You could try running a seam from the hem of the sleeve down to the hemline, underneath the arm. They are likely to twist after washing, and for the small size, you would probably need to shorten the sleeves and the hemline as well. I would bast or pin first and try it on.
You could try cutting off the t-shirt design and sewing it to a t-shirt that fits. Or putting it on a denim jacket or a tank or something different, so it looks more purposeful.
If the design is on the back, you could change the t-shirt from a shirt to a cardigan by cutiing open the front and trimming it. Or try to think of other ways to wear it without just being a t-shirt, if that makes sense.