Whether the state or federal grant is on a draw down basis or reimbursement basis, the grant can be used as the down payment.

Whether the state or federal grant is on a draw down basis or reimbursement basis, the grant can be used as the down payment.

• A. True
• B. False
• C. Only draw down basis grants may be used
• D. Only reimbursement basis grants may be used

Answer: (B)

Grant funds are meant to cover eligible project costs, and the way the grant is disbursed—draw-down versus reimbursement—affects when you receive funds, not whether the grant can serve as the upfront down payment in all cases. In most programs, the down payment (local match) must come from non-grant sources and is provided at or before project start to secure the award. The grant then reimburses or provides funds as expenditures are incurred, or, in some cases, may advance funds only if the agreement explicitly allows an upfront payment. Because of that general rule, you cannot rely on the grant to automatically act as the down payment.

Grant funds are meant to cover eligible project costs, and the way the grant is disbursed—draw-down versus reimbursement—affects when you receive funds, not whether the grant can serve as the upfront down payment in all cases. In most programs, the down payment (local match) must come from non-grant sources and is provided at or before project start to secure the award. The grant then reimburses or provides funds as expenditures are incurred, or, in some cases, may advance funds only if the agreement explicitly allows an upfront payment. Because of that general rule, you cannot rely on the grant to automatically act as the down payment.