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 comes 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 your income. 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.
Grants
When it comes to students, grants are usually given to those who are in financial need. A lot of the time, these grants come from the federal government, 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
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, which 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
- Indigenous 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, search and apply for any grants that work for you.
Are Grants Considered Taxable Income?
While grants are often considered to be taxable income, it really depends on the type of grant.
Student Grants: For full-time students, all the grants you receive are considered non-taxable. However, for part-time students, there may be a partial exemption, but this depends on the cost of your tuition.
Artist and Researcher Grants: Grant money that is received for projects or research is reported on line 13020 of your income tax return. You can reduce your taxable amount by deducting allowable expenses that are related to the project.
Business Grants: Government grants and subsidies that you receive for your business are also usually taxable and reported as income.
How Long Grant Application Processing Takes
The grant application process generally takes anywhere from 8-16 weeks to get approval. That said, it can take up to 6 months for grant recipients to receive the funds. However, the exact timeline is dependent on the type of grant that you’re applying for.
Federal Government Grants: These can take anywhere from 2 to 4 months to be reviewed and receive approval.
Provincial/Municipal Grants: These grants are often processed faster and can usually take 7-8 weeks.
In Canada, hiring grants can take 2-4 weeks, with training grants up to 3 months, and marketing expansion grants taking 3-6 months.
Applying for Grants and Loans Together
If you’re in Canada and looking into student aid programs, you’re able to apply for both grants and loans with one application. By doing this, you can be assessed for both provincial and federal student aid at the same time. In order to apply, you have to register with your provincial student assistance office, which can also be done through your school’s financial aid office.
Since all applications are done based on the province that you live in, there are multiple financial aid options you can get approved for. These include federal student loans, which can help with financial support for graduate programs, living expenses, and even standard college expenses. You could even qualify for more than one grant.
The Main Reasons Grant Applications Get Rejected
The number one reason that grant applications get rejected is that the core eligibility criteria aren’t met. The exact reasoning can vary based on the type of grant application, but ultimately, not meeting the requirements is the main reason for all types.
Repayable Grants Vs Non-Repayable Grants
Non-repayable grants are essentially considered to be free money and don’t need to be paid back, as long as you meet the terms of the loan. Repayable grants need to be repaid, but they’re similar to federal loans with no interest rates and flexible payment terms. This is a much more affordable form of financial support than private loans.
Repayable grants are also one of the most common funding options for business growth, funded by the government. The repayment plans are specific, depending on what the loan funds.
Bursaries Vs Grants Vs Scholarships
In Canada, there are many ways to fund your student education, whether you’re a local or an international student. Some of these options include bursaries, grants, and scholarships. Approval is often based on your academic achievements, and the application process can be highly competitive. If you’re approved, you’ll receive an award letter stating what you’re approved for and what the conditions include. Here’s how they differ.
Bursaries: While academic achievement can help with approval for a bursary, the main requirement is need. These are often reserved for low-income families and can be combined with government programs and other funding sources. Many bursaries are gift-aided by providing the funds directly to the school.
Grants: While grants are similar to bursaries, most grants are specialized and focus on specific demographics. These grants require you to meet specific criteria in order to be eligible.
Scholarships: Scholarships are one type of free aid that is solely based on your academic achievements. Unlike loans, the money borrowed doesn’t need to be returned, but there are usually conditions you need to meet throughout the school year. If you leave school for any reason, you could lose your scholarship altogether.
If these aren’t options for you, there are other ways you can fund your education. These include loans through the Canadian government or provincial/territorial governments, to help cover the costs related to your education and other expenses.
You can also go through banks and credit unions to get student loans and student lines of credit. While these aren’t interest-free like some government loans, they do have much lower rates than traditional loans.
Women-Owned Business Grants Available in Canada
In Canada, there are many different grants available to support business needs for women-owned businesses that are sponsored by the Women Entrepreneurship Strategy as well as private initiatives. These grants can range anywhere from $5,000 to over $100,000. Some of these grants include:
- BMO Celebrating Women Grant Program
- Mastercard Small Business Fund
- Visa She’s Next Grant Program
- Women Entrepreneurship Loan Fund
- WeBC
Indigenous Specific Grant Programs in Canada
There are also many indigenous-specific grant programs out there to support First Nations, Inuit and Metis communities. There are even major federal programs through Indigenous Service Canada and Crown-Indigenous Relations and Northern Affairs Canada. In fact, there are many different grants out there that focus on certain areas and special circumstances. These include grants for:
- Arts, Culture and Languages
- Environment and Climate Action
- Business and Economic Development
- Research, Education and Community
What Happens When You Don’t Meet Grant Conditions?
When you get approved for a grant, there are usually conditions you need to meet in order to keep those funds. If you don’t meet these conditions, then you could have to repay the funds, have the grant immediately terminated, and be ineligible for future grants.
Common Scams Targeting Those Looking for Grants in Canada
When you’re looking for grants, whether it’s for non-profits, job creation, or real estate purchases, it’s important that you make informed decisions on who you apply to. There are plenty of common scams out there, but you can detect them by looking for some key differences. These include:
- Fake government websites
- Requests for advanced fees
- Canadian Anti-Fraud Centre impersonators
- Student aid supports with upfront fees
If anything feels off, it’s best not to apply and double-check to see if it’s a scam or not.
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.
