In its latest response to suspected fraud in Minnesota, the Trump administration has suspended nearly 7,000 small business loans amid concerns about abuse in pandemic-era lending programs.
The suspensions, announced by the Small Business Administration (SBA) Jan. 1, affect up to $400 million in loans and bar flagged borrowers from receiving future SBA assistance.
SBA Administrator Kelly Loeffler said in a Jan. 1 post on the social media platform X that over the past week, the agency has reviewed thousands of loans approved in Minnesota as part of an effort to identify suspected fraudulent activity.
“Today, our agency took action to suspend 6,900 Minnesota borrowers amid suspected fraudulent activity. In total, these borrowers were approved for 7,900 PPP and EIDL loans worth approximately $400M,” Loeffler wrote.
She said the borrowers will be barred from all SBA loan programs, including disaster loans, and cases will be referred to federal law enforcement “where appropriate” for prosecution and repayment.
Federal and state authorities are investigating suspected fraud across multiple, separate Minnesota programs, including small business lending, child nutrition initiatives, Medicaid billing, autism programs, and housing programs.
One of the largest fraud prosecutions in Minnesota involves the Feeding Our Future case, in which prosecutors allege that a nonprofit group siphoned off more than $250 million in taxpayer funds during the COVID-19 pandemic through fake meal sites, shell companies, and falsified invoices, as CatholicVote previously reported.
According to CBS News, the nonprofit claimed it worked with restaurants and caterers to distribute meals to schools and other programs. The Department of Justice has charged at least 92 individuals in connection with the scheme.
Federal prosecutors have said potential losses tied to related fraud investigations in the state could exceed $9 billion, CatholicVote reported.
The SBA action comes amid a broader federal effort to halt funding while agencies verify how pandemic-era dollars were spent. On Dec. 30, the Department of Health and Human Services (HHS) announced that it had frozen roughly $185 million in annual childcare payments to Minnesota and required recipients to provide documentation showing how the funds were used.
HHS Deputy Secretary Jim O’Neill said Jan. 2 on FOX News Channel’s “The Story with Martha MacCallum” that the department has not yet received receipts or proof of expenses tied to the payments.
Congressional scrutiny is also intensifying. The U.S. House Committee on Oversight and Government Reform is scheduled to hold hearings on the Minnesota fraud cases on Jan. 7 and Feb. 10, according to FOX 9. Minnesota Democratic Gov. Tim Walz — whose administration has drawn ever-increasing scrutiny over its handling of the suspected fraud — has been invited to testify at the February hearing.
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