Vice President JD Vance joined officials from the Trump administration to address alleged fraud during the COVID-19 pandemic connected to small businesses, amounting to over $39 billion. The statement from the Small Business Administration (SBA) in Missouri underscored the government’s intensified efforts to tackle fraud, an area Vance has focused on since January 2025.
The SBA identified hundreds of thousands of businesses with ties to fraudulent Paycheck Protection Program (PPP) funds and Economic Injury Disaster Loans (EIDL), comprising both genuine and fictitious entities. Vance emphasized the public’s expectation that their government payments should support approved causes, not fraudsters. “The American people have every right to expect that when they write a check to the IRS, when they write a check to the federal government, that money is going to go to where the law says it should go and not to fraudsters,” Vance stated.
Newsweek reached out to the government’s Pandemic Oversight panel for further comment.
Understanding the SBA’s Efforts to Combat Pandemic-Era Loan Fraud
As part of the crackdown initiative, the SBA has already suspended more than 150,000 businesses, with the recent announcement significantly enlarging this target group. SBA Administrator Kelly Loeffler revealed that 870,000 organizations were suspended from receiving government funds, linked to $39 billion in suspected fraud mainly during the pandemic. Demand letters have been sent to those believed to have defrauded taxpayers, warning them to repay or face legal consequences.
This movement is part of the White House’s broader strategy to eliminate fraud, often attributing blame to the Biden administration. Nonetheless, some relief measures hark back to Trump’s initial term in office. U.S. Attorney General Todd Blanche stressed in a press release the original goal of pandemic loan assistance was to support American small businesses, not fraudsters. He stated, “The defendants charged during our summer surge allegedly fabricated businesses, submitted false payroll and revenue claims, stole identities, and concealed foreign ties on their applications—but they will now be prosecuted to the fullest extent of the law.”
Professor Emeritus Don Kettl from the University of Maryland School of Public Policy explained that Congress collaborated with Trump’s first administration to swiftly distribute funds during the pandemic’s peak. “The push was on because COVID had devastated many parts of the economy, and the administration wanted to get money quickly out the door,” said Kettl. Initially, recipients were only required to certify compliance with program conditions and dedicated usage for COVID relief. Over half of the funds were distributed before tighter controls were introduced. When the SBA began referring cases of fraud for investigation, the Inspector General lacked sufficient data in two-thirds of them, exacerbated by the volume of cases and limited workforce.
States with High Numbers of Borrowers Banned Over Fraud Allegations
The SBA suspended 112,000 borrowers in California with alleged fraud amounting to $8.6 billion, although this announcement excluded California. Florida faced the highest number of suspensions, exceeding 118,000, equating to over $5 billion in suspected fraud. Other states with notable suspensions include Texas, Georgia, New York, and Michigan.
Insights on Pandemic Fraud Post-COVID-19
Key figures such as Vance, Blanche, Loeffler, and FBI Director Kash Patel have highlighted the administration’s uncompromising approach toward fraud. “Fraudsters took advantage of this country’s generosity when we were most vulnerable. It is disgraceful,” stated Scott Brady, executive director of the White House Task Force to Eliminate Fraud. He criticized the previous administration while affirming the current resolve, “Although the previous administration looked the other way, President Donald Trump and Vice President Vance won’t. Fraudsters take note: We’re coming after you.”
The SBA previously estimated over $200 billion in pandemic-era loans and payments were incorrect, approximately 17 percent of the total. The Government Accountability Office identified rapid relief needs at the pandemic’s onset in early 2020 as contributing to self-verification opportunities exploited by fraudsters who fabricated businesses to access multiple payments.
Kettl remarked, “It’s hard to make comparisons across administrations. There’s undoubtedly hundreds of billions of dollars of fraud in federal funds every year, and tracking it down requires staff and technology to dig into the details. Any time that the government is in a hurry to get things done—and, especially, to spend money—problems are certain, and that makes the temptation inescapable for some individuals to cheat taxpayers.”
Under Biden’s tenure in 2024, around 3,500 individuals were prosecuted, recovering over $1.4 billion. Kettl’s assessment indicated difficulties in tracing funds now due to some organizations being shadowy and legitimate organizations possibly losing documentation. “Since the goal was to spend money, most of the money has been spent, so the odds of recovering most of it are tiny,” he mentioned. “The most that the SBA is likely to be able to accomplish is to put those suspected of fraud on a do-not-contract list, so they can’t repeat the behavior.”
Contact Newsweek editors on this story: Jenna deJong and Sam Wilson.