SBA Announces Revisions to Surety Bond Guarantee Program

More small businesses will have access to larger contracts.

U. S. Small Business Administration (SBA) recently announced a major revision to their Surety Bond Guarantee (SBG) Program. The new provision more than triples the eligible contract amount from $2 million to $6.5 million that the Agency will guarantee on surety bonds for both public and private contracts. These new higher limits will help small business construction and service providers to have greater access to larger contracts. "These new contact ceilings are one more way we can help small businesses, particularly in the construction and service sectors, compete for and win critical contacting opportunities that help them grow their businesses and create jobs," SBA Administrator Karen Mills said. "Additionally, these changes, which are enthusiastically supported across the surety industry and small business community, will help spur economic growth and recovery in areas that have been hard hit by disasters, bringing jobs and economic activity to regions at a time when it is needed most."   The revisions are a result of the Fiscal 2013 National Defense Authorizations Act and are expected to increase surety bond agents and brokers and their surety companies to increase participation in the SBG Program. In addition, the changes increases the government contact value up to $10 million that SBA can guarantee if a contracting officer of a federal agency certifies that the guarantee is necessary for the small business to obtain bonding and if it is in the best interest of the government. SBA partners with the surety industry to help small businesses that are not able to obtain bonding in the commercial marketplace. Under the partnership, SBA provides a guarantee to the participating surety company of between 70 to 90 percent of the bond amount if the contractor was to default or fails to perform.