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What's a Targeted EIDL Advance? Do You Qualify?

What's a Targeted EIDL Advance? Do You Qualify?
LeeMarie Kennedy
LeeMarie KennedyUpdated October 19, 2021
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
It’s been a challenging couple of years for the entire world, and that definitely includes people who own small businesses. Since the COVID-19 pandemic reared its ugly head, many small business owners have seen serious drops in revenue or been forced to shut down due to government-issued restrictions and regulations. The Targeted Economic Injury Disaster Loan (EIDL) Advance is one form of funding from the U.S. Small Business Association (SBA) meant to help business owners ease the economic burden caused by COVID-19.There are certain rules and restrictions that apply to Targeted EIDL Advances. In this article, we’ll break down who’s eligible for Targeted EIDL Advances, where they need to be located, when they can receive funds, and how to apply. 

What Is a Targeted EIDL Advance?

For eligible EIDL loan applicants in low-income communities who have been economically affected by COVID-19, a Targeted EIDL Advance offers funds of up to $10,000. To be eligible, an applicant needs to have: 
  • Previously received an EIDL Advance of less than $10,000 in an initial round of funding, or 
  • Previously applied for an EIDL Advance, but never received the funds 

What Are the Requirements to Qualify for the Targeted EIDL Advance?

To receive an SBA Targeted EIDL Advance, a small business has to meet the following requirements (in addition to the usual EIDL loan requirements): 
  • The business must be located in a low-income community. In order to determine this, the applicant can use a special SBA mapping tool
  • The business must demonstrate a reduction in revenue of 30% or more during an eight-week period starting March 2, 2020 or later. Business owners can confirm this by providing gross monthly revenue documentation (more on that shortly).
  • It must have no more than 300 employees. This applies to business entities, independent contractors, sole proprietors, and private nonprofit organizations.
Note: Agricultural enterprises are not eligible. 

How Do You Demonstrate Economic Loss?

You can start to prepare for the SBA to confirm eligibility based on economic loss by gathering up your business’s tax documents. From there, according to the SBA: 
  • If you meet the low-income community criteria, you’ll be asked to provide gross monthly revenue for January 2019 through the most recent month-to-date period (all forms of combined monthly earnings received) to confirm that your revenue has been reduced by 30 percent for the Targeted EIDL Advance and by 50 percent for the Supplemental Targeted Advance. 
  • You’ll also be required to electronically sign an IRS Form 4506-T to allow the SBA to request tax information on your behalf. Tax verification processes and requirements for businesses in U.S. territories may differ.

What Is a Supplemental Targeted Advance?

A Supplemental Targeted Advance offers small businesses a supplemental payment of $5,000 they’re not required to repay, regardless of whether they already received an initial EIDL Advance. The combined amount of any previously received EIDL Advance or Targeted EIDL Advance ($10,000 maximum) and the Supplemental Targeted Advance ($5,000 maximum) cannot exceed $15,000. Supplemental Targeted Advance applicants also need to meet certain eligibility requirements
  • The small business must be located in a low-income community, as designated by the SBA mapping tool
  • It must be able to prove economic loss of 50% or greater during an eight-week period beginning March 2, 2020 or later (as compared to the same period the previous year) by providing gross monthly revenue documentation. 
  • It must have no more than ten employees. This would include independent contractors, sole proprietors, and private nonprofit organizations. 
Note: Agricultural enterprises are not eligible. 

How Do I Apply for a Targeted EIDL Advance? 

You can apply for a Targeted EIDL Advance online by visiting the U.S. Small Business Administration’s Disaster Loan Assistance website. The estimated application time is around two hours and ten minutes. The application process will start by verifying your eligibility, proceed to asking you to provide business information like EIN and revenue, specific business owner information, and additional information before your final submission. You’d also need to have the proof-of-economic-loss documentation outlined earlier. 

Can I Apply for a Second Round of EIDL Advance Funds?

You can apply for only one COVID-19 EIDL loan. But if you received EIDL funds already and they were less than the current maximum of $2 million, there’s no need to apply for the EIDL loan twice (unless you are subject to a different kind of disaster, like a hurricane). Instead, you can revisit your original application and ask for an increase. The SBA EIDL Advance is a different program that has a different process. Here, the SBA will reach out directly to EIDL applicants who were offered an EIDL Advance of less than the $10,000 maximum allotment and offer instructions about how to provide the required information to determine eligibility and submit documentation for any additional grant funds.

Can EIDL Loans Be Forgiven?

If you’re wondering whether EIDL loans are forgivable, the short answer is yes and no. That’s not very helpful, so let’s dive into the longer explanation.There are two components of the current EIDL program: loans and grants. 
  • EIDL loans, which can be for up to $2 million, are generally not forgivable and will need to be repaid. There is, however, one exception: If a business received an EIDL between January 31, 2020 and April 3, 2020, and applied for a forgivable Paycheck Protection Program (PPP) Loan or refinanced their EIDL into a PPP, their EIDL can be forgiven.  
  • EIDL grants are a little different. They offer businesses $1,000 per employee for up to ten employees, cap their limit at $10,000, and do not require repayment. 

Are EIDL Loans Taxable?

In the case of EIDL loans, taxes are handled in the same way as would be any other business loan taxation. They’re not reported as taxable business income on a tax return. In fact, the expenses that are covered by the EIDL loan can even be deducted. This wasn’t always the case, though. At first, EIDL Advances were supposed to be reported as taxable income, but, under the Consolidated Appropriations Act, this decision was reversed. 

The Takeaway

For small businesses that suffered the financial burdens of the COVID-19 pandemic, relief in the form of government-backed loans and grants is available. And, for those that have not yet received their full share of reprieve, the EIDL Targeted Advance or Supplemental EIDL Advance may help them get the financial support they still need.If you’re a small business owner in search of a loan that works for you, you can apply for a small business loan online with Lantern by SoFi. By filling out a simple form, comparing financing options from a network of lenders, and getting the capital you need in as little as 24 hours, you can get back to running your business. 

Frequently Asked Questions

What is a Targeted EIDL Advance?
How do I apply for a Targeted EIDL Advance?
How long does a Targeted EIDL Advance take?
Is a Targeted EIDL Advance still available?
Is a Targeted EIDL Advance taxable?
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Photo credit: iStock/Avosb

About the Author

LeeMarie Kennedy

LeeMarie Kennedy

LeeMarie Kennedy is a Boston-based copywriter and content creator with over a decade of experience writing for a variety of publishers, institutions, and corporations. She has spent the last few years focusing on writing for financial services, technology, HR and TA, and health & wellness sectors. LeeMarie has a BA in Journalism from Quinnipiac University and a MS in Organizational Communication from Northeastern University and was an original contributor to The Daily, SoFi's newsletter.
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