Grants and loans for people with records: what's real

USA.gov says the federal government does not offer "free money" for individuals, and that federal grants are typically only for states and organizations.^1,2

USA.gov says federal grants usually go to groups such as universities, research labs, nonprofit organizations, state and local governments, law enforcement and businesses, not to people for personal expenses. What the federal government does offer people is loans (for school, buying a home, starting or growing a business, disaster recovery and farming) and benefits such as help with food, health care and housing. Benefits usually do not have to be repaid, and each program has its own eligibility rules, application process and deadlines. The Department of Labor reentry grants covered below go to organizations that serve people with records, not to individuals.

Grants.gov, the federal grants site, says most of its funding opportunities are for organizations, not individuals, and that none of them provide personal financial assistance.^3,4

Grants.gov says individuals can apply only to the funding opportunities that are open to individuals, and every notice of funding opportunity has a section that says who is eligible. For personal financial help, Grants.gov sends people to USA.gov. Grants.gov also says applying for a federal grant is completely free.

The FTC says offers of free money from government grants are scams, including offers of grants to pay for education, home repairs, home business expenses or unpaid bills.^5,6

The FTC says scammers run online ads for fake grants, call from a fake number that makes the call look like it comes from a government agency, and send texts, emails and social media messages saying you might qualify. USA.gov says promises of "grants" or "free money" from the government are often scams.

The FTC says the government will not call, text, email or message you on social media to offer you a grant, and no government agency will ask for your Social Security, bank account or credit card number that way.⁵

The FTC says scammers often ask for your Social Security number to see if you "qualify" (you always will), then ask for bank account details to "deposit" the grant or to pay fees. They may pretend to be a real agency, such as the Social Security Administration, or make up an official-sounding name, such as the Federal Grants Administration, which the FTC says does not exist. Real government grants require an application and are always for a very specific purpose.

Do not pay for a list of grants or any up-front fee. The FTC says the only place to find a list of all federal grants is Grants.gov, and that list is free.^4,5

The FTC says no government agency will ever ask you to pay to get a grant, or to pay with cash, a gift card, a cash reload card, a wire transfer or cryptocurrency. Scammers may promise a refund if you are not satisfied, but the FTC says that is a lie. Grants.gov says applying for a federal grant is completely free.

Report a government grant scam to the FTC at ReportFraud.ftc.gov. If you already paid, contact the company you used to send the money right away, say it was fraud and ask them to reverse it.^4,5,6

Grants.gov also gives the FTC's toll-free number for complaints about government grant scams: 1-877-FTC-HELP (1-877-382-4357). The FTC says it uses and shares reports with law enforcement partners, and that the sooner you act after paying a scammer, the better.

A record does not by itself keep you from federal student aid. Drug convictions no longer affect eligibility, and if you are on probation or parole or living in a halfway house, you may be eligible. Limits apply while you are confined.^7,8

Federal Student Aid says that while you are confined in an adult correctional or juvenile justice facility, you may get a Pell Grant only if you are enrolled in an approved prison education program. You can still get a Federal Supplemental Educational Opportunity Grant (FSEOG) and Federal Work-Study if you qualify (Federal Student Aid notes you probably won't get Work-Study while confined, because a Work-Study job is hard to do from inside), but you can't get federal student loans. Once you are released, the limits tied to your incarceration are removed. Federal Student Aid also says to fill out the FAFSA even if you may not be eligible for federal aid, because most schools and states use it to award other aid. Our college and financial aid answer goes through these rules, including what to ask about each college's own admissions questions.

The Department of Labor's Reentry Employment Opportunities (REO) program gives grants to organizations, not individuals, to run job training and reentry services for people who have been involved in the justice system.^9,10

The Department of Labor says REO grants go to groups such as state agencies, tribal organizations, local governments, nonprofits and workforce boards. Core services include case management, occupational skills training that leads to industry-recognized credentials, employment, work experience, tutoring, mentoring and high school equivalency preparation. Current initiatives include RESTART (July 1, 2026 to December 31, 2029), which funds training and employment opportunities in skilled trades and high-demand industries, with priority on shipbuilding, advanced manufacturing and Registered Apprenticeship, and Pathway Home, which gives adults in state prisons or local jails reentry services before release that continue after release. Whether a funded program serves your area depends on which organizations hold grants, so ask a local reentry program or American Job Center.

