So restrictions on the business and the use of state funds are typically imposed. Loans can be extended directly by a state, through a state-chartered corporation, or indirectly, through guaranteed loans from commercial lenders. Typically, loans are used for longer term capital needs such as plant and equipment. Most states require collateral, that in the event of loan default, the state doesn't lose its entire investment. Interest rates may be at the market rate or may be subsidized by the state.
Most loans require the borrower to satisfy certain criteria before a loan is granted.
If you are located in a rural area, contact the U.S. Department of Agriculture. Grant Programs Grants are sums of money provided to businesses without a repayment obligation. Grants can be funded by federal and state government agencies or by private. Grants are rarely used except for research and development, and few for-profit businesses qualify for grant programs. They are generally reserved for non-profit organizations.