The Small Business Administration (SBA) has decided to suspend federal funding to Minnesota amid an ongoing investigation into alleged fraud, the agency’s administrator revealed on Monday.

SBA Administrator Kelly Loeffler announced on social media platform X that the agency is temporarily stopping its annual funding to Minnesota as it examines $430 million in suspected fraudulent activity related to the Paycheck Protection Program (PPP) within the state.

“This administration is committed to curbing fraudulent activities and will not distribute unchecked funds to those exploiting the system,” Loeffler stated. “We remain steadfast in our efforts to dismantle the criminal networks siphoning resources from American taxpayers.”

The Paycheck Protection Program, established during the COVID-19 pandemic, has disbursed over $800 billion in loans aimed at supporting small businesses across the nation.

Last week, Loeffler informed Minnesota’s Democratic Governor Tim Walz of the decision to withhold more than $5.5 million in state funding as the investigation progresses.

In her letter to Walz, Loeffler noted individuals indicted in Minnesota’s “$1 billion pandemic scheme involving a massive Somali fraud network” also received at least $3 million in PPP loans. 

The SBA has since identified 13,600 additional PPP loans in Minnesota – totaling $430 million – suspected as fraudulent, according to Loeffler. 

“With dozens of investigations underway, the conclusion is unavoidable,” Loeffler wrote. “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.” 

Walz’s office noted that PPP “is a federal program created, administered, and disbursed by the federal government” and blamed Loeffler for not identifying any alleged fraud in the program.

“The Walz Administration has no role,” his office said.

Walz has come under even more scrutiny in light of a viral video alleging rampant day care funding fraud in the state. 

Last week, independent journalist Nick Shirley released video footage of himself visiting several Minnesota day care facilities reportedly receiving state funds and finding them devoid of children.