would continue administering their own SEA programs under the revised federal parameters, applying the higher 10% participation cap and the broadened activity options once the amendments take effect two years after enactment (or sooner if a state updates its law). Participants would certify weekly to a state-designated agency that they are working full-time toward self-employment. The Secretary of Labor would issue regulations, after notice-and-comment and OMB approval, and separate guidance to state workforce agencies containing a model list of qualifying activities and best practices for verifying compliance.
Legislative status & sources
Latest action
Received in the Senate and Read twice and referred to the Committee on Finance.
Official CRS summary
Show the CRS summaryHide the CRS summary
This bill increases the percentage of individuals who may participate in a Self-Employment Assistance (SEA) program, generally expands eligibility for such programs, and modifies certain SEA program requirements.
As background, an SEA program provides an individual with an SEA allowance, rather than regular unemployment compensation benefits, if such individual is (1) eligible for unemployment compensation benefits and identified as likely to exhaust such benefits, (2) participating in self-employment assistance activities which include entrepreneurial training, business counseling, and technical assistance and are approved by the state, and (3) working full-time on establishing a business and becoming self-employed. Under current law, the number of individuals participating in an SEA program may not exceed 5% of the individuals receiving regular unemployment compensation benefits in the state.
The bill
- increases the percentage of individuals who may participate in a state SEA program to 10%,
- eliminates the requirement that an individual be determined likely to exhaust unemployment compensation benefits (generally expanding individual eligibility for an SEA program), and
- requires individuals to certify (at least weekly) that they are working full-time on establishing a business and becoming self-employed.
Finally, the bill allows individuals to meet the requirement to participate in state-approved self-employment assistance activities if such activities either (1) include entrepreneurial training, business counseling, and technical assistance (permitted under current law); or (2) are performed pursuant to a state-approved business plan and market feasibility study.
Legislative subjects
Employment taxes; Self-employed; State and local government operations; Taxation; Unemployment
Committee report
H. Rept. 119-509