Stay-at-home orders issued to slow the spread of the COVID-19 (coronavirus) pandemic have had overwhelming effects on the job market, with 6.6 million Americans filing initial unemployment claims in the final week of March.*

Small businesses, which make up nearly half of the US workforce, have been hit especially hard, struggling to retain workers, pay bills, and keep their doors open. In an effort to provide relief during this difficult time, the Federal Government has dedicated nearly $350 billion in forgivable, short-term funding to help keeps workers on the payroll.

What is the Paycheck Protection Program? 

The Paycheck Protection Program1 (PPP), created under the Coronavirus Aid, Relief, and Economic Support (CARES) Act signed into law on March 27, approves up to $349 billion in forgivable loans to small businesses during the COVID-19 crisis. The program, designed to keep people employed, is being carried out by the Small Business Administration (SBA) with support from the Department of the Treasury. The SBA has agreed to absolve the loans if all employees are kept on the payroll for eight weeks.

Business owners can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will also be available to make these loans once they are approved and enrolled in the program. Lenders began processing applications on April 3 and the program will remain open through the end of June.

Who can apply?

Essentially, any small business impacted by the COVID-19 pandemic may be eligible for a PPP loan. This includes:

  • Any small business concern that meets the SBA’s size standards
  • Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern with the greater of 500 employees or that meets the SBA industry size standard if more than 500
  • Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
  • Sole proprietors, independent contractors, and self-employed persons

How to apply?

Since PPP loans are approved on a first-come-first-serve basis, and lenders need time to process the loan, applications should be submitted as soon as possible.

To apply, small business owners should complete the Paycheck Protection Program Borrower Application Form2 and submit it, with the required payroll documentation, to an approved lender. The best way to do this is through your primary banking relationship; however, if you do not have a current relationship or if you run into roadblocks with your bankers, we can help (see “How Janney Can Help”).

Loan Specifics

PPP loans have a maturity of two years and an interest rate of 1%.1 They can be obtained for up to two months of average monthly payroll costs (up to $100,000 annualized for each employee) plus an additional 25%. That amount is subject to a $10 million cap.

Loans will be fully forgiven if the funds are used for payroll costs (at least 75%), interest on mortgages, rent, and other business expenses. Payments will be deferred for six months and no collateral or personal guarantees are required. Additionally, neither the government nor lenders will charge small businesses any fees.3

Forgiveness is based on the employer preserving or quickly rehiring employees and maintaining salary levels. The amount forgiven will be reduced if full-time headcount declines or if salaries and wages decrease.

Note: This information is not meant to be comprehensive. Before applying for a PPP loan, please read all documentation outlining terms and specifics and discuss them with your Janney Financial Advisor.

How Janney can help 

While Janney is not an approved lender, and therefore cannot provide funding available under the PPP, the Depository Team within the Capital Markets Group has extensive relationships with community banks across the US. They are ready, willing, and able to serve as resource and referral to the best lending option in any given geographical market.

Please contact your Janney Financial Advisor for additional information or to kick off the referral process.

*US Department of Labor, Unemployment Insurance Weekly Claims News Release, April 2, 2020:

1 Small Business Association Coronavirus Relief Options:

2 Small Business Association PPP Borrower Application Form:

3 US Treasury PPP Fact Sheet: This material is for informative purposes only and contains references to concepts that have legal, accounting and tax implications. Neither

Janney Montgomery Scott LLC nor its Financial Advisors give tax, legal, or accounting advice. Please consult with the appropriate professional for advice concerning your particular circumstances.


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