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The Small Business Administration (SBA) announced Thursday that it has suspended 6,900 Minnesota borrowers after 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 involving borrowers in Minnesota.
“Going forward, these individuals will be banned from all SBA loan programs, including disaster loans,” 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)
He said, “After years, the American people will finally begin to see criminals who steal from law-abiding taxpayers being held accountable – and this is the first state.”
Loeffler said the suspected fraudulent activity involved 7,900 PPP and EIDL loans approved during the COVID-19 pandemic.
The announcement comes as Minnesota Governor Tim Walz and his administration face a multibillion-dollar investigation into social services fraud.
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Loeffler sent a letter to Walz on Tuesday, December 23, informing her that her agency would freeze more than $5.5 million in annual aid to resource partners in the state “until further notice.”
“I am informing you that effective immediately and until further notice, the SBA is pausing the distribution of federal funds to SBA resource partners serving the state of Minnesota, totaling more than $5.5 million in annual support,” Loeffler wrote.
The SBA said at least $2.5 million in PPP and EIDL funds issued during the pandemic era were linked to the Minneapolis-based Somali fraud scheme.
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SBA Administrator Kelly Loeffler announced the suspension of thousands of Minnesota borrowers as Governor Tim Walz’s administration faces investigation over alleged pandemic-era fraud. (Anna Moneymaker/Getty Images; Chip Somodevilla/Getty Images)
Loeffler told Walz that $430 million in PPP funds involving about 13,000 loans were flagged as potentially fraudulent but still funded, including some that were forgiven during the Biden administration.
“The volume and intensity of potential fraud is staggering, its magnitude matched only by your response to those attempting to stop it,” he wrote.
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The SBA says it has identified nearly $400 million in potentially fraudulent PPP and EIDL loans involving Minnesota borrowers. (AP Photo/Rod Lamky, Jr.)
Fox News Digital has contacted Walz’s office for comment.
Fox News Digital’s Charles Kreitz contributed to this report.
