After Minnesota, SBA Will Investigate Fraud State by State: Administrator Kelly Loeffler
🔴 WATCH THE FULL EPISODE: https://ept.ms/4bmYV0qShow more SBA chief Kelly Loeffler reveals her agency uncovered thousands of COVID-era loans that had been flagged for potential fraud but were not fully investigated under the previous administration, she says. Instead the cases were closed, and many of those loans were actually forgiven.
She says her agency found 8,000 suspected fraudulent loans in Minnesota, totaling some $400 million, prompting the SBA to suspend nearly 7000 borrowers.
The agency is now going state by state investigating abuses of pandemic era PPP and EIDL loans and handing cases to federal law enforcement. Show less
So what we did was look at what was happening in Minnesota and we said this is a great place to investigate deeply immediately and we did that.
We worked through the holidays from Thanksgiving up to New Year's on about 20,000 different files, found about 8,000 instances of fraudulent loans and moved quickly to make sure that those borrowers, there were about 7,000 of them, some of them had two loans, could never access the services of the SBA again.
That includes everything from small business lending on which we provide a government guarantee to a disaster loan.
So we are now, because of this blueprint we have, we're going to be able to go state by state and see where people have defrauded the federal government, which means taxpayers, to ensure that they are investigated, that we're turning those files over to federal law enforcement and that they can't receive federal support.
You know, some of the criticism around this issue, around this move, I guess, right, we learned about Minnesota and very quickly, I mean, within days, you know, almost 7,000 borrowers are suspended.
It almost felt like a blanket thing.
But you're kind of suggesting that there's, you know, sort of deliberate looking at every one of these files.
Can you just kind of unpack that a little bit for me?
Absolutely.
So this was very much driven during COVID.
We saw that $1.2 trillion in federal funds went out through the SBA.
That was in the form of the Paycheck Protection Program and the Economic Injury Disaster Loan Program.
Tell me that number again.
$1.2 trillion.
That's a lot.
Now, it was a lot of money, but what the federal government had asked the country to do was to shut down their businesses to stay home.
And small businesses, which make up 99% of all businesses in this country that employ nearly half our workforce, there's 36 million of them now, a record number under President Trump.
But these businesses were told to cease operations.
It was devastating and would have been even more devastating had that federal assistance not come out.
And most small businesses were legitimate and used it for good, kept their employees on the payroll.
It made a huge difference locally.
And those businesses are back on their feet.
But there's a certain group of actors that saw opportunity and disaster and defrauded the government.
And that's where we saw under the Biden administration, they quickly started forgiving fraudulent actors, loans that were already fraud flagged.
So there was a set of thousands and thousands of loans that have been frauded, marked as fraud.
They were not ever further investigated.
Those cases were closed.
Those loans were being forgiven.
That's where we're going back now and just saying these files are now closed.
They've been marked as fraud.
We're sending them to federal investigators because no more sweeping this under the rug.