❓WHAT HAPPENED: Nearly 7,000 Minnesota borrowers were suspended by the Small Business Administration (SBA) over suspected pandemic-era loan fraud.

👤WHO WAS INVOLVED: SBA Administrator Kelly Loeffler, citizen journalist Nick Shirley, and Somali-linked networks operating daycare centers in Minnesota.

📍WHEN & WHERE: Minnesota, with actions announced on Thursday, January 1, 2026.

💬KEY QUOTE: “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.” – Kelly Loeffler

🎯IMPACT: 6,900 borrowers were banned from SBA programs, with $400 million in loans under scrutiny, and cases referred to federal law enforcement for potential prosecution.

Small Business Administration Administrator (SBA) Kelly Loeffler said Thursday that 6,900 Minnesota borrowers have been suspended from SBA programs over suspected fraud involving pandemic-era Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds. The loans, valued at roughly $400 million, were associated primarily with daycare centers investigators say were tied to Somali-connected networks.

Under the action, the affected borrowers are barred from all current and future SBA lending, including disaster assistance. Loeffler said the agency is escalating enforcement efforts after years of investigations into Covid-era relief abuse. “We will also refer every case, where appropriate, to federal law enforcement for prosecution and repayment,” she said. “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.”

The announcement followed reporting by citizen journalist Nick Shirley, who documented numerous daycare and autism centers that appeared to be empty, minimally staffed, or otherwise inconsistent with the scale of federal funding they received. His findings helped renew public attention on long-running allegations that some facilities were used as fronts to siphon government aid.

Minnesota has faced sustained scrutiny over fraud during and after the COVID-19 pandemic, particularly under programs administered at the state level. Acting U.S. Attorney Joe Thompson has warned that suspected fraud across Minnesota Medicaid and related programs could ultimately exceed $9 billion. The broader scandal first gained national attention with the Feeding Our Future case, in which a nonprofit and dozens of defendants were charged with stealing hundreds of millions of dollars from the Federal Child Nutrition Program.

The latest revelations have intensified political fallout. Minnesota Republicans have called for the resignations of senior state officials, including Democrat Gov. Tim Walz, arguing that weak oversight allowed large-scale fraud to continue unchecked. At the federal level, House Oversight Committee Chairman James Comer has summoned Minnesota officials to testify about how the alleged schemes operated and why warnings were missed.

Some lawmakers have also focused on the role of Somali-linked networks identified in multiple federal indictments and investigations, prompting heated debate over immigration, enforcement, and accountability. Federal authorities have already secured convictions in several high-profile cases involving pandemic relief and welfare fraud.

Amid mounting concerns, the Department of Health and Human Services has frozen certain federal childcare payments nationwide while reviewing suspected abuse.

Image by Gage Skidmore.

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