Unemployment benefits as seed money

Using unemployment payments to start a business could be a problem.

To be eligible to draw unemployment benefits, a laid-off employee must file a claim with the local office of the state department of employment, be able and available for work, be actively seeking suitable employment, and then document these efforts.

Starting your own business would, by definition, mean you aren't looking for work, which is contrary to what you told the government agency you were doing. If the agency found out, it's likely it would seek to recover those benefits, and perhaps take other legal steps.