What are the allowable deductions for companies with reagrds to employees and loans?

If you make a loan to your employee then the interest earned from that loan will treated as income for the company. If you incur any expenses in earning that income from the interest then you should be able to deduct those expenses.

If the loan then becomes irrecoverable then this would actually be a capital loss to the company and would be included in the overall capital gains/loss of the company when calculating the taxable income.