One of the most important things on a felon’s mind after prison is employment. They would need a job that can pay the bills and provide basic needs. This might be not so easy for them because of their criminal history. A report from the Bureau of justice showed that only 12.5% of employers consider ex-convicts when hiring.
Many business owners do not see felons as trustworthy. In some cases, the nature of their crime may dissuade people from giving them certain kinds of jobs. For instance, working at a daycare or teaching at a school.
Earning a good living as a felon can be problematic. A very sound option for former offenders is starting a small business. Entrepreneurship is one of many lucrative paths a felon can take. This will allow them to be their own boss. They don’t have to be worried so much about the shadows of their past.
Starting a small business is not as easy as it seems. Whoever is planning on it will need funds. For felons, grants and loans will go a long way in easing the burden. Grants and loans are not the same. A loan is money that a person lends to another, to be returned with interest.
A grant, on the other hand does not need to be paid back to the giver. Since they are given at no cost, they must be given to only those with exceptional financial needs. Both loans and grants may be given by the government or private organizations.
There are many grants and start-up loans for small businesses felons can choose from.
Small Business Grants For Felons
Most loans require the borrower to have a good credit score. Most felons have bad credit. They are probably without income and full of debt. As a result, felons may have a hard time receiving some of these loans. Bad credit also means higher interest rates. So, ex-convicts may also struggle to repay loans.
Grants are a better option for felons. It also helps that the money doesn’t have to be paid back. There are many state grants and non-profit aids that can help the felon start-up a small business. Some of these are:
This is a website where one can apply directly for government grants. Government grants are simply grants given by the federal or state government. There are many grants on the site. Anyone who needs a grant can search the database using filters.
For instance, eligibility, funding type, keywords, etc. For felons, it’s not advisable to streamline their search. They can surf for grants for small businesses, entrepreneurs, industry and so on. They must also chose their keywords wisely. The words should be able to yield the widest possible range of results.
Department Of Labor Grants
The United States Department of Labor helps many people with grants for small businesses, housing, feeding, and other needs. Felons are also eligible to apply for these grants. The downside is, there is a lot of competition. This is because application is open to everyone. Ex-convicts may not be seen as top priority. Career One Stop are centers sponsored by the US Department of Labor. Anyone can visit in to seek help regarding employment and small business loans.
This involves receiving funds from a lot of people to achieve a particular cause. Felons can go on crowd funding sites to get funds. They can present their vision and business ideas. It’s important to draft the case in a very persuasive way.
Local Non-profit And Religious Organizations
This is also a channel to get grants to start a small business. For churches, it helps if a relative or friend already goes there. Some non-profits are created mainly to help felons get back on their feet. Felons should ask around for local churches and non-profits that can useful.
Small Business Start-Up Loans for Felons
In case receiving grants does not work out, applying for loans is the next best thing. Here are a few loans for felons who wish to start a small business:
Small Business Administration (SBA) Microloan Program
This program enables anyone to get loans from the federal government. It’s not for just felons, but for anyone who chooses to apply. They can only apply through a community lender. The lender will give information on the criteria that must be met. One can receive up to $50,000. However, the average loan amount is about $13,000.
The SBA micro loan is secured. This means that the felon has to provide collateral before getting it. Regardless of how it sounds, getting an SBA loan isn’t so easy. Felons might meet some obstacles.
Here are some of them:
- Crimes of moral turpitude could disqualify the felon. Examples include embezzlement, burglary and scams.
- Most SBA loans go out to those with good credit scores. A lot of ex-convicts would not qualify.
Real Estate Loans And Equipment Financing
Both of these are similar. Basically, the lender gives loans to purchase a property. The loan is self-secured because the property serves as collateral. As a result, the lender won’t pay much attention to receiver’s criminal history. If they default on paying the loan, the lender can just seize the property. They could then sell it off to regain the money. This loan type is a great choice to get equipment or shops to start-up a small business.
Amazon Sellers Funds
This is a good option for those who wish start or grow their business online. Amazon offers loans to its sellers to improve their sales. It’s a win-win for both Amazon and the seller. The turn-around time is favorable and the interest rates are fair.
Microfinance State Funds
Every state offers small business loans to citizens. The amount is usually between $5000-$8000. This is just enough to kick-start a small business. In a way, it’s similar to SBA loans, but with a much quicker turn-around time.
Family And Friends Loans
Some felons will be more comfortable with this option. People who are close to them have a better understanding of their condition. To prevent disagreements, everything should be put in writing.
Here are important things that should be included in the document:
1 The loan amount
2 Payment schedule
3 Terms and conditions of the contract
4 Interest rate: This should not be ignored. Even though the lender has a close relationship with the receiver, both should agree on a suitable interest rate. This will prevent the IRS from taxing the lender unnecessarily.
Getting Ready to Start a Small Business as a Felon
Running a successful business would require skills. It’s advisable to take some courses, join a practical class, or get a degree. This will go a long way in improving the felon’s credibility as well. There are a couple of resources they can take advantage of.
Some of these are:
1 The Correctional facility: Felons can enroll in skill acquisition programs in prison. They may have the opportunity to learn craft making, operating MS office and so on.
2 Local Community Self-development Programs: There could be programs organized in the local communities to help people acquire skills. Some of these may be free or very affordable.
3 Teaching and Training Platforms for felons: There are organizations that train and teach felons on how to start and grow small businesses. Example is the non-profit group, Inmates to Entrepreneurs. They offer both online and offline courses. They also organize workshops in some correctional institutes. Ex-convicts can also look into other platforms offering free counselling and advice for anyone with small business aspirations. SCORE is one example. For over 50 years, they’ve helped many people to start and grow their businesses.
4 Distance learning: Felons can get an education to help them be more successful. There are many affordable colleges around they can enroll in to get a degree. There are federal student grants that could help. For instance, the Federal Supplemental Educational Opportunity Grant (FSEOG). Aspiring students with special financial needs can receive between $400 – $4000.
Some degrees felons can get are:
- Graphics Design
- App development
Being self-employed is very advantageous to felons. They are already excluded from receiving high paying jobs, in many cases. With small businesses, they can call the shots, and make good money while they’re at it. The problem is, most ex-convicts do not have the necessary funds they need to start a small business. Fortunately, there are many grants and loans for felons. Grants are better than loans because you don’t need to pay back.
Felons can get grants from the government or non-profits. Crowd funding is also a good option. Sites like GoFundMe and IndieGoGo could be of help. Although most loans require good credit, they are still worth looking into. Examples of loans for felons are SBA loans, family and friends, microfinance state funds, and amazon sellers funds. Before starting a business, it’s good to acquire some skills and education.
Luckily, there are many resources to help felons achieve this dream. For instance, there are grants available to felons to reduce schooling costs.