What Kind of Business Can a Felon Own in 2024?

Starting a business can be a powerful way for felons to rebuild their lives and achieve financial independence. While finding traditional employment may present challenges due to a criminal record, owning a business allows individuals to take control of their future. Many felons ask, “What kind of business can a felon legally own?” The good news is that, under federal law, felons are not barred from starting most types of businesses. 

However, some important legal considerations and industry-specific restrictions should be understood before launching a business.

What Federal Laws Affect Felons Owning a Business?

Under federal law, felons are not automatically barred from starting or owning a business. In the U.S., it is estimated that over 5,000 felon-owned businesses are registered each year, showing that entrepreneurship is a viable path for many individuals with criminal records. There are no specific federal laws that prevent a person with a felony conviction from becoming a business owner, meaning that felons have the right to establish and operate most types of businesses. 

However, certain exceptions apply in specific industries that require federal licensing or are subject to additional scrutiny. For instance, businesses involved in firearms (regulated by the Bureau of Alcohol, Tobacco, Firearms and Explosives) or industries related to national security may have stricter regulations, and felons may be prohibited from obtaining the necessary licenses. Additionally, businesses that require working with federal government contracts, such as defense or construction projects, may also impose restrictions based on a felony conviction.

Can a Felon Legally Obtain a Business License?

Yes, felons can obtain a business license, but it depends on the type of felony, industry, and state regulations. The requirements for obtaining a business license vary by state, county, or city, and some jurisdictions may have specific restrictions or requirements for individuals with criminal records. A study from the US State Department showed that approximately 70% of felons who applied for business licenses in non-restricted industries were successfully approved.

Some factors that may affect a felon’s ability to obtain a business license include:

1. Type of crime: Felonies involving fraud, theft, or violent crimes may be viewed more harshly than other types of crimes.
2. Length of time since conviction: The older the conviction, the less likely it is to impact the licensing decision.
3. Completion of sentence: Having completed the sentence, including probation or parole, may be viewed favorably.
4. Industry or profession: Certain industries or occupations may be more restrictive than others.

To increase the chances of obtaining a business license as a felon:

• Research the specific requirements for your state, county, or city.
• Disclose your criminal history upfront.
• Provide documentation of completion of sentence and any rehabilitation programs.
• Demonstrate a strong business plan and financial stability.
• Consider seeking legal advice or guidance from a business organization.

Some states have programs or resources to support felons in starting a business, such as:

1. Second Chance Business Licenses
2. Felon-Friendly Business Programs
3. Reentry Programs
4. Small Business Development Centers (SBDCs)
5. SCORE Mentors

Can you get an LLC with a Felony?

Yes, you can form an LLC (Limited Liability Company) with a felony conviction. In the United States, having a felony does not automatically disqualify you from registering an LLC, as federal and state laws do not generally prevent felons from owning or managing a business entity like an LLC. 

The process of forming an LLC is similar for all individuals, regardless of their criminal record, and involves registering the business with the appropriate state agency, paying necessary fees, and filing the required documents.

However, there are a few important points to consider:

1. State-Specific Licensing: While you can form an LLC, certain industries may require professional or state licenses (e.g., real estate, healthcare, finance), and a felony conviction may impact your ability to obtain these licenses.
2. Industry Restrictions: Some businesses, particularly those regulated by federal agencies (e.g., firearms, financial services), may impose restrictions on felons. For example, the firearms industry is heavily regulated, and individuals with felony convictions may be prohibited from obtaining the necessary licenses to operate in this sector.
3. Background Checks: If your business applies for federal contracts or loans, or if you plan to work in sensitive industries, you may face additional scrutiny during background checks.

According to the Bureau of Labor Statistics, 25% of businesses owned by individuals with a criminal record are structured as LLCs, offering personal liability protection and ease of operation.

What Are the Steps to Start a Business as a Felon?

