How to Become a Successful Entrepreneur with a Criminal History

by in Finance
become a successful entrepreneur

Life after prison is never easy. With a goal and a business plan, you can live a life of self-made bliss, without having ever to look back. Being employed with a criminal record can be a great challenge, which is why more and more business owners are considering the self-employment world as an opportunity to build a business with a high income, or create a lifestyle with freedom than a traditional job. If you have a criminal record and want to become a successful entrepreneur, follow this guide to get the answers to all the required questions.

The United States has one of the largest untapped workforce pools in the world – prisons.

An estimated 2.3 million people are sitting behind bars, and a lot of them have proven leadership and business skills. However, when a felon comes out of prison, prospects are thin, and the pay is often 40% less than people without a criminal record. People automatically make assumptions that former criminals will revert to their old ways.

This stigma results in a vicious cycle of felon unemployment, which leads them to go back to a life of crime due to society’s prejudices. How can former inmates start over in an outside world that shuns their past?

By Starting a Business and Becoming Entrepreneurs

Being your own boss means that you won’t have to deal with workplace discrimination and preconceived notions about what you did. Don’t let your criminal history get in the way of becoming a successful entrepreneur. Take this quote from felon turned multi-millionaire Mark Erwin:

“The first and only thing that matters is, your history doesn’t matter. It’s what you make from today forward that really matters.”

If you’re a former felon who wants to become a successful entrepreneur, make a mental imprint of that quote. Read it, memorize it, and know it by heart. Now, it’s time to work.

You Can Start a Business Even with a Criminal History

There are no laws, Federal or state, that prevents felons from owning a business even if they get a criminal record as a juvenile or an adult. To register a business, all you need to do is go to your state’s Secretary of State website and create a new business entity. The fees vary for each state, and you’ll need to find out the requirements to begin the application process.

You can consult with your lawyer on what business type serves you best, or you can even hire one to do your paperwork. However, it’s effortless to register a business on your own these days, especially single-member LLC types. It only takes a few minutes, and you’ll be saving money on attorney’s fees.

Consult with an attorney to explore what businesses you can and can’t go into.

There are specific prohibitions on the business type and licensing requirements if you have a criminal past. A convicted felon cannot hold positions in anything that involves the following:

  • Medicine.
  • Law.
  • Finance.
  • Dangerous materials.

The laws are changing however, and some states allow felons to become lawyers. You also won’t be able to get a surety bond, a type of insurance policy that protects consumers. A surety bond is a requirement in many states if you’re a mortgage provider, auto dealer, contractor, or plumber. The good news is that you can get all the other types of commercial insurance. 

There are a lot of other business options out there, aside from the prohibited ones listed here. Just as in any business or startup, choose something that you’re already knowledgeable in or something you love doing. You should also start by drafting a solid business plan to act as a roadmap you can follow.

Getting a Business License

Most businesses rely on permits or licenses from federal and state agencies, depending on their location and type.

  • Federal license. A requirement for businesses regulated by a federal agency. Examples include firearms, agriculture, and alcohol.
  • State license. A requirement for businesses depending on their type and location. Examples include retail stores, construction, and restaurants.

As a result of their past offenses, a former inmate may not get a license to operate a liquor or firearms store. Or an ex-con who went away for financial fraud cannot offer services as a financial adviser.

Funding and Finances

Money is the lifeblood of your business, and it will be hard to come by in the beginning. The best scenario for an ex-con is that family and friends help with funding the startup. Often, there will be no questions asked when you go to a loved one. If this option is off the table, one good source for financial aid is the Small Business Association (SBA).

The SBA guarantees loans from banks, credit unions, and other certified lenders. However, the SBA will not approve loans to businesses with owners convicted of a “crime of moral turpitude.” This type of crime is either a significant dishonesty crime or a violent felony.

Crimes of moral turpitude include the following:

  • Aggravated assault
  • Attempted murder
  •  Embezzlement
  • Perjury

The lender offering the loan in the SBA lending program will have its own set of requirements. One of the stipulations may include that any criminal history might disqualify a person from getting a loan.

A good option would be the SBA Microloan Program, which is easier to get. SBA Microloans range from $5,000 to $50,000 and can be used for capital, inventory, or equipment. Other options include grants and programs for felons who want to go into business.

Be Aware of Your Rights

Starting a new business and to become a successful entrepreneur is hard work, but even more so with a criminal history in your background. But if you succeed to lift the extra work to get financed, you will be able to get the better of the difficulties and be hopeful with a new, prosperous life.

In case of confusion, get help from a legal professional or attorney who is aware of local laws about business licenses for criminals.

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