The Small Business Administration (SBA) has halted more than $5.5 million in annual federal funding to Minnesota after explosive findings revealed that individuals tied to the infamous $1 billion Somali fraud scheme also received millions in taxpayer-backed Paycheck Protection Program (PPP) loans.
SBA Administrator Kelly Loeffler announced the funding freeze Tuesday in a scathing post on X, directly notifying Democrat Governor Tim Walz that his state can no longer be trusted with federal tax dollars.
Loeffler wrote on X:
Today, I informed Governor Tim Walz that SBA is halting $5.5 million in annual funding to Minnesota pending further review.
This action follows alarming findings: individuals indicted in the $1 billion Somali fraud scheme also received at least $3 million in PPP loans, and SBA has since identified 13,600 additional PPP loans in Minnesota – totaling $430 million – suspected as fraudulent.
With dozens of investigations underway, the conclusion is unavoidable: Minnesota cannot be trusted to administer federal tax dollars. Its socialist welfare system has enabled fraud at industrial scale, at the expense of honest Americans – and these are the consequences.
Today, I informed Governor Tim Walz that SBA is halting $5.5 million in annual funding to Minnesota pending further review.
This action follows alarming findings: individuals indicted in the $1 billion Somali fraud scheme also received at least $3 million in PPP loans, and SBA…
— Kelly Loeffler (@SBA_Kelly) December 23, 2025
Earlier this month, Loeffler revealed that numerous individuals and nonprofits already indicted in Minnesota’s COVID-relief scandal also received SBA-backed loans, suggesting a coordinated, multi-agency exploitation of pandemic programs.
Among the groups implicated was Feeding Our Future, a centerpiece of the sprawling fraud operation that siphoned hundreds of millions from federal nutrition programs.
“Numerous individuals and nonprofits indicted in the $1 billion Minnesota COVID fraud scandal, including Feeding Our Future, received SBA PPP loans in addition to other state and federal funding,” Loeffler wrote on X Tuesday.
“I have ordered an investigation into the network of Somali organizations and executives implicated in these schemes. Despite Governor Walz’s best efforts to obstruct, SBA continues to work to expose abuse and hold perpetrators accountable, full stop.”
An SBA spokesperson confirmed to Fox News Digital that the agency is now investigating every individual and organization indicted in Minnesota’s broader COVID-fraud scandal:
“The agency is investigating all individuals and organizations indicted as part of the $1 billion Minnesota COVID fraud scheme to identify any that may have also fraudulently obtained PPP loans—evaluating their citizenship status, the legitimacy of their nonprofit work, and other requirements for eligibility.”
On Tuesday, in her formal letter to Walz, Loeffler made clear that the funding cutoff would remain “until further notice.”
Loeffler cited Thompson’s calculations, stating that:
- The Somali fraud network netted at least $1 billion through Minneapolis-centered schemes
- At least half of certain Medicaid programs were allegedly looted
- The final damage could exceed $9 billion
According to the SBA:
- At least $2.5 million in PPP and EIDL funds were directly tied to the Somali fraud network
- Another $430 million across 13,000 PPP loans were flagged as potentially fraudulent
- Some of those loans were fully forgiven during the Biden administration
According to the letter:
As Administrator of the U.S. Small Business Administration (SBA), 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.
This action is the result of a fundamental breakdown in the public trust. Under your leadership, Minnesota failed to safeguard taxpayer dollars, and SBA will not continue to place federal resources at risk in a state where oversight measures are ignored and accountability is abandoned.
During your tenure, Minnesota became the epicenter of the largest fraud scandal of the pandemic, and recent indictments and convictions indicate that fraud is endemic to the state-administered welfare programs in your state. In addition to the $1 billion pandemic scheme involving a massive Somali fraud network, federal prosecutors now estimate that at least “half” of certain state-administered Medicaid funding since 2018 has been pocketed by criminals in Minnesota, totaling an additional $9 billion. Numerous other federal agencies, from the U.S. Department of Agriculture to the U.S. Department of the Treasury, have also launched investigations into rampant abuse that likely siphoned funds away from citizens in need.
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. When legislators and whistleblowers raised concerns about potential abuse during the pandemic, your Administration resisted oversight, refused accountability, and allowed the misconduct to metastasize. Even now, you continue to defend the broad “generosity” of your state, while dismissing public criticism as “racism.”
It is unclear how many state and federal programs have been exploited at the expense of families, workers, and small businesses in Minnesota. But there is no credible evidence that your state has the necessary safeguards in place to responsibly administer federal programs — or address the criminal activity that has been allowed to fester. When a governor demonstrates his Administration cannot be trusted to protect taxpayer dollars, SBA has an obligation and the authority to act.
Accordingly, the agency is halting funding associated with the following programs in Minnesota pending further review:
• Small Business Development Centers (SBDCs): Annual federal awards totaling $2,223,927.
• Women’s Business Centers (WBCs): Annual federal awards for three WBCs, totaling $450,000.
• SCORE: Annual federal awards totaling approximately $300,000.
• SBA Microloan Program: All microloan awards, which totaled $2,604,144 in FY25.
• Federal and State Technology (FAST) Partnership Program: All reimbursements, which totaled $94,420 in FY25.
• SBA Growth Accelerator Fund Competition (GAFC): All awards, which totaled $150,000 in FY25.What happened in Minnesota is the consequence of socialist policies deliberately designed to pump out 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.
SBA’s responsibility is to taxpayers and small business owners, not to criminals or the politicians who enable them. We will continue to do what you did not: protect federal dollars on behalf of the American people.
Read more: pic.twitter.com/EBgSjmBq7q
— Kelly Loeffler (@SBA_Kelly) December 23, 2025
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