Starting or expanding a business can be a daunting task. Having some basic information surrounding grants and loans can be a huge help in moving your business forward. While there are some similarities between the two, there are many differences.
What Is a Loan?
A loan is a borrowed sum of money that you have to pay back with interest within a certain timeframe. Typically, loans are geared more toward companies with good credit scores or financial profiles. Loans may be a good option for your business if you need money fast and can qualify for one.
What Is a Grant?
Grants are sums of money that you do not have to pay back, but you do have to use for a specific purpose. You may qualify for a grant if you own your own product or idea, and if you fall into the specific criteria the grantor sets. This can include being a certain demographic as an owner or offering services/products in a specific industry.
What Do They Have in Common?
While the differences were discussed above, both grants and loans share a few commonalities. Grants and loans can come from any number of sources, including financial institutions, private corporations, trusts, governmental entities, and friends or family. Similarly, both require that the money be spent on what the loan servicer or grantor stipulates. This means there are rules regulating what should and shouldn’t be bought with the given funds.
Which Is Best For Me?
You may be asking yourself which type of funding to apply for. This depends on a few criteria, including the amount you need, the time you need it by, and your eligibility. If you have any questions about obtaining a grant or a loan for your small business, contact us here. We may be able to help you.