7 CFR § 273.9(b)(1)(ii) and (c)(9) & 7 CFR § 273.10(a)(2)(i)


Subtract the allowable self-employment expenses from the gross self-employment income to determine the net self-employment income. Determine the EDG’s monthly net income by: 

  • dividing the net self-employment income by 12 months for annualized income, or
  • dividing the net self-employment by the number of months the income is intended to cover for averaged income. 


Budget the net self-employment income following Calculating Net Income and Benefit Levels.


New Business

7 CFR § 273.11(a)(1)(i)


A new business is one that has been operating less than 12 months.  


Average the income and expenses the business received and projects receiving in the coming year, over the period of time the business has been operating. 

Example:  The EDG started a daycare in their home 4 months ago. Their gross self-employment income for the 4 months is $3,200. They had $200.00 in allowable expenses in the 4 months. They expect the income and expenses to be the same in the coming year.  Determine the EDG’s eligibility based on their business records to-date. $3,200/4=$800, $200/4=$50, $800-$50=$750 per month.  Budget $750.


Budget zero if the business has not yet received income. 


Substantial Change

7 CFR § 273.11(a)(1)(i)


Budget income based on anticipated amounts if the EDG reports the averaged or annualized amount does not accurately reflect the EDG’s actual monthly amounts because of a substantial increase or decrease in the business. 


Use income and expense amounts for the months after the substantial change and, if needed, add additional amounts the EDG anticipates, and divide by the number of months used.  Do not use prior earnings.


Example:  An individual farms hay and last year had an annual gross self-employment income of $80,000. After a hurricane, the majority of the crop was lost this year. The farmer anticipates the remaining crop will only bring in $15,000. The farmer did not have crop insurance. Determine eligibility using the anticipated income of $15,000 instead of the previous year’s income.