Entrepreneurship and Small Business (ESB) V2 Certification Practice Exam

Grants are a unique form of financial assistance that do not require repayment. This primary characteristic distinguishes them from other types of funding, such as loans or investments. In contrast to loans that must be paid back with interest or equity financing where investors expect ownership stakes in exchange for funding, grants are typically awarded based on specific criteria aimed at promoting social, economic, or innovative objectives.

Grants are often issued by government bodies, non-profit organizations, or other entities that have funds available for projects that align with their goals. They facilitate growth for small businesses and entrepreneurs without the burden of debt. While grants do sometimes come with requirements or objectives that need to be met (which could relate to the option regarding strict contracts), the fundamental aspect is that as long as the terms are adhered to, there is no obligation to repay the grant amount, which solidifies option B as the primary characteristic.