Grants and Loans: What’s the Difference?


Grants and LoansHave you ever thought about the difference between grants and loans? You may think that they are interchangeable since they mean the same thing: money.

As a grant seeker, you may choose between applying for a loan or a grant. These two options are alike since they both finance your proposed project. However, they are distinct and you will find differences between these two.

Here’s what to keep in mind when identifying grants from loans.

The Distinction of Grants and Loans


This is the big difference of the two. A grant is a free money given to a grant seeker. You will not repay it. On the other hand, making a loan would require you to repay the amount at a set schedule and with interest.


In grants, you need to comply with the funders’ rules and guidelines.  Making regular reports on how the funds are being spent is a strict requirement to follow. You might find such rules tedious, but it is necessary to ensure that the project is real and is enforced. While loans do not monitor how you carry out your project.


All financial institutions have loan program. A grant, on the other hand, is a fund from charitable foundations and government agencies. You only deserve it if you pass their guidelines. Thus, there are more available loans than grants.


Qualifying for a loan is easier since it is based on credit history and the status of the business operation. This is the main reason non-profit groups often opt for a grant. To apply for a grant, you need to write a good proposal. Meanwhile, going for loans just require applicants to fill up forms and submit required documents. After that, the acceptance or rejection of a loan application can be known after some days. The result of a grant application, however, takes longer time since it will undergo many reviews.

In looking for funds, you are often caught choosing between applying for loans and grants to finance your proposed projects. Know the pros and cons of each option before you make the choice. You may seek advice from a grant proposal writer to help you decide.

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