SBA suspends 111,000 California borrowers over $8.6B suspected fraud

The federal Small Business Administration suspended more than 111,000 California borrowers after uncovering $8.6 billion in suspected fraudulent activity linked to the COVID pandemic, SBA Administrator Kelly Loeffler announced Friday. 

“We have suspended nearly 112,000 borrowers tied to at least $9 billion in suspected fraud,” Loeffler said in a press release on Friday. “This staggering number represents the most significant crack-down on those who defrauded pandemic programs, and it illuminates the scale of corruption that the Biden Administration tolerated for years.”

The SBA reported that all in, it suspended 111,620 California borrowers who received 118,489 Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) loans, totaling $8.6 billion. 

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PPP loans were COVID-era federal relief program that gave small businesses money to keep workers on the payroll, while EIDL loans are part of an SBA program that provides low-interest disaster relief loans to help businesses survive during times of diaster, including the pandemic. 

“Once again, the Trump SBA is taking decisive action to deliver accountability in a state whose unaccountable welfare policies have created a culture of fraud and abuse at the expense of law-abiding taxpayers and small business owners,” Loffler continued. 

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The announcement follows California Attorney General Rob Bonta saying on Thursday that the Trump administration was promoting “baseless claims” of persistent fraud in the state. 

“Trump claims California is wasting money when, in reality, our programs are helping lower-income individuals and lower-income families get healthcare, food and housing assistance,” Bonta said on Thursday. 

“Trump claims, wrongly, California is perpetuating fraud when we are the victim,” he added. 

Bonta’s office noted that California recovered nearly $2.7 billion in various fraud schemes across the last 10 years, “including by partnering with the federal government.” 

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Fox News Digital reached out to Bonta’s office on Friday for additional comment. 

Newsom’s office directed Fox News Digital to the Governor Newsom Press Office X account, which mocked the SBA announcement. 

“OMG. The Trump Administration found MAJOR FRAUD in programs THEY control, Newsom’s Press Office’s X account posted, linking to a New York Post exclusive on the announcement. 

“The state has no role running / administering these programs.Were they hiding this??? California doesn’t hide fraud … we fight it. Nearly 1,000 arrests + over $125 billion STOPPED under @CAGovernor Gavin Newsom.”

Loeffler continued that the alleged California fraud comes after the SBA suspended 6,900 borrowers in Minnesota associated with 7,900 potentially fraudulent PPP and EIDL loans, which totaled roughly $400 million. 

“As we did in Minnesota, we are actively working with federal law enforcement to identify the criminals who defrauded American taxpayers, hold them to account, and recoup the stolen funds. 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, comparing California to its investigations in Minnesota. 

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Minnesota became ground zero for welfare and social services fraud surrounding the pandemic late in 2025, when investigators uncovered sweeping fraud schemes that could top $9 billion.