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Find answers to your questions about the Small Business Administration's EIDL loans & targeted EIDL advances for small business owners in need of COVID relief.
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The SBA’s COVID-19 EIDL portal closed on May 16, 2022, and is no longer accepting applications, requests for increases, reconsideration, and appeals due to a lack of any more available funding. However, small businesses can still get some COVID-related relief by applying for the employee retention tax credit–a free tax refund of up to $26,000 per employee.
As a small business owner, you may be wondering, “What is Targeted EIDL Advance?” As of January 1, 2022, the SBA’s Economic Injury Disaster Loan (EIDL) program for businesses affected by COVID-19 is no longer accepting applications. Nevertheless, as these loans begin to enter repayment, merchants may still have questions about the process, how deferments work, or even basic terminology.
Table of Contents
An Economic Injury Disaster Loan (EIDL) is a loan program through the Small Business Administration. This program provides long-term, low-interest loans to businesses that have sustained an economic injury due to a disaster. An EIDL provides a business with working capital to fund daily operations to help the business overcome the disaster’s economic impact.
The SBA EIDL is available to businesses that have been impacted by the COVID-19 pandemic. Small businesses, agricultural businesses, and nonprofits may be eligible to receive a low-interest loan provided all SBA requirements are met.
EIDL loans have a deferment window. This is essentially a grace period wherein no payment is required. With the SBA’s most recent deferral extension, the EIDL Loan deferral window is now 30 months, up from an initial 12-month window.
The deferral applies to both the EIDL loan principal and interest, and to loans made in 2020, 2021, or 2022.
The Targeted EIDL Advance is a grant of up to $10,000 to eligible small businesses impacted by COVID-19. These funds are disbursed more quickly than EIDL loans and do not have to be repaid.
The EIDL loan is a low-interest, long-term loan that must be repaid over a period of up to 30 years. Businesses impacted by the coronavirus can receive up to six months of working capital through this loan program. Applying for and receiving the loan may take several weeks or longer.
The EIDL Targeted Advance is a grant program designed to provide coronavirus-impacted businesses with fast funding of up to $10,000 to meet immediate business needs. The main difference between an EIDL Targeted Advance vs. a loan is that Advance funds do not have to be repaid.
The Supplemental Targeted EIDL Advance is a grant that’s available to qualified businesses even if they’ve previously received an EIDL loan, EIDL Advance, or EIDL Targeted Advance. Qualifying businesses can receive up to $5,000. The maximum you can receive from all three EIDL Advance programs combined is $15,000.
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.
There are a few ways to check the status of your EIDL application including by phone, email, and through 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.
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