You may be launching into a business venture out of passion — or a need to find equitable employment in a market where employers don’t favor your personal history. Unfortunately, this is a common scenario for people with criminal histories, so you’re not alone.

According to the Prison Policy Initiative, 62 percent to 65 percent of former convicts remain unemployed each year after reentry into the job market. Unemployment is persistent for this group even four years after ending their sentence.

Because of this reality, many former convicts turn to entrepreneurship as the answer. Some 3.8 percent of small business owners have a criminal record, according to the RAND Corporation. And if small business ownership weren’t hard enough, you may also face funding challenges due to a low credit score from your time in incarceration.

In some cases, you won’t be eligible for the same government funding that other business owners get. For example, the SBA barred those with a criminal history from the Paycheck Protection Program when it first came out during the COVID-19 pandemic. According to the RAND Corporation, the policy affected over 200,000 small businesses. The government later walked back this policy, but it likely affected whether businesses owned by former convicts got funding.

Despite challenges, getting funding for your small business through grants or bad credit business loans is possible. Let’s dive into your small business financing options.


Key takeaways

  • Former convicts can apply for general small business grants for funding
  • Entrepreneur courses aimed at former convicts offer a wealth of knowledge about starting a business
  • You may be eligible for an Education Pell Grant
  • Try local when looking for startup resources

Grants for entrepreneurs with criminal records

Many grants don’t exclude former convicts from applying. Here’s a list of small business grants that may be open to entrepreneurs with a record:


This government-run search engine helps small businesses find grants and other types of funding. Its directory houses over 1,800 grants — most aimed at providing funds for a specific use. Grants come from government departments, such as the Department of Agriculture.

You won’t find grants specifically for business owners with a criminal record, but many don’t exclude those with a criminal history.

    • Use the search engine’s filters to narrow down by your industry and type of business.
    • See if your business is eligible for any grants.
    • To apply for a grant, you’ll need to register an account with
    • Contact the agency department offering the grant to ask that your account be affiliated with the agency.

2. SBA 8(a) program

This program, run by the Small Business Administration, could make your business eligible to bid for government work contracts. Through the SBA 8(a) program, the government aims to use disadvantaged businesses for at least 5 percent of its contract work. It also provides mentorship and technical support, such as for complying with regulations.

The program lasts nine years, much longer than most entrepreneur programs. Getting this long-term support ensures sustainability for your business.

The SBA does require business owners to show “good character” to qualify. So approval may be subject to the type of criminal history and other factors.

  • To apply for this program, you’ll need to:

3. Fresh Start Business Grant

This private grant offered by Incfile offers $2,500 for aspiring business owners to use for startup costs. You must be at least 21 years old, and you’ll need to submit a business plan to show your projected growth.

Along with the grant, you’ll get access to Incfile Gold, which offers tax consultations and services to incorporate your business.

Incfile also offers a $2,500 grant for young entrepreneurs in high school, trade school or a university to apply toward education expenses.

    • Apply directly on the website.
    • Upload a two-minute video about how entrepreneurship will influence your life.
    • Upload your business plan.

4. FedEx Small Business Grant

Started in 2012, the FedEx Small Business Grant awards grants to 10 winners each year. You must be a for-profit business that needs shipping services to be eligible.

Thousands of small businesses from all industries apply, from healthcare to snowboarding. So you’ll need a unique product or service to stand out to the judges. In 2023, the grant application deadline was in February, and winners were announced in May.

    • Apply on FedEx’s grant contest page.
    • Open an account with FedEx. A business account number is required.
    • Check the timeline to see when winners will be announced.

5. Small Business Growth Fund

The Small Business Growth Fund awards $5,000 to $25,000 to eligible small businesses. Grant organizers are looking for small businesses that fit these qualifications:

  • For-profit
  • Based in the US or Puerto Rico
  • Has less than $1 million in annual revenue
  • Show how the grant will help them grow significantly

Hello Alice offers the grant in partnership with the Global Entrepreneurship Network (GEN), and it’s funded by Etsy and Progressive. Hello Alice is a free service that provides education, financing and a support network of like-minded entrepreneurs that help each other on their journey to success.

    • Sign up for a free Hello Alice account.
    • Complete the application online.
    • Check back to see when winners are announced.

6. National Association for Self-Employed Growth Grants

The National Association for Self-Employed (NASE) offers Growth Grants of up to $4,000 for small businesses. It focuses on businesses with the potential to grow if given the capital to invest in new equipment, employees or other opportunities. Unlike most grants, NASE awards a new winner each month.

  • Register online to become a NASE member. You must keep your membership for the required amount of time:
    • Annual members can apply immediately.
    • All other members can apply after three months.

    Follow the instructions to apply online.

7. Comcast RISE Investment Fund

The Comcast RISE Investment Fund is designed to promote small business growth while focusing on diversity, equity and inclusion. The fund was created originally to support businesses recovering from the COVID-19 pandemic.

The fund is eligible for businesses in Baltimore, Detroit, Memphis, Philadelphia and Portland. A total of 100 winners will be awarded grants in each city.

This year, the grant will award funds as well as:

  • Consulting services
  • Educational resources
  • Creative production, media and technology services
    • Create an account with Comcast RISE.
    • Submit an eligibility criteria form. This will notify you whether your business is eligible for the grant.
    • Submit an application.

