Hennepin County shuts down small business relief fund due to fraud

Hennepin County has terminated its Small Business Recovery Fund following widespread allegations of fraud. The $2 million program was established to provide financial relief to brick-and-mortar businesses impacted by Operation Metro Surge, a federal immigration enforcement operation that began in December 2025.

Out of approximately 300 applications received, officials flagged more than 200 for potential fraud. Investigations involving document checks, site visits, and scrutiny for AI-generated content revealed issues such as duplicate applications for multiple businesses, non-existent businesses, and the use of real business information for fraudulent purposes.

As a result of the review, the county approved only 82 applications, distributing approximately $500,000 in grants. The program, administered by the nonprofit NextStage, offered one-time payments between $3,000 and $10,000 to cover commercial rent or mortgage costs for eligible local businesses.