11/27/2005
SBA Surety Bond Guarantee Program Can Open New Opportunities for Small Businesses
by U.S. Small Business Administration
Small business contractors and service companies requiring surety bonding can look to the U.S. Small Business Administration for assistance.
SBA's Surety Bond Guarantee Program guarantees surety companies against a percentage of the losses sustained as a result of a contractor's default on a guaranteed bid, payment or performance bond, making them more willing to issue bonds for smaller, newer companies. The SBA can guarantee bid, payment and performance bonds for construction, service, and supply contracts up to $2 million for eligible small contractors.
SBA guarantees 90 percent for bonds on contracts up to $100,000, and on bonds for socially and economically disadvantaged contractors. Certified HUBZone contractors are eligiible for the 90 percent guarantee under the Prior Approval Program. More information on the HUBZone Empowerment Contracting Program is available at www.sba.gov/hubzone.
The SBA charges fees to both the contractor and the surety company. Rates are published periodically in the Federal Register. The SBA does not charge the contractor a fee for a bid-bond guarantee.
For more complete information on Surety Bond Guarantee program, go online to www.sba.gov/osg for a list of area office contacts.
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