Federal investigators from the Government Accountability Office (GAO) released reports Wednesday indicating that millions of dollars intended for small businesses were misallocated due to a weak application process in a SBA program. A Congressional hearing on the investigation is taking place today.

GAO investigators claim the SBA's Historically Underutilized Business Zone (HUBZone) program, intended to boost small businesses in economically depressed areas with federal contracts, allowed wealthy, unqualified businesses to commit fraud and abuse the program.

GAO's six-month investigation into HUBZone, created in 1997, reveals that SBA rarely makes site visits and doesn't verify facts on applications it receives. According to GAO, it was able to obtain HUBZone certification for four false business firms it created to test the soundness of the application process. 

The report states that since 2006, federal agencies gave more than $105 million to these firms that were acting as primary contractors on federal contracts.

The House Committee on Small Business hearing on the investigation takes place today, in Washington, DC. SBA Acting Administrator Jovita Carranza, GAO Director William Shear and Managing Director of GAO's Forensics Audits and Special Investigations Gregory Kutz will participate as witnesses. --Elizabeth Wilson

President Bush announced Wednesday his decision to appoint Sandy Baruah (bah-roo-ah) as head of the SBA. The decision came as somewhat of a surprise, as the acting administrator was expected to remain in charge until the end of Bush's term. It will be up to Bush's successor to determine whether to keep Baruah in the spot or nominate a new candidate.

If approved by the Senate, Baruah would replace Steven Preston, who was recently confirmed as Secretary of Housing and Urban Development. Jovita Carranza, the SBA's second-in-command as the deputy administrator, has been the agency's interim head.

Baruah is an assistant secretary of commerce. It's not yet known how the move will affect small businesses, but Sen. John Kerry (D-Mass.), chair of the Small Business and Entrepreneurship Committee, says he plans to review Baruah's record carefully to make sure he fits the job.

"The next administrator at the SBA must be ready to offer creative solutions for the current credit crunch, implement programs that will actually help women and minorities gain access to federal contracts and loans, and make sure that small firms have access to counseling and training to grow their businesses in this tough economic climate," Kerry says in a written statement. --Elizabeth Wilson

You've got to love networking on Facebook--its 21 million users do--and now small businesses can get some advertising on the site for free, according to the Associated Press.

Small-business owners should know that the behemoth San Francisco-based Visa is investing in networking, and becoming one of Facebook's 24,000-plus applications already added to the site in the past 13 months.

Visa Business Network debuted Tuesday on Facebook, and the first 20,000 small businesses in the United States that join will be given $100 in advertising credit to use on the site. That adds up to $2 million worth of free advertising Visa will pump into the small business world.

The hang-out site that still has leaps and bounds to go to prove its advertising worth gets the powerful hand of Visa marketing added to its resume in the new business network's launch.

There, entrepreneurs can swap virtual business cards, connect with the 80,000-plus small business owners already on Facebook and even seal business deals.

One of the interactive elements provided by the network includes a Q&A feature headed by five of Entrepreneur's expert columnists who are there to offer solutions to small businesses. --Elizabeth Wilson

If you're mechanically and environmentally inclined, a $10 million prize could soon be yours. The X Prize Foundation is offering $10 million for a super-efficient car. The competition is open to established automakers and unknown engineers, and it's meant to result in cars available for purchase, not just concept cars.

So far, more than 60 teams have signed up for the competition. The winners will participate in a cross-country race in 2009, in which they'll be judged on fuel efficiency, speed, distance and other factors. For more information, check out the website for the Progressive Insurance Automotive X Prize.

Do you think your business idea has what it takes to shake up the business world, but not enough money to make it happen? Then prepare your elevator pitch for PerfectBusiness.com's National Pitch Challenge. The goal of the competition is to find the best business ideas in the U.S., and fund at least 25 businesses across the country. The top 10 pitches will receive a business prize package, consulting services and funding from angel investors and venture capitalists.

"We're looking for serious business ideas from capable entrepreneurs," said Dan Bliss, co-founder of PerfectBusiness.com. "Most professional investors are interested in startups or existing businesses that have potential for rapid growth and large returns on investment."

