Business funding for formerly incarcerated founders
Capital for a formerly-incarcerated founder almost always comes from a stack, not a single source: a microgrant for tooling, a CDFI loan for working capital, a tax credit to offset payroll, and pay-it-forward revenue share once the business is live. This page maps the entire stack.
Programs we recommend
- Apply
Felons to Founders Pay-It-Forward Stack
Felons to Founders
- Type
- Fund / Other
- Amount
- Revenue-share, no equity
- Area
- United States
Restitution-first capital model: founders receive infrastructure + capital and pay forward a percentage of revenue to the next cohort.
- Apply
Work Opportunity Tax Credit (WOTC) — Ex-Felon Target Group
U.S. Department of Labor + IRS
- Type
- Tax credit
- Amount
- Up to $9,600 per qualifying hire
- Area
- United States
Federal employer tax credit for hiring ex-felons within one year of release. Filed via IRS Form 5884 and ETA Form 9061.
- Apply
Federal Bonding Program
U.S. Department of Labor
- Type
- Fund / Other
- Amount
- Free $5,000 bond per hire (first 6 months)
- Area
- United States
Fidelity bonding that removes the 'uninsurable' objection employers cite when hiring formerly incarcerated workers. Free to the employer.
- Apply
Hello Alice + Wells Fargo Open for Business Fund
Hello Alice / Wells Fargo Foundation
- Type
- Grant
- Amount
- $10,000
- Area
- United States
Recurring grant rounds for U.S. small businesses. No criminal-history bar; reentry-led businesses regularly fund.
FAQ
What's the Work Opportunity Tax Credit (WOTC) and why does it matter?
WOTC is a federal tax credit (up to $9,600 per hire) for employers hiring from targeted groups, including ex-felons within one year of release. It improves the unit economics of any business that employs other reentry talent.
Can I combine grants and loans?
Yes — and you should. A typical stack is a $5K microgrant for equipment + a $15K Kiva 0% microloan for working capital + a CDFI line of credit at year 2.
Other capital paths
- Small business grants for felonsA vetted, regularly-updated list of small business grants formerly incarcerated founders can actually apply for in 2026. Eligibility, amount, and direct application links.
- Startup loans for felonsLoan programs that explicitly fund formerly incarcerated entrepreneurs in 2026. Real rates, real lenders, no payday traps.
- SBA loans for felonsHow the SBA evaluates criminal history on the 1919, which offenses trigger automatic denial, and the SBA-approved lenders most likely to fund formerly incarcerated founders.