A grant is a financial award given by an entity, typically a government or organization, that does not require repayment, whereas a loan is a borrowed sum of money that must be repaid with interest over a specified period. Grants are often awarded based on need or merit, while loans are provided with the expectation of repayment and may require collateral or creditworthiness.

Grant Vs. Loan

Financial award

Government grant

Organization grant

A loan is a financial agreement in which a lender provides money to a borrower with the expectation of repayment, typically with interest, over a specified period. Loans are crucial for facilitating large purchases, investments, and economic growth by enabling individuals and businesses to access funds they may not immediately have.

Loan

Borrowed sum of money

Repayment with interest

Specified Period

Need-based grants are financial aid awards given to students based on their financial need, aiming to make higher education accessible regardless of economic background. These grants do not require repayment, making them an essential resource for students from low-income families to afford college tuition and associated costs.

Need-based Grants

Merit-based grants

Expectation of repayment

Collateral is an asset pledged by a borrower to secure a loan or credit, serving as a protection for the lender against the borrower's default. It reduces the lender's risk by providing a claim on the asset, which can be seized and sold if the borrower fails to meet their financial obligations.

Collateral

Creditworthiness is a measure of a borrower's ability to repay a loan and reflects their financial health and trustworthiness. It is determined by evaluating factors such as credit history, current debt levels, income stability, and financial behavior.

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