8. State Trade Expansion Program (STEP)

The State Trade Expansion Program (STEP) is offered through the Small Business Administration to help businesses expand exports to international markets. The grant can help with costs related to expanding your business, such as upgrading e-commerce on your website, creating international marketing campaigns or going to trade shows.

You’ll need to keep detailed records of how you use the STEP funds and meet reporting requirements per STEP’s terms and conditions. For example, you’ll need to submit audited financial statements, quarterly reports and performance reports.

  • Open an account with and apply for the STEP grant online. The grant is offered by your state government.

Additional resources for felons

Opportunities for felons to jumpstart or expand a business venture are out there. If you can’t find grant money for released prisoners, here are some other ways to accomplish your funding and entrepreneurial goals:

Small business loans for felons

Lenders may not specifically bar felons or those with a criminal history from applying for a business loan. But lenders assess a business owner’s character and may do so using personal information. If the lender sees delinquent financial accounts or certain convictions like embezzlement, they could deny the application. You may find loan or financing options from:

Where to get business loans for felons Description Lenders
SBA-approved lenders Business owners with a past criminal history may be eligible for an SBA loan. You’ll have to provide details about convictions on Form 912. The SBA will not approve those on probation, parole or currently incarcerated.
Community Development Financial Institutions (CDFIs) CDFIs focus on supporting the community and serving disadvantaged businesses.
Online lenders Online lenders tend to have lenient eligibility requirements and may not ask about personal history. Most lenders require at least six months in business or an annual revenue of $100,000.
Peer-to-peer lenders and crowdfunding platforms Crowdfunding and peer-to-peer lending raise money through small investments or loans from people interested in investing in your business.
  • Prosper
  • Kickstarter
  • Kiva
  • Indiegogo

Educational Pell Grants

The good news is that people with a criminal history can get a Federal Pell Grant. You’re eligible even if you’re currently incarcerated in a local facility, are on probation or parole or are living in a halfway house. You can use Pell Grants for undergraduate college education or accredited trade schools to receive federal funding. Talk to the school’s financial aid office to see if they accept Pell Grants.

A few exceptions that will make you ineligible:

  • Currently in a federal or state facility
  • Convicted of a forcible or nonforcible sexual offense and required to complete an involuntary civil commitment

Second Chance Pell Grant

The federal government founded the initial Second Chance Pell Grant in 2015 to help those incarcerated get funding for eligible prison education programs.

The Second Chance program is designed to inform those incarcerated about their educational opportunities and help them apply for federal funding. It also helps them continue the program if they’re transferred to a new facility or released. Plus, the program offers transitional services as individuals re-enter the workforce.

But Congress recently reinstated eligibility for the Educational Pell Grant to include some incarcerated individuals under the Free Application for Federal Student Aid (FAFSA) Simplification Act in 2020.

A revised Second Chance Pell Grant program will now operate under the Experimental Sites Initiative (ESI). Current Second Chance programs can continue serving students for three award years as they work toward meeting new regulations.

Entrepreneurship programs for felons

Several nonprofit organizations help former convicts re-enter the workforce and start their own businesses through programs like:

Program Length Details
Defy Ventures 14 weeks for Entrepreneur Bootcamp
  • CEO of Your New Life gives former convicts skills and habits to prepare them for employment
  • Entrepreneur Bootcamp helps former convicts with stable housing achieve the next step in their journey
  • Business Accelerator helps entrepreneurs learn how to launch and grow a startup business
Inmates to Entrepreneurs Self-paced or 8-week courses
  • The 8-week course covers starting a business with less than $1,000, marketing and sales
  • UServe provides an in-depth study of starting a business, financing, hiring and more
Project REMADE 12 weeks
  • Bi-weekly classes
  • Mentor teams help develop a business plan
  • At the end, you present your business plan to a panel of executives at Stanford Law School
The Last Mile Not stated
  • Offers web development and audio and video production training in prison facilities
  • Preps former convicts for reentry into employment

Free or low-cost resources for felons

One of the best ways to get support as a new business owner is to connect with local resources and business owners going through the same journey.

  • Small Business Development Centers (SBDC). Your local SBDC provides training, mentorship and funding opportunities for small businesses.
  • SCORE. SCORE is a small business mentoring and resource program offered through the Small Business Administration. It offers free, one-on-one mentoring from a local business expert near you. It also offers training events, webinars and a Startup Roadmap course to help you get your business idea off the ground.
  • Local grant or entrepreneur programs. Search for local grants, nonprofit organizations and programs designed to help small business owners succeed. State websites may provide a list of grants dedicated to specific purposes.

Frequently asked questions

  • Yes, felons and those with a criminal record can get credit cards. But an extended incarceration could lower your personal credit score if you haven’t used different forms of credit in a while. Your credit score is affected by factors like your recent payment history and amount of credit used.
  • The SBA doesn’t approve loans for those currently incarcerated for a crime or those on parole or probation. Any business engaged in illegal or speculative activities are ineligible, as well as those in specific industries. Ineligible industries include gambling, investment, lending, multilevel marketing, dealers of rare coins, nonprofit or religious organizations or government entities.
  • Yes, a felon can start a business organized as a limited liability company (LLC). To fund the business, you may be able to get an LLC loan, though you’ll need to make sure that you meet the lender’s minimum qualifications, such as time in business.