Fraud Risk Is Rising in Government-Funded Business Lending. Field Verification Still Matters.

As 2026 begins, fraud tied specifically to government-funded and government-backed businesses is again drawing attention. Recent audits and enforcement actions continue to highlight a recurring issue across these programs: funding decisions are often based on documentation, while real-world business activity is not always verified beyond initial approval.

Research published by the Government Accountability Office estimates that fraud across federal programs represents hundreds of billions of dollars in potential losses annually. Much of this exposure stems from misrepresentation, outdated operational information, or lack of ongoing verification after funds are disbursed.

Public enforcement actions from the Small Business Administration reinforce this pattern. Investigations into government relief and funding programs show that many fraudulent cases involved businesses that technically existed but were inactive, operating at a smaller scale than reported, or no longer conducting business at the stated location. These situations were difficult to identify through paperwork alone.

For lenders, servicers, and asset managers supporting government-backed lending programs, this creates a familiar challenge. Desk reviews, financial statements, and phone outreach provide part of the picture, but they rarely confirm whether a business is actively operating in a way that aligns with its stated purpose and use of funds.

This is where field services remain relevant.

On-site verification, business confirmation and contact with delinquents help validate real-world activity. They answer fundamental questions that paper reviews cannot. Is the business operating at the listed address. Is there observable activity. Is equipment present and in use. Are contacts reachable in person, not just on paper.

Guidance published by federal oversight and grants agencies consistently identifies misrepresentation and lack of ongoing verification as common risk factors in government funding programs. These risks tend to surface operationally before they appear in financial metrics or reporting exceptions.

For risk and compliance teams, field verification is not about enforcement or escalation, but confirmation. It helps separate administrative delays from material risk and allows teams to respond proportionally, based on observable facts rather than assumptions.

As scrutiny around government-funded businesses continues into 2026, combining desk-based review with on-the-ground verification provides a more complete risk picture. Field services support better decisions by replacing uncertainty with clarity.

Aspen Field Services supports lenders, banks, and asset managers with timely, accurate field verification across North America. Navigate to learn more here, on our website, goaspen.com

Sources

Government Accountability Office Federal Fraud Estimates and Oversight Reporting

https://www.gao.gov/products/gao-24-105833

Small Business Administration Office of Inspector General Fraud Investigations and Indictments Related to Government Relief Programs

https://www.sba.gov/article/2025/12/12/eleven-individuals-indicted-stealing-more-two-million-dollars-covid-relief-funds

Small Business Administration Press Release PPP Fraud Enforcement and Sentencing

https://www.sba.gov/article/2025/12/18/co-founder-paycheck-protection-program-lender-service-provider-sentenced-65m-covid-19-relief-fraud

U.S. Department of the Treasury Federal Contracting and Fraud Oversight Initiatives

https://home.treasury.gov/news/press-releases/sb0309

Grants.gov

Grant Fraud Risk and Prevention Guidance

https://www.grants.gov/learn-grants/grant-fraud/grant-fraud-responsibilities.html

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