After claiming to have found hundreds of millions of dollars in questionable loans, the Department of Government Efficiency (DOGE) has instituted some changes to how loan applications will be handled by the Small Business Administration moving forward. At the same time, the cost-cutting department is pushing to eliminate more than 40 percent of the SBA’s workforce.
DOGE, in a recent post on X, announced that moving forward all direct loan applications will require a date of birth on them and it was pausing the direct loan process “for those under 18 and above 120 years old.”
“Basic sanity checks like these are initial steps toward minimizing fraud in government payment programs,” the agency wrote.
That follows an allegation earlier this month that during the Trump and Biden administrations in 2020 and 2021, the SBA granted 5,593 loans, totaling $312 million, to a business owner who was allegedly 11 years old or younger at the time of the loan. “While it is possible to have business arrangements where this is legal, that is highly unlikely for these 5,593 loans, as they all also used an SSN with the incorrect name,” DOGE wrote.
The SBA, in 2023, acknowledged widespread fraud in the pandemic-era Paycheck Protection Program. The agency estimated at the time it disbursed over $200 billion in potentially fraudulent loans, with as much as 17 percent of all PPP funds going to bad actors. (The Justice Department has prosecuted many of those offenders.) DOGE, however, did not provide any proof for its recent claims.
Even so, SBA director Kelly Loeffler gave her full-throated support to DOGE. “The Biden admin enabled and covered up large-scale fraud, waste, and abuse at the SBA,” she wrote on X. “Excited to be working with DOGE to end it—and hold criminals who committed fraud accountable.”
Staff cuts coming
Loan processes aren’t the only changes DOGE is making to the SBA. As it has with several other governmental departments, the cost-cutting agency has instituted a major staff reduction, with plans to reduce the agency’s workforce by 43 percent—approximately 2,700 jobs. Those will come through voluntary resignations, the expiration of term appointments, and some layoffs. The SBA says the move will save taxpayers more than $435 million in salary payments annually by the 2026 fiscal year. It has also terminated dozens of SBA contracts.
The SBA, in a statement, said that core services, such as the loan guarantee and disaster assistance programs and field and veteran operations, will not be impacted by the cuts.
“Just like the small-business owners we support, we must do more with less,” said Loeffler. “We have therefore submitted plans to pursue a strategic restructuring that will realign the agency and its resources with our founding mission. By eliminating non-mission-critical positions and consolidating functions, we will revert to the staffing levels of the last Trump administration, which supported a historic economic boom. We will return our focus to driving private sector growth and delivering disaster relief with accountability, efficiency, and results.”
The SBA, earlier this month, dismissed all probationary employees only to immediately rescind that, telling them the notification they received was a mistake.
The next day, it reversed course again, telling those workers their positions had, in fact, been terminated. The Trump administration also recently announced it would be moving management of student loans to the SBA.
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