Feds Suspend Nearly 7,000 MN Borrowers In $400M PPP, EIDL Fraud Crackdown

ST. PAUL, MN — The U.S. Small Business Administration has suspended thousands of Minnesota borrowers from its loan programs after identifying what it described as widespread suspected fraud tied to pandemic-era relief funding.

In a statement Monday, SBA Administrator Kelly Loeffler said the agency reviewed thousands of COVID-era Paycheck Protection Program and Economic Injury Disaster Loan approvals connected to Minnesota borrowers.

According to the SBA, the agency has suspended 6,900 Minnesota borrowers linked to roughly 7,900 PPP and EIDL loans totaling approximately $400 million.

“These individuals will be banned from all SBA loan programs, including disaster loans, going forward,” Loeffler said, adding that cases would be referred to federal law enforcement where appropriate for prosecution and repayment.

The SBA said the review focused on pandemic-era loans approved during COVID-19 relief efforts, when federal programs rapidly distributed funds to businesses nationwide.

Loeffler described the Minnesota action as the first step in a broader national crackdown on suspected fraud tied to federal relief programs.

“After years, the American people will finally begin to see the criminals who stole from law-abiding taxpayers held accountable,” she said. “This is just the first state.”

The move comes days after federal officials with the U.S. Department of Health and Human Services froze Minnesota’s child care funding amid separate allegations of widespread fraud in the state’s social services programs.

The SBA did not release the names of the borrowers involved or specify how many cases have already been referred for criminal investigation. Federal officials said additional enforcement actions are expected as reviews continue in other states.

The agency emphasized that suspensions are administrative actions and that borrowers remain entitled to due process as investigations move forward.