ST. PAUL (KFGO-CBS) — Thousands of pandemic-era loans in Minnesota have been suspended for suspected fraud, U.S. Small Business Administration’s Kelly Loeffler announced Thursday night.
Loeffler says 6,900 borrowers were suspended for 7,900 Paycheck Protection Program (PPP) and Economic Injury Disaster (EIDL) loans worth approximately $400 million.
“These individuals will be banned from all SBA loan programs, including disaster loans, going forward. We will also refer every case, where appropriate, to federal law enforcement for prosecution and repayment,” Loeffler wrote in a post on X. “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.”
Loeffler did not provide any additional details about the allegedly fraudulent loans.
Last week, Loeffler sent a letter to Minnesota Gov. Tim Walz stating that the Small Business Administration would be halting $5.5 million in annual funding to Minnesota “pending further review.”
On Dec. 2, Loeffler announced she ordered a full investigation into “the network of Somali organizations and executives” implicated in pandemic-era fraud schemes in the North Star state.
The Small Business Administration’s internal watchdog in June 2023 estimated that the agency disbursed over $200 billion in “potentially fraudulent” COVID-era EIDL and PPP loans. That’s about 17% of the total funds that were disbursed under those programs during the pandemic
Under the Coronavirus Aid, Relief and Security Act, signed into law by President Trump in 2020, borrowers could self-certify that their loan applications were accurate. Stricter rules were put in place in 2021 to stem pandemic fraud, but “many of the improvements were made after much of the damage had already been done due to the lax internal control environment created at the onset of these programs,” the SBA Office of Inspector General found.
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