Business Loan Options for Felons – When it comes to availing any small business loans for felons, having a felony or criminal background of any type can put you at a significant disadvantage. It is difficult for any entrepreneur to start a business, but it is considerably more difficult for those with a criminal past.
In most cases, having a criminal record may cause your loan application rejected. However, if you broaden your search enough, you might eventually get a business loan. This post will show you how to identify the best option of business loans for criminals.
Best Business Loan Options for Felons
Banks have become much stricter on whom they lend to. However, it is not impossible to get a business loan for felons. Therefore, it is great to try different options so that chance of getting loans is high.
1. SBA Micro Loans for Felons
The Small Business Administration (SBA) may give loans for a small amount of up to $13000 to felons, but it depends on the felony. They will not give a loan to a business where the owner has a conviction for ‘moral turpitude crimes. It means that if you have not been convicted of any serious crime, you can avail microloan option offered by SBA.
2. Loans from family and friends
Among the best business loans for convicts are loans from family or friends. Your family and friends understand the circumstances that led to your conviction better than anyone else did, and they will be supportive of your efforts to become a business owner. Although a single-family member or friend may not provide significant assistance, a series of small loans may be sufficient to start your company.
The most important thing to remember when taking out a loan from a friend or family member is to have all the details in writing. If you skip this step, you will end up with many problems later. Put all of the loan’s important terms in writing, including the amount, interest rate, payment schedule, and late payment penalties.
3. Crowd Funding
Raising funds through any “crowd financing website” has grown popular. Similar to peer-to-peer lending, the investor is not interested in your past. They will decide to invest based on your project.
Crowd fundraising is based on two ways. The first is based on reward, whereas the second is based on equity. In the reward-based approach, you set the amount of money you want to raise, and in the second approach, you sell a stake in your business.
The two best websites for business loan options for felons are faasfunds.com and Indiegogo.com. You can present your project here to obtain business loans.
4. Real Estate and Equipment Loans
Some additional business loans for felons include commercial real estate loans and equipment finance. These are self-secure loans, which mean that the lender gives a loan on your assets—equipment or real estate. The lender will seize and sell the collateral if you default on the loan.
Having collateral that covers the entire loan amount offers the lender more assurance and a “guarantee” that they will be repaid. As a result, criminal background plays a lesser role. Many lenders who specialize in equipment or real estate finance may ignore a borrower’s criminal history if the underlying asset is in good working order.
5. Online Based Short-Term Business Loan Options for Felons
Online lenders are another option for convicts looking for business loans. OnDeck, Kabbage, and other online lenders are more flexible than banks in terms of qualification standards. You do not need to have the perfect credit history to qualify, and most of these lenders will not turn down an otherwise qualified applicant because of a criminal record.
On the other hand, short-term online loans are only a choice if you already have a solid business that has been operating for at least a year. Short-term lenders place a premium on the revenue generated by your company. Your criminal history should not matter too much if you can show excellent business financials.
Business loan options for felons – Final Thoughts
A business loan may be just what you need to get your company off the ground and into the future. However, before making a decision, you should thoroughly consider all of the implications. You do not want the loan to become a burden on your shoulders.