Turning your unemployment benefit into a real opportunity to start your own business is one of those ideas that, once you hear about it, makes you think: “Why doesn’t everyone do this?”. In Spain, the SEPE allows you to cash out your unemployment benefit in one lump sum to start a business, a measure aimed at promoting self-employment and giving an initial boost to those who have an idea, motivation, and something valuable to offer.

However, there are nuances, conditions, requirements, advantages, and also certain risks worth knowing. In this article, we explain everything you need to know, step by step, so you can decide whether this option is right for you and how to apply for it without stumbling over bureaucracy.

What Does “Cash Out Your Unemployment Benefit” Mean?

When we talk about cashing out your unemployment benefit, we are referring to the possibility of receiving part or all of the remaining payments of your unemployment benefit in a single lump sum, to allocate it to the initial investment required to start a business or self-employment project.

The concept of capitalization or “single payment”

The official term is unemployment benefit capitalization or single payment. It is a legal mechanism offered by the State Public Employment Service (SEPE) to unemployed individuals who want to start a business.

Instead of receiving your benefit month by month, you can request a one-time payment of a percentage (normally up to 60% or 100%, depending on your situation) to cover start-up expenses, self-employment registration costs, or investment in a worker-owned company or cooperative.

When is this option better than receiving monthly payments?

This option is especially useful when you have a solid business idea and need immediate liquidity to get started. For example, to pay a security deposit for a premises, equipment, training, self-employment fees, or initial inventory.

However, if your project is not yet clear or you are unsure about becoming an entrepreneur in the short term, it may be more convenient to continue receiving the benefit monthly. The decision depends on your personal situation and the level of risk you’re willing to take.

Requirements to Apply for the Lump-Sum Unemployment Payment

The SEPE establishes a series of strict requirements you must meet in order to apply.

Who can apply

Eligible individuals must:

• Be legally unemployed.
• Be eligible for a contributory unemployment benefit (not a subsidy).
• Have at least three monthly payments pending.
• Not have received the lump-sum payment in the last four years.

Specific conditions

• You must not have started the activity before applying.
• You must not already be registered as self-employed or have started the business.
• The application must be submitted before starting the activity; if you have already begun, the SEPE will reject it.
• You cannot contest your dismissal or be waiting for a legal resolution.

Required documentation and key deadlines

You will need to submit:

• ID card or NIE.
• Official single-payment application (SEPE form).
• Business plan or explanatory report.
• Proof of registration or next steps (e.g., self-employment registration request, statutes, cooperative registration…).

The resolution usually takes around four weeks, though it may vary depending on the workload of each office.

What Can the Capitalized Benefit Be Used for?

The goal of the lump-sum benefit is not to “give you money just because,” but to finance the start of your professional activity. This is why SEPE sets clear rules.

Starting activity as a self-employed worker

If you are registering as self-employed, you may use the money for:

• Purchasing materials, equipment, or machinery.
• The rental or renovation of a business premises.
• Registration and legal fees.
• Professional training related to the business.

You may also allocate up to an additional 15% of the amount to pay your social security self-employment fees.

Joining a cooperative or worker-owned company

Another option is to invest the lump-sum payment in a cooperative or worker-owned company, whether existing or newly created, as long as you join as a stable worker-member.

Allowed expenses (and those that are not)

You may invest in almost any expense directly related to the start of activity, but you cannot use the capitalized benefit for:

• Personal debt repayment.
• Purchasing vehicles not used professionally.
• Non-justifiable or unrelated expenses.

Remember: you must keep all invoices and provide them if SEPE requests them.

Advantages and Risks of Using Your Unemployment Benefit to Start a Business

Benefits

• Immediate liquidity: start without needing loans or debt.
• Public financing with no interest.
• Psychological boost: using your benefit to build something of your own can be motivating.
• Possibility of combining part of the benefit (if you request only a partial payment) while launching the business.

Risks and obligations

• You must keep the business active for at least five years.
• If you stop earlier or fail to justify expenses, you may have to return part or all of the money.
• There’s always a risk of business failure, as with any entrepreneurial project.

So, if you choose this path, do it with planning, strategy, and professional advice.

Practical Steps to Apply for the “Single Payment” and Start Your Business

Step 1: Check your entitlement and remaining benefit

First, check how many months of unemployment benefit you have left. You can do this on the SEPE website or by booking an in-person appointment.

Step 2: Prepare the business plan or explanatory report

This document is key. It must detail your idea, expected investment, expenses, income forecast, and viability. It doesn’t need to be lengthy, but it must be convincing.

Step 3: Submit the application to SEPE

You can apply online or in person. Attach the required documents and indicate whether you want the full or partial payment.

Step 4: Once approved, start the activity

You have a maximum of one month from approval to start your business and justify expenses. Do not leave it to the last minute.

Frequently Asked Questions

Can I cash out my benefit and later combine it with a salaried job?

No, this option is only for entrepreneurship. If you later take a job, you must inform SEPE.

What if I change business or stop activity early?

You may have to refund a proportional amount of the aid, unless there is a justified case of force majeure.

How long do I have to use the capitalized funds?

Generally, you have one month from approval.

What if I registered as self-employed before applying?

In that case, you are not eligible. You must apply before starting the activity.

Tips to Maximize Your Chances of Success with This Option

Prepare a solid business plan

Take your time, ask for feedback, and review the numbers. The more solid it is, the easier it will be to justify the investment and achieve real success.

Select expenses wisely and keep receipts

Keep every receipt, invoice, or document, even the small ones. It may seem tedious, but it will save you trouble with SEPE.

Seek professional advice

Working with a tax or employment adviser can be the difference between doing everything correctly or making mistakes that cost money.

Maintain activity during the first years

Demonstrating continuity and compliance (social security, taxes, invoicing) is key to ensuring you don’t have to return anything.

And by the way, if you need help structuring your project, exploring opportunities, or even purchasing a business that is already running, you can do it with the help of Business in Spain, where you will be supported throughout the process.

Conclusion: Turning an unemployment benefit into a self-employment opportunity

Ultimately, cashing out your unemployment benefit to start a business is a valuable tool for those who want to reinvent themselves. It is not a casual decision, of course. But with a good plan, advice, and a bit of courage, it can become the doorway to a new professional chapter.

Sometimes, losing a job is just the first step toward building something bigger and your own. And who knows, maybe a few years from now, you’ll look back and see this moment as the beginning of your true professional independence.