Grants versus Loans
The Differences between Government Grants and Government Loans
On a superficial level grants and loans do the same thing: they provide you with money. As such the two terms are often used interchangeably when talking about financial assistance; yet they have very distinct differences. A grant is a sum of money awarded to an individual or group for a specific project or necessity that does not have to be repaid. Meanwhile a loan is a sum of money borrowed from the money source, which has to be paid back; and usually with interest.
When applying for a grant or a loan, both have the option of private or public funding sources. Grants, however, must be applied for through the submission of an application and proposal. Loans usually just require the completion of a generic loan form.
After being approved for a grant or loan, the amount of time it takes to receive the funds can vary based on the amount solicited and the intended use. Loans tend to be faster at giving funds as there is less processing time. Grant money, however, can be received in as little as several weeks after the application is approved.
Why Grants are Better than Loans
- You don’t have to pay them back– Grants are free money donations granted to recipients for various reasons, and do not need to be paid back. This is money meant to assist worthy individuals who have met the granter’s donation standards and the funds are to be applied to a specific initiative; if not the recipient will suffer consequences.
- You don’t need capital– Not just anybody can get a loan these days. In fact banks and other fund sources are not very sympathetic to helping individuals in need of funds, because this is often equated with risk. Usually to qualify for a loan individuals must have some sort of capital to cover at least the partial value of the loan- a car, house, business etc… Grants on the other hand require no capital and do not look at individuals in terms of their risk, because this is free money.
Don’t Worry There is Help
Applying for grants can be stressful business and simple errors in the application and proposal process can have you quickly rejected. Fortunately there is help. Using the government grant kit will provide you with the help you need to apply to the grant best suited to your needs and thus increase your chances of approval. Don’t risk being rejected when there is free help to get you the money you need.