SBA Administrator Kelly Loeffler said the borrowers were approved for 7,900 pandemic relief loans worth about $400 million.
The Small Business Administration (SBA) has suspended 6,900 Minnesota borrowers amid suspected fraudulent activity in the state’s pandemic-era loan programs, SBA Administrator Kelly Loeffler said on Jan. 1.
In a post on X, Loeffler said the SBA took the action after reviewing thousands of Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) approvals in Minnesota during the COVID-19 pandemic.
Loeffler noted that the suspended borrowers were approved by the state for 7,900 PPP and EIDL loans worth about $400 million, though she did not elaborate on the potential fraud linked to the loans.
The individuals will be barred from participating in all SBA loan programs moving forward, and the agency intends to pursue legal action, according to Loeffler.
“We will also refer every case, where appropriate, to federal law enforcement for prosecution and repayment,” she stated.
“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.”
The PPP is a government loan initiative designed to help small businesses pay up to eight weeks of payroll costs and to cover mortgage interest, rent, and utility expenses. The EIDL program aims to provide small businesses with low‑interest loans during a disaster.
The suspension came just days after Loeffler sent a letter to Minnesota Gov. Tim Walz on Dec. 23, 2025, informing him that the SBA would halt the disbursement of $5.5 million in annual grants to the state amid an ongoing probe into the COVID-era programs.
According to her letter, the agency uncovered that Minnesota has granted at least $2.5 million in PPP and EIDL loans to “individuals indicted as part of the Somali fraud scheme” during the pandemic. It also found that the state issued another 13,600 PPP loans totaling about $430 million that “were initially flagged by SBA as fraudulent but later funded—and in many cases forgiven under the Biden administration.”
“The volume and concentration of potential fraud is staggering, matched in its egregiousness only by your response to those who attempted to stop it,” Loeffler wrote.
“When legislators and whistleblowers raised concerns about potential abuse during the pandemic, your Administration resisted oversight, refused accountability, and allowed the misconduct to metastasize.”
Walz’s office did not respond to a request for comment by publication time.
