Being an entrepreneur can be a rewarding way to earn a living. It gives people the ability to share something with others and be able to set their own hours. Making their own business decisions can be a big reason why people open their own business to begin with. Being a business owner or someone who wants to start a business can also be challenging. This is because it takes money to make it happen. The key lies in finding the best business loans for ex-felons.
When it comes to taking out business loans, lenders are not likely to ask if you have committed any felonies. You do not have to voluntarily share that information with them, either. If they ask about your criminal record you should always be honest in sharing the details. However, if they do not ask about it, then you have no reason or obligation to offer the information. Having said that, being an ex-felon is not necessarily a reason that would be held against you when it comes to taking out a business loan.
What Matters when it comes to Business Loans
When you are looking for a business loan, whether you are an ex-felon or not, it is helpful to know what criteria lenders are concerned with. They are not likely going to care about your criminal record, but there are some things they will care about. These things they care about will help to make the decision as to whether or not you can be approved for a business loan.
Some of the things that business loan lenders will care about include:
- Your credit score. This is going to be one of the most important pieces of information when it comes to obtaining a business loan. They want to know if you have a record of paying back your debts. Your credit score will also help influence the interest rate you are offered. Better credit scores lead to lower interest rates, and vice versa.
- Business longevity. The lenders are about how long you have been in business. Most want to give loans to businesses that have been around for at least two years. There are also start-up loans to help people who have a business idea and want to take out a loan to get it started.
- What the funds will be used for. Before seeking a business loan know what you want to use the funds for. Lenders will want to know what the funds will be used for. Business loans are usually approved for such things as purchasing a commercial building, buying equipment, or paying overhead costs.
If there is some type of collateral that they can verify, or a co-signer who will be helping you to obtain the loan, your chances of being approved will be greater. Having a source of collateral or a co-signer for the loan helps secure it, so that banks know they will still get the funds back if you stop paying on the loan.
Best Business Loans for Ex-Felons
There are many options when it comes to business loans. The Small Business Administration (SBA), which is a government-backed agency, offers small business loans. There are also private lenders that you can consider, as well as places in your community, such as banks and credit unions. If you have a bank that you do your banking with, that may be the best first place to inquire about obtaining a small business loan.
Here are some places to consider looking into regarding finding the best business loans for ex-felons:
Small Business Administration (SBA) – This government agency provides around $45 billion in small business loans per year. In 2023, they announced they would be giving even more small business loans than in prior years. They are making it easier for people who are minorities or come from other certain groups to obtain a commercial loan. Their program works by you obtaining a commercial loan from a bank or credit union, and then the SBA backs the loan for the lender. This means that if you default on paying it back, the SBA will pay back 85% of it. Since the SBA provides such a good backing, the bank is more likely to give loans to people. The SBA also gives out microloans to those who qualify. To get more information about their program, click here.
Lending Tree – This organization helps people find a small business loan that will work for them. Whether you want funding to help with start-up costs, expansion, equipment, or purchasing a commercial space, they can find you the best loans available. You will provide them information about your company, such as the type of company it is, how long it has been in business, and what the funds will be used for, etc, and they will help you find the best options. They get quotes from many lenders, so that you do not have to contact each place yourself. They do the work for you in trying to find the best possible business loans for ex-felons. To get more information, click here.
Funding Circle – This company provides some of the best business loans for ex-felons, and others. They will give business loans to those with lower credit. They also make the decisions quickly and provide the funding within two days of being approved. They do require that you be in business for at least two years and have revenue of at least $50,000 per year, and you have to have a personal credit score of at least 600, which is considered an average score. If you can meet those requirements they can provide you a business loan that can be used to grow or strengthen your business. For more information or to apply for a loan, click here.
Start with these lending options to find a good business loan, but do not forget to check with places in your own community. Contact your local bank or credit union to see if you qualify for one through them as well.
