SBA and COVID-19 Loan Fraud 

March 7, 2025

Bob Coleman
Founder & Publisher

SBA and COVID-19 Loan Fraud 

SBA Administrator Kelly Loeffler’s First Day Memo emphasized “cracking down” on loan  fraud: “SBA’s loan programs should be a powerful tool for empowering small business formation and delivering critical aid to disaster victims. 

“The prior Administration left these programs with unaddressed fraud – including an estimated $200 billion in pandemic-era fraud. 

“Starting today, the SBA will institute a zero-tolerance policy for fraud and investigate fraud across all programs.”

Loeffler continues that SBA has established a “Fraud Working Group” and will appoint a “Fraud Czar” to identify, stop, and claw back criminally obtained funds on behalf of the American taxpayer.

One of the first things SBA will do is examine the underlying data. The absence of an audited financial statement is problematic in determining exact loss and fraud numbers.

Where does the $200 billion figure come from?

The SBA Inspector General provided this estimate in a June 2023 report. 

The OIG estimates that SBA dispersed over $200 billion in potentially fraudulent funds: $136 billion in COVID-19 EIDL and $64 billion in PPP loans.

SBA disagrees with the $200 billion figure and offers three criticisms of the OIG number:

SBA writes, “the vast majority of fraud, 86% by SBA’s estimate, occurred in the first 9 months of COVID-EIDL and PPP.”

“The white paper’s estimate of a 34% potential fraud rate does not align with SBA’s current repayment data. Only 12% of lending went to borrowers who are past due on payments.”

And, SBA believes OIG presents an estimate of “potential fraud” as if it were “likely fraud.”

We will publish the results of the financial audit of COVID-19 the actual amount of loan fraud as soon as it is available. 

Check out more reporting in this week’s Fraud Friday YouTube video: youtube.com/@ColemanReport