Subsidies Money Person Pay Types Direct Indirect Interest Free

Businesses can receive many types of subsidies, but they can be divided into two "categories" (groups): "direct subsidies" and "indirect subsidies."

"Direct subsidies" include "cash grants" and "interest-free loan." A "cash" (money) "grant" (money given or awarded to someone for a purpose) is a "direct" (without the involvement of another person or organization) payment to the "recipient" (the person or organization that receives something). An "interest-free loan," like any other "loan" (money that is given to someone with the expectation that it will be paid back), involves a cash payment, but the recipient must pay it back. However, the recipient does not have to pay "interest" (a percentage of the original amount) as he or she would if receiving a loan from a bank.

"Indirect subsidies" do not involve the payment of cash to a recipient, but they still "benefit" (bring advantages to; help) the "beneficiary" (the person who receives the benefits of something). "Tax breaks," or opportunities to save money on taxes, paying less than usual, are an example of indirect subsidies. For example, if a community wants to "attract" (bring in) a large manufacturer in order to create jobs, it might offer a tax break so that the company does not have to pay taxes for the land where the factory is built. Another example of an indirect subsidy is a "rent rebate," where the government "reimburses" (pays back) the company or a "portion" (part) or all of its "rent payments" (money paid to use land or a building).