State aid is any direct or indirect advantage granted by the State or through state funds, which distorts or threatens to distort competition by favouring certain companies or manufacturing sectors and thus affecting interstate trade. Among others, these include grants, subsidised loans, and guarantees. If this aid is granted to companies selectively by the State, it can distort competition within Europe. For this reason, state aid is only permitted under strict legal regulations of the EU Commission in exceptional cases. The corresponding legal framework is laid out in Articles 107 to 109 of the Treaty on the Functioning of the European Union (TFEU) and numerous regulations. You can find detailed information on this in the links below.