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What’s the difference between government grants and loans?

Are you looking to get help paying for your education? Does your non-profit organization need financial assistance to complete a community project? The government offers financial help, but you may not know what’s available and where to find it. 

There are two main types of help offered by the government: grants and loans. Use this quick guide from USAGov to explore the difference between the two and find out how to apply.


Government grants fund projects that will benefit parts of the population or the community. Grants provide money for projects that help improve the economy or the public. Understand key information about grants:

  • The federal government awards grants to state and local governments, universities, research labs, law enforcement, non-profit organizations, and businesses. 
  • People can't use grants for personal benefits. Organizations receive this funding and don’t have to repay it. 
  • To search or apply for grants, visit the federal government’s free, official website, There you can check your eligibility, find tips for the application process, learn how to write a successful grant proposal and more.


Government loans are borrowed money for an individual as a personal benefit or assistance. These loans are for specific purposes like help with student financial aid, housing situations, or utility bills. Understand key information about loans:

  • Individuals can receive loans. You are required to pay back money, often with interest.
  • Sometimes loans are available to cover disaster or emergency relief. Examples include if a major hurricane affected your home or the coronavirus pandemic hurt your small business. 
  • Use to begin your search for government loan programs. Check your eligibility with the online pre-screening tool and read about each loan application process. 

No matter how you’re applying for financial aid, know that the federal government does not give “free money” to individuals. If you receive a message saying you qualify for a "free" grant or money, it is likely a scam. 

Want more information about government grants and loans? Learn more at

LAST UPDATED: April 5, 2023


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