A major revision in the U.S. Small Business Administration’s Surety Bond Guarantee Program could equate to more help for small businesses.
SBA now has tripled 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. The higher surety bond guarantee limits are expected to help construction and service sector small businesses gain greater access to private and public contracts and secure larger contracts vital to small business growth.
“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,” said Karen Mills, SBA administrator. “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 part of the Fiscal Year 2013 National Defense Authorization Act and expected to bolster participation by surety bond agents and brokers and their surety companies in SBA’s SBG program, Mills said.
The changes also allow SBA 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 it is in the best interests of the government.
SBA partners with the surety industry to help small businesses that would otherwise be unable to obtain bonding in the traditional commercial marketplace, Mills said. 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.