SBA Administrator Kelly Loeffler announced a massive crackdown on Thursday, suspending 6,900 Minnesota borrowers after uncovering widespread suspected pandemic loan fraud. The agency identified nearly $400 million in potentially fraudulent funds tied to the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).
Loeffler stated that these individuals are now permanently banned from all SBA loan programs, including disaster assistance. She confirmed that “the agency will refer appropriate cases to federal law enforcement for prosecution and repayment” to ensure taxpayer dollars are recovered.
The administrator also sent a stinging letter to Governor Tim Walz, announcing the immediate halt of over $5.5 million in annual support to SBA resource partners in Minnesota. She criticized the “staggering” volume of potential fraud that occurred under his watch, particularly during the previous administration.
According to the SBA, at least $2.5 million of the fraudulent funds were linked to a Somali-run scheme based in Minneapolis. Loeffler noted that many of these suspicious loans were even forgiven by the Biden administration despite clear red flags.