Can felons legally start a business?

Yes. No federal law prevents people with felony convictions from starting a business. You can form a sole proprietorship, LLC, or corporation regardless of criminal history. No state requires a background check to register a business entity. Limitations only apply to specific regulated industries where licensing boards may review history.

Can a felon open a business bank account?

Yes, though some banks are more accessible than others. Criminal records don't appear in ChexSystems, but convictions involving financial crimes can create challenges. Online banks like Relay, Novo, and Mercury tend to have higher approval rates. Apply as a registered LLC with your EIN to create separation between personal history and business entity.

Can you get an LLC with a felony?

Yes. No state requires a background check to form an LLC. File Articles of Organization and pay the fee ($50-$500 depending on state). An LLC is actually recommended for entrepreneurs with records because it provides liability protection and privacy with a registered agent service.

Can felons get SBA loans?

It depends on loan type and situation. SBA Microloans (up to $50,000) through nonprofit intermediaries have more flexibility—some specifically serve returning citizens. Start with microloans or alternatives like Kiva (0% interest, up to $15,000) to build business credit before pursuing larger SBA financing.

What is the best business to start with a felony?

Service businesses (detailing, cleaning, junk removal, lawn care) have low startup costs and no licensing requirements. Income depends on reliability, not background. Online businesses are ideal because clients see your portfolio and reviews—not your record. Trade-based contracting works well if you have existing skills.

Do I have to tell customers about my criminal record?

No. You're not legally required to disclose in most business contexts. Focus marketing on value—quality work, reliability, customer service. Some entrepreneurs choose to share their story, but it's entirely your decision.

What licenses can felons not get?

This varies by state and has changed rapidly due to licensing reform. Fields like healthcare, finance, and real estate have traditionally had restrictions. Many states now use "direct relationship" standards—only allowing denial if your conviction directly relates to the profession. Check your state's current laws rather than assuming disqualification.

Starting a Business with a Felony

The Complete 2026 Guide to Entrepreneurship After Incarceration

This guide is published by Felon Friendly Jobs Now (FelonFriendlyJobsNow.com), a resource platform built specifically for the 70+ million Americans navigating life with a criminal record.

Our team has spent years researching felon-friendly employers, state-by-state legal requirements, and real pathways that work. We've seen what succeeds—and what doesn't. This guide reflects that experience.

Nobody is going to hand you a second chance. You have to build it yourself.

If you're reading this with a conviction on your record, you already know how the traditional job market works. Applications vanish into silence the moment you check that box.

Here's what they don't tell you: the same system that closes employment doors leaves a wide-open path to ownership. There is no background check to start a business. No box to check when you register an LLC.

When you're the boss, you don't need anyone's permission to hire yourself.

Before the Business Plan: The Internal Work Nobody Talks About

The biggest obstacle to entrepreneurship after incarceration isn't the felony. It's what the felony did to how you see yourself.

Imposter syndrome hits harder when society has labeled you with a word designed to define your entire identity. That voice telling you that you don't deserve success? It's lying.

The truth: the skills required to survive incarceration are the same skills that build successful businesses.

Skills You Already Have

Risk assessment: You've made decisions where the stakes were your freedom, your safety, your life.
Resource maximization: You know how to make limited resources stretch. That's called bootstrapping.
Reading people: Survival required quickly assessing who could be trusted. That's client evaluation.
Adapting under pressure: When circumstances changed, you adjusted. Entrepreneurs call this "pivoting."
Long-term thinking: You planned when conditions made planning nearly impossible. That vision is rare.

The transition isn't about becoming someone new. It's about redirecting who you already are.

The Legal Reality: What a Felony Actually Prevents

Let's separate myth from reality.

What a Felony Does NOT Prevent

Forming an LLC or corporation. No state requires a background check. None.
Getting an EIN. The IRS does not run criminal background checks.
General business licenses. Typically requires paying a fee—not passing a background check.
Selling services or products. No law prevents offering your labor or goods in the marketplace.

What May Be Restricted

Professional licenses: Healthcare, finance, real estate have licensing boards—but conviction ≠ automatic denial.
Federal contracts: Some opportunities restricted based on conviction type.
Bonded businesses: Surety bonds can be harder (but not impossible) with a record.