CareerOneStop, a Department of Labor site, has a ReEntry Program Finder that lists local programs that help people with a criminal record with their job search, career planning and training.^11,12,13,14

CareerOneStop says reentry programs specialize in helping people overcome the barriers caused by a criminal record, and that different programs offer different services, so it suggests contacting a few to ask what help they offer. Its justice-impacted section also says reentry programs can help with housing and other needs, and it has a step-by-step guide to finding a job after incarceration.

About 2,300 American Job Centers across the country help people search for jobs and find training, and the Department of Labor says the system gives specialized attention to justice-involved people, among other groups.^15,16,17

Find a center with CareerOneStop's American Job Center Finder, or call the Department of Labor's help line at 1-877-US-2JOBS (TTY 1-877-872-5627). The Department of Labor says services vary from state to state and some have eligibility requirements, so call ahead. Under the WIOA Adult program, centers must give priority for individualized career services and training paid for with WIOA Adult funds to people who receive public assistance, other low-income people and people who are basic skills deficient. Veterans also get priority of service in all Department of Labor-funded employment programs.

Two employer-side programs, the Federal Bonding Program and the Work Opportunity Tax Credit (WOTC), can come up when you apply for jobs. They help employers, not you directly. Our background check guide explains both.^18,19,20

The Federal Bonding Program, run by the Department of Labor, gives employers fidelity bonds that cover the first six months of employment at no cost to the job applicant or the employer. The WOTC was authorized only for workers who began work on or before December 31, 2025. As of October 28, 2026, the DOL and IRS pages still showed that end date and we found no renewal by Congress, so do not count on it.

SBA says it does not provide grants for starting or expanding a business, and USA.gov says there are no federal grants for starting a business.^21,22

SBA says its grants go to nonprofits, Resource Partners and educational organizations that run counseling and training programs. USA.gov lists personal funds, investors and small business loans as the ways to fund a business. SBA says it only emails from addresses ending in @sba.gov, so treat anyone who says they are from SBA but uses another address as a possible scam.

SBA loans are loans, not grants. You apply for a 7(a) loan through a participating lender, and for a microloan of up to $50,000 through an SBA-approved nonprofit intermediary.^23,24

SBA says 7(a) borrowers must be creditworthy and show a reasonable ability to repay, and that the maximum 7(a) loan is $5 million. For microloans, SBA says the intermediary makes all credit decisions and sets all terms, the average microloan is about $13,000, the longest repayment term is seven years, and interest rates are generally between 8% and 13% depending on the intermediary.

Under SBA's current rule, a business is not eligible for a 7(a) or 504 loan if an owner of more than 20 percent, an officer, a director or a key employee is currently incarcerated or serving a sentence of imprisonment or is under indictment for a felony or for a crime involving financial misconduct or a false statement.^25,26,27,28

The rule (13 CFR 120.110(n), as it read in the eCFR on October 27, 2026) says a business is ineligible if it has an Associate who is currently incarcerated, serving a sentence of imprisonment imposed upon adjudication of guilty, or under indictment for a felony or any crime involving or relating to financial misconduct or a false statement. SBA's definition of an Associate for a small business includes an officer, director, owner of more than 20 percent of the equity, or key employee. SBA says "serving a sentence of imprisonment" includes house arrest, work release and similar programs, but not someone held in jail awaiting trial, though that person is still ineligible while under indictment for a felony or a crime involving financial misconduct or a false statement. For microloans, 13 CFR 120.707(a) bars intermediaries from lending to a business with an Associate who is currently incarcerated or serving a sentence of imprisonment imposed upon adjudication of guilty, and to childcare businesses with an Associate on probation or parole for an offense against children. The same section says intermediaries may lend only to businesses eligible under Part 120, so ask the intermediary whether the 120.110 rules also apply. Separately, unless SBA waives the rule for good cause, 13 CFR 120.110(q) makes a business ineligible if it, or a business an applicant or Associate owned, operated or controlled, defaulted on a federal loan and cost the government money. If you may have an old defaulted federal debt, ask a lender or an SBA resource partner whether this applies.

Since May 30, 2024, SBA no longer treats probation or parole as a reason a business is ineligible for 7(a), 504 or microloans. The one narrow exception is childcare microloans.^{25,27,29,30,31}

SBA's final rule (89 FR 34094, published April 30, 2024, effective May 30, 2024) removed those restrictions. Before it, a business with an Associate on probation or parole could not get a 7(a) or 504 loan, and microloans had a bar for an Associate on probation or parole for an offense involving fraud or dishonesty. SBA said at the time that people who are currently incarcerated and people who have previously defrauded the government remain ineligible. SBA's loan manual (SOP 50 10, version 8.1, effective October 1, 2026), in its core requirements for all 7(a) and 504 loans, says a business owned by someone on parole or probation may be eligible, but if the business depends primarily on that person, the applicant must give the lender a plan for keeping the business running in case of reincarceration, and the lender should consider whether to require another person to guaranty the loan. The eCFR (current through October 27, 2026) lists the 2024 rule as the last amendment to both 13 CFR 120.110 and 120.707.

