SBA Makes Changes to its Surety Bond Program

WASHINGTON – The U.S. Small Business Administration has noted two important changes to its Surety Bond Guarantee (SBG) Program that will increase contract opportunities for small contractors, supporting them to grow their business operations.  The changes will become effective on September 20, 2017.

The SBA will increase the guarantee percentage in the Preferred Surety Bond Program from no more than 70 percent to no more than 90 percent.  The SBA’s guarantee will be 90 percent if the original contract amount is $100,000 or less, or if the bond is issued to a small business that is owned and controlled by socially or economically disadvantaged individuals, veterans, service disabled veterans, or certified HUBZone and 8(a) businesses.  All other guarantees will be 80 percent.

The eligible contract amount for the Quick Bond Application (Quick Bond) will increase to $400,000 from $250,000.  The Quick Bond is a streamlined application process, with reduced paperwork requirements, that is used in the Prior Approval Program for smaller contract amounts.  SBA’s review and approval requires minimal time, allowing small businesses to bid on and compete for contracting opportunities without delay.

“These changes strengthen a program that is in place to help small business construction firms establish bonding so that they may grow to perform on larger contracts,” said Anthony Ruiz, San Antonio District Director. “This will undoubtedly help small contractors to secure contracts with not just federal projects but with city, county, municipal, state and private sector.”

SBA guarantees bid, performance and payment bonds issued by surety companies. This Federal guarantee encourages surety companies to bond small businesses who are having difficulty obtaining bonding on their own.

Through its SBG Program, consisting of the Prior Approval and the Preferred Surety Bond Programs, the SBA guarantees bid, payment and performance bonds for contracts that do not exceed $6.5 million, and up to $10 million with a federal contracting officer’s certification.  The SBA’s guarantee encourages the surety company to issue a bond that it would not otherwise provide for a small business.

For more information on the SBA’s Surety Bond Guarantee Program, please visit www.sba.gov/surety-bonds.