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PPP Loans and Valuations – Don’t Make the Mistake of Inflating Values

Updated: Feb 8, 2022

From a Business Brokers perspective, showing PPP loans on your company financials is very important! First off, the PPP loan must be forgiven before a business can be transitioned to a new owner. Second, there is a lot of discussion on where the PPP loan amount is shown on the financials. Is it the balance sheet of the P&L? Like any business loan, the recommendation is to show this on the balance sheet.

If your CPA chooses to reflect the loan on the P&L, it must be considered “Other Income” and not as sales revenue. It is also “other expenses”, assuming PPP dollars have been used for payroll or other approved expenses.

This conversation is important as it affects the valuation and can overstate cash flow. Buyers and Sellers of lower market/mainstream market businesses need to understand the impact of PPP dollars.

SBA lenders will identify the PPP loan and apply their standard operating procedures to factor the loan into the valuation. It is important to work with your CPA to understand cash flow of your business and not inflate values due to receiving your PPP dollars.

Also, did you know that the fee waiver from the SBA (small business administration) is still available for loans under $350,000. This can be a savings of 2-3% of the total loan amount. Currently, this is available thru the end of September 2022.

For more information, contact Agency Professionals Business Brokers at or visit our website

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