When it comes to small business funding, there are many more options than there once were. On the broad spectrum, there are loans, and there are grants. Choosing which one is the right option for your business is not always as cut and dry as it may seem.
What is the Difference?
Generally speaking, a loan has to be repaid, and a grant does not. Grants are also typically reserved for those businesses that meet certain requirements, while anyone can apply for a loan. Of course, applying for a grant that you qualify for does not guarantee approval any more than applying for a loan does, but most grants are not even open to everyone for application. Also, grant funds do not typically rely on credit history, but rather meeting the necessary requirements.
No Repayment Doesn’t Mean Free
While repayment in the traditional sense is not required for grant funds, there are other requirements that can be tedious and time-consuming. Many grants come with heavy compliance and reporting requirements. In some cases, paying someone to handle this comes with financial burdens of its own, and if the requirements are not met, the funds must be returned.
So Which is Better?
Truthfully, it just depends. While not having to repay funds is enticing, do take into account the amount of funding received versus the time commitment that is comes with. If your business is eligible for grants by all means look into it. Fill out the necessary applications and see what happens, but be certain you are aware of everything that is required of you if you accept the funds. Also, know that even if you are eligible for grants, you may still need loans funds.
For your business financing needs, Biz2Credit is here to help. We have an extensive network of lenders that offer small business financing of all types. We can help you find the perfect lender for your needs. Visit Biz2Credit.com today to get started.