SBA freezes over 100,000 California borrowers in sweeping $9B pandemic fraud crackdown

The Small Business Administration (SBA) announced Friday it had suspended more than 100,000 California borrowers amid suspected fraud, with the alleged abuse totaling nearly $9 billion.

SBA Administrator Kelly Loeffler said the agency suspended 111,620 California borrowers linked to suspected fraudulent activity across SBA pandemic-era loan programs. Those borrowers received 118,489 Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) loans totaling more than $8.6 billion.

“Once again, the Trump SBA is taking decisive action to deliver accountability in a state whose unaccountable welfare policies have created a culture of fraud and abuse at the expense of law-abiding taxpayers and small business owners,” Loeffler said in a statement.

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“Today, we announced we have suspended nearly 112,000 borrowers tied to at least $9 billion in suspected fraud,” she said. “This staggering number represents the most significant crackdown on those who defrauded pandemic programs, and it illuminates the scale of corruption that the Biden administration tolerated for years.”

Loeffler referenced the Trump administration’s fraud crackdown in another blue state, saying, “As we did in Minnesota, we are actively working with federal law enforcement to identify the criminals who defrauded American taxpayers, hold them to account and recoup the stolen funds.

“As we continue our state-by-state work, our message is clear: Pandemic-era fraudsters will not get a pass under this administration.”

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The announcement comes after the SBA said last month it had suspended 6,900 Minnesota borrowers after uncovering what it said was widespread suspected fraud.

The agency previously reviewed thousands of PPP and EIDL loans approved in Minnesota, identifying nearly $400 million in potentially fraudulent loans tied to borrowers.

That suspected activity included 7,900 PPP and EIDL loans approved during the COVID-19 pandemic, according to Loeffler.

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The SBA previously said at least $2.5 million in PPP and EIDL funds issued during the pandemic era were connected to a Somali-linked fraud scheme based in Minneapolis.