SBA Announces Measures to Stop Fraud

The United State Small Business Administration (SBA) recently announced new verification measures within its loan application process, in what it describes as an effort to strengthen protections against fraud, and to ensure that its programs only benefit eligible American small business owners.

The changes were made as part of the much publicized efforts of the Department of Government Efficiency (DOGE). According to a press release from the SBA, DOGE uncovered over $360 million in loans made to applicants over the age of 115 and under the age of 11. It cites data from the U.S. Social Security Administration.

“With the help of DOGE, the SBA has already made a number of common-sense reforms to prevent the rampant fraud we’ve seen over the last four years,” commented SBA Administrator Kelly Loeffler. “Unlike the previous Administration, we respect the American taxpayer and are dedicated to ensuring every dollar entrusted to this agency goes to support eligible, legitimate small businesses. With these simple fraud prevention measures, we will end the abuse of our loan programs – with stronger safeguards to hold bad actors accountable.”

Hon. Kelly Loeffler, SBA Administrator

The SBA’s loan programs will include citizenship verification as a provision to ensure that only legal and eligible applicants can access the Administration’s programs. Lenders are required to confirm that applicant businesses are "not owned in whole or in part by an illegal alien." Loan programs will also include date-of-birth verification, which the Administration says will mitigate fraud stemming from applicants using an identity other than their own, including those of children or the deceased. The date-of- birth verification process will automatically flag any applicant claiming to be younger than 18 or older than 115 of age, utilizing automatic fraud alerts.

The SBA said in its press release, "Under the last administration, lax guardrails allowed illegal aliens, children, and the deceased to apply for and receive approval for SBA assistance. In June 2024, the SBA approved a $783,000 loan application for a small business that was 49% owned by an illegal alien. In February, an internal SBA audit identified the illegal status of the individual and halted the loan from being disbursed – ensuring that $0 was distributed to the business."

It went on to say that DOGE found that from 2020 to 2021, the Administration issued over 3,000 loans worth $333 million to borrowers over 115 years old (again citing the Social Security database). DOGE also said it identified over 5,509 SBA loans totaling about $300 million that were disbursed to children under the age of 11 during the same period.

In other recent SBA news, the Administration announced it would award up to $1.1 million in funding to three eligible applicants to support "Made in America Manufacturing." The deadline for application was on May 12. Recipients will likely be announced soon.