California SBA Fraud
The Epicenter of PPP and EIDL Dysfunction
California received more pandemic relief funds than any other state. It also leads the nation in fraud prosecutions while legitimate borrowers struggle with collections and bureaucratic nightmares.
California's SBA Disaster
California's 4.1 million small businesses were hit hard by pandemic shutdowns that lasted longer than almost any other state. The state's strict lockdown policies, while debated for public health reasons, created a perfect storm of desperate businesses and overwhelmed relief programs.
The result was predictable: billions in loans went out the door with minimal verification, fraudsters took advantage, and legitimate businesses now face collections while the criminals who stole billions remain largely unprosecuted.
Key California Statistics
- $87+ billion in PPP and EIDL loans distributed to California businesses
- 847 fraud prosecutions initiated in California (more than any other state)
- $2.1 billion in fraud identified by investigators
- 3,200+ California borrowers reported to Treasury collections in 2025
- Average EIDL loan: $142,000
Major California Cities
Los Angeles
The Los Angeles metropolitan area received the largest share of California's pandemic loans. LA County alone saw over $35 billion in disbursements. The entertainment, hospitality, and restaurant industries were particularly hard hit, and many businesses took EIDL loans that they're now struggling to repay.
LA is also ground zero for fraud prosecutions, with the US Attorney's Office for the Central District of California bringing more PPP fraud cases than any other district in the nation.
San Francisco / Bay Area
The tech industry's work-from-home capabilities meant many Bay Area companies weathered the pandemic better than others. But restaurants, retail, and service businesses in San Francisco, Oakland, and San Jose faced devastating losses. The high cost of living in the Bay Area made EIDL loan amounts larger on average, and the collections burden proportionally heavier.
San Diego
San Diego's tourism-dependent economy was crushed by travel restrictions. Hotels, restaurants, and attractions along the coast took massive EIDL loans to survive. With tourism only partially recovered, many are now facing the reality that their debt burden is unsustainable.
Central Valley (Fresno, Sacramento, Bakersfield)
Agricultural businesses in California's Central Valley face unique challenges with EIDL loans. Seasonal workers, variable income, and thin margins make the rigid repayment structure particularly difficult. Many farms and farm-adjacent businesses are now in collections.
Notable California Fraud Cases
"The Instagram Influencer" - Los Angeles, 2024
A social media influencer obtained $5.2 million in PPP loans for fake businesses, then posted pictures of luxury cars and vacations. Sentenced to 10 years in federal prison.
"The Ghost Employee Scheme" - Orange County, 2024
A group submitted 142 fraudulent PPP applications using stolen identities as "employees." Total fraud: $21 million. Eight defendants sentenced to a combined 87 years.
"The Real Estate Developer" - San Francisco, 2025
A Bay Area developer obtained $8 million in EIDL loans for properties that weren't operating businesses. Used funds to purchase additional real estate. Awaiting trial.
View more cases in our Prosecution Tracker Database.
California-Specific Resources
State Resources
- CA Attorney General: Consumer complaint hotline for fraud reporting
- CA Small Business Advocate: State-level assistance for small businesses
- Legal Aid Foundation of LA: Free legal services for low-income borrowers
- Bay Area Legal Aid: Serving the SF Bay Area
California Bankruptcy Considerations
California offers two systems of bankruptcy exemptions (System 1 and System 2). For EIDL borrowers considering bankruptcy:
- Homestead exemption: Up to $300,000-$600,000 depending on county and circumstances
- Wildcard exemption: System 2 offers a substantial wildcard for non-exempt assets
- Retirement accounts: Generally fully protected in California
Consult with a California bankruptcy attorney for specifics on your situation.
California Borrower Stories
We've received hundreds of submissions from California small business owners dealing with SBA dysfunction. Common themes include:
- Restaurant owners who took EIDL to survive shutdowns, now facing collections while still recovering
- Sole proprietors who received contradictory information about forgiveness eligibility
- Legitimate businesses flagged for "fraud review" with no clear path to resolution
- Tax refunds seized without clear warning or opportunity to contest
Share your California EIDL story to help other borrowers.