Do the division first, because the division is the whole story. Take the $22.2 billion the SBA referred to Treasury and divide it by the 562,000 loans it referred. You get roughly $39,500 per loan.
Thirty-nine thousand five hundred dollars. That is not a fraud ring. That is not a fleet of Lamborghinis bought with a shell company. That is the size of a COVID Economic Injury Disaster Loan taken out by a hair salon that shut its doors in April 2020, or a Paycheck Protection Program loan for a two-truck landscaping outfit. The headline number is enormous because the number of borrowers is enormous. The individual amounts are small, ordinary, and exactly the size of the loans the programs were built to make.
The One Sentence The Press Release Did Not Emphasize
Here is the fact that should have led every story about this referral. Of the roughly 560,000 borrowers whose debts were sent to Treasury for collection and whose information was transmitted to the Department of Justice, fewer than 1,000 had ever been the subject of an SBA Office of Inspector General investigation.
Fewer than one thousand out of five hundred sixty thousand. Round it however you like. It is under 0.18 percent. For 99.8 percent of the people now receiving collection notices, the agency's determination that their loan is "suspected fraudulent" rests on something other than an investigation.
What did it rest on instead? The agency has not said. There are obvious candidates: duplicate IP addresses at application, mismatched employer identification numbers, addresses that repeat across filings, businesses that later dissolved, self-certified revenue figures that do not reconcile with tax records. Some of those are genuine fraud markers. Every one of them is also a description of a legitimate small business that used a shared coworking wifi, hired a sketchy loan agent, moved, closed, or estimated its 2019 revenue wrong at two in the morning during a pandemic.
Give The Agency Its Due, Because The Fraud Was Real
This is the part where honesty costs something, so here it is. The pandemic loan fraud was gigantic and it was not imaginary. The SBA Office of Inspector General estimates that at least $200 billion of the roughly $1.2 trillion in pandemic lending was fraudulent. That is a real number produced by real auditors, and it represents an actual theft from actual taxpayers on a scale that is difficult to hold in your head.
An agency that discovered $200 billion had walked out the door and did nothing would deserve every bit of contempt available. Administrator Kelly Loeffler is not wrong that the previous posture, which she characterized as a de facto amnesty, left an enormous amount of stolen money uncollected. Wanting that money back is the correct instinct. Referring genuinely fraudulent loans to Treasury and to the Justice Department is a legitimate and overdue use of the agency's authority.
The objection is not that the SBA is collecting. The objection is the ratio.
California Was The Dress Rehearsal
This machine did not switch on in April. On February 6, 2026 the SBA announced it had suspended 111,620 California borrowers who had received 118,489 PPP and EIDL loans totaling more than $8.6 billion. One state. One hundred eleven thousand people, suspended at once.
California Attorney General Rob Bonta's response was that the state is the victim of the fraud rather than the perpetrator of it. He has an obvious political motive for saying so, and that does not make him wrong about the mechanism. When you flag 111,620 borrowers in a single announcement, you are not adjudicating 111,620 cases. You are running a query.
A query is a fine way to build a list of leads. It is not a finding. The distance between those two things is the entire content of due process, and it is the distance the SBA has spent 2026 collapsing.
What Happens To You If The Query Was Wrong
Now the question that matters if you are one of the 562,000. Your loan has been referred to Treasury. Treasury's Bureau of the Fiscal Service can offset your federal tax refund. It can garnish. It can add collection fees. Your information has gone to the Department of Justice. You did not receive a hearing, because there was not one.
So what is your remedy? Read the SBA's own announcement and look for the paragraph explaining how a borrower who was flagged in error gets un-flagged. Look for the appeal. Look for the deadline, the form number, the office, the phone number, the standard of review, the name of the human being who decides.
It is not there. The announcement describes the referral, the dollar figure, the coordination with the White House Task Force to Eliminate Fraud, and Loeffler's statement that these borrowers "will finally face accountability." It does not describe a single mechanism by which a person wrongly included in a batch of 562,000 can get out.
Two Standards, One Agency
Hold this next to what the same agency did three months later. On July 4 the SBA doubled the combined 7(a) and 504 ceiling to $10 million, a genuine structural fix available exclusively to businesses already creditworthy enough to borrow five million dollars. Established borrowers with a CFO got a bigger door. Borrowers whose $39,500 EIDL got caught in a spreadsheet got a Treasury offset and no phone number.
Nobody designed that contrast on purpose. That is the part worth worrying about. Each decision had a defensible internal logic, and the sum of them is an agency that extends careful process to borrowers who can afford lawyers and batch processing to everyone else.
The Fix Is Boring And Cheap
None of this requires abandoning collections. It requires four things that would fit on an index card.
- Publish the criteria. If a loan was flagged, say which rule caught it. Secret criteria cannot be rebutted, which is the only reason to keep them secret.
- Create an actual appeal. A form, a deadline, a named office, a human decision-maker, and a written result. Suspend collection while it is pending.
- Report the error rate. Once appeals exist, publish how many succeed. If the queries were good, that number vindicates the agency. If they were not, the public deserves to know before Treasury garnishes another refund.
- Separate the tiers. A $39,500 EIDL with a paperwork discrepancy and a $2 million shell-company PPP loan are not the same case and should not travel to Treasury in the same batch.
The SBA has spent this year proving it can find borrowers at enormous scale. Five hundred sixty-two thousand referrals in one announcement. One hundred eleven thousand suspensions in another. What it has not shown is that it can tell the difference between a thief and a florist, because telling the difference requires the investigation it performed fewer than a thousand times.
Two hundred billion dollars really was stolen. Go get it. Just stop pretending that a database query is a verdict, and stop mailing the bill to people you never looked at. If the agency has already done this to you, send us the story, and the rest of the receipts are filed here.