SBA Suspends 6,900 Minnesota Borrowers Over $400M Pandemic Loan Fraud

In a sweeping federal crackdown, the U.S. Small Business Administration (SBA) has suspended nearly 7,000 Minnesota borrowers after uncovering an estimated $400 million in suspected pandemic loan fraud. The move marks one of the largest fraud-related suspensions in SBA history and paints a damning picture of rampant abuse under the guise of COVID-19 relief abuse that occurred under Democrat leadership in Minnesota.

SBA Administrator Kelly Loeffler announced Thursday that the agency had completed a review of Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) records in the state, revealing shocking levels of fraudulent activity. Loeffler confirmed that 7,900 loans were flagged as suspicious, tied to $430 million in pandemic funds, some of which were forgiven by the Biden administration despite red flags.

“This is just the first state,” Loeffler warned, adding that those responsible will be banned from all future SBA programs and referred for federal prosecution and repayment. “The American people will finally begin to see the criminals who stole from law-abiding taxpayers held accountable.”

Among the worst offenders: a Somali-based fraud ring operating out of Minneapolis, where at least $2.5 million in COVID relief funds were funneled through shell businesses and fraudulent applications.

Key details from the SBA findings:

• 6,900 Minnesota borrowers have been suspended from future SBA loan programs.

• At least $430 million in loans were flagged for fraud and still processed during the pandemic.

• $5.5 million in annual federal SBA funds for Minnesota resource partners have been frozen indefinitely.

• Thousands of loans were forgiven under the Biden administration despite glaring fraud indicators.

In a scathing letter sent to Governor Tim Walz on December 23, Loeffler directly blamed the state’s Democrat-led government for enabling the fraud through inaction and obstruction. “The volume and concentration of potential fraud is staggering,” she wrote, adding that Walz's response to whistleblowers and fraud investigators was matched only by the egregiousness of the crimes themselves.

This revelation comes as Walz’s administration is already under fire for its failure to prevent other high-profile fraud cases, including the Feeding Our Future scandal, which saw over $250 million in stolen federal child nutrition funds.

With Democrats at the helm, Minnesota has become a national epicenter of government corruption and welfare abuse, and the numbers don’t lie. Instead of protecting taxpayers, state leaders appear to have turned a blind eye if not outright facilitated the looting of pandemic relief programs meant to help real small businesses survive.

Meanwhile, honest entrepreneurs across America watched as criminals walked away with millions and in many cases, with Washington’s blessing.

The SBA’s decision to suspend funding and launch federal investigations is long overdue. But if this is “just the first state,” one can only imagine how deep the rot goes in other Democrat-controlled strongholds.

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