SBA suspends nearly 7,000 Minnesota borrowers over suspected $400M pandemic loan fraud
SBA suspends 6,900 Minnesota borrowers over suspected $400 million fraud scheme involving PPP and disaster loans during COVID-19 pandemic response.
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The Small Business Administration (SBA) announced Thursday that it suspended 6,900 Minnesota borrowers after uncovering what it says is widespread suspected fraud.
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 borrowers in Minnesota.
"These individuals will be banned from all SBA loan programs, including disaster loans, going forward," Loeffler wrote on X.
Loeffler said the agency will refer appropriate cases to federal law enforcement for prosecution and repayment.
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The Small Business Administration announced the suspension of nearly 7,000 Minnesota borrowers after identifying hundreds of millions of dollars in suspected pandemic loan fraud. (Bill Clark/CQ-Roll Call, Inc via Getty Images)
"After years, the American people will finally begin to see the criminals who stole from law-abiding taxpayers held accountable — and this is just the first state," she stated.
The suspected fraudulent activity included 7,900 PPP and EIDL loans approved during the COVID-19 pandemic, Loeffler said.
The announcement comes as Minnesota Gov. Tim Walz and his administration face scrutiny over billions of dollars in social services fraud.
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Loeffler sent a letter Tuesday to Walz on Dec. 23, telling him that her agency will "halt" more than $5.5 million in annual support to resource partners in the state "until further notice."
"I am notifying you that effective immediately and until further notice, the SBA is halting the disbursement of federal funds to SBA resource partners operating in the state of Minnesota, totaling over $5.5 million in annual support," Loeffler wrote.
The SBA said that at least $2.5 million in PPP and EIDL funds issued during the pandemic era were connected to a Somali fraud scheme based in Minneapolis.