SBA's rule sets only a minimum. A lender can still run its own criminal history check and can say no if a record, together with other information, shows an unacceptable credit risk.^{28,29,30,32,33}

SBA says lenders must follow the Equal Credit Opportunity Act and other laws, and cannot use criminal history in a way that has an unjustified discriminatory effect on a protected class. Question 4 on SBA's current borrower forms, Form 1919 for 7(a) loans and Form 1244 for 504 loans (both version 02/2025), asks only whether the applicant or any Associate is currently incarcerated, serving a sentence of imprisonment imposed upon adjudication of guilty, or under indictment for a felony or any crime involving or relating to financial misconduct or a false statement. A "yes" answer makes the business ineligible, and SBA said when it changed the question in 2024 that there is no waiver or exception because it is a regulatory requirement.

SBA's partners offer free or low-cost business counseling and training: Small Business Development Centers (SBDCs), SCORE mentors and, for women entrepreneurs, Women's Business Centers.^22,34,35

SBA says SCORE mentors give advice at no cost on topics such as financing and business planning, and that SBDCs give individual business advising and help with business plans and access to capital. SBA's pages for these partners do not single out people with records, so ask a partner whether it has worked with entrepreneurs who have a record. You can search by ZIP code with SBA's local assistance tool. USA.gov lists SBA's Answer Desk as 1-800-827-5722 or answerdesk@sba.gov.

The FTC says a company that promises you a loan or credit card no matter your credit history, but wants a fee first, is running a scam. Legitimate lenders will not promise a loan before they check your credit.³⁶

The FTC says real lenders can require an application or appraisal fee before they consider your application, but nobody legitimate will tell you that paying a fee means you will get a loan. It is also illegal for telemarketers to promise a loan and ask you to pay for it up front, under the Telemarketing Sales Rule. The FTC suggests checking with your state attorney general or banking regulator to see if a lender is registered in your state, and reporting scams at ReportFraud.ftc.gov.

The CFPB describes a payday loan as a short-term, high-cost loan, generally for $500 or less and usually due on your next payday, and says payday lenders generally do not check whether you can repay.^37,38,39

The CFPB gives an example: a typical two-week payday loan with a $15 per $100 fee works out to an annual percentage rate of almost 400 percent, compared with about 12 to 30 percent on credit cards. The CFPB also says payday loan payments are not reported to the nationwide credit reporting companies, so even on-time payments do not help rebuild your credit. Some states do not allow payday lending, so check with your state regulator or attorney general.

You can get your credit reports free at AnnualCreditReport.com, the only site authorized to fill orders for them. The CFPB says a secured credit card or a credit builder loan can help you rebuild credit.^38,39,40

The FTC says federal law gives you a free copy of your report from each of the three nationwide credit bureaus once every 12 months, and that the bureaus have permanently extended a program to let you check each report weekly for free at AnnualCreditReport.com. If you find mistakes, dispute them with the credit bureau and with the business that supplied the information. The CFPB says a secured card takes a cash deposit that sets your limit, and a credit builder loan holds the money for you as savings while you make small payments, usually over six to 24 months. Debit cards, cash and prepaid cards do not build credit, and fees and interest rates can be high on secured cards. If a past bank account problem is holding you back, see our bank account pages.

The FCC says that in many states calling or texting 211 connects you with a local referral center that can point you to help with food, shelter, rent and utility bills, as well as health care, job training and other services.⁴¹

The FCC says 211 is a referral service: specialists match your needs to agencies and community organizations and link or refer you to one that can help. It says 211 covers all 50 states, the District of Columbia and Puerto Rico, and reaches about 99 percent of the U.S. population according to 211.org, so confirm service in your area at 211.org.

USA.gov's benefit finder shows benefits you may qualify for, by category such as food, housing and utilities, health, and welfare and cash assistance, and how to apply. Our SNAP and Section 8 answers explain how a record affects those two programs.^42,43,44

USA.gov says each benefit program has its own eligibility rules, application process and deadlines. Temporary Assistance for Needy Families (TANF) is federally funded and state-run, each state or tribal government runs it differently, and you must live in the state where you apply. USA.gov also lists food assistance, emergency and rental housing help, and help with utility bills, and offers a free question line (Call USAGov or chat).