I would encourage you to apply to both internships at your dream company and apply to an entry level position. Usually if Recruiters are searching for interns they are looking at juniors because they know that after the internship they will still have another year of college left. In comparison, college graduates are generally looking for full time positions which companies may or may not have at the moment. I think it is important to work for a company that aligns with the work you wish to do and what you value, not just because of the salary they are offering. If you focus on a job that can help you grow and develop your skills, in the long run it can lead you to applying for a full time position in your dream company.
Marlyn recommends the following next steps: