Small Business Grant vs. Loan: 4 Differences to Know

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Comparing Small Business Loans vs. Grants
1. Grant vs. Loan Eligibility Requirements
Type of business or industry Whether it's a startup or an established business Business size and number of employees Estimated or actual revenues
Business and personal credit scores Personal income or business income Profit and loss statement Cash flow statement Business or personal assets
2. How Grant vs. Loan Funding Can Be Used
3. Funding Amounts
4. Repayment Requirements
5. The Application Process
Loan interest rates Whether rates are fixed or variable Loan fees, including origination fees and prepayment penalties Repayment terms Collateral requirements Personal guarantee requirements
Loan versus Grant: How to Decide
Can I earmark these funds for a specific purpose? How much money do I need? Are there any grants for which my small business is eligible? Will my business be able to pay back these funds? Do I have the time to search out and apply for grants? Do I have a personal or business credit score that will allow me to get good terms on loans?
The Takeaway
About the Author
Rebecca Lake is a freelance writer specializing in personal finance, investing and small business. Her work has appeared online at U.S. News and World Report, Forbes Advisor, CreditCards.com and Investopedia. Rebecca writes about a variety of topics for SoFi, including budgeting, saving money and student loans.
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