What Is the New Targeted EIDL Advance Grant?

Congress created new provisions under the $900-billion stimulus package (passed December 2020) to better support the businesses most negatively impacted by the COVID-19 pandemic, including a new grant. These funds have more rigorous requirements than other forms of disaster-relief funding like the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDLs), and Emergency Economic Injury Grants (EEIGs). 

Here’s everything you need to know about the new EIDL grant, which the SBA refers to as the Targeted EIDL Advance. 

What Is the Targeted EIDL Advance?

The Targeted EIDL Advance is a more robust and targeted version of the EEIG. It’s aimed to help BIPOC-owned businesses and other underserved businesses access vital funding to help weather the coronavirus pandemic. Qualifying businesses can receive a grant of up to $10,000 through the program. 

Who Can Qualify for the Targeted EIDL Advance?

To be eligible for a grant through the Targeted EIDL Advance, a business must meet the following criteria:

• The business is located in a low-income community. 
• The business suffered a 30% or greater economic loss in 2020 (compared to the same quarter in 2019).
• The business employs 300 or fewer individuals. 
• The borrower must apply for the grant between January 31, 2020, and December 31, 2021. 

Borrowers who meet these qualifications are eligible whether or not: 

• They previously applied for an EIDL and were approved. 
• They accepted an EIDL previously. 
• They have any other SBA 7(a) loans. 

How Does the Targeted EIDL Advance Program Work?

The Targeted EIDL Advance is designed to help underserved borrowers maximize the $10,000 from the EEIG. Eligible entities can request Targeted EIDL Advance funds if they didn’t receive an EEIG previously due to a lack of funding. If a business did receive an EEIG but they did not receive the full $10,000, the borrower can request the remaining amount through the Targeted EIDL Advance for a combined total of $10,000. 

What Is an EIDL?

An Economic Injury Disaster Loan (EIDL) awards up to $2 million for qualified borrowers who have suffered a demonstrable negative impact due to a disaster. COVID-19 EIDLs, a subset of the loan program, have a maximum loan size of $500,000, a max interest rate of 3.75%, and a max term of 30 years.

What Qualifies as a Low-Income Community?

A low-income community is defined (in 26 USC 45D(e)) as a “population census tract,” which generally refers to a neighborhood-sized area where the poverty rate is at least 20% or:

• For neighborhoods outside a metropolitan area: The median family income does not exceed 80% of the statewide median family income.
• For neighborhoods in a metropolitan area: The median family income does not exceed 80% of the statewide or metropolitan area median income. 

How Do You Prove Economic Loss to Qualify?

Borrowers must demonstrate an economic loss greater than 30% in order to qualify. Here are the ways that eligible borrowers can prove that loss to the SBA:

• You can compare gross receipts from March 2, 2020, through December 31, 2020, and a comparable 8-week period during 2019. You may also use the 8 weeks prior to March 2, 2020. OR
• If your business is a seasonal business concern (meeting the SBA’s definition of a “small business concern”), then the loss amount is determined by the SBA.

How to Apply for a Targeted EIDL Advance Grant

Borrowers must apply through the SBA’s website. At the time of publication, they had not yet made that information public. When it is ready, you’ll likely be able to find information on how to apply through the SBA’s umbrella page for everything related to the EIDL program. 

Lendio strives to provide you with the most current information as it relates to the Paycheck Protection Program, related SBA programs, and relevant regulations. The rules and regulations governing these programs are being regularly clarified by the SBA, and other agencies. In some cases, the provided guidance may directly conflict with other competing guidance, laws, rules, or regulations. Due to these changes, Lendio cannot guarantee that the information contained in this page reflects new changes or updates.

Lendio advises you to review the SBA guidelines and regulations on your own and determine your Company’s best approach to receiving SBA loans. Lendio urges you to consult your own attorneys, lawyers, and consultants to make the best decision possible. The information contained herein should not be construed as legal or tax advice, and should not be relied upon as such.