WASHINGTON, D.C. — The U.S. Small Business Administration marked a sharp contrast in fortunes for small businesses this month, announcing a surge in lending to manufacturers under a key working capital program while simultaneously suspending more than 111,000 California borrowers tied to billions of dollars in suspected pandemic-era loan fraud.
On February 2, the SBA said its 7(a) Working Capital Pilot Program has delivered more than $150 million in new lending since its launch, with more than $125 million approved since President Donald J. Trump took office last January. Agency officials said small manufacturers — which account for 98 percent of U.S. manufacturers — have driven much of that growth as domestic production rebounds under the administration’s economic agenda.
SBA Administrator Kelly Loeffler said the program is helping manufacturers rebuild supply chains, hire workers, and expand after decades of trade policies that pushed jobs overseas. The Working Capital Pilot, known as WCP, complements the SBA’s core 7(a) and 504 loan programs by giving small firms access to flexible, short-term financing to support growth.
Since its inception, small manufacturers have made up more than a quarter of the WCP portfolio, SBA officials said. The program offers both asset-based loans, which allow firms to borrow against inventory and other assets, and transaction-based financing that can cover up to 100 percent of direct costs tied to specific orders. The structure allows businesses to support both domestic and international sales under a single credit facility.
Complete details on the program, including the fiscal year 2026 program guide and a list of delegated lenders, are available at https://www.sba.gov/partners/lenders/7a-loan-program/7a-working-capital-pilot-program. Lenders can also seek counseling through the agency’s finance managers at 7aWCP@SBA.gov, with additional assistance listed at https://www.sba.gov/local-assistance/export-trade-assistance/export-finance-managers.
Just days later, on February 6, the SBA announced a sweeping enforcement action following a visit by Loeffler to San Diego, suspending 111,620 California borrowers amid suspected fraudulent activity tied to pandemic-era relief programs. The suspensions cover 118,489 Paycheck Protection Program and Economic Injury Disaster Loans totaling more than $8.6 billion.
The agency said the action follows a similar crackdown in Minnesota, where nearly 6,900 borrowers were suspended in connection with roughly $400 million in potentially fraudulent loans. Borrowers under suspension are barred from receiving new SBA-backed loans and from participating in other agency programs, including federal contracting through the 8(a) Business Development Program.
SBA officials said the enforcement effort is part of a broader, state-by-state review aimed at identifying fraud, coordinating with federal law enforcement, and recovering misused taxpayer funds, even as the agency continues to expand access to capital for legitimate small businesses and manufacturers nationwide.
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