The Direct Relationship Standard

Many states have reformed licensing laws. Under the "direct relationship" standard, a board can only deny your application if your conviction directly relates to the profession.

A drug conviction from fifteen years ago has no relationship to cutting hair or fixing HVAC systems. Boards must also consider time elapsed and rehabilitation evidence.

⚠️ Important: Licensing requirements vary significantly by state and change frequently. Always verify current requirements with your state's licensing board before making business decisions. This guide provides general information, not legal advice.

📌 Know Your State's Rules

Licensing laws and Ban the Box policies vary dramatically by state. Our state guides break down exactly what's allowed where you live.

→ [Link: Browse State Employment Guides]

Business Models That Work: Choosing Your Path

The best business depends on three factors: your skills, your startup capital (even if near zero), and any parole/probation restrictions like travel limits.

Path 1: Service Businesses (Start With Almost Nothing)

These convert time and effort directly into income. Startup costs under $500. Revenue within days.

Mobile detailing: Basic supplies cost a few hundred dollars. You go to customers.
Cleaning services: Residential to start, commercial for recurring revenue.
Junk removal: Requires truck access. Strong demand in every market.
Lawn care: Basic equipment. Recurring weekly clients create predictable income.
Pressure washing: One commercial contract can anchor your business.
Moving services: Physical work with solid margins. Grow into a crew operation.

What we see working: We regularly see returning citizens succeed with mobile detailing and cleaning services because they require almost no startup capital and let your reliability build your reputation fast.

Path 2: Skilled Trades (Leverage What You Know)

If you have trade skills from work, vocational training, or prison programs—the goal is moving from employee to contractor to owner.

Construction/renovation: Drywall, painting, flooring, roofing. Many states have reformed restrictions.
Welding: High-demand skill. Mobile welding commands premium rates.
HVAC/electrical/plumbing: Typically require licensing. Check your state's current rules.
Auto repair: ASE certification has no background check. Mobile mechanic = low overhead.
Barbering: Licensing required but many states have reformed. Strong community business.

Path 3: Digital Businesses (Your Record Is Invisible)

The internet doesn't run background checks. Clients see your portfolio and results—not your record.

Freelancing: Writing, design, video editing, virtual assistance. Platforms like Upwork and Fiverr.
E-commerce: Buy low (thrift, liquidation), sell on eBay, Amazon, Poshmark.
Content creation: YouTube, podcasting, blogging. Zero barrier to entry.
Digital products: Ebooks, courses, templates. Build once, sell repeatedly.

Banking with a Criminal Record

You need a business bank account. Operating in cash creates accounting nightmares and jeopardizes your LLC protection.

The Challenge

Banks use ChexSystems to track banking history. A criminal record itself doesn't appear there, but financial crimes or past banking problems can create hurdles.

Where to Open a Business Account

Online business banks (highest success): Relay, Novo, Mercury, Bluevine. Streamlined processes focused on your business.
Credit unions: Community-focused. Decisions made locally by people, not algorithms.
CDFIs: Community Development Financial Institutions serve underbanked communities specifically.
Bank On programs: City initiatives connecting underbanked individuals with accessible accounts.

What we see working: Many entrepreneurs with records report success with Novo and Relay. The key is applying as a registered LLC with your EIN—it creates separation between personal history and business entity.

Tips for Approval

Form your LLC first. Apply as a business, not just yourself.
Get your EIN. Free at IRS.gov. Takes 15 minutes.
Have documents ready. LLC papers, EIN confirmation, ID, proof of address.
If denied, ask why. The reason may be fixable or mean trying a different institution.

📌 Need More Banking Help?

Our Banking Resources Hub covers second-chance accounts, building credit after incarceration, and financial tools that work for justice-impacted individuals.

→ [Link: Explore the Banking Resources Hub]

Funding Your Business: Real Options

Capital access is the biggest barrier. Traditional bank loans require credit history and collateral you may not have. But alternatives exist.

⚠️ Important: Loan eligibility, interest rates, and program availability change frequently. Always verify current terms directly with lenders. This information is for educational purposes only.

