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If your small business has been hard hit by the COVID-19 pandemic, an Economic Injury Disaster Loan (EIDL) could be a major boost to get you back on track. But what’s the difference between an EIDL Loan and the Targeted EIDL Advance? It’s often brought up in small business circles and something you should understand.

hands counting money

Most importantly, how do you get government money to help recover from the hard times the pandemic has brought upon us? The ClaimYourAid team has broken down these complex government programs to make it easier for you to decide on the best next steps for your business. 

What Is an EIDL Loan? 

Let’s start with the EIDL loan. Yes, we know the “L” actually stands for loans, but it’s the term you’re likely to hear, so bear with us!

The COVID-19 Economic Injury Disaster Loan program was approved by Congress as a way to help small businesses, non-profits, and even some faith organizations recover from the pandemic. It allowed businesses that couldn’t find help from their own banks or through grant funding to apply for money that could be used to pay fixed debts, payroll and expenses, accounts payable and other bills that the pandemic had made difficult or impossible to cover.

Current EIDL Status

The federal program is no longer open — the US Small Business Administration stopped accepting applications in January 2022. But with up to $2 million available to individual businesses during the length of the program, EIDL loans helped some 3.7 million businesses employing more than 20 million people. Best of all, those loans came with low interest rates — 3.75% fixed for businesses — and there’s no penalty for paying it off early. 

Wait, paying it off? Yes, because the program was built as a loan, most of those funds will have to be paid back to the federal government over time. Because of the pandemic, payments have been deferred for a time to allow business owners to get the ground back under them. Deferment does, however, come with a cost as interest may accrue during that period. 

What Is an EIDL Advance?

Did you notice we said “most” of the funds will have to be paid back? There is one small exception to that rule, called the Targeted EIDL Advance. 

If you’ve ever had an employee ask for an advance on their paycheck — or maybe gotten one yourself — you may be wondering if this is just money you can get faster from the government. If only!

There are, in fact, two different EIDL Advance options, and neither one puts money in your pocket faster, although both come with one big benefit: They don’t have to be paid back!

Targeted EIDL Advance 

The first EIDL Advance is the Targeted EIDL Advance. It’s only available if you’ve put through an EIDL loan application — which again expired in January 2022. It was available to businesses that:

  • Had 300 employees or fewer
  • Were located in a low-income community
  • Demonstrated more than 30% reduction in revenue during an eight-week period beginning on March 2, 2020, or later.

The Targeted EIDL Advance offered up to $10,000 in money for businesses that fit all three qualifications, and none of it has to be paid back. That makes it more like a government grant than a loan. 

Supplemental Targeted EIDL Advance

The second EIDL Advance option is the Supplemental Targeted Advance. Once again, program applications have been closed, and once again it offered up money that did not have to be paid back to the government. 

The Supplemental Targeted Advance of up to $5,000 was available only to companies that:

  • Had 10 employees or fewer
  • Were located in a low-income community
  • Prove more than a 50% economic loss during an eight-week period beginning on March 2, 2020, or later, compared to the same period of the previous year. 

What About Me?

With applications for both the EIDL loan and EIDL Advance options closed, is your business out of luck when it comes to getting financial aid from the government? Maybe not!

There are still countless other funding options still open for small business owners to get help. Click here to schedule your free consultation with a member of the team to find out if your business qualifies for government grants, credits, or refunds.