SBA EIDL Loans & Targeted EIDL Advance: Your Questions Answered

The 2020 EIDL Advance allowed small businesses facing economic hardships due to COVID-19 to request an advance of up to $10,000 as part of the EIDL loan application process. This funding was a grant that was not required to be repaid and was available to small businesses that met the SBA’s requirements.

The 2021 Targeted EIDL Advance also provides up to $10,000 in funding to eligible small businesses affected by the COVID-19 pandemic. However, this round of funding is only open to applicants that previously applied for the EIDL. During this round of funding, eligible businesses must meet one of these conditions: they either did not receive an advance due to a lack of program funding or did not receive the full $10,000.

Additionally, businesses must also be located in a low-income community to qualify for a Targeted EIDL Advance. Qualifying businesses must also show a reduction in income of at least 30%.

The SBA will contact businesses that are eligible to receive the Targeted EIDL Advance. No additional borrower application is required at this time.

Your EIDL loan and advance can be used for a variety of business purposes. Funds are to be used to cover your business’s day-to-day expenses. Your loan or advance can be used as working capital to cover a number of business expenses, including but not limited to payroll and benefits, utilities, rent, and fixed debt payments. There are a handful of restrictions surrounding how EIDL funds are spent. You can’t use funds for dividends or bonuses, expanding facilities, relocating, or acquiring fixed assets.

One thing to note is that there are further restrictions if you have received a loan through the Paycheck Protection Program (PPP). If you have a PPP loan, “double-dipping” is not allowed if you also have an EIDL loan or advance. That means you can’t use the funds from your PPP and EIDL for the same purpose. For example, if you use your PPP funds to cover payroll expenses, you can’t use your EIDL for those same payroll expenses.

Unsure of how to spend your EIDL funds? Check out all the ways you can (and can’t) spend your EIDL loan.

Since EIDL loans go directly through the SBA rather than a lender, there’s no requirement to have a business checking account. However, some applicants have reported issues where there was a mismatch in information between their personal bank accounts and the information they gave to the SBA.

According to the SBA, an applicant may be declined for an EIDL loan based on “unsatisfactory credit history,” so you should assume that they’ll be looking at your credit. That said, there’s no specific credit score that’s cited as a minimum.

Given that you’re dealing with an overburned, slow-moving government organization, we highly recommend you double- and triple-check your applications for errors before submitting them.

If you have made an error, you’ll need to get in touch with the SBA. First, you’ll want to check on the status of your application (see below). You’ll then want to contact the SBA’s Disaster Assistance Processing and Disbursement Center. Explain your situation to them by phone or email. Bear in mind that you may have to be persistent and patient given the volumes of applicants the SBA is dealing with.

There are a few ways to check the status of your EIDL application including by phone, email, and through the SBA’s Economic Injury Disaster Portal or SBA Assistant. If you mailed your application the old-fashioned way, you should contact the SBA by phone, as you won’t have a username and password for the online tools.

A business must be located in a low-income community to receive an EIDL Advance.  A low-income community is an area that has a poverty rate of 20% or more. Rural businesses must have a median family income of 80% or less of the statewide median family income. Businesses in suburban and urban areas must have a median family income of 80% or less of the metropolitan area’s median family income.

To determine if you’re in a low-income community, you will use census data. One of the easiest ways to determine if you qualify for an EIDL Advance is to use the Federal Financial Institutions Examination Council’s geomap tool. Learn more about using this tool and qualifying for the EIDL advance.

Technically, no, but some businesses have reported otherwise. The SBA now has their own tool you can use to see if your community is eligible. The convenient thing about the Targeted EIDL Advance is that it’s by invitation only. If the SBA invites you to get a Targeted EIDL Advance, then there’s a decent chance you’ll qualify for one. If not, you won’t be able to get one.

If you received an invitation from the SBA and subsequently applied, you can check the status of your Targeted EIDL Advance through the SBA’s Economic Injury Disaster Portal.

If you previously applied for the EIDL and were denied, you may submit a reconsideration request up to six months after applying.

If you received an EIDL and need additional funding, you may be eligible to modify your loan and receive an increased amount.

If you own multiple businesses, you may submit an EIDL application for each eligible business.

Finally, if you applied for the EIDL Advance in 2020 and were unable to receive one due to a lack of program funding, you may now be eligible to receive funding. However, you do not need to submit a second application. Instead, the SBA will contact you regarding eligibility.

Most EIDL applicants will receive a funding decision within 21 days. If you’re approved, you should get a disbursement within a week of approval. You can read more about the process in our SBA EIDL Funding Timeline: What To Expect During Application, Approval, & Processing.

EIDL loan forgiveness is not an available option, so you will need to repay it in full. Fortunately, though, repayment terms are extremely favorable — up to 30 years at a fixed APR of 3.75%. You won’t find those kinds of terms with just any lender.

If you received an EIDL Advance or Targeted Advance, these are grants and are forgivable. In other words, if used properly, these funds do not have to be repaid.

Both death and illness are circumstances that could lead to you defaulting on your EIDL loan. Debt obligations may vary depending on how much you’ve taken out, whether you’ve signed a personal guarantee, and any available business assets that the SBA could liquidate to cover the debt.

When dealing with settling estates, it’s best to speak to a lawyer about your options and speak to the SBA about any possible deferments or relief.

Neither EIDL loans nor EIDL Advances are considered taxable business income. Additionally, qualified expenses that are paid for with EIDL funds can still be written off your taxes.

Yes, the Targeted EIDL Advance is a grant. You don’t have to pay it back.

Businesses that had applied for the earlier 2020 round of grant funding and only received a partial payment, and that were located within an economically distressed area were offered Targeted EIDL Advance. You can learn more in our Targeted EIDL Advance explainer.

If your Targeted EIDL Advance status is listed as “in progress,” this usually means that application was started but was not completed. Once this phase concludes, you’ll be asked to submit requested materials.