The Small Business Administration (SBA) has referred 562,000 loans suspected to be fraudulent to the Treasury Department for collection, the agency said in an April 24 statement.
The borrowers of these loans “are tied to $22.2 billion in delinquent Paycheck Protection Program (PPP) and COVID Economic Injury Disaster (EIDL) loans,” the SBA said.
PPP was a COVID-19-era loan program that helped businesses retain employees during the pandemic. EIDL was another pandemic program that provided loans and advances to businesses to help them recover from the crisis's negative impacts.
The SBA had approved around $1.2 trillion in PPP and EDIL loans during 2020–2021, out of which at least $200 billion is estimated to be fraudulent, according to the agency.
The SBA is legally required to refer delinquent debts to the Treasury’s Bureau of the Fiscal Service when they are “sufficiently past due.” The agency is also expected to notify loans flagged by its internal systems as potentially fraudulent to appropriate investigation and law enforcement authorities.
Under the prior administration, the then-SBA had failed to refer the 562,000 loans to the authorities for collection and investigation, according to the statement.
“Until today, none of the 560,000 borrowers had been compelled to repay the $22.2 billion they owed American taxpayers. Fewer than 1,000 of these borrowers had been subject to investigations by the SBA Office of Inspector General,” the SBA said.
“With today’s referral, Treasury will begin collecting on the outstanding debt as part of the Trump Administration’s commitment to recouping stolen pandemic-era funds on behalf of American taxpayers and small business owners.”
This is the SBA’s “largest referral package on record,” it said.
At the time, Trump said the task force could recoup hundreds of billions of dollars for American workers.
“This is a very big thing that we’re doing,” the president said. “The kind of money we’re talking about is country-changing.”
Officials estimate that up to $300 billion per year is stolen from government programs nationwide by fraudsters.
GAO has made 42 recommendations since June 2020 related to improvements to the SBA and its pandemic relief programs. The SBA implemented 17 of these recommendations, most of which concerned fraud risks.
“GAO has estimated that the additional controls SBA put in place for its pandemic-relief programs collectively had saved the government more than $30 billion as of the end of fiscal year 2025,” LaFountain said.
In addition to the recent referral of 562,000 suspected fraudulent loans to the Treasury, the SBA has cracked down on fraud, especially related to the pandemic-era, in recent months.
These borrowers received 7,900 loans totaling approximately $400 million. Loeffler said the people involved in the fraud would be banned from taking part in any SBA loan programs moving forward.
On Feb. 6, the SBA announced suspensions for 111,620 borrowers in California due to suspected fraud in PPP and EIDL loans. These borrowers received 118,489 loans totaling more than $8.6 billion.
“As we continue our state-by-state work, our message is clear: pandemic-era fraudsters will not get a pass under this Administration,” Loeffler said.