The Small Business Administration (SBA) announced on February 6 that it has suspended the eligibility of 111,620 borrowers in California suspected of being involved in fraudulent loan assistance during the pandemic. This fraud involves the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL).
The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act to provide funds to small businesses for payroll expenses for up to 8 weeks, including benefits. The EIDL loans during COVID-19 were aimed at helping small businesses recover from the negative impacts of the pandemic.
In California, these borrowers received a total of 118,489 PPP and EIDL loans, amounting to over $8.6 billion. SBA Director Kelly Loeffler described this as the “most significant enforcement action” taken against pandemic program fraudsters.
Loeffler stated, “Just as we did in Minnesota, we are actively collaborating with federal law enforcement to target criminals defrauding American taxpayers, hold them accountable, and recover stolen funds. As we continue state by state, the message is clear: fraudsters during the pandemic will not get away under this administration.”
On February 6, Loeffler posted on social media platform X that she visited an address in San Diego linked to 14 small businesses established during COVID-19, which collectively received over $2 million in pandemic loans but have not fully repaid them yet.
She mentioned that SBA plans to file criminal charges regarding this $8.6 billion fraud case with the Department of Justice. The Epoch Times contacted Governor Gavin Newsom’s office for a response but did not receive a reply at the time of publication.
In Minnesota, Loeffler announced the suspension of $5.5 million in federal payments last December due to a fraud scandal. In a letter to Governor Tim Walz, she stated that SBA had issued 13,600 pandemic relief loans totaling $430 million suspected of fraudulent activities.
Based on her post on X platform on January 1, SBA suspended the eligibility of 6,900 Minnesota borrowers who had previously been approved for 7,900 PPP and EIDL loans totaling around $400 million, currently under fraud investigation.
She wrote, “These individuals will be prohibited from participating in all SBA loan programs, including future disaster loans. After years, the American people will finally see those criminals who stole funds from law-abiding taxpayers being held accountable, and this is just the beginning for one state.”
On February 2, SBA announced the sentencing of the last defendant in a $7.7 million unemployment assistance fraud case involving the agency and multiple states during the pandemic. The defendants were accused of fraudulently obtaining over $5.6 million by using more than 1,000 false unemployment claims.
Special Agent in Charge Jennifer Runyan of the FBI Detroit Field Office stated that the scheme disrupted the lives of over 900 victims. One victim, a nurse working over 12 hours a day on the front lines during COVID-19, had to deal with the theft of her identity.
Runyan mentioned, “These defendants not only stole money, they also stole the inner peace of hard-working Americans during a national crisis.”
In December 2025, the Government Accountability Office (GAO) informed the Senate Committee on Small Business and Entrepreneurship that despite the end of the public health emergency of COVID-19, some government programs continue to be exploited by fraudsters.
Acting Director of Financial Markets and Community Investment at GAO Courtney LaFountain mentioned that since June 2020, GAO has made several recommendations to improve pandemic relief programs to SBA.
LaFountain stated, “GAO estimates that by the end of the 2025 fiscal year, the control measures implemented by SBA for pandemic relief programs have saved the government over $30 billion.”