Get Approved for up to $35,000 in 3 minutes
Apply Now
Blog Categories
Loan Calculator

Loans vs. Grants - What's the Difference?

Written by Jessica Steer
Are you looking into starting a business or paying tuition for any other reason? Do you need a loan to accomplish these things? It is actually quite common. Doing anything these days costs a lot of money and sometimes we just need that little bit of extra help to get off our feet. Did you know that a loan isn’t your only option?
Table of Contents

    Depending on what you are going to school for or what business you are starting, there are grants available to help you accomplish these goals.

    What is a personal grant vs a personal loan?

    While both personal loans and personal grants can get you the money you require, they are very different things and require different qualifications

    Personal loans

    A personal loan is something you take out based on your income that you pay back over time with interest. Most loan companies or financial institutions offer open loans which allow you to pay off the loan sooner than the agreed-upon term in order to save money on interest. However, if you do not pay off the loan the lender can send you to collections which puts a hard hit on your credit score, or they could seize any collateral if you got a secured loan.

    Personal grants

    A personal grant does not require to be paid back. However, there are certain qualifying factors that you must meet in order to get a grant, this is common when looking to pay for post-secondary education. While it is most common for students to apply for grants, they are also available to small businesses and nonprofits, even individuals for various reasons. They are usually given out by government departments, trusts, and even corporations.

    Small business grant vs. small business loan

    If you are looking at starting a small business a good portion of the time most of the funding comes from savings. The rest of the money comes from loans or grants. There are a few differences between the two.

    Small business loans

    In order to get a small business loan, you can either go through a financial institution or get a government loan. Most financial institutions will give commercial loans to small businesses and government loans come from government funding programs that have specific criteria about what kinds of businesses can receive a loan from them. Both of these kinds of loans do need to be paid back though.

    Both of these types of loans require:

    • A good, detailed business plan
    • A good credit score
    • Collateral
    • Personal investment

    This shows the lender that you are serious about your business as well as able to pay the money back. Oftentimes, small business owners have the money to get the business started and cover things like office space, but they use the business loan to help with covering operating expenses and pay staff when they first get off of the ground. It is also noted that collateral is required in order to receive a business loan making this a secured loan. This offers the bank some piece of mind if the loan is defaulted at all.

    Some loans are also done as a merchant cash advance. These types of loans allow the small business to pay them back through card payments from customers, directly from the terminals.

    Small Business Grants

    Grants can be much more difficult to obtain and your ability to qualify for them depends on the type of business that you are starting. Not all business types are eligible for grants. They are mostly given to those who open businesses that are in demand throughout the country. This is done in order to give people an incentive to start these types of businesses.

    Business grants and corporate grants are given to businesses once they meet the requirements and submit an application. While some private organizations do offer grants, they are mostly offered by the government. A good portion of the government grants come in the form of small business relief grants, especially during and after the COVID-19 pandemic.

    Grants vs Loans vs Scholarships

    When you become a student it can be overwhelming to figure out how you are going to pay for your education. Luckily you do have some options. Whether you decide to go for a student loan, grant, scholarship, or even all of the above there are plenty of options available to you.

    Personal Loans

    So we know that loans involve your credit score as well as income earned. You have to be able to pay the money back and are given a certain amount of time to be able to do so. This is true for both secured and unsecured loans, however, lenders tend to be more lenient when it comes to students who need financial assistance.

    As a student, you have more options when it comes to a personal loan. Not only can you get a loan from a bank, financial institution, or private lender, but you can also get lines of credit.even government funded student loans are available. The great thing about these is that they are super flexible and a lot of the time, loan repayments aren't required to start until you complete your degree or, in some cases, 1 to 2 years later. In other cases just the interest payments are required until you finish school or obtain a full time job.


    When it comes to students, grants are usually given to those who are in financial need. A lot of the times these grants come from the federal governments and they use a few specific criteria to decide if you qualify such as:

    • family income
    • family status
    • disability status
    • cost of the school

    The thing with grants is that they are often more limited and don’t cover the cost of your full education. If you can qualify for a grant there aren’t any conditions tied to them so if you receive one, you get to keep it.


    Scholarships are different from grants because anyone can qualify for them. Instead of being based on financial need, they are based on:

    • success in academics
    • studying in in-demand fields
    • excelling in athletics
    • scholarship competitions
    • being a student of a specific ethnicity or group

    Just like grants, scholarships do not need to be paid back, however, sometimes there are conditions to meet in order to maintain the scholarship such as GPA and completion of a certain specified degree. Unlike grants, though, there are many more scholarships available, however, this can also make it difficult to find the one that you would qualify for.

    What is a government grant?

    A government grant is funding that is given to a person or a business by the federal provincial or local government for a specific reason. Most of the time these grants are awarded to those who are low income or are starting a business in a field that is currently in high demand. The government uses these grants to help add to the economy with qualified workers.

    Do you have to pay back Canada student grants?

    Just like any other grant given by the government or a private institution, you don’t have to pay back a Canada student grant. These grants work with the Canada student loan program that the federal government also offers to help students with financial aid by offering low interest loans.

    Why is a grant better than a loan?

    While loans are super helpful when it comes to going to school or opening a small business, a grant is preferred for a few reasons.

    • You don’t have to pay grants back. Grants are given to you after you apply and prove your qualifications.
    • Grants don’t require you to have a good credit score or make a ton of money.
    • Grants don’t come with conditions, once you receive them they are yours.

    What are the different types of grant funding?

    In Canada, different types of grant funding are offered. The Government of Canada offers grants for:

    • Agriculture
    • Arts, Culture, and Sport
    • Business
    • Environment
    • Indiginous Peoples
    • Gender equality
    • Health
    • International development
    • Jobs/apprenticeship training
    • Leave from work/caregiving/pension
    • Research
    • Student AId

    You are able to go directly to the website and search and apply for any grants that work for you.

    How can Spring financial help?

    Are you in need of a personal loan? No matter what the reason, spring financial can help. We offer personal loans up to $35,000 that we can e-transfer to you within just a few hours after approval. We specialize in loans for all credit situations and are committed to helping you improve your financial health. You can apply online or give us a call at 1-888-781-8439.

    Online Loans from 9.99%*

    Skip the branch visits, apply online in minutes and get the financing you want today.

    Get a Loan Quote

    Subscribe to receive special offers and financial tips

    Subscribe To Our

    Receive Special Offers, and Learn Tips and Tricks to Improve your Finances.