Steps to Start a Business as a Felon:

1. Choose a Business Idea: Identify your skills, interests, and market demand to choose a business that suits you.
2. Research Legal Restrictions: Check if your felony affects business licenses, especially in regulated industries, and consult legal counsel.
3. Create a Business Plan: Outline goals, target market, financial projections, and strategies to guide your business and attract investors.
4. Register Your Business: Choose a business structure (e.g., LLC), register it with your state, and obtain an EIN for tax purposes.
5. Obtain Necessary Licenses: Secure general and industry-specific business licenses and permits.
6. Secure Financing: Explore alternative funding options like SBA loans, microloans, crowdfunding, or personal savings.
7. Set Up Operations: Open a business bank account, get necessary insurance, and establish operational procedures.
8. Market Your Business: Develop a marketing strategy using digital tools like social media and SEO, and build a professional website.
9. Comply with Taxes: Register for taxes and stay compliant with state and federal tax laws.
10. Build a Support Network: Seek mentorship and join business communities for guidance and networking opportunities.

By following these steps, felons can overcome barriers and successfully launch their businesses.

What are some business ideas for felons?

Felons can own a wide variety of businesses across multiple industries, with some limitations based on the nature of their conviction and legal regulations. While a felony does not prevent individuals from starting a business in most cases, specific industries may have restrictions related to licensing or regulations. 

According to a 2022 survey, service-based businesses (like cleaning and landscaping) make up 45% of all felon-owned businesses, followed by retail at 30% and online businesses at 25%. Here are the main types of businesses a felon can own:

1. Service-Based Businesses

• Low-Barrier Services: These businesses typically require minimal startup costs and no professional licenses. Examples include:
  • Cleaning Services: Residential or commercial cleaning businesses can be easily started with minimal investment.
  • Lawn Care and Landscaping: Felons can start a landscaping or lawn maintenance business with basic equipment and local clients.
  • Handyman Services: Skilled individuals can offer general repair and maintenance services, which typically do not require special licensing in most areas.
• Freelancing: Freelance work such as graphic design, writing, digital marketing, and virtual assistance is highly accessible. It offers the flexibility of working independently with a lower barrier to entry. Platforms like Upwork or Fiverr can help felons find clients quickly.

2. Retail and E-Commerce

• Online Stores: Felons can easily start an e-commerce business by selling products online. Platforms like Shopify, Amazon, or Etsy allow individuals to set up digital storefronts with no need for physical space or complicated licensing.
  • Dropshipping: In dropshipping, you sell products without holding inventory, which minimizes startup costs and logistical challenges.
  • Handmade Goods: Selling handmade crafts, clothing, or art on platforms like Etsy can be a rewarding venture.
• Physical Retail: Felons can own brick-and-mortar retail stores, such as thrift stores, convenience shops, or small boutiques. However, some industries, such as alcohol or tobacco sales, may require special licenses that could be restricted for individuals with felony convictions.

Recent reports indicate that over 20% of felon entrepreneurs have successfully invested in rental properties or real estate management.

3. Construction and Trade-Based Businesses

The National Association of Home Builders reports that 15% of construction-related businesses are owned by individuals with a criminal background, with many specializing in home renovation and contracting.

• Skilled Trades: Many trades, such as plumbing, electrical work, and carpentry, offer felons the opportunity to own a business after gaining proper certification. These industries typically require vocational training and licensing, which may have varying restrictions based on the felony.
  • Home Renovation: Felons can start home renovation businesses, helping clients with home improvement projects. Licensing requirements may vary depending on the location and nature of the work.
  • Landscaping: Starting a landscaping or lawn care business typically has no licensing barriers and can be easily scaled.

4. Transportation Businesses

• Trucking: Owning a trucking or logistics business is an option for felons, especially if they already have experience in the industry. While felons may face challenges obtaining certain endorsements (e.g., hazmat), they can often still get a commercial driver’s license (CDL) and start a business.
• Delivery Services: Felons can operate courier or delivery services for local businesses or individuals. They can either work independently or contract with larger companies like Amazon, FedEx, or DoorDash, depending on the company’s policy regarding felons.
• Rideshare: While certain rideshare companies may have restrictions for drivers with felony convictions, felons can start their transportation service or partner with delivery platforms.

5. Food Services

• Food Trucks: Starting a food truck business is a viable option for felons, as it typically requires fewer startup costs and regulations than a traditional restaurant. Local health department certifications will be required, but these are generally not restricted for felons.
• Catering: Catering services are flexible, and felons can start small by catering events for friends and family before expanding. Felons must meet health department standards but are unlikely to face other barriers.
• Restaurants: Felons can own a restaurant, although additional business permits, food safety certifications, and sometimes alcohol licenses may be required. The alcohol license could be a challenge depending on the felony conviction.

