Small Business Finance News

SBA Program In Hot Water With GAO

Written by Jenna Weiner
Published: 8/13/2010

Government investigators find program aimed at helping underprivileged entrepreneurs is being abused.

A program by the federal government's small business authority has come under scrutiny thanks to a recent internal investigation.

Entrepreneur Business Trend Higher

The U.S. Small Business Administration's HUBZone program was investigated by the Government Accountability Office. The GAO found that the HUBZone program, which devotes funds to businesses in economically challenged areas, was giving money to companies that did not meet its requirements.

The GAO investigation revealed that some businesses in the program had lied about where their offices were in order to gain access to the funding.

&"In our previous investigations, we found that many of the firms in the 29 cases fraudulently used 'virtual offices' and fake business locations as their principal offices to qualify for HUBZone status,&"said Gregory Kutz, managing director of forensic audits and special investigations for the GAO, in a statement to the House of Representatives Committee on Small Business. &"Our testing revealed that the SBA still does not adequately authenticate self-reported information - especially principal office locations - to ensure program eligibility.&"

The GAO made news for small business owners recently after recommending more oversight for funds allocated in the American Recovery and Reinvestment Act. Among the biggest concerns of the office was how $7.2 billion was being spent by the Department of Commerce's National Telecommunications and Information Administration.

Share this article


About Our Small Business News

Our journalists cover all aspects of small business ownership. Our perspective is all about giving you news you can use to start and grow your business.

Additional Resources for Entrepreneurs

Lists of Venture Capital and Private Equity Firms

Franchise Opportunities


Business Glossary