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How Can a Felon Start a Business?

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Felons who finish their incarceration often apply for jobs in areas they have worked in before. Some attempt to find something in a different field, requiring more education or learning new skills.

There are resources available for them to find employment, but some may want to take a different route and look into starting a business of their own.

This blog post will address the issue of how a felon can start a business.

  • Starting a Business
  • Business Plan
  • Funding
  • Business License
  • Business Insurance
  • Recommended Action


Starting a Business

There is no Federal or state law preventing a felon owning a business. However, a felon may be prohibited from owning some based on the type of business and the requirements for licensing.

A felon may not be able to obtain a surety bond, which is a type of insurance policy to protect customers. A surety bond is typically required for a plumber, contractor, mortgage provider, and auto dealer in many states.

It is essential for a felon to talk with an attorney for advice on how to proceed with starting a business to have the best chance to be successful. This begins by selecting an area in which he or she already has experience, knowledge, and the skills necessary to be successful with this type of business.

For example, someone who has worked in the construction industry and wants to start a small remodeling business will have an advantage because of their training and experience in construction work.

Some potential areas for a new business include:

  • Welding
  • Gardening
  • Lawn care
  • Cleaning
  • Deliveries
  • Construction
  • Equipment hauling

Business Plan

It is important to have a business plan when starting a new venture. This is a summary of the objectives of a business, including financial details and a budget for the business.

A business plan has the following sections:

  • Industry overview
  • Market analysis
  • Competitive analysis
  • Marketing plan
  • Management plan
  • Operating plan
  • Financial plan


Obtaining finances for a new business is essential to get it going. One source for financial aid is the Small Business Association (SBA), which loans money to small business owners. SBA guarantees loans offered from certified lenders, such as banks and credit unions.

The SBA will not approve loans to individuals or businesses with an owner convicted of a crime of moral turpitude. This crime is one that goes against the community standards, typically a violent felony or a crime involving major dishonesty.

Crimes of moral turpitude include:

  • Embezzlement
  • Aggravated assault
  • Attempted murder
  • Perjury

The lender participating in the SBA lending program will have its own requirements, including that any conviction might disqualify someone from receiving an SBA loan.

The SBA Microloan Program is a loan program for felons to consider. Microloans are easier to get, and most felons are not looking for loans greater than $50,000. The maximum microloan is $50,000 while the average SBA microloan is $13,000. A small loan amount of $5,000 dollars or less can more easily be approved.

SBA microloans can only be used for:

  • Capital
  • Supplies
  • Inventory
  • Fixtures
  • Equipment and/or Machinery

There are additional options for start-up funding.

Kickstarter can help raise money for a small business if the business makes some type of product. With Kickstarter, people pledge money to a new business in order to get a reward after the company is operating.

Go Fund Me is another great source by posting a goal of starting a business.

In addition to government programs, there also a number of non-profit organizations that are willing to help felons. Grants.gov provides information on the various grants that are offered by the federal government for felons. If a felon can prove that he or she has the skills for their business to succeed a grant can be more easily acquired.

Business License

The majority of businesses need some type of license and permit from federal and state agencies. Those required depend on the type of business, location, and laws in that state.

A federal license is necessary for any business with activities regulated by a federal agency like businesses in agriculture, alcohol, and firearms. A state license depends on the type of business and location, which may include construction, restaurants, and some retail operations.

For example, a license is usually necessary for a bank, liquor store, and a daycare. These are businesses that a felon might not be able to operate as a result of their offense. They could not own a business dealing with firearms while a felon with a financial crime could not own a business involving financial services.

Business Insurance

Businesses carry insurance to protect themselves against financial losses resulting from a lawsuit or physical damage to company-owned property. Commercial insurance helps ensure that a business can continue to operate after a loss occurs.

Business insurance protects businesses from major losses due to events that may occur during the operation of a business. Business insurance does not cover small losses that a company experiences.

Business insurance may be obtained from a registered insurance company through each state’s Department of Insurance or the National Association of Insurance Commissioners. The three main types of commercial insurance are:

  • Liability insurance
  • Property insurance
  • Workers’ compensation insurance

Recommended Action

In order to be successful in starting a business, it is essential for felons to be honest about their background. They are already viewed with negative perceptions of being dishonest, untrustworthy, and unwilling or unable to follow directions from authority figures.

Having their record expunged can give them the chance needed to begin with a clean record and succeed in starting a business. Expunging a criminal record allows anyone to honestly state on any application that he or she has not been convicted of a crime.

It is a significant challenge, but it might be worth it for a felon that wants to start a business to create a small business website as well. Having his or her record expunged and documenting any training programs, rehabilitation, or additional education could make the essential difference in a felon succeeding in starting a business.

Having support from family, friends, or previous employers can make a huge difference. A felon doesn’t have to be defined by his or her crime. We are not defined by our mistakes but by how we recover from them. He or she can begin again and live an honest life no matter how difficult it might seem.

What do you think about this blog post? Have you or someone you know been in the situation of trying to start business with a felony? What was that like for him or her, and how did he or she achieve success? Please tell us in the comments below.

3 thoughts on “How Can a Felon Start a Business?”

  1. I was starting a business when I was wrongfully incarcerated and forced to take a plea deal for a crime I never committed, the alleged witness even says willingly that I didn’t do this. Doesn’t matter, I dated a crazy girl who was taken advantage of by the crooked Nevada DA and did nothing to help me. Oops! Heart break from losing the love of my life and a record aside, the justice system in this country is seriously f’d up, and the judges and DA of Nevada should be ashamed. There are plenty of people who deserve their incarceration and records, but then there are people like me who get caught in the crossfire for wrong place wrong time with no preper recourse. I’ve never been in trouble in my life. I was just poor and couldn’t afford an attorney. Anyways, I don’t think I can ever get it expunged but maybe sealed someday. Starting a business may be my only course to achieving the happiness I deserve for once, I have the skills, but I’m praying that this bogus felony conviction won’t hinder me. If that doesn’t work, then it’s to the streets as a starving artist. Yippee!

  2. How do they expect a person released into a post hurricane, pandemic, opioid epedemic with absolutely nothing but the desire to work and help others? I have so many skills but can get reliable transportation. Try to start a business and no help. Forget food or a place to live. I’m trying to work and I get blank stares and dumb unrealistic advice however well meaning it is.

  3. Wanting to start a foreclosure cleaning and property preservation business in Austin Texas and need to know where I can locally get financial assistance grant to start the business.


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