Editor’s note: This article was first published in February 2011. The requirements for taking unemployment benefit as a lump sum (capitalización del paro) reflect Spanish rules as of February 2011; the scheme has been amended several times since, so check current SEPE rules.
As you’ve probably heard, it’s possible to collect your unemployment benefit (el paro) all at once. This is known as capitalizing the benefit: you receive the full amount you’re entitled to, provided you use it to start a business. Below are the requirements for capitalizing the benefit.
What the lump-sum payment is
The lump-sum payment (pago único) is an employment promotion measure designed to make it easier to launch self-employment projects, whether that means starting work as a self-employed person or joining a cooperative or worker-owned company (sociedad laboral), either one already operating or a newly created company, as a worker-member.
Requirements for the lump-sum payment
- You must be receiving a contributory unemployment benefit following the permanent termination of an employment relationship.
- You must have at least three months of benefit still to be paid.
- You must not have been granted a lump-sum payment of unemployment benefit, in any of its forms, in the previous four years.
- If you are starting work in a cooperative or worker-owned company, it must be as a worker-member and on a stable, not temporary, basis.
- You must not have started the activity before the date on which you apply for the lump-sum payment.
- If you challenged the termination of the employment relationship that gave rise to the unemployment benefit, you must apply for the lump-sum payment after the corresponding proceedings have been resolved.
In theory, receiving the lump-sum payment is a good way to finance your business, but it’s also a double-edged sword, because it comes with conditions attached. Specifically, four pages of small print that you should go through with a specialist adviser (gestor), who can explain the consequences of breaching any of those clauses.
Taking the lump-sum payment can be an excellent way to end up in debt to the state if your plans don’t work out as expected and your business isn’t as profitable as you hoped.
Once again, we stress the need to study your business idea properly and draw up a good business plan, for your own sake, because desperation and/or excitement can sometimes make you see profits where you’ll only find losses.
For more information about the lump-sum payment or capitalizing the benefit, contact your nearest employment office.
Further reading
- Public grants for the self-employed
- Ways to finance your business
- Where to find funding for an online business idea
- How to start a business with no money
- Profitable business ideas
Featured image: verkeorg, CC BY-SA 2.0, via Flickr.
