How to Get Small Business Loans for Ex-felons

It may surprise some persons to know that ex-offenders can apply for and get small business loans and grants. This is a good thing since many former prisoners will have a difficult time getting a job above minimum wage. These loans for ex-felons make it possible for them to start their own business. Some of these loans for ex-felons come from the federal government, while others are available through organizations interested in helping former convicts turn their lives around.

Before seeking small business loans for ex-felons, some important steps should come first. Before trying to start a business, it is necessary to decide on the following:

  • The type of business
  • What are the start-up costs?
  • Is there a market for the goods or services it will provide
  • How will you get customers/clients?

When looking for a small business loan, a business plan and references will show that you are serious about what you want to do. For more information on applying for small business loans or how to start a business, the following websites are worth visiting:

  • The U.S. Small Business Administration (
  • Inc. (
  • (

Reading professional business journals such as Inc. online will provide a wealth of information not only on starting a business but also on how to make it successful. Asking for guidance and support is important to the successful operation of any business venture. Joining networking groups such as the local chamber of commerce organization can also be helpful to new businesses.

One of the best places to learn about loans and grants that are available for small businesses is on the Loans and Grants link on the Small Business Administration ( website.

Grants for Ex-Felons

One of the most popular grants for ex-felons is the Federal Pell Grant (, which an ex-felon can use for education. This is not a loan, so persons who get one will not need to repay the money. Some types of crimes disqualify an ex-felon from getting this loan such as sexual offenses and some drug convictions.

ALSO SEE: How to Get Housing And Jobs For Felons In Utah

Small Business Loans for Ex-felons

Tips for Finding Lenders and Grants for Those with Bad Credit Risk

The fact is that many lenders will see ex-felons as a bad credit risk and will more often than not refuse to give them loans. Other ways to find the funding to start your own business include:

  • Borrowing from family and friends: For many ex-offenders, help from friends and family is the easiest way to get a freelance or small business started. Just make sure to put in writing the terms of the loan to protect all parties involved.
  • Going into a partnership: Going into a partnership with someone you trust is also a good way to get the necessary funding and support needed to start a small business. Make sure to get legal advice and guidance to protect yourself and your prospective partner or partners.
  • Angel investors ( These private individuals who help people with good business ideas start a venture are great sources of funding and support to run a successful business. Angel investors can be found in many places such as your church, a charity, or even through other networking organizations.
  • Microlenders: Some of these agencies will lend money to people with bad credit to help them start a business and may be willing to assist an ex-felon with a small business loan. Some microlenders to research include Accion (, Zopa (, Prosper (, and for females only, there is Count-Me-In (

Unless the lender clearly states that someone with a former conviction cannot apply, you should be able to seek a loan. You may be surprised to find that being a former felon does not automatically stop you from benefitting from some of the available loans and grants for small businesses. With the right business model, many former inmates can use loans to become financially stable. This is one sure way to avoid getting back into a life of crime and ending up back in prison.

Many lenders will see an ex-felon as a bad risk, however, this is no reason to give up on your dream of starting a business. If you are interested you should learn as much as you can about starting a small business, operating it, and how to find funding regardless of your credit history. Some great sources of information to get you started are:

  • The Chron business page (
  • StartUpNation (
  • Bloomberg BusinessWeek (

Determination and continuous learning are two factors that will help an ex-felon or anyone start and run a successful small business. The Internet is a great source of information for these ventures. This free information will be very important to the ex-felon who is serious about starting over.

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