(The Center Square) – Small businesses owners applying for federal loans will now face extra identification requirements following changes by the Trump administration.
The Small Business Administration unveiled new fraud prevention efforts this week, including citizenship verification to ensure benefiting businesses are not owned wholly or partially by noncitizens.
The new rules also require date of birth verification to ensure loans do not go to applicants using the identities of children or the deceased.
SBA Administrator Kelly Loeffler said in a statement that the move builds upon other “common-sense reforms” the SBA and the Department of Government Efficiency are taking to root out and prevent “rampant fraud” occurring during the last four years.
“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,” Loeffler said. “With these simple fraud prevention measures, we will end the abuse of our loan programs – with stronger safeguards to hold bad actors accountable.”
Loeffler referenced a DOGE investigation finding that between 2020 and 2021, SBA doled out thousands of loans worth $333 million to applicants more than 115 years old, and thousands more, worth $300 million, to borrowers under 11 years old.
Much of the fraud stemmed from the lack of safeguards in aid programs that were created or greatly expanded during the COVID-19 pandemic.
While SBA distributed more than $1 trillion in loans and grants to 10 million small businesses during the pandemic, more than 2 million recipients were “likely fraudulent” according to an analysis from the Government Accountability Office, as previously reported by The Center Square.