Surety Bonds
Category: Federal
Surety bonds help small businesses win construction, supply, and service contracts by providing a cusotmer with a guarantee the work will be completed. Many contracts require surety bonds, which are offered by suretycompanies. The SBA guarantee provides an incentive for surety companies to work with small businesses that would not be able to obtain the bond. Eligible small businesses can receive the bonding assistance necessary to compete for contracting and subcontracting jobs using the Surety bond Guarantee Program. Small businesses that often come to the SBA for surety bonds include: startups and firms in business less than three years; businesses with credit issues or internally prepared financial statements; subcontract trades with a desire to establish their own bonding as a prime contractor and those wishing to increase their current bonding limits.
For public and private prime contracts and all subcontracts, the SBA guarantees bid payment, performance, and ancillary bonds issued by surety companies. The cost of contract is up to $6.5 million. SBA reimburses surety companies in case of default 90% of losses, sustained for veteran and service disabled veteran, minority, 8(a), and HUBZone-certified small businesses; all projects up to $100,000; and 80% for all other small businesses.
For federal contracts, the SBA guarantees bid,, payment, performance, ancillary bonds issued by surety companies-if a guaranty would be in the best interest of the government. Cost of the contract would be up to $10 million. SBA reimburses surety companies in case of default 90% of losses sustained for veteran and service disabled veteran, minority, 8(a), and HUBZone-certified small businesses; all projects up to $100,000; and 80% for all other small businesses.
Typically, small businesses provide financial statements and other documentation when applying for surety bond gurantees. The process is streamlined under the SBA's QuickApp Program, which is for contracts below $400,000. The streamlined app reduces the normal paperwork to a simple two-page application, and the small business does not need to file any financials with SBA. SBA partners with 35 surety companies and hundreds of bonding agents. Applications submitted through SBA authorized agents can be approved in less than two days and with hours for QuickApps.
Contacts
Jennifer C. Bledsoe
Bonding Specialist
Phone: (202) 205-6153
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