SBA Halts Minnesota SBDC Funding in Response to Somali PPP and EIDL Loan Fraud

January 6, 2025

by Bob Coleman
Founder & Publisher

SBA Hot Topic Tuesday: SBA Halts Minnesota SBDC Funding in Response to Somali PPP and EIDL Loan Fraud

SBA has responded to the evolving Somali loan fraud scandal by immediately halting funding for the following Minnesota state programs:

  • Small Business Development Centers (SBDCs): Annual federal awards totaling $2,223,327
  • Women’s Business Centers (WBCs): Annual federal awards for 3 WBCs totaling $450,000
  • SCORE: Annual federal awards totaling approximately $300,000
  • SBA Microloan Program: All microloan awards totaling $2,604,144 in FY25
  • Federal and State Technology (FAST) Partnership Program: All reimbursements totaling $94,420 in FY25
  • SBA Growth Accelerator Fund Competition (GAFC): All awards totaling $150,000 in FY25

In a letter to Governor Tim Walz, SBA Administrator Kelly Loeffler writes:

“The SBA has uncovered at least $2.5 million in Paycheck Protection Program (PPP) and COVID Economic Injury Disaster Loans (EIDL) that were granted to individuals indicted as part of the Somali fraud scheme.”

“We identified another 13,600 PPP loans in Minnesota, totaling about $430 million, that were initially flagged by SBA as fraudulent but later funded — and in many cases forgiven — under the Biden Administration.”

“The volume and concentration of potential fraud is staggering, matched in its egregiousness only by your response to those who attempted to stop it. What happened in Minnesota is the consequence of socialist policies deliberately designed to pump welfare funding without oversight or accountability. SBA will not further that agenda by continuing to send funds to a state that has demonstrated a reckless refusal to enforce the law.”

The Fallout

The immediate impact of the SBA’s funding halt in Minnesota falls most heavily on the state’s Small Business Development Centers and Women’s Business Centers. These centers do not make loans, approve credit, or distribute capital. Instead, federal funding is used almost entirely for operating overhead and personnel, including counselor salaries, benefits, training, rent, data systems, and required reporting infrastructure.

SBDC support is now paused, directly affecting the statewide network hosted by the Minnesota Department of Employment and Economic Development and its university partners:

  • Bemidji State University SBDC
  • Central Lakes College SBDC (Brainerd)
  • Metropolitan State University SBDC (Twin Cities)
  • Minnesota State University, Mankato SBDC
  • Minnesota State University Moorhead SBDC
  • Minnesota State College Southeast SBDC (Winona / Red Wing)
  • Northland Community & Technical College SBDC (Thief River Falls / East Grand Forks)
  • Southwest Minnesota State University SBDC (Marshall)
  • St. Cloud State University SBDC
  • University of Minnesota Duluth SBDC
  • University of Minnesota Crookston SBDC

Also affected are the 3 Women’s Business Centers located in Minneapolis, St. Paul, and Rochester.