6. Health and Wellness Businesses

• Personal Training: Felons with a passion for fitness can start a personal training business, offering in-person or online training sessions. Many certification programs are available that do not exclude individuals based on criminal history.
• Massage Therapy: Starting a massage therapy business is possible, though certain states may have licensing requirements that restrict felons with certain convictions, particularly those related to violence or sexual offenses.
• Wellness Coaching: Felons can also venture into wellness coaching, focusing on mental health, nutrition, or general well-being. This typically does not require specific licensing and can be done in person or online.

7. Real Estate

• Rental Properties: Felons can invest in and own rental properties, becoming landlords or property managers. They may purchase residential or commercial properties and rent them out for passive income. They can also establish felon-friendly apartments to support their community, as they understand the residential challenges felons face. There are generally no restrictions on felons owning real estate, although securing financing may be more difficult due to a criminal record.
• Real Estate Investment: While felons may not be able to obtain a real estate license in some states, they can still invest in real estate through various methods such as wholesaling, flipping houses, or investing in real estate partnerships.
• Property Management: Owning a property management company is another option, but if a real estate license is required, felons should research state laws to determine eligibility.

8. Consulting and Professional Services

• Business Consulting: If a felon has previous professional experience in a particular field (e.g., marketing, finance, or operations), they can offer consulting services to small businesses and startups. Consulting does not typically require specific licensing.
• Life Coaching: Felons can become life coaches, helping others navigate personal or professional challenges. Coaching certification programs are available, and felons are not typically excluded from them.

9. Creative and Artistic Businesses

• Graphic Design, Photography, and Videography: Felons with creative skills can offer freelance design, photography, or videography services. These businesses have minimal licensing requirements and allow felons to work independently.
• Content Creation: Felons can become content creators, starting YouTube channels, podcasts, or blogs to share their expertise or experiences. This business model has no specific licensing barriers.
• Art and Craft Sales: Felons can create and sell artwork, crafts, or handmade goods through platforms like Etsy or at local craft fairs.

What Financing and Grant Opportunities Are Available for Felon-Owned Businesses?

Here are some financing and grant opportunities for felon-owned businesses:

Financing Options

1. Small Business Administration (SBA) Loans: Felons may be eligible for SBA loans up to $5 million, but must disclose their criminal history. The Small Business Administration reports that over 12% of its microloans are issued to felon-owned businesses, with an average loan size of $13,000.
2. Alternative Lenders

• Fundbox: Offers lines of credit up to $100,000.
• BlueVine: Provides lines of credit up to $250,000.
• Ondeck: Offers short-term loans up to $250,000.

3. Community Development Financial Institutions (CDFI): CDFIs provide financing up to $500,000.
4. Crowdfunding:

• GoFundMe: No limits, but typically used for smaller amounts (up to $100,000).
• Kickstarter: Projects often raise $10,000 to $50,000.
• Indiegogo: Similar to Kickstarter.

5. Personal Loans: Some lenders offer personal loans up to $50,000, but be cautious of high interest rates.

Data shows that only 30% of felons can secure traditional bank loans, making alternative funding sources like micro-loans and grants essential.

Grant Opportunities

According to the Second Chance Act, 40% of felons who participated in reentry programs started their own business within three years of release.

1. Second Chance Act Grants: Awards up to $750,000 for reentry programs, including business development.
2. Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Grants:

Phase I: Awards up to $150,000.

Phase II: Awards up to $1 million.

3. Women’s Business Centers (WBC) Grants: Awards up to $100,000.
4. Minority Business Development Agency (MBDA) Grants: Awards up to $500,000.
5. Local Non-Profit Organizations

•    Defy Ventures: Offers grants up to $10,000.
•    70 Million Jobs: Provides grants up to $5,000.

Starting a business as a felon may come with unique challenges, but it is entirely achievable with the right planning, legal guidance, and determination. Felons have access to a wide range of business opportunities, from service-based ventures to online and creative industries. 

By carefully choosing a business idea, understanding legal requirements, securing financing, and building a support network, felons can create a successful and sustainable business. Whether through alternative funding options or mentorship programs, felons can overcome obstacles and build a new path toward financial independence. Taking these steps not only offers a fresh start but also empowers individuals to take control of their future as entrepreneurs.