New EIDL Advance Program Helps Struggling Small Businesses

The Paycheck Protection Program (PPP) loan money has just run out, and PPP loan applications are generally no longer even being processed. But the Small Business Association (SBA), the government agency that handled those loans, has just launched a new form of COVID-19 disaster loan that could provide your small business with a grant for as much as $10,000. 

You might even be eligible for an additional $5,000 bonus on top of that. And these funds are awarded as grants that do not even need to be paid back. 

These brand new small business economic relief efforts are new additions to the Economic Injury Disaster Loan (EIDL) program, which has seen significant increases to funding in recent months. The EIDL program does not get as much public attention as the PPP loan program but has provided more than $200 billion in small business loans during the pandemic.

The new EIDL programs are grants under the umbrella of Targeted EIDL Advance grants. While they do have the word “Advance” in the name, like a payday advance, these are grants, which do not have to be paid back. And unlike PPP loans, the forgiveness is automatic—cutting out all the time-consuming bookkeeping and documentation work that has exasperated so many small businesses that received PPP loans.

“Many of our nation’s small businesses are still struggling to recover from the economic impact of the COVID-19 pandemic, and we’ve found that the smallest businesses—the majority of which are minority-owned—are hurting the most,” SBA administrator Isabella Casillas Guzman said in a statement. “The Supplemental Targeted Advance funds will help us make sure that no small business falls through the cracks or gets left behind.”

Congress’s recent COVID-19 relief packages authorized $35 billion for these grants. They are generally intended for small businesses that are located in low-income communities, have 300 or fewer employees, and can show a loss of 30% or more in income at some point during the pandemic. Let’s take a look at the eligibility requirements and whether your small business could be eligible for the $10,000 grant—or even the additional $5,000 bonus grant.

Does My Business Qualify for a Targeted EIDL Advance?

There are 2 types of new grants under the new EIDL program. Targeted EIDL Advance grants can be as large as $10,000. The even more generous version called Supplemental Targeted Advance adds another $5,000 on top of that.

But this is an “invite-only” program, and the SBA is the organization determining who gets an invite. The invites are determined by information submitted on previous COVID-19 EIDL applications, so the only small businesses that are eligible are those that have previously applied for an EIDL loan. 

But you’re eligible for these advances even if you’ve been turned down on a previous EIDL application and even if you’ve received previous EIDL advances. You can learn more about applying for a COVID-19 EIDL Loan on the SBA website.

Targeted EIDL Advances vs. Supplemental Targeted Advances

These are 2 programs with very similar-sounding names, but they are different to the tune of thousands of dollars. Targeted EIDL Advances can be as large as $10,000. Supplemental Targeted Advances are awarded in addition to already-approved Targeted EIDL Advances and can add as much as $5,000 more to the grant.

Targeted EIDL Advances can be awarded to small businesses that meet the following criteria:

• The business has completed the Targeted EIDL Advance application.
• The business is located in a low-income community. You can use this interactive map to determine if your business is in a low-income community.
• The business has 300 or fewer employees.
• The business has seen a 30% loss in revenue during any 8-week period throughout the pandemic compared to the same 8-week period during the previous year.

Supplemental Targeted EIDL Advances can be awarded to small businesses that meet the following criteria:

• The business has completed the Targeted EIDL Advance application.
• The business is located in a low-income community. You can use this interactive map to determine if your business is in a low-income community.
• The business has 10 or fewer employees.
• The business has seen a 50% loss in revenue during any 8-week period throughout the pandemic compared to the same 8-week period during the previous year.

The requirements are complex. And just as we saw with the delays in early PPP loans, these advances have had a similarly bumpy rollout. 

“Targeted EIDL Advance, a $35 billion initiative, has been plagued with problems, from extensive delays to poor communication to plain mismanagement,” according to a recent investigative report in The American Prospect. According to that report, applicants “say they’ve been wrongly denied grants or have waited months for decisions, often without any updates. They recount days spent on the phone with customer service reps, contradictory answers from the agency, and emotional distress from having to deal with nettlesome bureaucracy while trying to revive their livelihoods.”

But it’s important to remember that these programs were put together on the fly and for a crisis unprecedented in the modern economy. Many factors you may find frustrating are actually safeguards against large companies gaming the system to get loans meant for small businesses or means to discourage PPP loan fraud. The SBA is legitimately trying to reduce fraud risk and increase oversight. 

The unexpected upside to a bumpy rollout is that there’s still plenty of money left to be disbursed. A late April report from the SBA showed that not even $1 billion of these Targeted EIDL Advance grants has been awarded yet, which means there are billions more left to be disbursed.

The names of these programs may be confusing, and their red tape may be frustrating. Yet the rewards of the many different types of SBA loans can mean thousands of dollars of relief for your small business.

Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice. All information, content, and materials available in this post are for general informational purposes only. Readers of this post should contact their attorney, business advisor, or tax advisor to obtain advice with respect to any particular matter.