Sometime back I wrote about the Paycheck Protection Program enacted as part of the CARES legislation. This program made loans to businesses to cover payroll and other operating expenses. The intent was to avoid layoffs.
The rules allowed for the loan to be forgiven provided the business showed proceeds were used for acceptable purposes. It was acceptable to maintain workers on the payroll with incidental uses for other business expenses.
Many New Mexico businesses obtained PPP loans. As might be expected there was some confusion about how the rules actually worked. This included whether a business would be able to qualify for forgiveness. Treasury announced it would review any loan in excess of $2 million for program compliance.
We always hear that business hates uncertainty. The PPP had much of it. I want to address two. First, can a business deduct the expenses paid with loan proceeds? Second, how will prospective buyers of a PPP business view the loan?