A combination of a grant and a loan is a way of financing in which non-repayable support is supplemented with a repayable source. It arises from a practical need: a grant almost never covers the whole budget, and the recipient must secure the rest themselves, while also covering expenditure in advance and waiting for reimbursement. Three approaches are used – an ordinary commercial loan for co-financing and bridging cash flow, a favourable loan from public financial instruments, and schemes that combine both components directly. Involve the bank before you submit the application, since a loan commitment is usually an attachment and approval takes time. Watch out for the rule that the same eligible expenditure cannot be financed twice, and that the favourable part of the loan counts towards the cumulation of aid.
See also: Financial instruments, Project co-financing, Cumulation of aid.