Microloans and Alternative Lending

Kiva (kiva.org): Crowdfunded loans up to $15,000 at 0% interest. Story-based, no credit score required.
SBA Microloans: Up to $50,000 through nonprofit intermediaries. More flexible than traditional banks.
CDFIs and nonprofit lenders: Mission-driven organizations serving underserved entrepreneurs. Reasonable rates.

Programs for Justice-Impacted Entrepreneurs

Defy Ventures (defyventures.org): Training, executive mentorship, pitch competitions with seed capital.
Center for Employment Opportunities: Some locations offer small business support and resource connections.
Local reentry organizations: Many have entrepreneurship tracks or know about local grants.

What we see working: Kiva is often the first funding source for justice-impacted entrepreneurs because approval is based on your story and plan—not your credit score or background check.

Bootstrapping Principles

Start with what you have. $200 budget? What business can you start for $200?
Revenue first. One paying client beats a perfect business plan.
Reinvest everything. Every dollar back into the business until you're stable.
Minimal overhead. Work from home. Free tools. Avoid debt for non-revenue items.
Trade when you can't pay. Exchange services with other businesses.

📌 Present Yourself Professionally

Whether you're pitching to lenders or meeting potential clients, first impressions matter. Our Resume Kit helps you present your best self—focused on skills and value, not your past.

→ [Link: Get the Resume Kit — $49.99]

Step-by-Step: From Idea to Legal Business

Step 1: Choose Your Structure

Sole Proprietorship: Simplest. No formation docs. But no liability protection.
LLC (Recommended): Liability protection + privacy with registered agent. No background check.

Step 2: Name Your Business

Verify availability on your Secretary of State website. Check domain name availability. Keep it easy to spell and remember.

Step 3: Register

File Articles of Organization with your state. DIY online or use services like LegalZoom, ZenBusiness, Northwest Registered Agent. Fees: $50-$500 depending on state.

Step 4: Get Your EIN

Apply at IRS.gov. Free. 15 minutes. Receive immediately. Required for business banking and taxes.

Step 5: Open Business Bank Account

Bring LLC documents, EIN, and ID. See banking section above for institution recommendations.

Step 6: Local Licenses and Permits

Check city/county requirements. Your local SBDC can help identify what's needed—free service.

Step 7: Set Up Operations

Bookkeeping: Wave Accounting (free) or simple spreadsheet.
Phone: Google Voice (free second number).
Email: yourname@yourbusiness.com via Google Workspace or Microsoft 365.
Web presence: Google Business Profile (free) minimum. Website can come later.

Marketing: You Don't Owe Anyone Your Story

You are not required to disclose your criminal history to customers. Focus on value: quality work, reliability, fair prices.

Build Reputation on Results

Deliver excellent work every time.
Show up when you say you will.
Ask for reviews and referrals.
Photo-document your work (with permission).
Be professional in every interaction.

Your past becomes irrelevant as your present reputation grows.

If You Choose to Share Your Story

Some entrepreneurs make authenticity part of their brand. Growing consumer support exists for second-chance businesses. If this feels right:

Control the narrative. You decide what, how much, and when.
Lead with the present. Who you are now comes first.
Make it about the work. Your commitment is the message.

Bootstrapping Principles

Start with what you have. $200 budget? What business can you start for $200?
Revenue first. One paying client beats a perfect business plan.
Reinvest everything. Every dollar back into the business until you're stable.
Minimal overhead. Work from home. Free tools. Avoid debt for non-revenue items.
Trade when you can't pay. Exchange services with other businesses.

The Path Forward

Entrepreneurship isn't easy for anyone. There will be setbacks, slow months, and moments of doubt.

But here's what's different: this path belongs to you. Nobody can fire you from your own business. Nobody can run a background check on the owner.

Start with what you have. Take the first step, then the next. You don't need to see the entire staircase—just the step in front of you.

The skills that got you through the hardest times will serve you here. The resilience, the adaptability, the refusal to quit—that's exactly what entrepreneurship demands.

Your past is real. It happened. But it doesn't get to write the rest of your story. That part is up to you.

Continue Your Journey

[Link: State Employment Guides] – Felon-friendly employers in your state
[Link: Banking Resources Hub] – Financial services for justice-impacted individuals
[Link: Resume Kit] – Present yourself professionally to clients and lenders
[Link: State Expungement Guides] – Learn if clearing your record is possible