Author
Home > Business > What is the Difference Between Grant and Loan?

Guilherme Mazui

•4 minutes to read

What is the Difference Between Grant and Loan?

🆚 Go to Comparative Table 🆚

The main difference between a grant and a loan is repayment. A loan requires you to repay the money you borrow, whereas a grant does not, making it essentially a gift. Here are some key differences between grants and loans:

Grants:

  • Are non-repayable, meaning you don't have to pay them back.
  • Are usually awarded by government departments, trusts, or corporations.
  • Are given to individuals, businesses, educational institutions, or non-profits.
  • Are often based on financial need.
  • May have more stringent eligibility requirements and application processes.
  • Funds are often more limited compared to loans.

Loans:

  • Require repayment, along with interest.
  • Are generally given by banks, private lenders, or individuals.
  • Can be used for a wider range of purposes, such as capital assets and operational costs.
  • Are often based on credit and ability to repay.
  • May have fewer requirements to qualify and are more accessible to a broader range of people.
  • Can provide more financing than grants, based on your credit and ability to repay.

In summary, grants are non-repayable funds often awarded based on financial need, while loans are funds that must be repaid with interest and are generally given based on credit and ability to repay. Each option has its advantages and disadvantages, so it's essential to consider your specific needs and circumstances when deciding between a grant and a loan.

On this page
  • What is the Difference Between Grant and Loan?
  • Comparative Table: Grant vs Loan

    • Comparative Table: Grant vs Loan

    Here is a table that highlights the differences between grants and loans:

    Feature Grants Loans
    Meaning Grants are financial aid awarded by the government or other organizations for a specific purpose. Loans are financial assistance provided by banks, financial institutions, or private lenders, which must be repaid with interest.
    Repayment Grants are non-repayable and non-interest bearing. Loans require repayment, usually with interest, over a specified period.
    Purpose Grants are often awarded for specific projects, non-profit organizations, educational institutions, or businesses. Loans can be taken for various purposes, including personal, business, or educational expenses.
    Qualification Grants may have specific qualifications or criteria that must be met by the applicant. Loans require borrowers to meet certain eligibility criteria, such as credit score, income, or collateral.
    Source Grants are typically provided by government departments, trusts, foundations, or corporations. Loans are generally given by banks, private lenders, or individuals.
    Availability Grants are limited in number and amount, as they are usually sponsored by government departments with a specific budget. Loans offer more opportunities, as they can be provided by various sources, including banks, private lenders, or individuals.

    In summary, grants are non-repayable financial awards given for specific purposes, while loans are financial assistance that must be repaid with interest. Grants are often awarded by government departments, trusts, or corporations, while loans can be provided by various sources, including banks and private lenders.

    Read more:

    Guilherme Mazui

    Guilherme Mazui is graduated in journalism from the Federal University of Minas Gerais (UFMG) and a master's degree in Communication from the University of São Paulo (USP). In addition, he has experience in advertising writing and has worked as a content editor in several companies.