What’s a Targeted EIDL Advance? Everything You Need to Know


What’s a targeted EIDL advance? It has been a challenging couple of years for the entire world, and especially for people who own small businesses. Since the COVID-19 pandemic reared its unsightly 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 a program run by the Small Business Administration (SBA) to ease the financial burden caused by COVID-19. Targeted EIDL Advances are subject to certain rules and restrictions. We’ll discuss who qualifies for Targeted EIDL Advances, where they need to be located, when they can receive funds, and how to apply in this article.

What Is a Targeted EIDL Advance?

For eligible EIDL loan applicants in low-income communities impacted by COVID-19, a Targeted EIDL Advance offers up to $10,000. An applicant must:

  • A previous EIDL Advance of less than $10,000 in an initial round of funding, or
  • Applying for an EIDL Advance but not receiving funds

How Do You Qualify for the Targeted EIDL Advance?

In order to qualify for an SBA Targeted EIDL Advance, a small business must meet the following requirements (in addition to the usual requirements for an EIDL loan):

  • The business must be located in a low-income community. The applicant can use a special SBA mapping tool to determine this.
  • During an eight-week period beginning March 2, 2020, or later, the business must demonstrate a 30% reduction in revenue. Business owners can confirm this by providing monthly revenue documents (more on that shortly).
  • It must have no more than 300 employees. Business entities, independent contractors, sole proprietors, and private nonprofit organizations fall under this category.

Note: Agricultural enterprises are not eligible.

How Do You Demonstrate Economic Loss?

Gathering your business’s tax documents is an excellent way to start preparing for the SBA to confirm eligibility based on economic loss. From there, according to the SBA:

  • 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 will 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 allow the SBA to request tax information on your behalf, you’ll also need to electronically sign an IRS Form 4506-T. Tax verification processes and requirements may differ for businesses in U.S. territories.

What Is a Supplemental Targeted Advance?

Supplemental Targeted Advances provide small businesses with a $5,000 supplemental payment that they don’t have to repay, regardless of whether they have already received an EIDL Advance. The combined amount of any previously received EIDL Advance or Targeted EIDL Advance (up to $10,000) and any Supplemental Targeted Advance (up to $5,000) cannot exceed $15,000. Additional Targeted Advance applicants must also meet the following requirements:

  • According to the SBA mapping tool, the small business must be located in a low-income community.
  • A company must prove an economic loss of 50% or more during an eight-week period beginning March 2, 2020, or later (as compared to the same period the previous year) by providing documentation of gross monthly revenue.
  • 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.

I want to apply for a targeted EIDL advance. What should I do? 

You can apply for a Targeted EIDL Advance online by visiting the U.S. Small Business Administration’s Disaster Loan Assistance website. The application process should take about two hours and ten minutes. The application process begins by verifying your eligibility. It is followed by requesting your business information like your EIN and revenue, specific information about the business owner, and additional information before you submit your application. The proof-of-economic-loss documentation outlined earlier would also be required.

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

You can only apply for one COVID-19 EIDL loan. There is no need to apply twice if you have already received EIDL funds and they were less than the current maximum of $2 million (unless you are affected by a different type of disaster, such as a hurricane). Instead, you can revisit your original application and request an increase. SBA EIDL Advance is a different program with 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. They will 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 forgiven, the short answer is yes and no. That’s not very helpful, so let’s get into the longer explanation. The EIDL program consists of two components: loans and grants.

  • EIDL loans, which can be for up to $2 million, are generally not forgivable and will need to be repaid. However, there is one exception: if a business receives an EIDL between January 31, 2020, and April 3, 2020, and applies for a forgivable Paycheck Protection Program (PPP) Loan or refinances their EIDL into a PPP, the EIDL will be forgiven.
  • EIDL grants are a little different. For up to ten employees, they offer businesses $1,000 per employee, 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. Tax returns do not report them as taxable business income. The expenses that are covered by the EIDL loan can even be deducted. This wasn’t always the case, though. EIDL Advances were initially meant to be reported as taxable income, but under the Consolidated Appropriations Act, this decision was reversed.

The Takeaway

Government-backed loans and grants are available to small businesses that were affected by the COVID-19 pandemic. For those that have not yet received their full share of reprieve, the EIDL Targeted Advance or Supplemental EIDL Advance may be able to help.

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. Simply fill out a form, compare financing options from a network of lenders, and get the capital you need in as little as 24 hours.