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Small Business Surety Bond Guarantee Program

Can the small business surety bond guarantee program help your business?

Huff Insurance is proud to announce that we have bonding companies that have agreements with the Small business administration (SBA) to allow small contractors to qualify for surety bonds on projects for a total cost of up to $6.5 million.  The program is referred to as the small business surety bond guarantee program.

The SBA program is funding for minority owned business and making sure that credit is available for contractors that would otherwise not qualify for bonds in standard surety markets.

This small business surety program is a great alternative to non -standard contract programs that can include collateral or fund control.

This is a great way for contractors to be able to provide bid bonds and performance bonds.

In 1935 congress passed the Miller Act that requires to obtain performance and payment bonds on qualified federal public work projects that exceed $100,000.

The SBA surety program helps to encourage bonding companies to extend bonds to businesses that would not otherwise qualify, and it reduces the risk to the Surety.  The SBG program is available for contracts up to $6.5 million in size.

For newer contractors with little or no bonded project experience, the SBA Quick program allows contractors with challenging credit to qualify for jobs up to $400,000 in value.   For larger bonds, most surety companies will require a CPA reviewed or audited financial statement and certain standards for working capital.  The Small Business Administration program helps to reduce the underwriting standards allowing contractors to bid projects while providing the surety companies with financial background.

Do you qualify for the surety bond guarantee program?

It was used to help small contractors complete for more government contracts.   It is only available if you are not able to obtain a bond without the SBA program.

The SBA will review the following information:

  • Partial Subcontract- the contractor must be fully responsible for the oversight and management of the subcontractors and needs to perform at least 15% of the work in house.
  • Debarment- all owners with 20% ownership interest in the contracting company must prove that they are not currently debarred, suspended, proposed for debarment or voluntarily excluded from transactions with any Federal agency. Debarment is the state of being excluded from enjoying certain possessions, rights, privileges or practices and the act of prevention by legal means.
  • Size- general contractors must have $39.5 million or less in revenue and trade contractors must have $16.5 million or less in revenue.
  • Moral Character- must prove that they are of strong moral character. They will examine criminal history of bond claims.
  • Capacity- contractor must demonstrate they are able to successfully complete the project that the bond is being requested for.

To qualify for the bonds on contracts up to $400,000

  • No open bankruptcies
  • No criminal convictions or pending charges
  • No past due child support
  • No maintenance clauses greater than 2 years
  • No liquidated damages clause greater than $5000 per day
  • Applicants must preform 20% of the work
  • Work can not be more than 50% completed at the time of the application
  • No asbestos, remediation, pool contractors, demolition or software development
  • Bid spread can not be greater than 20%

Bond premiums are generally 2.5% for the first $100,000 and .6% SBA Fee.

Huff Insurance is happy to be an agent that is authorized to offer this bonding program.  Please give us a call today to help with your bonding needs.

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