Start Your Small Business: Loans or Grants?

When starting your small business you may be faced with the question of choosing between small business loans or grants. There are inherent differences between small business loans and grants and it is good to know more information about both of these ways of financing your small business before embarking on the journey.


While small business loans in America come from either the government or banks, small business grants come from government-sponsored agencies or private sources.

Comparing Loans and Grants

Loans are easier to obtain and are more versatile than grants. In order to qualify for a loan you must seek a lender, apply and interview. Grants are harder to come by and therefore harder to get. In addition to the multitudes of banks that offer small business loans, the government-sponsored U.S. Small Business Administration (SBA) offers many loan programs for small businesses. However, the SBA offers only grant programs designed for non-profit organizations with specific focuses on business management, leaving most businesses ineligible for an SBA grant.

The Advantage of Loans

While it might seem less appealing to take on the debt of a loan, in the long run it could be the best choice for your business. Small business loans are easier to find, have more flexible parameters, and offer you more options when it comes to starting or expanding your business. Whatever you choose, remember that investing in your business increases your chances of having a successful business.