The suspected fraud is related to pandemic-era loans given out to businesses.
The Small Business Administration (SBA) has referred 562,000 loans suspected to be fraudulent to the Treasury Department for collection, the agency said in an April 24 statement.
The borrowers of these loans “are tied to $22.2 billion in delinquent Paycheck Protection Program (PPP) and COVID Economic Injury Disaster (EIDL) loans,” the SBA said.
PPP was a COVID-19-era loan program that helped businesses retain employees during the pandemic. EIDL was another pandemic program that provided loans and advances to businesses to help them recover from the crisis’s negative impacts.
The SBA had approved around $1.2 trillion in PPP and EDIL loans during 2020–2021, out of which at least $200 billion is estimated to be fraudulent, according to the agency.
The SBA is legally required to refer delinquent debts to the Treasury’s Bureau of the Fiscal Service when they are “sufficiently past due.” The agency is also expected to notify loans flagged by its internal systems as potentially fraudulent to appropriate investigation and law enforcement authorities.
Under the prior administration, the then-SBA had failed to refer the 562,000 loans to the authorities for collection and investigation, according to the statement.
“Until today, none of the 560,000 borrowers had been compelled to repay the $22.2 billion they owed American taxpayers. Fewer than 1,000 of these borrowers had been subject to investigations by the SBA Office of Inspector General,” the SBA said.
“With today’s referral, Treasury will begin collecting on the outstanding debt as part of the Trump Administration’s commitment to recouping stolen pandemic-era funds on behalf of American taxpayers and small business owners.”
This is the SBA’s “largest referral package on record,” it said.
The latest move is coordinated with the White House Task Force to Eliminate Fraud, which was officially established on March 16 by President Donald Trump via an executive order. The task force is headed by Vice President JD Vance, with Federal Trade Commission Chairman Andrew Ferguson acting as co-chair.
At the time, Trump said the task force could recoup hundreds of billions of dollars for American workers.
“This is a very big thing that we’re doing,” the president said. “The kind of money we’re talking about is country-changing.”
Officials estimate that up to $300 billion per year is stolen from government programs nationwide by fraudsters.
