The Three EIDL Products
The SBA offered three separate products under the EIDL umbrella: (1) EIDL Loan -- up to $2 million, must be repaid with 3.75% interest over 30 years. (2) EIDL Advance -- $1,000 per employee up to $10,000, this is a GRANT and does not need to be repaid. (3) Targeted EIDL Advance -- additional $5,000 for businesses in low-income areas, also a GRANT.
How to Verify What You Received
Log into the SBA EIDL portal (covid19relief1.sba.gov or mysba.sba.gov). Your account will show the loan amount, advance amount, and targeted advance amount separately. If you are unsure, call the SBA at 1-800-659-2955. Your loan documents (closing documents) will show the loan amount; the advance was deposited separately and may have arrived before the loan.
Common Confusion Points
Many borrowers received the advance first (sometimes weeks before the loan) and do not realize they are separate. Some borrowers received only the advance and no loan. The advance may have been deducted from the loan amount (reducing the loan disbursement). If you received a $10,000 advance and a $150,000 loan approval, you may have received $140,000 in loan funds plus $10,000 in advance funds.
Tax Treatment
EIDL advances are not taxable income -- they are excluded by statute (Economic Aid Act). The EIDL loan proceeds are not taxable income because loans are not income. Interest paid on the EIDL loan is a deductible business expense. If you settle the loan for less through OIC, the forgiven amount may be taxable as cancellation of debt income (similar to a 1099-C).
Frequently Asked Questions
Do I have to repay the EIDL advance?
No. The EIDL advance and targeted EIDL advance are grants. They never need to be repaid. Only the EIDL loan must be repaid.
Was my advance deducted from my loan?
Possibly. Early in the program, the SBA deducted the advance from the loan disbursement. Later, this practice was reversed for many borrowers. Check your SBA portal for exact amounts.
I only got $1,000 -- was that the advance or the loan?
If you received exactly $1,000 early in the pandemic (April-June 2020), it was likely the EIDL advance (calculated at $1,000 per employee for businesses with 1 employee). If it came later with loan documents, it may have been a small loan.
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