SBA suspends nearly 7,000 Minnesota borrowers over suspected $400M pandemic loan fraud

SBA Administrator Kelly Loeffler said the agency reviewed thousands of Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) loans approved in Minnesota, and identified nearly $400 million in potentially fraudulent loans tied to borrowers in Minnesota.

"These individuals will be banned from all SBA loan programs, including disaster loans, going forward," Loeffler wrote on X.

"After years, the American people will finally begin to see the criminals who stole from law-abiding taxpayers held accountable - and this is just the first state," she stated.

The suspected fraudulent activity included 7,900 PPP and EIDL loans approved during the COVID-19 pandemic, Loeffler said.

Loeffler sent a letter Tuesday to Walz on Dec. 23, telling him that her agency will "halt" more than $5.5 million in annual support to resource partners in the state "until further notice."

"I am notifying you that effective immediately and until further notice, the SBA is halting the disbursement of federal funds to SBA resource partners operating in the state of Minnesota, totaling over $5.5 million in annual support," Loeffler wrote.

Loeffler told Walz that $430 million in PPP funds tied to roughly 13,000 loans were flagged as potentially fraudulent but were still funded anyway, including some that were forgiven during the Biden administration.

Fox News Digital has reached out to Walz' office for comment.

Fox News Digital's Charles Creitz contributed to this report.