Trump Official Pulls $5.5 Million in SBA Funds From Minnesota
The Trump administration is withholding $5.5 million in annual funding to Minnesota due to allegations of fraud by individuals and businesses in the state with government loans, according to a social media post from the U.S. Small Business Administration.
The move is the latest in a series of examples of the federal government withholding funds from Democratic-led states and cities. The announcement comes as Republicans are stepping up investigations into alleged fraud in Minnesota, including by some groups that received COVID-era emergency loans.
President Donald Trump and his administration have recently focused their attention on allegations of fraud and criticized Minnesota Governor Tim Walz, claiming he mishandled the management of government funds. Last month, Trump announced that he was revoking the temporary protection status of Somali refugees living in the state, citing accusations that Somalis were involved in fraud.
SBA Administrator Kelly Loeffler announced in a post on X on Tuesday that she would withhold $5.5 million in small business funds going to the state “pending further review.”
“With dozens of investigations ongoing, the inevitable conclusion is that Minnesota cannot be trusted to manage federal tax dollars,” he said in the post, which did not provide further details about which funds would be withheld.
Walz spokeswoman Claire Lancaster criticized the Trump administration for trying to blame the Minnesota governor instead of addressing weaknesses in federal programs.
“As the governor battled fraud, the Trump administration spent the last month sending dozens of letters, statements and social media posts threatening to withhold funding and investigate the state,” Lancaster said in a statement. He said the alleged frauds “reveal failures within federal systems that are administered and controlled by the federal government and have nothing to do with the Walz Administration.”
The House Small Business Committee sent a letter to Loeffler on Tuesday seeking information about federal pandemic relief funds flowing to Minnesota organizations in connection with the fraud scandal.
Minnesota nonprofit Feeding Our Future was at the center of the largest accused pandemic relief scam in U.S. history, according to the Justice Department. As of November, dozens of people have been charged in this case.
Loeffler and the SBA did not immediately respond to requests for comment.
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