The Small Business Administration (SBA) has decided to suspend federal funding to Minnesota amid investigations into alleged fraud within the state, the agency’s chief announced on Monday.

SBA Administrator Kelly Loeffler disclosed the decision on X, stating, “We are temporarily halting annual funding to Minnesota while we thoroughly investigate $430 million in suspected Paycheck Protection Program (PPP) fraud in the state.”

Loeffler emphasized the administration’s firm stance against fraud, declaring, “This administration will not tolerate issuing blank checks to fraudsters. We are committed to dismantling the criminal networks that have been exploiting American taxpayers.”

During the pandemic, the PPP initiative distributed over $800 billion in loans to support small businesses.

Last week, Loeffler informed Minnesota’s Democratic Governor Tim Walz of the SBA’s decision to put a hold on more than $5.5 million in funding to the state, pending further investigation.

In her communication to Walz, Loeffler highlighted that individuals charged in Minnesota’s “$1 billion pandemic scheme, which involves a significant Somali fraud network,” had also secured 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.