7,800 Wisconsin Borrowers Suspended in SBA Fraud Investigation
The U.S. Small Business Administration (SBA) has suspended 7,800 borrowers in Wisconsin who are allegedly connected to approximately $375 million in suspected pandemic-era loan fraud.
The SBA announced the suspensions on July 8. According to the agency, the suspected fraudulent activity involved loans issued through the Paycheck Protection Program (PPP) and the COVID Economic Injury Disaster Loan (EIDL) program.
The action is part of the agency’s ongoing state-by-state review of pandemic relief programs, conducted in coordination with the White House Task Force to Eliminate Fraud, the U.S. Department of the Treasury, and federal law enforcement partners.
Pandemic Relief Programs Under Increased Scrutiny
The PPP and EIDL programs were established in 2020 to help businesses survive the economic disruption caused by the COVID-19 pandemic. The PPP provided forgivable loans to eligible businesses that maintained payroll and met other program requirements, while the EIDL program offered low-interest disaster loans to help businesses cover operating expenses during periods of financial hardship.
Together, the programs distributed hundreds of billions of dollars in emergency assistance to businesses across the United States. While the relief helped millions of legitimate businesses remain operational during the pandemic, the speed at which the programs were implemented also created opportunities for fraud, prompting years of investigations by federal agencies.
The SBA said the latest action is part of its ongoing investigation into the alleged misuse of these programs.
How the Suspensions Affect Borrowers
Borrowers suspended by the SBA cannot receive future small business loans or disaster loans from the agency. They are also ineligible for other SBA programs, including federal contracting opportunities available through the 8(a) Business Development Program.
The Wisconsin action was carried out in coordination with the White House Task Force to Eliminate Fraud. The SBA is also working with the Department of the Treasury and federal law enforcement agencies as it continues reviewing suspected fraud involving pandemic relief loans.
SBA Administrator Kelly Loeffler said the agency’s work is focused on identifying suspected fraud, recovering taxpayer funds, and protecting programs intended for legitimate small businesses.
More Than 150,000 Borrowers Suspended Across Five States
The Wisconsin suspensions are the latest in a series of actions taken by the SBA across the country. According to the agency, more than 150,000 borrowers have now been suspended from SBA programs across five states. Together, those borrowers are connected to more than $10 billion in suspected PPP and COVID EIDL fraud.
The previously announced actions include 112,000 borrowers in California connected to $8.6 billion in suspected fraud and 27,000 borrowers in Ohio connected to approximately $1.1 billion.
The SBA has also suspended 6,900 borrowers in Minnesota connected to $400 million in suspected fraud and 1,500 borrowers in Maine connected to $93 million. The 7,800 Wisconsin borrowers included in the latest announcement are connected to another $375 million in suspected fraudulent loan activity.
SBA Previously Referred 560,000 Borrowers for Collection
The state-level suspensions follow a separate enforcement action announced by the SBA in April. In that action, the agency referred more than 560,000 borrowers connected to $22 billion in suspected fraudulent pandemic-era loans to the U.S. Department of the Treasury for collection.
The SBA described the action as its largest fraud enforcement effort to date and the largest referral package in the agency’s history.
Suspension and collection referral are separate actions. The state-by-state suspensions prevent affected borrowers from receiving future SBA loans and accessing other agency programs. The April action sent suspected fraudulent accounts to the Treasury Department for collection.
The SBA said it will continue coordinating with federal law enforcement agencies to pursue recoveries and seek civil or criminal penalties when appropriate. The agency also plans to work with its Office of Inspector General to investigate suspected pandemic relief fraud in additional states.
