SBA Suspends Over 111,000 Borrowers in California Amid Fraud Investigation

The Small Business Administration (SBA) has put a hold on more than 111,000 borrowers in California after discovering what they suspect to be $8.6 billion in fraudulent activity linked to the pandemic, according to SBA Administrator Kelly Loeffler’s announcement on Friday.

Loeffler stated, “We have suspended approximately 112,000 borrowers for suspected fraud of at least $9 billion,” and emphasized that this is the most significant effort to address fraud within pandemic relief programs, reflecting a troubling level of corruption that has persisted under the Biden administration.

The SBA’s findings indicate suspension of $8.6 billion across 111,620 California borrowers, who received a total of 118,489 loans through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).

PPP loans are designed to aid small businesses in retaining employees during tough times, while EIDL loans provide low-interest disaster relief to help businesses weather crises, including pandemics.

Loeffler further remarked, “Once again, the Trump SBA will take decisive action to enforce accountability in states where irresponsible welfare policies have created a culture of fraud and abuse at the expense of law-abiding taxpayers and small business owners.”

This announcement follows California Attorney General Rob Bonta’s comments that the Trump administration is making “baseless claims” about ongoing fraud in the state. Bonta countered, stating, “President Trump claims that California is wasting money when in fact our programs are helping low-income people and families with health care, food and housing assistance.”

Bonta asserted, “President Trump is falsely claiming that California is perpetuating fraud when we are the victims.” His office also pointed out that California has reclaimed nearly $2.7 billion over the last decade from various fraudulent activities, working alongside the federal government.

In response, Governor Gavin Newsom’s office directed inquiries to their X account, which took a jab at the SBA’s announcement. They quipped, “Oh, the Trump administration has discovered significant fraud in a program they administer.” The post emphasized that California has no part in managing these programs and highlighted the state’s efforts against fraud, including nearly 1,000 arrests and over $125 billion in suspensions under Newsom’s leadership.

Loeffler noted that these fraud allegations in California follow the SBA’s recent suspension of 6,900 borrowers in Minnesota, which involved about 7,900 potentially fraudulent loans totaling roughly $400 million.

“As we did in Minnesota, we are actively working with federal law enforcement to identify criminals who defrauded American taxpayers, hold them accountable, and recover stolen funds. Our message is clear: Pandemic-era fraudsters will not get a pass under this administration,” Loeffler asserted, drawing parallels between the ongoing investigations in California and Minnesota.

Minnesota had become a focal point for pandemic welfare and social services fraud when a substantial fraud scheme exceeding $9 billion was unveiled in late 2025.