SBA News & Updates

SBA Refers 562,000 Suspected Fraudulent COVID Loans to Treasury for Collection, Totaling $22.2 Billion

White House Task Force to Eliminate Fraud coordinates largest single referral package in SBA history. Affected borrowers may see Treasury Cross-Servicing activity in the coming weeks.

SmallBiz Recon™ Editorial Desk

What Happened

On April 24, 2026, the U.S. Small Business Administration (SBA) announced it has referred 562,000 suspected fraudulent loans to the U.S. Department of the Treasury (Treasury) for collection. The referral covers $22.2 billion in delinquent Paycheck Protection Program (PPP) and COVID Economic Injury Disaster (EIDL) loans previously flagged for suspected fraud during the prior administration but not transferred to Treasury or referred to the U.S. Department of Justice (DOJ).

According to SBA News Release 26-47, this is the largest referral package on record. The borrowers have also been transmitted to DOJ.

SBA Administrator Kelly Loeffler is quoted in the release stating that the action is the agency's “most decisive action yet” related to borrowers tied to suspected pandemic-era fraud, and that Treasury will now begin collection activity on the outstanding debt.

Primary source: SBA News Release 26-47, April 24, 2026, sba.gov/article/2026/04/24/sba-sends-562000-suspected-fraudulent-loans-treasury-collections-totaling-22-billion

The Numbers, As Reported

Why This Matters for Borrowers

Under federal law, SBA is required to refer delinquent debts to Treasury's Bureau of the Fiscal Service once they become sufficiently past due. The April 24 referral activates that statutory pathway for the 562,000 affected accounts.

For borrowers whose accounts are part of this referral package, the practical near-term consequences may include:

• Receipt of a Treasury Cross-Servicing notice, often the first official notice that an account has moved beyond SBA servicing
• Engagement by a Treasury-contracted Private Collection Agency (PCA) such as Coast Professional, CBE Group, or similar firms
• Treasury Offset Program (TOP) activity affecting eligible federal payments
• A possible 30 percent administrative fee added by Treasury once an account is in Cross-Servicing
• Potential DOJ review separately, as the borrower list was also transmitted to DOJ

This information is educational. It is not a representation that any specific borrower is in any specific status. The only way to confirm an individual account's status is through the borrower's own records and direct communications from SBA, Treasury, or a Treasury-contracted collection agency.

What Borrowers Should Know About Their Rights and Options

Borrowers who believe their account has been referred in error, who have evidence of identity theft, who never received funds, or who dispute the amount have established federal procedures available to them. These procedures exist independently of any service provider.

General borrower options established by federal procedure include:

• Requesting validation of the debt
• Submitting a written dispute to Treasury and to the assigned collection agency
• Documenting and reporting suspected identity theft to SBA and to the Federal Trade Commission
• Reviewing SBA correspondence for the original Notice of Intent to refer and any prior pre-referral due process notices
• Retaining licensed legal counsel for any matter that may involve litigation, criminal exposure, or representation before a tribunal

SmallBiz Recon™ does not provide legal advice and does not represent borrowers in legal proceedings. SmallBiz Recon™ provides document preparation and administrative packaging services on a scrivener basis under Florida's Brumbaugh framework. Borrowers needing legal advice should consult a licensed attorney in their state.

Context: How We Got Here

The April 24 referral did not occur in isolation. Public, citable context includes:

• The SBA Office of Inspector General published Report 23-09 in June 2023, estimating that more than $200 billion in pandemic relief funds were disbursed to potentially fraudulent actors, representing at least 17 percent of total program disbursements (Source: SBA OIG Report 23-09).
• The Government Accountability Office, in report GAO-25-107267, identified weaknesses in SBA's referral process to its OIG and noted that approximately 2 million of nearly 3 million SBA-to-OIG referrals for COVID EIDL were classified as not actionable due to data quality or duplication issues (Source: GAO-25-107267).
• The White House established the Task Force to Eliminate Fraud in March 2026, chaired by Vice President JD Vance and FTC Chairman Andrew Ferguson, to coordinate cross-agency anti-fraud actions (Source: SBA News Release 26-47).
• In February 2026, SBA announced the suspension of 111,620 California borrowers and 6,900 Minnesota borrowers tied to suspected pandemic-era fraud, totaling approximately $9 billion combined (Source: SBA News Release 26-47 citing prior actions).

What This Is Not

To preserve accuracy and avoid speculation:

• This article does not assert that any individual among the 562,000 borrowers is guilty of fraud. SBA's language is "suspected" fraud. Suspicion is not adjudication.
• This article does not assert that all 562,000 borrowers will face DOJ prosecution. Transmission to DOJ is not the same as the filing of charges.
• This article does not assert that Treasury referral, by itself, eliminates any borrower defense, appeal right, or dispute pathway available under federal procedure.
• This article does not represent the views of SBA, Treasury, DOJ, or any federal agency.

How SmallBiz Recon™ Operates in This Environment

SmallBiz Recon™ is a non-attorney document packager. Our role is administrative document preparation under client direction, organized around SOP 50 52 2, Treasury Financial Manual Volume 1 Part 4 Chapter 5000, and the Fair Debt Collection Practices Act. We do not appear before agencies on behalf of clients, we do not give legal advice, and we do not predict outcomes.

Clients who believe they may be affected by the April 24 referral can request a no-fee intake review to determine whether document preparation services may be appropriate for their situation. Clients are always free to self-submit any document, retain a licensed attorney, or proceed without any service provider at all.

Confirmed vs. Not Confirmed

Sources

Important Policy Update: SBA Recall Services & Treasury Guidance

The U.S. Treasury recently issued a clarification regarding COVID EIDL and COVID PPP debts that have been transferred into the Treasury's Cross-Servicing program. Treasury explained that it does not independently return debts to the Small Business Administration in mass or on an individual basis because Treasury acts strictly as the federal government's collection agent once a debt has been referred. Under the Treasury Financial Manual governing Cross-Servicing, the original creditor agency retains ownership and ultimate authority over the debt, including whether a debt may be recalled or returned to agency servicing. In other words, Treasury cannot simply decide to send a debt back to the SBA unless the conditions within federal debt collection procedures are met and the originating agency authorizes that action.

The clarification also addressed what happens when a debt progresses further in the federal collection pipeline. If a debt is referred to a private collection agency (PCA) through the Treasury Cross-Servicing program, Treasury itself no longer manages the active collection file. At that stage, borrowers must communicate directly with the assigned collection agency regarding payment arrangements or disputes. Borrowers whose debts remain within Treasury Cross-Servicing may still submit dispute requests to Treasury for review; however, once a debt has been placed with a contracted collection agency, that agency becomes the primary point of contact for handling disputes and collection matters.

This framework is also the reason SmallBiz Recon™ separates the submission process for different requests. Dispute packages are submitted to the U.S. Treasury because Treasury administers the Cross-Servicing collection program and reviews disputes while the account is active within that system. Recall or reinstatement requests, however, must be directed to the Small Business Administration, since the SBA remains the original creditor and retains the authority to determine whether a debt may be recalled or returned to SBA servicing.

We apologize for any inconvenience and remain dedicated to seeking a clearer resolution as the situation evolves. — THE, SmallBiz Recon