Our Guide to The New Targeted EIDL Advance Grant
Fortunately, the federal government recently passed a bill that allocates funds to provide relief to small businesses and nonprofits. Part of that bill included new funds, and rules, for a second round of Economic Injury Disaster Loan Advance grants. These grants are called “Targeted EIDL Advances.”
For qualifying businesses, the EIDL grants provide $10,000 in completely free, non-repayable money.
Even during good economic times, $10,000 is far from negligible. Therefore, it’s a good idea to familiarize yourself with the details of Targeted EIDL Advances.
In this post, you’ll learn what these grants are, how they might benefit you, and how you can apply for the EIDL program.
What’s the Targeted EIDL Advance?
The Targeted EIDL Advance program is the second round of a COVID-era expansion of the Economic Injury Disaster Loan program. The first round was called the EIDL Advance program and funds were disbursed in early 2020. The Targeted EIDL Advance itself is a grant that, like the EIDL Advance, provides up to $10,000 to qualifying small businesses and nonprofits.
Unlike the EIDL Advance, the Targeted EIDL Advance is, well, more targeted. It aims to serve businesses in low-income areas, which means it has more stringent qualification criteria.
Moreover, while you can apply for an Economic Injury Disaster Loan (EIDL), it’s not required to be eligible for the advance.
What’s The Qualification Criteria for Targeted EIDL Advances?
To be eligible for a Targeted EIDL Advance your business must:
- Employ no more than 300 employees
- Have suffered an economic loss greater than 30 percent in 2020 compared to 2019
- Be located in a low-income community
While the employee restriction is self-explanatory, there’s more important details about the other two qualification criteria.
First, what does “economic loss greater than 30 percent” mean? According to the SBA, it’s a 30 percent revenue reduction relative to 2019 during any 8-week period beginning March 2nd, 2020.
For example, let’s say your 2019 revenue for the 8-week period beginning May 5th, 2019 was $100,000. To be eligible, your revenue for the 8-week period beginning May 5th 2020, would have to be $70,000 or less. Alternatively, you could look for other 8-week periods in which you had a sufficiently large year-over-year revenue reduction.
As for what a “low-income community is” the SBA is using the definition from section 45D9(e) of the Internal Revenue Code. Keep in mind that your business must have a business address in a low-income community to be eligible.
Finally, there’s one caveat for otherwise qualified applicants who previously received an EIDL Advance. Rather than the full $10,000, these applicants are eligible to receive only the difference between $10,000 and the amount they previously received.
So, if you meet the qualification criteria and you received $5000 from your EIDL Advance, you can now receive up to $5000.
If you’ve received nothing previously, you’re eligible for the full $10,000. Finally, if you’ve already received $10,000 in EIDL Advances, you’re not eligible for the targeted EIDL Advance.
The Pros and Cons of Targeted EIDL Advances
For eligible businesses, there really isn’t a downside to Targeted EIDL Advances other than the time it takes to research and apply.
As mentioned earlier, Targeted EIDL Advances don’t need to be paid back in any form. Once you’re approved for the EIDL advance, your business will receive the money.
In addition, the rules on what you can spend your advance on are very flexible. According to the SBA, these funds “Can be used for working capital and normal operating expenses.”
Also, as we’ll explain in the next section, even the application process is easy to follow. In short, if you’re eligible for a Targeted EIDL Advance, you should apply.
EIDL Advance Grant Application Process and Deadlines
Unlike the first round of EIDL advances, you don’t need to do anything to apply until the SBA contacts you. According to their website, “SBA will first reach out to EIDL applications that already received a partial EIDL Advance. Applicants will be contacted directly by SBA via email in the coming weeks with instructions.”
Further, starting December 27, 2020, the SBA started emailing applicants who applied for—but didn’t receive—EIDL assistance. If you haven’t received an email, keep in mind that SBA communications will come from an email ending in @sba.gov.
All this to say, until the SBA contacts you, all you can do now is start preparing your paperwork. During the application process, you’ll need to provide your business’ monthly gross receipts from January 2019 to the present. Additionally, you may be asked to provide IRS Form 4506-T.
Finally, if you haven’t already filed your 2019 Federal Tax Return, you’ll need to complete that process before applying.
For more information on Targeted EIDL Advances, check out the SBA’s page on the topic.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.