1.3 BUILDING BLOCKS
Five traditional instruments are the building blocks of every structure
5 min
| Instrument | What it is | Fits when | Who provides it |
|---|---|---|---|
| Grant | Money that is not repaid | Pilots and public goods with no revenue | Donors and foundations |
| Loan | Money repaid with interest | A cash flow can service the debt | Banks, development finance institutions and impact lenders |
| Equity | Ownership in exchange for capital | A business can grow and be sold | Impact funds and investors |
| Guarantee | A promise to cover part of a loss | Lenders see the risk as too high | Development finance institutions, foundations and donors |
| Insurance | Paid out when a defined event occurs | Shocks threaten repayment | Insurers and parametric pools |