Small Business Administration Suspends Over 111,000 California Borrowers for Suspected Fraud

SBA Administrator Kelly Loeffler says the fraud amounts to $8.6 billion in sketchy loans from the COVID-19 pandemic

Published on Feb. 6, 2026

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The Small Business Administration has suspended over 111,000 California borrowers due to suspected fraud during the COVID-19 pandemic, according to SBA Administrator Kelly Loeffler. Loeffler says the fraud amounts to $8.6 billion in questionable loans, calling it the "most significant crackdown on those who defrauded pandemic programs" and highlighting the "scale of corruption" under the previous administration.

Why it matters

This case underscores ongoing concerns about fraud and abuse in government relief programs, particularly during times of crisis when oversight may be more lax. It also raises questions about the effectiveness of the SBA's fraud detection and prevention measures, as well as the broader issue of accountability for those who misuse taxpayer funds.

The details

Loeffler says the fraud allegedly occurred through people collecting money under the Paycheck Protection Program and Economic Injury Disaster Loans, which were intended to help businesses through economic hardships during the pandemic. She claims the "staggering number" of suspended borrowers represents the largest crackdown on pandemic-related fraud to date.

  • The SBA suspended the 111,000 California borrowers on Friday, February 6, 2026.

The players

Kelly Loeffler

The current administrator of the U.S. Small Business Administration, appointed by former President Donald Trump.

California Democratic Attorney General

The state's top law enforcement official, who has denied Loeffler's claims about fraud as "baseless".

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What they’re saying

“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.”

— Kelly Loeffler, SBA Administrator (New York Post)

“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.”

— Kelly Loeffler, SBA Administrator (New York Post)

What’s next

The SBA and California state authorities are expected to continue investigating the alleged fraud and pursuing any criminal charges against those found to have misused pandemic relief funds.

The takeaway

This case highlights the ongoing challenge of preventing fraud and abuse in government aid programs, especially during times of crisis when funds are distributed quickly. It also underscores the political tensions around these issues, with the current SBA leadership criticizing the previous administration's oversight.