SBA program increases surety bond guarantee ceiling
Published on 03/01/2013
The U.S. Small Business Administration (SBA) has revised its Surety Bond Guarantee (SBG) Program to help small construction and service companies gain greater access to larger private and public contracts.
The changes, authorized by the Fiscal Year 2013 National Defense Authorization Act, triples the SBG Program's eligible contract amount from $2 million to $6.5 million. With the increase, the SBA will be able to guarantee bonds for government contracts valued at up to $10 million 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 interests of the government.
"These new contract ceilings are one more way we can help small businesses, particularly in the construction and service sectors, compete for and win critical contracting 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 SBA partners with the surety industry to help small businesses that would otherwise be unable to obtain bonding in the traditional commercial marketplace. Under the partnership, SBA provides a guarantee to the participating surety company of between 70 and 90 percent of the bond amount if a contractor defaults or fails to perform.
