Previously, as part of the SBA’s Economic Injury Disaster Loan (EIDL) program, small businesses could apply for an EIDL grant of up to $10,000 as an advance on their EIDL loans. These advances were treated as tax-free grants and did not need to be paid back. The EIDL advance program funds were exhausted and are no longer available.
With the second round of stimulus, the grant was refunded, but targeted towards low-income communities and with stricter eligibility.
Recipients who are eligible for the targeted EIDL advance will be contacted by the SBA—applicants are not required to take any action.
What is the targeted EIDL advance?
The grant, now called the “targeted EIDL advance”, is available only to small businesses located in low-income communities.
Eligible recipients can receive up to $10,000 in advance funds if they are a small business located in a low-income community who previously applied for the EIDL Advance grant but did not receive it due to lack of program funding or those who previously received partial funding. You can check to see if you are based in a low income community using the SBA’s policy map.
Who will be eligible for the targeted EIDL advance?
If the following statements apply to you, then you may be eligible for the targeted EIDL advance grant.
- You applied for EIDL assistance on or before December 27th, 2020 and either received partial grant funds or no grant funds at all.
- You are located in a federally designated low-income community.
- You can demonstrate more than 30% reduction in revenue during an 8-week period beginning March 2nd, 2020 or later.
- You have 300 employees or fewer employees.
If the above criteria applies to you, remember, you don’t need to apply: the SBA will contact eligible recipients directly. Applicants will receive an email invite from the SBA.
Further Reading: FAQ Regarding Targeted and Supplemental EIDL Advance
What is a low-income community?
The SBA has not provided guidance on how they will define a low-income community.
The IRS defines low-income as any of the following:
- The poverty rate is over 20%.
- For communities not located in metropolitan areas - Median family income in your community does not exceed 80% of the statewide median family income.
- For communities located in metropolitan areas- Median family income in your community does not exceed 80% of the metropolitan median family income.
How can I demonstrate a 30% reduction in revenue?
According to the SBA, you will be required to provide gross monthly receipts starting from January 2019 through the most recently completed month. For example, if you’re applying in February 2021, you would use January 2021.
The SBA will then use this information to determine if your business experienced a 30% or greater reduction in revenue.
How Bench can help
Getting approved for an EIDL loan is a great first step in successfully navigating COVID-19 as a business.
But once you receive the loan, you’ll need to spend the funds in the right way, and keep a number of records to comply with the SBA agreement you signed.
In our EIDL Loan Handbook for Small Businesses, Bench’s expert bookkeepers outline the bookkeeping and recordkeeping requirements to remain compliant with the SBA’s loan terms. We also cover the conditions of the EIDL, including what you can and cannot spend the funds on.
How much will I get?
The SBA is offering businesses the opportunity to receive the grant even if they already received a grant before.
In 2020, the EIDL grant was limited at $1,000 per employee up to a maximum of $10,000 per business.
In 2021, eligible businesses that received a partial grant for less than $10,000 can apply for the difference. So if a business received a $2,000 grant with their EIDL but were eligible for the full $10,000, they can now apply for the remaining $8,000.
For businesses that did not receive a grant due to a lack of EIDL funding, they can now apply for the full $10,000.
How do I get the EIDL grant?
In 2020, it was as simple as ticking a box in your SBA EIDL loan application. The EIDL grant was not included by default, and had to be officially requested.
In 2021, if you are eligible for the targeted EIDL advance, the SBA will be reaching out to you directly via email.
Further reading: How to Fill out Your SBA EIDL Loan Application.
When will I get the EIDL grant?
According to the SBA, once you’ve submitted the required documentation, they will aim to process your request within 21 days of receiving your application. Any application decisions will be communicated via email.
This, unfortunately, brings us right back to the unpredictability of the SBA’s processing times. We simply don’t know how long it will take the SBA to actually process these requests and deposit the funds.
Do I have to pay the targeted EIDL advance grant back?
While the SBA refers to this program as an advance, it was written into law as a grant. This means that the amount you are given through this program does not need to be repaid, even if your application is ultimately rejected. There will be no interest charged on this amount.
Do I need to return the grant if I don’t get the EIDL?
No, you are allowed to keep the EIDL grant even if you don’t qualify for the EIDL loan, or you decide to decline the EIDL funding.
Your EIDL loan offer will automatically expire after 60 days if you do not sign the loan agreement.
Is the grant given to everyone who applies?
According to the guidance released by the SBA, this grant will only be available to small businesses in low-income communities that applied for EIDL assistance on or before December 27th 2020.
Starting February 1st, the SBA will first send out emails to businesses that received an EIDL Advance grant of less than $10,000 in 2020, followed by businesses that did not receive the grant in 2020 due to exhaustion of program funds.
Other COVID-19 resources
Want to know more about the EIDL loan program?
- Recordkeeping for Your EIDL Loan
- The EIDL for Sole Proprietors and Self-Employed
- What Can I Spend EIDL Loan On?
Interested in other relief programs?