SBA Loan Identity Fraud Continues to Grow into 2021

• In 2020, the Federal Trade Commission (FTC) received nearly 100,000 business or personal loan fraud reports, many of them related to Small Business Administration (SBA) loan identity fraud.
• That’s more than double the number of loan fraud reports from a year earlier. The Identity Theft Resource Center (ITRC) has also seen a spike in SBA loan identity crime reports since the COVID-19 pandemic.
• Identity thieves apply for SBA loans (primarily Economic Injury Disaster (EIDL) and Paycheck Protection Program (PPP) loans) using stolen Social Security numbers and business Employer Identification numbers (EINs).
• Scammers are also targeting consumers through phishing schemes in an attempt to steal their Social Security Numbers and other personal information needed to commit SBA loan identity fraud.
• If anyone believes they are the victim of an SBA loan identity crime or would like to learn how to protect themselves from becoming a victim, they can contact the ITRC to speak with an advisor toll-free at 888.400.5530 or via live-chat. Just go to www.idtheftcenter.org to get started.

Small Business Administration (SBA) loan identity fraud spiked in 2020 due to COVID-19, and it continues to be a growing issue in 2021. The Federal Trade Commission (FTC) says in 2019, they received 43,920 reports of fraud involving business or personal loans; the number more than doubled in 2020 as the FTC had 99,650 reports. The FTC acknowledges that not all of the reports are related to SBA loan identity fraud, but also notes many of them are.

The Identity Theft Resource Center (ITRC) has seen a spike in calls and live-chats around SBA loan-related identity theft. The contacts continue today as contact center advisors work to help victims. Here is a testimonial from one victim who turned to the ITRC regarding their SBA loan identity crime case:

“I want to thank you for all your suggestions. You are the third (organization) I have contacted and by far the most helpful. I received a form from the Small Business Administration, and after returning it with the police report and the Identity Theft Report, I was informed that my debt with them would be canceled. It is such a huge weight off me. I did everything you suggested, and our credit is frozen with all the CRA’s. Thank you again.”

There are different forms of SBA loan-related identity theft of which  businesses and consumers should be aware:

Economic Injury Disaster Loans (EIDLs)

Economic Injury Disaster (EIDL) loans, loans for businesses that suffer substantial economic injury located within a disaster area, have always been available through the SBA. However, they have been expanded as part of the CARES Act to provide relief to businesses experiencing financial loss due to COVID-19. Identity fraud from an EIDL loan occurs when a threat actor applies for an EIDL loan using either a consumer’s Social Security Number (SSN) or a business’s Employer Identification Number (EIN).

Paycheck Protection Program Loans (PPPs)

Paycheck Protection Program (PPP) loans were designed to help businesses maintain their payroll and keep their workforce during COVID-19, and they are available through a lender. Identity fraud from a PPP loan occurs when an identity thief applies for a PPP loan using a stolen SSN, a business EIN or other stolen personal information needed to obtain a loan.

What to do if You Are a Victim of SBA Loan Identity Fraud

If a consumer or a business is the victim of an SBA loan identity crime (whether it’s from either an EIDL or PPP loan), they should take the following steps:

1. Go back to the source of the loan to notify them of the identity fraud. If the identity fraud is from an EIDL loan, the victim should contact the SBA. If the fraud involves a PPP loan, the affected party should contact the lender that issued the loan. See below for more information on what the SBA requires people to submit, where to submit it, and details on their process.
2. File an Identity Theft Report with the FTC at www.IdentityTheft.gov. An Identity Theft Report is one of the required documents by the SBA to cancel the loan debt as quickly as possible. Other documents needed include photo identification issued by a federal or state agency and a completed and signed Declaration of Identity Theft. For more information on the steps required by the SBA, click here.
3. Place a credit freeze to lock credit files until they are needed.A credit freeze is the most effective way to ensure new loans or accounts are not opened.
4. A less effective option is to place a fraud alert on credit files to alert potential creditors to take extra precautions before extending credit.
5. Verify with the Secretary of State’s Office or another government agency where the business is registered to ensure the company’s ownership and registration status have not been changed.

Contact the ITRC

Anyone who believes they are a victim of SBA loan identity fraud should contact the ITRC for more information. People can speak to an advisor by phone (888.400.5530) or by live-chat to develop a resolution plan. Anyone who wants to document their steps can use the ITRC’s ID Theft Help app’s case log feature. Consumers who want to learn more can also check out our latest education resources at www.idtheftcenter.org.