SBA suspends 6,900 Minnesota borrowers over suspected fraud concerns
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The Small Business Administration (SBA) announced Thursday it was suspending 6,900 Minnesota borrowers after what it said was widespread suspected fraud was uncovered.
SBA Administrator Kelly Loeffler said the agency reviewed thousands of Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) loans approved in Minnesota and identified nearly $400 million in potentially fraudulent loans tied to Minnesota borrowers.
“These individuals will now be barred from all SBA loan programs, including disaster loans,” Loeffler wrote on X.
Loeffler said the agency will refer eligible cases to federal law enforcement for prosecution and reimbursement.
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The Small Business Administration announced the suspension of nearly 7,000 Minnesota borrowers after hundreds of millions of dollars in suspected pandemic loan fraud was detected. (Bill Clark/CQ-Roll Call, Inc via Getty Images)
“After many years, the American people will finally begin to see criminals who steal money from law-abiding taxpayers be held accountable — and this is just the first state.” he said.
Loeffler said the suspected fraudulent activity involved 7,900 PPP and EIDL loans approved during the COVID-19 pandemic.
The announcement comes as Minnesota Gov. Tim Walz and his administration face scrutiny over billions of dollars in welfare fraud.
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Loeffler sent a letter to Walz on Tuesday, Dec. 23, saying her agency would “pause” its more than $5.5 million annual support to resource partners in the state “until further notice.”
“Effective immediately and until further notice, I am notifying you that SBA will cease disbursing federal funds that provide over $5.5 million in annual support to SBA resource partners operating in the state of Minnesota,” Loeffler said. he wrote.
The SBA said at least $2.5 million in PPP and EIDL funds issued during the pandemic were linked to a Minneapolis-based Somali fraud scheme.
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SBA Administrator Kelly Loeffler announced the suspension of thousands of Minnesota borrowers as Gov. Tim Walz’s administration faces scrutiny over allegations of pandemic-era fraud. (Anna Moneymaker/Getty Images; Chip Somodevilla/Getty Images)
Loeffler told Walz that $430 million in PPP funds tied to roughly 13,000 loans were flagged as potentially fraudulent but were still funded, including those forgiven during the Biden administration.
“The volume and intensity of potential fraud is staggering, how egregious it is matched only by your response to those trying to stop it,” he wrote.
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The SBA said it flagged nearly $400 million in potentially fraudulent PPP and EIDL loans tied to Minnesota borrowers. (AP Photo/Rod Lamkey, Jr.)
Fox News Digital has reached out to Walz’s office for comment.
Fox News Digital’s Charles Creitz contributed to this report.
