SBA Announces Suspensions for 870,000 U.S. Borrowers Tied to $39 Billion In Suspected Pandemic Fraud

WASHINGTON — Today, during a major fraud announcement in Kansas City, Missouri, alongside Vice President JD Vance, Attorney General Todd Blanche, FBI Director Kash Patel, and Assistant Attorney General Colin McDonald, SBA Administrator Kelly Loeffler announced that the U.S. Small Business Administration (SBA) suspended 870,000 U.S. borrowers connected to an estimated $39 billion in suspected fraudulent pandemic-era Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) activity. The nationwide action marks the culmination of the SBA’s state-by-state pandemic-fraud crackdown as a member of the White House Task Force to Eliminate Fraud. It is the agency’s largest suspension announcement to date, representing action against borrowers in 45 new states, six territories, and the District of Columbia. 

The SBA previously announced suspensions of more than 150,000 borrowers tied to approximately $10 billion in suspected PPP and COVID EIDL fraud across five states: California, Ohio, Minnesota, Maine, and Wisconsin.  Suspended borrowers are prohibited from receiving future SBA small-business and disaster loans and are ineligible for other SBA programs, including federal contracting through the 8(a) Business Development Program. 

“Today’s announcement represents the largest-ever action against perpetrators of SBA fraud, with 870,000 suspended borrowers tied to $39 billion in suspected fraudulent PPP and COVID EIDL activity. In partnership with Vice President Vance and the White House Task Force to Eliminate Fraud, we’re putting fraudsters on notice: the federal government will no longer turn a blind eye to those who stole from taxpayers and exploited programs designed to sustain small businesses during the pandemic,” said SBA Administrator Kelly Loeffler. “With demand letters going out to suspected fraudsters, we’re also sending a clear message that they must repay their debts or face Treasury collections and possible federal law enforcement. Under this Administration, the free ride is over. We are restoring accountability, recovering taxpayer dollars, and protecting SBA programs for the legitimate small businesses they were created to serve.”

During today’s announcement, top officials from the U.S. Department of Justice also announced a slate of enforcement actions against alleged PPP and COVID EIDL fraudsters, including numerous indictments secured as part of Operation Heartland Surge.

“Pandemic loan relief was meant to keep American small businesses alive during government lockdowns—not line the pockets of fraudsters,” said Attorney General Todd Blanche. “The defendants charged during our summer surge allegedly fabricated businesses, submitted false payroll and revenue claims, stole identities, and concealed foreign ties on their applications— but they will now be prosecuted to the fullest extent of the law.”

“This summer surge shows what is possible when dedicated public servants across the country work together with a single purpose,” said Assistant Attorney General Colin M. McDonald of the National Fraud Enforcement Division. “Our mission is clear: protect taxpayer funds, safeguard the integrity of federal relief programs, and deliver justice to those who exploited them. We will remain steadfast every day—standing shoulder‑to‑shoulder with our partners—to identify fraud, pursue those responsible, and restore confidence in the programs meant to help American small businesses thrive.”

“Fraudsters took advantage of this country’s generosity when we were most vulnerable. It is disgraceful. Although the previous administration looked the other way, President Trump and Vice President Vance won’t. Fraudsters take note: We’re coming after you,” said Scott Brady, Executive Director of the White House Task Force to Eliminate Fraud.

In a separate enforcement action, the SBA and its Office of the Inspector General, led by William Kirk, also announced that it is launching “Operation No Doze.” Under the operation, the SBA will send final 30-day demand letters to suspected fraudulent PPP and COVID EIDL borrowers, starting with approximately 8,000 in Kansas and Missouri. The letters will demand repayment of debt associated with the flagged loans and notify recipients of the consequences of failing to resolve their obligations within the required timeframe. The SBA previously referred more than 560,000 suspected fraudulent pandemic-era borrowers tied to $22 billion in loans to Treasury for collection.

“Operation No Doze brings a focused and coordinated approach to pursuing fraud in SBA’s pandemic relief programs,” said SBA Inspector General William Kirk. “By concentrating our investigative resources and working closely with SBA and our law enforcement partners, we are strengthening our ability to identify fraud, recover taxpayer funds, and hold accountable those who exploited programs created to help small businesses in a time of extraordinary need. This initiative makes clear that the passage of time does not diminish our commitment to accountability.”

Borrowers who fail to remit full payment within the 30-day period may face further legal and financial consequences, including:

• Enforcement under the Administrative False Claims Act, which may subject fraudulent borrowers to liability of up to double the government’s damages, plus administrative penalties.
• Referral to the U.S. Department of Justice for further legal action, as appropriate.
• Transfer of delinquent debts to the U.S. Department of the Treasury’s Bureau of the Fiscal Service Cross Servicing Program for collection. Such transfers may result in added interest and collection fees of up to 28 percent.
• Offset through the Treasury Offset Program against certain federal payments, including tax refunds, contractor and vendor payments, federal salaries, and Social Security and other benefit payments.

Today’s nationwide suspensions and the launch of “Operation No Doze” represent the latest phase of the SBA’s comprehensive effort to identify pandemic-era fraud, recover improperly obtained taxpayer funds, and protect SBA programs for legitimate American small businesses. 

The state-by-state breakdown of SBA suspensions is listed in the chart below:

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About the U.S. Small Business Administration
The U.S. Small Business Administration helps power the American dream of entrepreneurship. As the leading voice for small businesses within the federal government, the SBA empowers job creators with the resources and support they need to start, grow, and expand their businesses or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.