The top ten pitches will be determined by a panel of business experts and investors. You must be at least 18 years old to enter. Submissions will be accepted from September 1 through December 31, 2008. Winners will be announced on February 2, 2009. Check out the official website for more information. Good luck!

Is traditional desktop software a thing of the past? According to a recent survey conducted by online payroll service SurePayroll, it is--at least for small business. Instead, many small businesses are choosing to use web-based software that better allows them to compete with big businesses. In fact, three out of four entrepreneurs surveyed said they rely on online software, which enables them to work in an online environment in place of purchasing or licensing software.

SurePayroll's survey cited benefits to online software such as convenient access, the fact that they don't need internal support for the software, and fast and easy implementation.

When looking to the future, 75 percent of survey respondents predicted that in 10 years, desktop software will be eliminated, and all applications will exist on servers that can be accessed remotely.

Summer is quickly approaching, but for entrepreneurs, that doesn't necessarily mean vacation is on the horizon. If you're trading in margaritas and summer novels for coffee and file folders, add SCORE's "Summer Finance Fix-up" to your to-do-list. SCORE "Counselors to America's Small Business" announced a special home page feature this month focusing on business financing articles, workshops and other resources. The content should help small-business owners better manage cash flow and funds critical to business success.

Here are some free resources to check out:

· Creating a Cash Reserve: Find practical ideas and tactics to create a cash reserve in your business.

· Guide to Managing Cash Flow: Improve your understanding of how to manage your company's cash flow, measure the amount of cash on hand and prepare for cash flow shortfalls in the future.

· Five Tips on Getting a Loan and Five Tips on Approaching Your Bank: Learn how to use a business plan to get the bank loans you need. Get tips on how to evaluate your business, plus what lenders look for when making a decision to loan you money.

· Five Grant Resources for Small Businesses: Find out if there are any federal, state or local grants that may be appropriate for your type of business.

· How to Pay Business Debts You Can't Afford: This 16-page workbook from SCORE and Corporate Turnaround helps small businesses survive when facing economic and financial challenges.

These days, employee retention is a concern for many small businesses. Workplace Options, a provider of work/life employee benefits, hopes employers will try a new tactic to help keep workers: offering caregiving assistance.

According to a national survey commissioned by Workplace Options, about one in four employees is providing care for an older or disabled adult. Of those respondents providing geriatric care, 44 percent have missed time at work to care for their loved one. That's where Workplace Options comes in.

"Nearly half of workers polled feel it's very important for employers to provide caregiving assistance benefits to their employees," said Dean Debnam, CEO of Workplace Options. "Interestingly, employees are often less likely to discuss elder care issues than child care concerns in the workplace. Openly supporting employees who are facing elder caregiving challenges is critical to making them feel like they don't have to face the hurdles of senior care alone."

For more information on this work/life option, check out this fact sheet from Workplace Options.

According to this blog posting on Washingtonpost.com, the number of small-business loans less than $1 million increased by 15 percent from June 2006 to June 2007. The "Small Business and Micro Business Lending in the United States for Data Years 2006-2007" report found that a total of 8,633 institutions made 24.5 million loans values at $685 billion, compared to about 21 million loans totaling $634 billion the prior year. In addition, the SBA's Office of Advocacy reported that loans with a value of $100,000 to $1 million increased by about 32 percent.

What's the biggest concern for small businesses these days? According to a national survey released by the National Association for the Self-Employed, it's access to health care.

"The baker, the house painter, and the 20 million other micro-businesses in the U.S. are struggling to survive in this economy," says Kristie Darien, executive director of the legislative office of the NASE. "These businesses could be further threatened if we can't find a way to make insurance more affordable."

The survey, which polled about 4,000 micro-businesses, showed that high cost stopped small businesses from offering health insurance and thus put them at a disadvantage to larger businesses. Here are some survey highlights:

• About 67 percent of respondents said they have personal health insurance coverage, a notable increase from the 54.9 percent who reported the same in 2005.
• Of the more than 46 percent of responding businesses offering health insurance, only 18.6 percent offer coverage for full-time employees, compared to 46.2 percent in 2005.
• One in 10 respondents spent 25 percent or more of their gross revenue on health insurance, compared to 10.1 percent in 2005.