Small business owners applying for federal loans will now face tighter identity checks under new rules rolled out by the Trump administration. The Small Business Administration (SBA) announced the new fraud prevention measures this week, aimed at curbing abuse of government loan programs.
The updated rules require all loan applicants to verify their citizenship status, ensuring that SBA funds do not go to businesses owned wholly or in part by noncitizens. Applicants must also verify their date of birth to prevent the use of stolen identities, including those of children or deceased individuals.
SBA Administrator Kelly Loeffler said the reforms are part of broader efforts to restore accountability and respect for taxpayer dollars. “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 stated.
The SBA has faced scrutiny over widespread fraud during and after the COVID-19 pandemic, when emergency loan programs were launched and expanded with limited safeguards. A recent investigation by the Department of Government Efficiency (DOGE) uncovered serious lapses in identity verification. Between 2020 and 2021, the SBA issued thousands of loans totaling over $333 million to applicants listed as more than 115 years old. Another $300 million went to borrowers under the age of 11.
An earlier report by the Government Accountability Office estimated that over 2 million pandemic-era SBA loan recipients were likely fraudulent. The new rules seek to close these loopholes and ensure that future financial aid reaches only qualified, law-abiding business owners.
Loeffler emphasized that the reforms are “common-sense” and will significantly reduce fraud while holding wrongdoers accountable. The changes are expected to apply across all SBA loan and grant programs moving forward.
