GAO alleges major fraud in SBA program. The Government Accountability Office says hundreds and possibly even thousands of businesses in the Historically Underutilized Businesses program don't meet the requirements, reports USA Today. Nineteen businesses that were inappropriately awarded $30 million in contracts were caught red-handed. The House Small Business Committee's chairwoman, Rep. Nydia Vel√°zquez, D-N.Y., will recommend that the SBA shut down the program until they can sort through the wrongly-classified businesses.
Zuckerberg surrenders to users' redesign revolt. Valleywag has the scoop from inside Facebook headquarters: the company's staff has been consumed with "fire drills" trying to figure out how to deal with the maelstrom of negative feedback from its latest redesign and has finally capitulated—well, sort of. Zuckerberg's motivation behind the redesign was to make the social network operate more in "real-time"—like Twitter, which he tried to buy for $500 million and failed. Yesterday, Zuckerberg delegated the apology to his product director, Chris Cox. Read the full text here. They will be fixing some of the problems caused by the redesign, but not going back to the previous iteration.
Why small companies will win in this economy. At HarvardBusiness.org, management consultant Peter Bregman relays the story of Passlogix, a small company that's been killing its larger competitors of late. In fact, in a down economy Passlogix has secured multi-year, million-dollar prepaid contracts. According to Bregman, in an era filled with the failure of large corporations, small companies are actually more reliable business partners. Bregman writes: "The gap of confidence between small companies and big ones is growing'¶We simply don't trust companies anymore. We trust people. And in big companies, it's hard to even find a person to trust as we scream "operator" into our telephones only to get transferred to another menu whose options have changed. That gives small companies a huge advantage."
Have a question for President Obama? Want to give him your two cents about cutting the payroll tax or how to get capital flowing to entrepreneurs? Now's your chance. Yestrerday, Whitehouse.gov opened for questions for a "community-moderated online town hall" to be hosted on Thursday. Previous online events were moderated by the White House Press Secretary, but this one will feature Obama himself, says AllThingsD. Participants are encouraged to send in a video of themselves asking the question and can vote on submissions from others. The most popular questions will be answered—or at least addressed. So far, this question (from "swish" from Ellwood City, Pennsylvania) is the most popular in the small business section: "what specifically can the federal govt do to lower the cost of providing quality health coverage for small business owners?" Is that the most pressing concern for small businesses?
Cash for tweets. Twitter may be popular, but it's got no plan to make money, right? Not exactly. The Wall Street Journal surveys the ways marketers are using the service to sell ads. These include a startup that will pay to serve ads within a your personal Twitter stream, websites that cull tweets on a particular topic and sell traditional display ads, and a site that charges companies to display their messages. Yesterday, Twitter itself announced what could be the beginning of a revenue strategy, a deal with Microsoft. Meanwhile, the Journal quotes co-founder Biz Stone saying that Twitter plans to offer paid accounts. "The accounts would offer users more features in exchange for a fee," according to the article. For more on Twitter, check out the feature we did last year and, of course, follow Inc.
Obama's small business plan: it's a start, but only a start. Bizbox looks at some of the reactions to Obama's plan to help small business, and some of them aren't too enthusiastic. They plan to use TARP funds to buy securities on SBA loans, eliminate fees, and raising the amount of loans the government will guarantee. That's all well and good, but many are concerned this won't boost the number of loans and it won't solve the root of the small business problem—consumers just aren't spending. Bizbox concludes that it's a good beginning, but largely a symbolic one, and it's going to take more than gestures to save these companies. For more on the administration's efforts to get credit flowing for small businesses, see Inc.'s coverage.
Xobni gets another $3 million. Xobni, the social email platform we covered in our 30 under 30 issue, last October has gotten another $3 million, this time from BlackBerry Partners Fund, boosting its Series B total to $10 million. Seeing no signs of the recession, Om Malick calls it part of the "funding torrent" in Silicon Valley.
A different kind of Credit Crunch. While financial pundits have bemoaned the lack of lending by banks, the NYT's David Leonhardt says that, for some industries, the current problem isn't lack of credit — it's too much outstanding debt. Leonhardt looks at the three main players in the car rental industry, Avis, Enterprise, and Hertz, companies that took on so much debt in good times, they can't get low-interest loans now that the economy has soured. Leonhardt writes of this now-common problem, "Many [small businesses] are struggling to get financing but are afraid to be identified publicly as a spurned borrower. Instead, they are quietly cobbling together loans any way they can and hoping the squeeze eases soon." (For more of Enterprise, which owns the largest private fleet of cars in the world, check our cover story here.)
Small Business needs the Postman. Senator Olympia Snowe of Maine has sent a letter to Postmaster General John Potter pushing him to think about how reducing the mail delivery schedule could negatively impact small business, according to the Washington Post's small business blog. He wrote that the proposed reduction from six delivery days to five could really hurt small companies. "America's small businesses depend on reliable and consistent service from the USPS, and they could suffer significant setbacks by a shortened mail delivery week, such as lost sales, order backlogs, and job cuts," said Snowe.
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